Volkswagen May Be Worse Than Enron

Enron was a criminal enterprise.  Business schools use Enron as a case study that shows how a corporation can be corrupted by its leaders.  This article in the Financial Times argues that Volkswagen's damage to society may exceed the damage caused by Enron.  It provides seven kinds of damage related to VW's emissions scandal that support its conclusion.  Beyond the legal liabilities and reputational damages to the German car industry, VW has contributed to environmental pollution, and its actions have made it more difficult to explore technological solutions to our environmental problems.

Trump's Tax Plan Is Not A Populist Plan

You didn't really think that Trump's tax plan would soak the rich and cut taxes for the middle class did you?  Of course not, you would have been right if you questioned the rhetoric he uses to sell his tax plan to the public. This article examines Trump's tax plan in detail and it is really a plutocrat's tax plan with populist clothing.  It is much like Jeb Bush's tax plan which cuts tax rates for the rich while throwing a few bones to everyone else.  Trump's plan even eliminates the inheritance tax.

Trump's tax plan is like Jeb Bush's tax plan in another respect.  It would reduce the government's tax revenue by trillions over the next few years.  Trump and Bush both use dynamic scoring to argue that the revenue lost from the tax cuts would stimulate the economy and increase the tax base.  In other words, it is the same old voodoo economics that started with Ronald Reagan's huge cut in the top tax rate.  George W. Bush used the same dynamic scoring scam to justify his cuts in the top tax rates and the reduction in the tax rate on capital gains and dividend income.  We are still waiting for the economic growth promised by Reagan and Bush.  Apparently, both Trump and Bush believe that the public will like their rhetoric, and that most of the public will not look at the details.  They are probably right.  Otherwise politicians would not keep using the same scam.

What's Wrong With America:?

The majority of Americans are concerned about a future in which their children will not live as well as they have lived.  Many believe that the system is rigged against them.  However, most Americans are unaware of the extent to which political power, and the ability to rig the system, has shifted over the last four decades.  Robert Reich, who was in the Clinton cabinet, and is now a professor at Berkeley, delivered a speech at a meeting of political scientists that offers an apt description of the changes that have taken place.  He told them that they needed to do their job as political scientists and not leave this up to economists who refuse to go beyond the factors that encourage economic growth and efficiency.  He explains how the system has been rigged to discourage real discussions about income distribution.  In general, he argues that we no longer have a system of countervailing power that led to a more equal distribution of wealth and power.  He provides lots of details on how this has happened, and he goes well beyond the role of the economics profession in aiding and abetting the transformation.  We have undergone a quiet revolution that has taken place without firing a shot. 

John Boehner's Resignation Is Simply A Matter Of Geography

John Boehner, the Speaker of the House from Ohio, resigned his speakership because he has lost control of the House.  His resignation is easily explained by geography.  The GOP House is dominated by representatives from "Red States".  Conservative Republicans win almost all of the elections in Red States.  There are almost no Democratic members of the House from Red States.  Moreover, Republicans in the North East, Midwest, Mid-Atlantic and West Coast face stiff competition from Democrats.  Many Republicans in these areas have drifted away from the Republican Party as its politics increasingly reflect the cultural and social values of the Red States.  Representatives from Red States are willing to shut down the government in order to end funding for Planned Parenthood and other organizations which are inconsistent with the cultural and social values in their geographies.  The House of Representatives has become a symbol of a nation divided by geography. 

Rational Drug Pricing Is Desirable For Society But Not For Drug Firms

Jeff Sachs argues that the pricing of drugs by pharmaceutical firms has little to do with free market forces.  The industry depends upon government sponsored basic research by the NIH.  It turns that research into useful products for which it receives patent protections which limits competition.  It then hides the profits in tax havens so that it does not have to pay taxes to fund the NIH or the patent protection services by government.

This description of the drug industry is not atypical of modern industry.  Firms are dependent upon government services to help them create and defend their intellectual property rights.  Government services become even more important in our global economy.  Governments protect their access to markets and they negotiate trade agreements which protect patents and copyrights.  Much of the competition in the market is between industry groups which care primarily about the goods and services they provide.  They fund the lobby's which shape government policies in their interest. 

David Brooks Offers His Eulogy To The Republican Party

David Brooks has left the reservation.  He cannot bring himself to defend the political party of his mentor William F. Buckley.  Under Buckley's tutelage he helped to develop Young Americans For Freedom.  They had a vision of the Republican Party as the party of free enterprise.  They opposed their contemporary generation of college students who were radicalized by the Vietnam War.  Brooks has been radicalized by the efforts of GOP presidential candidates to win the votes of the most backwards looking segment of its political base.  He longs for the forward looking remnants of what was the Republican Party.  He worries that it cannot survive politically given the demographic trends that are in place.  He hopes that it can resist the reactionary elements in the GOP and return to what he believed it to be in his youth.  He fails to believe that his Party been captured by an elite group that has cultivated the reactionary forces in our society in order to gain control of the government which is the only threat to its power.

Jeb Bush Claims That US Ranks 46th In World On Ease Of Starting A Business

Jeb Bush was given a platform by the Wall Street Journal to blame Obama for over regulating business.  One of his claims is that Obama has made it hard to start up a business in the US.  He used data from the World Bank to support his claim.  Kevin Drum did some fact checking and found that the World Bank data cited by Jeb refers to the time it takes to register a business in New York City.  It has nothing to do with Obama or the national government.  The other facts that he cites also refer to local and state regulations.  The US ranks 6th on the World Bank scale at a national level. 

Bush was a state governor in Florida.  He must be familiar with the state and local regulations to which he referred.  His friends at the WSJ provided him with a platform to mislead the public and bolster his position among other GOP hopefuls who make similar promises about easing regulations on business.   Some of the regulations that he would eliminate are at the national level and they primarily benefit multinational corporations.  Bush offers little that make it easier to start a new business.