Econ 101 instructors take note—a new illustration of the important microeconomic concept of incidence just dropped. Economists emphasize that there is a world of difference between legal and economic incidence. Legal incidence specifies who, on paper, has the right to claim a benefit or the obligation to bear a liability. Economic incidence analyzes which party receives a benefit or bears a cost in actuality. Who gets to command more or fewer resources?
In a classic case of damning with faint praise, former President Donald Trump recently expressed his affection for Chinese President Xi Jinping, while threatening to engage in a trade war with China if he is reelected as President. In typical Trumpian style, he feted Xi as a smart, strong leader while also stating that while he is not specifically looking for a trade war, import duties even greater than the 60 percent he was previously reported as considering are completely on the table. An equitable fellow if ever there was one, Mr. Trump has also announced plans to ostensibly revitalize American manufacturing by levying a 10 percent tariff on imported goods across the board. This is hardly new, nor limited to Trump, as President Biden has maintained his predecessor’s duties on some $370 million worth of Chinese imports. Both national conservatives and liberal protectionists are dead wrong about tariffs and growth.
The U.S. Congress hasn’t done much in the past month with one notable exception. The U.S. House of Representatives made progress toward establishing a commission to address the nation’s worsening fiscal situation.
While the U.S. Senate was busy approving another $95 billion for various foreign policy purposes, two important things were happening to which almost no one in Congress was paying attention. One was the released January inflation data; the other was the updated Congressional Budget Office (CBO) 10-year fiscal outlook.
William F. Buckley once defined a conservative as “Someone who stands athwart history, yelling Stop.” With apologies to Buckley, we might define an economist as someone who stands athwart the contemporary public policy conversation, yelling, “This time isn’t different!”
It is no secret that the state and local governments make California a very difficult place to do business. The Golden State maintained its perennial position of the worst business climate in the country in Chief Executive magazine’s annual “Best and Worst States for Business” survey of hundreds of CEOs from across the nation. (Texas, Florida, and Tennessee once again topped the list.) But things are particularly bad for restaurant owners, and substantial increases in the minimum wage are only making them worse.
There are some big signs that the people of Las Vegas and the state of Nevada are getting genuine buyer’s remorse over the Oakland Athletics.