I guess I’m just not comfortable with a person who independently meets and speaks with foreign leaders, both adversaries and allies, running essential defense contractors. Call me old fashioned, but I think that’s a conflict.
Right now, dead is all US producers absent protection. Autos are defense-strategic, so we’ll protect, but I wonder if we have the wisdom to protect without just fattening favored subpar producers, like Tesla. Lots of firms pursuing autonomy. I’d not bet on Tesla to outperform.
We’re stumbling our way into a 1930s scale politico-economic crisis. Even over my relatively calm lifetime, it’s remarkable how much of what’s normal now would have been politically possible then. Things will get very fluid. They may just kill us. I’d not pretend to know the limits of the possible.
BYD is the biggest, yes. But it’s like 30% share; the rest of the market is quite dispersed. Our champions are like Boeing and Intel, firms that become essentially our industries. China might err its way into that, but so far, across its wide panoply of industries, it’s done a great job avoiding it.
Tesla did a good job for a while. The fact that it’s shares trade on the same basis as DOGE — based on Elon’s showmanship rather than anything real — has killed the firm. Yes, China did in its canny way learn from Tesla. Tesla is now dead, modulo the support and protection it will win from Trump.
that SpaceX remains private has served it well. it too has accomplished some extraordinary things. let’s see how long that lasts before Elon’s intercessions destroy it, one way or another, or more optimistically force divestment by a leader recklessly freelancing his own idiosyncratic foreign policy
yeah. Canada has a VAT and provincial taxes. there is work to be done sorting this stuff out, not insuperable problems. re the portfolio: you advocate the programs, bring taxes along for the ride, rather than the other way around. VAT as standalone is a terrible idea.
no. you get electric cars like China (almost) does, by openly subsidizing real capital formation. relying on bubbles to replace the work of economic calculation has served the US poorly. China does a slap-shot job of disciplining what it subsidizes, still does much better. 1/
it wisely subsidizes competitive industries, rather than firms. it has little need for champions or high equity flyers. it actually builds rather than hypes (while Tesla turns into Boeing, repurposing a six year old platform rather than innovating). /fin
VAT is regressive. VAT plus universal benefits is not. You can soften the edge of VAT with lower rates on necessities. The issue is, in order to create space for noninflationary expenditure, you have people who spend their marginal income. that limits progressivity of taxes for this purpose. 1/
i’d not support the VAT without a portfolio of universal benefits that it funds. that’s the tricky politics: VAT is part of a decent endgame, but you can’t advocate it on its own, you need to negotiate the package. /fin
He should never be able to accumulate it. I support taxing loans www.interfluidity.com/v2/9028.html but it isn’t enough. if his holding less of these enterprises forces a more conservative valuation of them, that’s a feature not a bug.
yup.
VAT is regressive. It's the meanest tax, most effective for financing expenditure, because it crowds out income that would otherwise be spent on goods and services. We'll disagree I'm sure, but Elon level wealth is intolerable and we should use wealth taxes to tax it quickly away. 1/
Income taxes are about progressivity and shaping the income and wealth distribution, not financing in the sense of making room for noninflationary expenditure. The standard deduction should be like 150K, and yes, there should be much higher tax brackets with very steep rates. /fin
i'd like to see more spending, not less. but different! you render that noninflationary with a VAT. you use the income tax (and wealth taxes) to remedy the lopsided wealth and income distributions. perhaps a bit radical for your tastes.
i'd say it's not desirable, the interest flows are undesirable, counterproductive, flows, rather than unsustainable. they are not very inflationary, because they go predominantly with populations with low marginal propensity to consume. so they turn out to be surprisingly sustainable. still bad.
Fed as bond vigilante. (I guess given how Clinton interacted with Greenspan, always it was thus.)
yet we have to live in it.
an irony of the mad-white-guy H1B debate is that the fix most in their interest is to make the visas more generous — eliminate the tight attachment to continued employment which means visa-holders accept worse conditions than native-born would to ensure continued status.
one can always overfit a model on hindsight, sure, but the point of the exercise is to try to develop some foresight…
so basically, people now fear adverse selection more than they used to, are therefore less willing to provide liquidity, a less liquid market is riskier and more volatile so the term premium rises?
i think the theory is when GDP growth is high, investment returns are high across the risk spectrum, so including risk-free rates. it's kind of a thin theory i think — it seems to me GDP growth could be high despite ample cash availabilty, and high RFR suggests people hungry just for cash.
another way to argue it is if you think a high GDP growth economy is a "hot" economy, so inflation risks are higher, so Fed is more likely to raise.
oh, i've noticed both ways. the fall had a straightforward story: the Fed finally declared inflation subdued and was going to begin a cutting cycle. prior too they acted as though inflation was now maybe chronic, so something of a shift from an expectation of persistent elevation to sharp cut cycle.
expectation of falling rates was a conventional, pretty easy story for much of 2024. the sharp U-turn not so much.