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Across the United States, people are talking about tax reform. Comprehensive overhaul of the federal tax code was a core part of President Trumps campaign platform, and voters on both sides of the aisle share a desire for a more efficient, modern, and competitive tax code that can help our economy grow and correct decades of the current tax codes disadvantages for individuals and businesses.
Tax reform is a very good thing. But the debate underway today in Alaska shows just how important the nuts and bolts of the reform process are, and how vital it is that significant tax policy shifts…

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Among the many things it does, the federal government is one of the nation’s largest lenders. It lends to farmers, homeowners, students, small businesses, exporters and rural electric utilities, among others. Altogether, there are more than 100 loan programs administered by 20 agencies overseeing lending worth $3.4 trillion in fiscal 2015, up from $1.5 trillion in 2007.
These fascinating figures come from a new report on federal credit programs. The report’s verdict is mixed: Many programs are justified to correct failures of private credit markets, but lending standards are often too lax,…

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Last week was budget mania in Sacramento and in the chaos that always ensues, Sacramentos Democratic leadership prevailed once again at using a legislative loophole to stack the cards in their favor.
First, a process primer. In California, the Legislature must pass a balanced budget before 11:59 PM on June 15; if not, they are docked pay each day the budget is late. The Budget Act is a laundry list of expenditures. But many of these line items require policy action to legally implement the authorized funds. To do this, the Legislature passes a budget package, which includes the Budget…

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In his letter to Congress last month, U.S. Trade Representative Robert Lighthizer emphasized that “NAFTA was negotiated 25 years ago, and while our economy and business have changed considerably over that period, NAFTA has not.” He’s right; the North American Free Trade Agreement (NAFTA) was written at a time when people still watched movies on VCRs, made calls from payphones, and played cassette tapes in their cars. We must modernize the agreement in a way that best serves Americans. With the hearings in the House and Senate this week and another executive branch hearing next week,…

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Could the purchase of a car save a neighborhood? In the past the answer to the previous question would have been quick and dismissive no. Blighted neighborhoods are improved by investment, while a purchase of a car amounts to consumption of wealth; at best something thats an effect of productive investment.
But thanks to technological advances, previous economic truths have become a bit more nuanced. With the arrival of ride sharing companies like Uber and Lyft, cars dont necessarily lose value the minute they leave the proverbial lot. Nowadays theyre capital goods that…

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In early January, then-President-Elect Trump bragged that he had helped put the kibosh on a plan to shift production of the Ford Focus from Michigan to Mexico. So where are they building it? In China. Fords decision to shift production across the Pacific proves how the marketplace actually works: Presidential strong-arm tactics cannot dilute rational economic decision-making.
Trump had attempted to grab credit for Fords decision not to build a $1.6 billion Focus plant in Mexico, despite the fact that Ford executives had said repeatedly that the decision had nothing to do with the…

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Imagine for a moment New England Patriots head coach Bill Belichick stepping down, only to be replaced by the teams defensive coordinator, Matt Patricia. Does anyone seriously think the Patriots present odds of winning the 2018 Super Bowl would hold firm at 7 to 2? What about if Tom Brady suddenly retires only to be succeeded by Jimmy Garoppolo?
All of this is worth considering from a business angle. In 2008, Tyler and Cameron Winklevoss were famously awarded at least $65 million after a legal battle with Facebook CEO Mark Zuckerberg. The twins contended that Zuckerberg expropriated…

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Business models often change quite dramatically over time in the American economy. Think of booksellers; Amazon changed the concept of a bookseller and its book retailing vision led to the radical diversification of its product line.
Some business models are more resistant to change, with firms concentrating on specialization rather than engaging in organizational innovation and diversification. Take the example of hospitals. Within our health system, hospitals carry out a repair shop function, and, despite new technologies and advancing professional skills, that function and business…

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Ever since President Trumps election, a cottage industry of politicians, journalists, scholars and commentators has sought to understand what motivates Trump supporters. Theories have ranged from globalization to a rebellion against Washington elitism to racism. But the true cause may have been overlooked: the postindustrial society.
It has imposed on the economy a wage structure that systematically generates inequality between the majority of Americans and the upper middle class, roughly defined as the top 20percent with a threshold income of a bit more than $100,000. We have two…

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Sometimes terrible tragedies can bring us together, and Im hopeful that somehow a lasting good will come out of the ballfield shooting in Alexandria, Va. Maybe even a rebirth of civility, which has virtually disappeared from politics, and perhaps our culture as well.
Representative Steve Scalise, fighting it out in a hospital in Washington, is an old friend of mine. I watched as he rose through the House ranks to become whip. Like everyone else, Im praying for his full recovery. Hes a wonderful man.
And like most everyone else, I was happy to hear President Donald Trump talking about…

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US Government bond securities throughout the 1930s would trade with negative yields the closer to maturity they became. It was not then, and is still not in the modern day, uncommon for treasury bill yields to be slightly negative upon expiration, but that was and is more or less a few basis points. These were longer-dated bonds, though, and the negative yield was at times on the order of several percent.
Stephen Cecchetti in a December 1987 paper, The Case of the Negative Nominal Interest Rates, written for the NBER introduces it by reciting a New York Times bond quote from December…

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In his endlessly interesting 1982 book China: Alive in the Bitter Sea, Fox Butterfield described a tragically backwards country. So primitive were even the relatively well-to-do cities like Peking that when lightbulbs went out, citizens had to take them to a central authority at which a functionary would check the bulbs serial number, then hand the subject one that worked. As for economic growth, there wasnt much of an economy to speak of despite false GDP statistics that indicated activity where there wasnt.
Interesting about all this is that by the time Butterfields book was…

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The Trump administration is determined to renegotiate the North American Free Trade Agreement (NAFTA) which created a single market from Mexico’s southern border to the Yukon but the main political appeal of this policy rests on a popular myth: that “fair” trade requires the United States to have a surplus or balanced trade with both Mexico and Canada.
We are supposed to feel especially aggrieved that Mexico regularly has a sizable surplus with us, $63.2 billion in goods in 2016, according to Commerce Department figures. This shows, as the president repeatedly has said, that U.S….

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“Let’s consider that statement. In the last 20 years the VIX closed lower than 10 on a total of 11 days, and 7 of those days were in the past month. Think about that - over the past 2 decades, was the last month the most benign macro environment? (e.g. last week: Comey testimony, UK elections, ECB, geopolitical uncertainty, Qatar, FANG flash crash, etc.).”
– Marko Kalonovic, JPMorgan’s head quant
I vividly remember episode 40 of Twilight Zone entitled “A Thing About Machines.” (Here is a clip of the episode)
Originally aired on Oct. 28, 1960, it’s the story of a repairman who pays a house…

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Weve enjoyed an eight-year bull market, but bears warn that we are in bubble territory. Is it time for value investors to bail? Nope.
Lets remember what a real bubble looks like.
Back in the 1990s, when computers and cell phones were just starting to take over our lives, the spread of the Internet sparked the creation of hundreds of Internet-based companies, popularly known as dot-coms. In too many cases, the idea was simply to start a company with a dot-com in its name, sell it to someone else, and walk away with pockets full of cash. It was so Old Economy to have a great idea, start a…

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