The Bear’s Lair: Use tax system to rein in CEO pay

Depending on the method of calculation used, the average Chief Executive Officer makes some 300 times the remuneration of the average worker. That multiple is up from 26 to 1 in 1978. Yet CEO performance has deteriorated, if we measure the economy in terms of productivity and so forth. It is thus clear that most of the rise in CEO pay is undesirable; it is however not at all clear how to reverse it. Continue reading

The Bear’s Lair: Anyone but Gary Cohn for Fed Chairman!

Nearly twelve years ago, on October 24, 2005, this column reviewed the potential runners for Fed Chairman and came to the conclusion that the worst possible choice would be Ben Bernanke. Needless to say, President George W. Bush appointed Bernanke the following week. Since Donald Trump bids fair to be a considerably better President than Bush, I have some hopes that this column may not be a perfect negative indicator this time round. So, Mr. President, there are good choices and bad choices for the next Fed Chairman, but above all, avoid your National Economic Council Director Gary Cohn. Continue reading

The Bear’s Lair: The incredible shrinking man

Since I am away this week, I am republishing a “classic,” in this case a review of Robert Skidelsky’s third volume of his Life of Keynes. The review was written and published by UPI in March 2002; it therefore takes no account of the frightening renaissance in Keynes’ reputation since the 2008 crisis.

In reading “Fighting for Freedom” the third volume of Robert Skidelsky’s biography of John Maynard Keynes (Viking, 2001, $34.95), I was struck by how much of Keynes’ economic thinking has since been discarded by mainstream economists. Truly, in terms of his remaining intellectual footprint, to borrow the title of the cult 50’s sci-fi movie, he is becoming an Incredible Shrinking Man. Continue reading

The Bear’s Lair: The coming crypto-currency bonanza

When I first looked at Bitcoin, I thought it was a badly constructed Millennial scam. Its vaunted “blockchain” had clear design problems, as Kevin Dowd and I pointed out in a Cato Institute paper. I now realize that this was a failure of imagination. I should have seen Bitcoin for what it was: the first flawed attempt to regain our freedom, as governments worldwide use software and thuggery to eliminate cash and Swiss bank accounts. The global government Godzilla will not stop its predations; we are so interconnected that votes for Brexit or Donald Trump merely slow it somewhat. But a crypto-currency with true anonymity – that at last will liberate us from its clutches. Continue reading

The Bear’s Lair: Destructive effects of the charitable tax deduction

President Trump’s tax plan removes the deduction for state and local taxes, but leaves in place a much worse policy, the charitable tax deduction. As tax policy, the charitable tax deduction is execrable, targeted primarily at the very rich and enabling such atrocities as the Clinton Foundation. However, it has a subtler undermining effect: it allows the very rich to get away without paying the taxes the rest of us suffer. This exemption from tax is why the rich now vote Left, betraying what should be their class interests. It needs to go – now. Continue reading

The Bear’s Lair: The robot revolution resembles the industrial one.

New technology disrupted working life as never before. A large percentage of the workforce seemed likely to lose its job and maybe never work again. Poverty threatened the displaced workers, who succumbed to addiction and disease. It sounds like a dystopian prediction on the introduction of robots – but it is actually a description of Britain’s problems during the first Industrial Revolution. The parallels are striking and instructive. Continue reading

The Bear’s Lair: Zero is the right inflation target

Janet Yellen has said that she wants to consider raising the Federal Reserve’s target inflation rate from 2% to a higher level. By doing so, she hopes to impose more steeply negative real interest rates without the difficulties of abolishing cash or conducting state roundups of savers. Morally as well as economically, her call must be resisted and indeed reversed: If we must have a Fed, and that Fed must have an inflation target, the inflation target should be a big fat zero. Continue reading

The Bear’s Lair: Britain needs hard money, hard Brexit

On June 8, Theresa May’s Conservatives came close to losing an election they should have won easily. The commentariat, all of whom like the Brussels bureaucrats and love the Brussels restaurants, claimed she had lost because of her firmness on Brexit and the Tories’ excessive devotion to fiscal austerity. Actually the Tories, not notably devoted to fiscal austerity, lost because they have tolerated the Bank of England’s appalling monetary sloppiness, with its devastating effect on the economy and on house prices. A hard Brexit and hard money are now needed to right the ship. Continue reading

The Bear’s Lair: Emerging markets in an autarkic world

Five years ago, the future for emerging markets seemed set fair. Globalization was driving much of the world’s manufacturing to them, as Western companies sought optimal global supply chains. All they needed to do was avoid selecting lunatic Marxist or Islamist dictators as leaders. Yet the future has changed; globalization is in retreat, though it’s not yet clear how far the retreat will go. However, that does not mean that emerging markets are condemned to long-term penury. Continue reading

The Bear’s Lair: Merkel-Macron Axis lacks a majority

Following the G7 meeting last week, Angela Merkel declared that the EU would need to deepen, and should cease relying on the U.S. and Britain. Judging by his macho “handshake” of Donald Trump, a man 31 years older, Emmanuel Macron agrees. Their dream has two problems: it would lead Europe into poverty and it almost certainly doesn’t have a majority among EU member states. Continue reading