If you, Like Trump, Are Concerned About Trade with China and Mexico there is Something You Can Do

If you, like Donald Trump are concerned about trade with China and Mexico and the trade deficit there is something you can do. You can buy VIGI. VIGI is an exchange traded stock fund with very low fees that invests in foreign Dividend Achiever stocks. The expense ratio is only one quarter of one percent so Wall Street is not getting much of a cut.

(To qualify as a Dividend Achiever, a company must have increased its dividend payout each year for the last 10 or more consecutive years and meet certain liquidity requirements.)

Why will this work?

When Foreigners buy more assets in the USA than USA citizens buy assets in foreign countries they are buying less goods and services and that is what produces a trade deficit. Essentially they sell goods and services to us and use some of the many that they make to buy assets.



So the deficit is a result of foreigners buying more US assets (stocks, bonds, T-bills, etc.) than US citizens buy foreign assets. The balance of payments is always nearly equal so if we buy more assets they will have to buy more goods and services. (There is some cash held outside the USA but it is a small amount and most of it is needed long term and it is not significant and is eroded by inflation.)

Interestingly, though foreigners own more assets in the USA (stocks, bonds, T-bills etc.) than US citizens own in foreign countries, US citizens receive more returns (dividends and interest) than foreigner receive on US assets. This shows that foreigners have been bidding up the price of US assets.

If you think that you cannot afford to buy even a little bit of stock ready this.

Bernie Sanders and the AMA

It is mind boggling to me that the likes of Bernie Sanders trot around the country talking about the high cost on healthcare and education (2 state issues BTW) but he never talks about the what is driving the costs up.

He would rather focus on talking about getting the very rich to pay for them rather than reducing the costs but the very rich do not consume enough for you to move sufficient consumption from them to everyone else to make a huge difference. He is a con artists like almost all politicians, he is probably cosy with the AMA.

BTW The more the Federal government pays for healthcare and education the more the states are motivated to regulate on behalf of the in state providers, pushing up costs.

One of the Problems with Federal Government Provision of Health Insurance and Schooling in the USA

Here in the USA health and education are state Government issues not federal issues.

The state governments regulate the healthcare industry and run the schools including at the University level, so if he federal Government pays for most of the healthcare and education there is an incentive for the states to do what they can to push up costs because most of the money comes from other states.  And what do know, surprise, surprise, that is what we see. USA spending is much more than other countries on healthcare and schooling.

To address the problem of high costs of schooling and healthcare at the federal level the President and congress need to take over the regulating of healthcare and take over the running of the schools. Alternatively they could mandate that the states provide healthcare and college free and provide any funding proportionally to the population.

This would require that the Constitution be amended.

A Reply to Dean Baker on Social Security

Dean Baker objects to means testing Social Security here. 

 

But, why not do the sensible thing and give all citizens above some age the same benefit? If I understand their Government speak correctly, that is what the Government part of the pension system in Australia does.

Social Security is already progressive see here, so why try to keep the voters deluded, thinking it is not welfare?

You could set the payment at $200/week/person, that would give the neediest a raise. I think this would reduce the total cost by about 30% which would mean that you could lower the tax allowing the citizens to spend that money when they choose to rather than in their older years. My Grandmother told my father spend the money when you are young and can still enjoy it.

Social Security is welfare program that was disguised as a Ponzi scheme to make it past the voters. Time to admit to them that it is and has always been a welfare program.

Another Difficulty with Implementing Single Payer Health Insurance in the USA

Another Difficulty with Implementing Single Payer Health Insurance in the USA is that if economists like Milton Friedman are correct the states are causing much of the high cost. Worse with the federal Government already paying for 50% of health care, state and local politicians have an incentive to push up medical costs in their states. This will only get worse if all medical spending is done through the Federal Government.

Is It Too Late to Implement Single Payer Health Insurance in the USA

It seems to me that it is probably too late to implement single payer health insurance in the USA.

• Because health care spending is now up to about 18% of GDP and...
• Because the industry has gotten so big there are a lot of people working in the industry, to some extent they will fight single payer.
• Because the industry has gotten so big the taxes to cover it  would have to big, and contrary to what Bernie says taxes are different from health insurance premiums. That is because if you quit paying your health insurance premiums you do not get the benefit but, if you work less or for less money and so no longer pay the taxes to cover your medical bills you are still covered in single payer (and people do that especially wives) and that expense is shifted to other tax payers.
• You cannot shift consumption from the very rich to consumers of health care because the rich do not consume enough.
• Of course you could cover everyone with what gov. spends today by cutting low benefit care but the AARP will have your head.

So IMHO it is too late!

Immigration

I would like the USA to return to the free immigration policies of the past (like when my grandparents immigrated). Then incoming immigrants where checked for communicable diseases and if clean they were granted entry.

BUT seeing that:

• There is a large percent of voters who are anti-immigration and a larger percent who are against illegal immigration. 
• It seems absurd to have a law that you have no intention of enforcing.
• The illegal immigrants who have been here the longest are better off than those who would have wanted to come but did not come because they did not want to come illegally.
• The illegal immigrants who have been here the longest are better off because they have had a chance to earn more money than those in Mexico.
• The illegal immigrants who have been here the longest are better off because they have had a chance to learn some English which might help them get a better job in Mexico.

So suppose we deport illegal immigrants starting with those who have been here the longest and for each one deported we let in a person from the queue. Or maybe we let in two people from the queue for each illegal deported.

This seems to be a reasonable compromise between pro and anti immigration voters.

Also, perhaps we should start a guest worker program.