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What We Read Today 03 October 2017

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Topics today include:

  • Archaeologists Announce that New Discoveries Solve Mystery of How the Great Pyramid Was Built

  • What They Don’t Want You to Know About the New Tax Plan

  • Taxing Business:  Net Savings

  • The Strange Official Economics of Interest on Excess Reserves

  • Why Pay Interest on Excess Reserve Balances?

  • Economic Freedom of the World: 2017 Annual Report

  • Report: Trump admin denied Puerto Rico request to let victims use food stamps for fast food

  • Trump Downplays Puerto Rico’s Suffering, Says It’s Not A ‘Real Catastrophe Like Katrina’

  • Report: Kushner's personal email moved to Trump Organization computers amid public scrutiny

  • Police say Las Vegas gunman planned ‘extensively,’ used cameras to monitor police as they approached

  • Scalise: Shooting 'fortified' my view on gun rights

  • The Poorest Tax Payers to Pay the Most Under Trump Plan

  • Senate Russia Probe Targets Youtube and Gmail

  • ‘Reflections on Gandhi’: George Orwell’s famous review of Gandhi’s ‘My Experiments With Truth’

  • Yashwant Sinha: Economic Crisis Intensifying, BJP Will Be Held to Account in 2019

  • Why the United States Should Welcome China’s Economic Leadership

  • Canada's Pension Funds Are Piling on Leverage, Moody’s Warns

  • And More

Articles about events, conflicts and disease around the world

Global

  • Economic Freedom of the World: 2017 Annual Report (Cato Institute)  The United States, for decades among the top four countries in the index, ranks 11th. The rankings of other large economies in this year’s index are Germany (23rd), South Korea (32nd), Japan (39th), France (52nd), Italy (54th), Mexico (76th), India (95th), Russia (100th), China (112th), and Brazil (137th). The 10 lowest-rated countries are: Iran, Chad, Myanmar, Syria, Libya, Argentina, Algeria, Republic of Congo, Central African Republic, and, lastly, Venezuela.

Click for large interactive map at the Fraser Institute.
economic.freedom.map.2015

U.S.

  • Report: Trump admin denied Puerto Rico request to let victims use food stamps for fast food (The Hill)  Puerto Rico Gov. Ricardo Rosselló says the federal government has denied the U.S. territory's request for its citizens to redeem food stamps for ready-to-eat hot meals, amid widespread food shortages and power outages in the aftermath of Hurricane Maria.  The nearly 1.3 million people on food stamps in Puerto Rico — almost 40 percent of its population— are unable to use the benefits of the federal program to buy fasts food or pre-prepared meals at supermarkets, according to The New York Times.

  • Trump Downplays Puerto Rico’s Suffering, Says It’s Not A ‘Real Catastrophe Like Katrina’ (Huffington Post)   President Donald Trump visited local officials and residents in Puerto Rico on Tuesday, congratulating them and boasting almost two weeks after Hurricane Maria left many of the island’s 3.4 million people without power, water or food.  When Puerto Rico’s governor told Trump that 16 people so far had been reported dead, the president lauded officials and minimized the hurricane’s damage, suggesting it was not “a real catastrophe like Katrina.”

  • Report: Kushner's personal email moved to Trump Organization computers amid public scrutiny (The Hill)  First daughter Ivanka Trump and husband Jared Kushner migrated their personal email accounts to computers and servers operated by the Trump Organization in response to criticism over their use, USA Today reported Tuesday.   According to internet registration records, the accounts were moved on either Sept. 26 or 27, several days after Kushner's lawyer confirmed that Kushner used a private account to communicate with White House officials.  Both Kushner and Trump are unpaid advisers to the president. 

  • Police say Las Vegas gunman planned ‘extensively,’ used cameras to monitor police as they approached (The Washington Post, MSN)  Authorities in Las Vegas said Tuesday that the gunman who killed least 59 people at a country music festival “extensively” planned the massacre, placing cameras in his room and the nearby hallway so he could see when police officers were closing in.  Lombardo also said the department has opened an investigation into the unauthorized release of images that show the crime scene, including the bullet-riddled door to the suite used by the gunman, Stephen Paddock. Police said Paddock fired at hotel security before taking his own life.

Investigators have sifted through a chilling but baffling array of clues in the wake of the deadliest mass shooting in modern American history, trying to determine the chain of events that caused a 64-year-old to gun down concertgoers from his hotel suite overlooking the Las Vegas Strip.

  • Scalise: Shooting 'fortified' my view on gun rights (The Hill)  House Majority Whip Steve Scalise (R-La.) says that getting shot at the GOP baseball practice over the summer — and nearly losing his life as a result — has strengthened his views against gun control.

  • The Poorest Tax Payers to Pay the Most Under Trump Plan (The Real News Network)  Economist Bill Black says that both Republicans and Democrats are financially illiterate when they speak about the deficit, and Trump's economic experts are 'completely disconnected from the real world'.

Russia

  • Senate Russia Probe Targets Youtube and Gmail (Bloomberg)  As part of a wide-ranging investigation into how Russian-linked operatives harnessed social media during the 2016 U.S. election, lawmakers are homing in on Google services including YouTube and Gmail.  The Senate has called Alphabet Inc.’s Google to testify on Nov. 1, along with executives from Facebook Inc. and Twitter Inc. A House panel, which is running its own probe, is focusing on any materials on Russian ad buying on Google, search engine manipulations, fake news and the potential uses of YouTube, according to two House committee members. Another target of the inquiry is Gmail, the committee members said.  Initially, Google said it found no evidence of targeted tactics like the thousands of election-related ads purchased on Facebook’s social network. Still, the online search giant has a wealth of channels that could be tapped to spread controversial political messages or sow discord online.  RT Network's YouTube presence may be part of U.S. lawmakers' scrutiny.

India

"In Gandhi’s case the questions one feels inclined to ask are: to what extent was Gandhi moved by vanity – by the consciousness of himself as a humble, naked old man, sitting on a praying mat and shaking empires by sheer spiritual power – and to what extent did he compromise his own principles by entering politics, which of their nature are inseparable from coercion and fraud?"

China

  • Why the United States Should Welcome China’s Economic Leadership (Cato Institute)  The Trump administration’s decision to abandon the Trans-Pacific Partnership (TPP) coincides with China’s interest in playing a more prominent role in advancing trade and economic integration in the Asia-Pacific region. This has raised concerns in Washington that such efforts will come at U.S. expense. In a new paper, Cato scholar Colin Grabow argues that these concerns are overwrought.  Grabow says:

 “Rather than sound the alarm over China’s latest moves, policymakers should be open to the possibility that Beijing is finally becoming the responsible stakeholder that many have long urged it to be.”

Canada

  • Average leverage has increased to 24% from 19% since 2009

  • Volatility exposure raises question: ‘Why take on more risk?

 

Other Scientific, Health, Political, Economics, and Business Items of Note - plus Miscellanea

  • Archaeologists Announce that New Discoveries Solve Mystery of How the Great Pyramid Was Built (Ancient Origins)  A new set of investigations in ancient Egypt have led to some startling discoveries – the translation of an ancient papyrus, the unearthing of an ingenious system of waterworks, and the discovery of a 4,500-year-old ceremonial boat – may be the final pieces to the millennia-old puzzle of how the Great Pyramid of Egypt was really built.

  • What They Don’t Want You to Know About the New Tax Plan (Wealthy Retirement)  Reducing the corporate income tax to 20% might nor produce the increase in corporate earnings that many are anticipating.  The reason is the coincident proposal to expense capex expenditures instead of accounting by depreciation.  Income (and therefore dividends) might actually decline.  Under the current 35% highest rate a corporation with net income of 19.5% of revenue could see net income rise or fall under the proposed tax as illustrated in the two examples below, depending on capex (first example none and second example 10% of revenue):

new.corp.tax.examples 

... it answers the question it poses by outlining some supposed benefits of having banks sit on immense piles of cash, without so much as hinting at the existence of any countervailing costs. As soon as those costs are considered, the supposed benefits turn out to be largely, if not entirely, fictitious.

 

  • Taxing Business:  Net Savings (Catherine Mulbrandon, Vizualizing Economics)  CB has contributed to GEI.  In the 1980s the effective top rate on pass-throughs (unearned) was dropped to match the corporate rate on profits, making pass-through businesses more desirable than in the past since with pass-throughs owners were not double taxed. As a consequence, these tax changes created an incentive to change the business structure from C corporation to pass-throughs. The double taxation of corporate profits had provided an incentive for corporations to retain earrings (to save) but a pass-through's profit is tax indifferent between saving and consumption (there is no incentive to either save it or spend it).

C corporation's share of net business income dropped from 1980 to 2012, 68% to 37%. The effect of fewer C corporations and more pass-through businesses was less savings since retained earnings by corporations was half of private savings (pdf). So, tax-induced decrease in number of corporations had a substantial effect on the level of private savings in the US.

Data Notes: Tax rates are from Internal Revenue Service; Tax Policy Center; Center for Tax Justice; Tax Foundation and  more details on the tax rates available in Part 1 and Part 2 in the series.

Federal Reserve Economic Data is the source for net savings.

Click for large image.


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