Watch out for inflation now Biden’s in charge
A NEW term in the economics and politics lexicon has arisen since inauguration day in the US – Bidenista (thankfully, the term Corbynista is now obsolete).
This is a moniker that Biden’s fellow left-wing Democrats may refer to with pride but, in reality, it refers to state economic planning and intervention, fiscal deficits, high taxes and likely inflation that renders any economy uncompetitive globally.
Biden is implementing a $2.25 trillion infrastructure programme whereby roads, bridges, ports, airports, etc will be updated (a good thing) which will be financed by rises in corporation tax from 21% to 28% (not so good). However, state expenditure will be incurred in the eight years that Biden hopes to be commander-in-chief whereas the tax revenue will flow into the US treasury in the next 15 years. A classic case of kicking the fiscal can down the newly-constructed motorway. Readers will notice a dislocation between state infrastructure expenditure and tax receipts which will be bridged by borrowing (health warning: the current US public deficit is $28 trillion versus GDP of $21 trillion).
In Obama’s administration Biden implemented industrial policy (a euphemism for state economic decision-making and control) whereby he favoured and subsidized “green” operations that, on many occasions, resulted in insolvencies. This caricatures Biden as a Wizard of Oz type character, sitting at his screen as he attempts to adopt the role of the market with arbitrary and flawed decision-making (I call them high-stakes economic bets). The market is far better equipped to process highly dispersed economic data than a guy in his 70s.
The final cherry on this interventionist cake is the re-emergence of strong trade unions and raising the federal minimum wage, despite the fact that there is no evidence of significant productivity improvements in US manufacturing to justify wage increases.
The US now has its own Magic Grandpa and I am concerned. Let market forces dictate what is produced and rely on state prudence in financial affairs to avoid deficits, tax rises that deter business investment and the evil of inflation.
Ian Roblin
Llanishen, Cardiff
The market is far better equipped to process highly dispersed economic data than a guy in his 70s
Ian Roblin
Thanks to all those ‘behind the scenes’
AS WELL as a huge thank-you to all the NHS staff and first responders throughout the Covid crisis, we also need to give a big thank-you to those behind the scenes who have been working throughout and risking their own health for the public.
For example, shop workers, bin men, taxi drivers, bus drivers, pharmacy staff and many more.
One company in particular I would like to mention, and admittedly is also an acquaintance of ours, which makes us aware of what they have been doing and continue to do, throughout Covid is TJ Services Mobility. The whole team have worked together since the beginning of lockdown, with not one of them furloughed. They are continually working with the social services, and no job is too small or too big, from fitting a handrail to mobility accessi
ble extensions.
John Lewis (not the department store!) is the driving force in the company. Known as “Legs” to many as he is 6ft 6in tall, he is always on hand for those in need and ensures that all “on call” requests, whether via social services or direct to him, are answered promptly.
John is a cheerful character, and those who have had the benefit of his home visits will know he will go that extra mile. One instance is asking them if they need anything else and bringing a little humour into their lives, eg do they need a light bulb changed while he’s there as he won’t need a ladder to reach it.
This is to say a special thank-you to all those of you “behind the scenes”. You are very much appreciated. Gaynor Preece Whitchurch, Cardiff