I watched the first hour of last night’s exercise in alternate realities and then went up to bed, knowing that if I watched the entire thing and the follow-up commentary and spin doctoring that I would be so angry it would take me hours to get to sleep and I’d been up since 3:00am yesterday.

In one reality U. S. economic growth and unemployment are still at the best level they’ve seen in decades, cuts in the personal income tax accomplished a lot more than they actually did, the many U. S. deaths due to COVID-19 have nothing to do with my omissions or deficiencies, tariffs on Chinese goods accomplished a lot more than they actually did, and Democrats are all just a bunch of Marxists burning down cities. In the other a lengthy but undistinguished Senate career is just water under the bridge, liberal interventionism never has adverse consequences, action or inaction by the Obama Administration had absolutely nothing to do with the most phlegmatic recovery in the post-war era, your family earning millions through influence peddling is just business as usual, and the violence in American cities is all Trump’s fault. Both of those alternates are only tangentially related to actual empirical reality as it is lived by most Americans.

They were both rude and disrespectful. Trump was ruder and more disrespectful, interrupting VP Biden almost continually. If any of you actually played Matt Taibbi’s drinking game, I don’t see how you made it through the first twenty minutes without collapsing on the floor in a stupor.

One of those men will be president next year. God help us all.

Well, the moment we have all been waiting for or dreading as the case may be is near at hand. The first presidential debate between President Donald Trump and Obama VP Joe Biden.

Should I watch? I’m torn. On the one hand I think it’s a pretty safe bet that we won’t be bowled over by the rhetorical or intellectual heft that will be displayed. Will it be exciting or a snore? I have a fairly limited appetite for frustration.

I don’t have much to say about the significance of the debate. I suspect that neither Donald Trump nor Joe Biden have a great deal to gain from the debate and quite a bit to lose. As far as I can see it’s all downside risk.

In his regular column at the Wall Street Journal Walter Russell Mead makes some observations about the European Union that you might not have considered:

The EU faces crises in the north (Belarus), east (the Syrian war and tension in the Eastern Mediterranean), south (Libya) and west (the Brexit impasse) and is struggling to produce a response to any of them. To be fair, all of these problems are tricky and none have obvious solutions, but the primary issue is that the EU isn’t set up to be a geopolitical actor.

This is partly a problem of process. The European Union is not built for speed. On important foreign-policy issues, where any one of the 27 member states can block action with a veto, getting to a consensus requires so much compromise that the ultimate policy often loses all coherence and any real chance of success. So much time is needed to reach that likely ineffective policy decision that by the time the EU reaches the station, the train has already pulled away.

Not only is the EU “not built to lead” it’s not built to follow, either. Each of the 27 members states is pursuing its own foreign policy goals and each has a veto. It’s a debating society not a sovereign state or federal superpower.

All of which would be fine if the EU were inclined to follow U. S. leadership but it isn’t. It is inclined to complain about the lack of U. S. example or leadership while providing none of its own.

I was gratified to see that the reaction of the editors of the New York Times to the non-revelations in President Trump’s tax returns resembled mine:

The government allows income to be sheltered from taxation for hundreds of different reasons, but real estate investors have long enjoyed a particularly sweet set of loopholes. A homeowner can write off the interest payments on a mortgage loan, but the owners of commercial buildings get a host of other benefits, too. It’s relatively easy for real estate investors to use past losses to offset income, to defer income and to avoid reporting some kinds of income. Best of all, the law lets investors claim a building is depreciating in value — a theoretical loss of money — even as the actual value increases.

“I love depreciation,” Mr. Trump said during the 2016 campaign.

Moreover, the formidable complexity of the tax code makes it difficult to tell when wealthy taxpayers have crossed legal lines. For the rich, taxation often becomes a kind of structured negotiation between the taxpayer’s experts and the government’s experts.

However, their prescription differs from mine. They’re satisfied with the tax code and the structure of the tax system. Rather than fixing the problem at its root they want more IRS agents doing audits and enforcing violations.

Will that actually accomplish anything other than creating more positions for federal employees? Or producing more business for tax accountants and tax attorneys?

The reason that very rich people, particularly very rich people who invest in real estate, can get away with deducting so much depreciation is the structure of the income tax. Nibbling away at the edges won’t accomplish anything. The problem is structural or “systemic” to employ the word they’re using these days.

There’s a story that’s gaining a bit of traction that I thought I’d pass along. From ClickOrlando.com physicians are using a drug cocktail to treat COVID-19 that anecdotally is having good results:

OCALA, Fla. – AdventHealth Ocala officials said a coronavirus treatment the hospital is using is leading to a better survival rate.

Officials said the drug combination protocol is known as ICAM.

ICAM uses medications such as vitamins to boost the immune system, steroids to control inflammation, blood thinners to prevent blood clots and antibiotics to help fight infection, according to officials.

“For 76 days our patients had zero transfers to the intensive care unit, zero mechanical ventilator placement, and zero death with ICAM and ICAM-similar regimens. I was absolutely pleased to see our patients getting better faster and we were able to provide the guidance needed to save lives,” said Dr. Carlette Norwood-Williams, director of pharmacy at AdventHealth Ocala. “Our research shows the right medication can influence improvements in a COVID-19 patient’s inflammatory marker response, contributing to the survival of the virus, regardless of age or comorbidity if they can start the therapy as soon as they are diagnosed.”

It will take lengthier and more formal study to prove out this treatment but the good news is that everything they’re using already is approved. I might also add that it has a passing resemblance to the treatment that was used by South Korean physicians early in the pandemic (HCQ, azithromycin, and zinc).

IMO an effective treatment for COVID-19 is at least as important as a vaccine and maybe more so. Whether a safe, effective vaccine materializes or not, an effective treatment will still be needed. Fingers crossed.

In what will certainly be the second biggest anti-climax of the year the editors of the Washington Post have endorsed Joe Biden for president:

In order to expel the worst president of modern times, many voters might be willing to vote for almost anybody.

Fortunately, to oust President Trump in 2020, voters do not have to lower their standards. The Democratic nominee, former vice president Joe Biden, is exceptionally well-qualified, by character and experience, to meet the daunting challenges that the nation will face over the coming four years.

concluding:

Democracy is at risk, at home and around the world. The nation desperately needs a president who will respect its public servants; stand up for the rule of law; acknowledge Congress’s constitutional role; and work for the public good, not his private benefit.

Just as desperately, it needs a president with the know-how and experience to show that values and results can go together.

It is fortunate to have, in Joe Biden, a candidate who can lead an administration that is both honorable and successful.

I think the biggest challenges for a prospective President Biden will be political. To live up to the standards the WaPo editors has set for him he will need to stand up not just to Republican opposition but to opposition within his own caucus.

Much is being made today of Donald Trump’s being able to avoid paying federal income taxes in most years by showing losses. I have no idea whether Trump cheats or merely exploits the system. My guess is the latter. The rich are different from you and me. Keep in mind the old accountant’s advice: avoidance is legal; evasion is illegal. As in practically everything else under our system the real scandal is in what’s legal.

There are many, many ways of constructing a tax system that is impossible to avoid or nearly impossible to avoid. Among them are a flat tax without deductions and a value-added tax. You can even make a VAT progressive using a rebate system but that introduces complexities which will inevitably be gamed.

Do you know who benefits most from the incredibly complex system we have now? It’s not the rich. It’s legislators. Our complicated tax system gives legislators plenty to trade.

That economic inequality has increased over the last half century can hardly be denied. I also happen to believe that you can’t maintain social equality without greater economic equality than we have now. At USA Today three pundits offer three different strategies for addressing the problem:

• Tackle childhood poverty
• Strengthen labor unions
• Exert political power to give workers more leverage in negotiating higher wages

I think that all three are ignoring some important factors so I’ll offer my own thoughts. The factors they’re ignoring include that higher wages are meaningless to people without jobs and the government cannot require that jobs be retained within the U. S. at a higher wage level.

What I would do is somewhat different. I would implement the following:

1. We must control and reduce immigration. Nothing else makes a bit of difference as long as employers can import a workforce, whether within or outside the law, at lower wages.
2. Restrain the ability of companies that engage in offshore outsourcing to bid on federal contracts. That might go as far as precluding it. If that doesn’t work, impose other restrictions, like prohibiting publicly-held companies from engaging in offshore outsourcing.
3. We need to definancialize the economy. I have written on this subject in the past.
4. We need to control wages in highly subsidized sectors.

I’m open to other suggestions but I think that those are sine qua non.

I wanted to bring a post by economist John Cochrane which in turn elaborates on one by Tyler Cowen to your attention. The post is about the effects of regulation on economic growth (it decreases it). He concludes:

If all this adds up, though, it asks the question just why “policy-making” technocratic elite, who have been so wrong about so much for so long remain able to impose such things on the rest of us. Why are they so immune from competition?

Are we running out of ideas or just constrained by bad regulation to do anything with good ideas? Case not yet closed, I think. Quantifying the damage of regulation is awfully hard.

to which I’d like to add a few thoughts. First, let me hasten to mention that I am not opposed to regulation. As I have pointed out before a pure market economy only promises to optimize production. It does not promise that the distribution of incomes or assets or goods will be egalitarian or even tolerable. Doing some things, like regulating entry into the banking business or providing health care services, are prudent but they do reduce economic growth and introduce distortions into the economy. Regulation is not a “one and done” phenomenon. Regulations must be adjusted over time as they are proven ineffectual or rendered obsolete.

But for regulators regulation is a self-licking lollipop. More is always better. Metrics are rarely applied to determine whether a regulation is merited. Regulations develop constituencies of their own.

When even Canada is subjecting new regulations to cost-benefit analysis, we are clearly doing something wrong.

In conclusion I should point out that when our economy is growing rapidly we can afford more regulations but when economic growth is already depressed due to their distortionary effects further regulations are a drag on the economy we might not be able to afford.