It occurred to me that I’ve alluded to deadweight loss pretty frequently here over the years without defining it. The triangle formed by the right edge of the grey tax income box, the original supply curve, and the demand curve is called Harberger’s triangle. That is the loss of economic activity that results from taxation. That is the deadweight loss of taxation. There are other forms of deadweight loss including the deadweight loss from price supports and the deadweight loss from crony capitalism in general.

One way to improve economic growth is to constain government only within the limits of what we actually need and only taxing to that degree. I think a substantial reason for slower growth in developed countries is deadweight loss of various different varieties.

I’m trying to hold my water on the ongoing House impeachment inquiry until they and their consequences have unfolded more fully. As you can see from the graph above of President Trump’s job approval rating, the inquiry, presumably, is not having the effect that House Democrats had hoped for as, I think, House Speaker Nancy Pelosi had suspected.

Meanwhile, the editors of the Wall Street Journal echo some of the things I’ve been saying here:

At the constitutional convention, Gouverneur Morris discussed the meaning of bribery and used the example of King Charles II taking money from King Louis XIV in return for supporting French policy in Europe.

Mr. Schiff’s problem is that he still hasn’t found a quid pro quo in the Ukraine episode that fits this traditional definition of bribery. Here he is on NPR again: “Well, bribery only requires that you’re soliciting something of value. It doesn’t have to be cash. It can be something of value. And clearly, given the concerted effort that was brought about to get these investigations going by the President, by Rudy Giuliani, by Ambassador [Gordon] Sondland, by others, this was something of great value to the President.”

Sorry, but bribery requires a specific quid pro quo. Mr. Trump asked Ukraine’s President to investigate corruption, including Joe and Hunter Biden. No such investigation began. There was no “quo.” Even if an investigation had started, it is unlikely to qualify as a quo under the bribery law because it isn’t a specific and tangible enough benefit like money.

By Mr. Schiff’s definition, “something of value” is anything that might benefit Mr. Trump politically. But Mr. Trump couldn’t know a Ukraine investigation’s result or even how it would proceed. Every President asks foreign leaders for actions or policies that would benefit him politically in some way. None of this absolves Mr. Trump of rotten judgment in all of this, but it doesn’t qualify as bribery.

The emphasis is mine. Creative definitions of crimes that actually have accepted definitions will not help Democrats sway public opinion in their direction. President Obama, presumably, got “something of value” from his executive agreement with the Iranians who received actual cash money. Bill Clinton got “something of value” when he bailed out the Mexican government with a $20 billion loan (without Congressional approval). Did they commit bribery? Every president always gets “something of value” from the deals he negotiates with foreign governments.

The House Democrats should tread carefully. They should not establish any precedents they don’t care to live by.

One of our economic problems is that large companies are sitting on massive amounts of cash. They aren’t expanding facilities, they aren’t buying other businesses. Presumably, they don’t see anything worth investing in or they don’t feel the need to put that cash to work. Following the cut in the corporate income tax rates of 2017 there was a small bump in corporate investment but not nearly as much as I’d hoped for.

It isn’t just businesses. High-earning individuals are also sitting on record amounts of cash. From Bloomberg:

America’s wealthiest households are stashing their cash at record levels. The top one percent have three times more in readily available cash than the bottom half, with holdings jumping from less than $15 billion shortly before the last recession to a record $303.9 billion at the end of 2018, according to Federal Reserve data released last week. By contrast, while holdings for the bottom 50 percent of households surged almost ten-fold since the pre-recession low, they’ve increased at a much slower pace than the wealthiest cohort.

The Chicago Tribune is curious about how Chicago Mayor Lori Lightfoot and the Chicago Public Schools plan to pay for the substantial raises they’ve given Chicago teachers as a result of the teachers’ strike:

Mayor Lori Lightfoot and Chicago Public Schools leaders have come up with enough cash to pay for the first year of new union contracts, relying on a couple of one-time windfalls to patch up the spending plan.

But for the next four years, they’re taking a bit of a leap by counting on money that’s not guaranteed to materialize. The district is banking on the state to keep its pledge to increase school funding, which can change year to year. CPS also is relying on its own ability to significantly raise property taxes, which assumes a healthy economy.

CPS officials said their revenue projections are based on historical trends and noted that the state is committed by law to increasing funding. The contracts “are responsible and affordable based on conservative assumptions about our finances and anticipated revenue,” district spokesman Michael Passman said in a statement.

I couldn’t help but wonder which “historical trends” she was looking at? I doubt it was population trends. Since 1950 Detroit’s population has declined by two-thirds as has St. Louis’s, Cleveland’s, and most other Midwestern cities. The only major Midwestern cities whose populations have increased since 1950 of which I’m aware are Indianapolis and Kansas City.

Chicago’s population has declined by one-third since 1950. If it follows the patterns of Detroit, St. Louis, and so on, its population could fall below 2 million for the first time in a century. The most difficult thing about those teachers’ raises is that the fewer remaining people of Chicago will be stuck with them in the form of pensions long after those teachers have retired or been RIF’ed due to Chicago’s declining population.

At The Hill law prof David Schoenbrod makes a plea to “make democracy real again”:

Back in the days of trust, President Kennedy and President Johnson both ran and won as experienced Washington insiders capable of getting government to accomplish more. With growing distrust, however, voters have tended to elect leaders who vow to upend Washington. Many new candidates ran as outsiders, including the peanut farmer turned governor Jimmy Carter, the Hollywood actor turned governor Ronald Reagan, the “man from hope” turned governor Bill Clinton, the Texan businessman turned governor George Bush, the Chicago community organizer turned senator Barack Obama, and the New York real estate tycoon turned reality television star Donald Trump, who had the additional political advantage of running against consummate insider Hillary Clinton.

The “trust”, as he calls it, was earned by the perception of Roosevelt’s handling of the Great Depression, whatever the truth of it may be, and by our victory in World War II. It has been waning ever since, dealt a mortal blow by the Vietnam War, and further weakened by a series of unwinnable and, in some cases, unnecessary wars. I do not believe we will be able to put the toothpaste back into that particular tube.

Here’s his prescription for solving the problem of Congress and the executive perennially dodging the blame for their feckless actions by blaming someone else:

Getting the right mix of policies is of course critical. But in a democracy, the choice should be made by elected officials who are responsible to their constituents. Instead, the cheating befuddles voters and makes government unstable. Congress should pass a statute to establish new legislative procedures that would force roll call votes on the most important hard choices between regulatory protection and regulatory burdens, the most important federal mandates that penalize states and localities for failing to do the federal bidding, and putting our troops into combat. Such votes would make politicians personally responsible for both the unpopular and popular consequences of their choices.

Finally, the statute should order the Congressional Budget Office to inform voters of the costs of spending increases and tax cuts. It is nonpartisan and has a reputation for speaking truth to power. That is why so many incumbents are leery of it. It should be ordered to mail voters an estimate of the annual cost to the average family of the tax increases or spending cuts needed to keep the debt from growing faster than the economy, how much Congress has changed that cost, and how much greater the cost will be if Congress continues to kick the can down the road.

He’s dreaming. To understand why, you need only look at the measures that did have a roll call vote. Anonymity has made little difference. Even when you know what your legislators did, they are not held accountable, generally because they have the right letter after their names.

Every reform that might actually be effective that I can think of would require a Constitutional amendment which means that they won’t happen. The one thing I can suggest is to expect less from the federal government. Demand that your legislators not nationalize everything they want to get done. Judging from the platforms of the individuals seeking the Democratic nomination for president, that’s not going to happen, either.

In his most recent Wall Street Journal column James Freeman remarks on the active life of Anonymous:

The government “whistleblower” seeking to overturn the results of an election in which more than 120 million Americans identified themselves and then voted is still insisting on anonymity. But a second anonymous federal employee is now blowing the whistle on the first one, alleging a problem with anonymous donations.

Gregg Re of Fox News reports:

A newly filed complaint to the Intelligence Community Inspector General (ICIG) alleges that the whistleblower whose allegations touched off House Democrats’ impeachment inquiry may have violated federal law by indirectly soliciting more than a quarter-million dollars from mostly anonymous sources via a GoFundMe page.
The complaint, which was filed last week and obtained by Fox News, alleged the donations from roughly 6,000 individuals “clearly constitute” gifts to a current intelligence official that may be restricted because of the employee’s official position pursuant to 5 CFR 2635.203 and other statutes. To date, the GoFundMe has raised over $227,000.
The first anonymous whistleblower’s lawyer tells Fox that the fundraising is being conducted legally. None of the attorneys involved is seeking to remain anonymous.

Another fundraising effort, which does not appear to be related, is the anonymous publication of a book critical of the President and purportedly written by a senior government official. “White House laughs off Anonymous book as old news” is the headline on a Politico story by Daniel Lippman.

None of which is really relevant to much of anything at all. I just find it amusing. Or frustrating. I guess that’s the cost of a 24-7 news cycle and social media. Never have so many done so much anonymously. It’s like everyone has become Sy Hersh.

The editors of the Wall Street Journal the present state of the march to impeachment in the House:

The impeachment case—after the failure of non-collusion with Russia and the non-obstruction of Robert Mueller —now boils down to President Trump’s dealings over a few weeks this summer with new Ukraine President Volodymyr Zelensky. Readers who want to save time should read Mr. Schiff’s opening statement Wednesday because it offers the most damning interpretation of events.

Mr. Schiff’s claim is that Mr. Trump sought to “condition, coerce, extort or bribe an ally into conducting investigations to aid his re-election campaign.” He did this by having his Administration threaten to withhold U.S. military aid and deny an Oval Office meeting until Mr. Zelensky publicly announced a corruption probe. That sums up the case.

We are not defending Mr. Trump’s phone call with Mr. Zelensky or any plan to deny military aid. Sending his personal lawyer, Rudy Giuliani, to lobby Ukrainian officials outside formal U.S. diplomatic channels was dumb, ran counter to Mr. Trump’s own policy, and was ultimately self-destructive.

Mr. Giuliani was hardly quiet about his efforts, and it appears that most of the American bureaucracy had heard something about it. Mr. Trump’s former national security adviser, John Bolton, opposed it. In the end the aid was delivered and Mr. Zelensky never began a corruption investigation. Like much else in this Administration, Mr. Trump’s worst impulses were blocked.

Mr. Schiff says this is still an impeachable “abuse of power” because criminals can be prosecuted if their attempts fail. But there is no underlying crime here. Democrats have given up calling it a “quid pro quo,” which must not have played well in polling. Instead they are using “extortion” and “bribery” to suggest a crime without citing any specific statute.

The Justice Department has already dismissed the bribery claim because there was no “thing of value” exchanged. And the extortion charge is absurd regarding U.S. aid to a foreign government.

or, said another way, despite the wall to wall news coverage and the many revelations very little has actually changed since my first post on this subject. It is likely that the House Democrats will vote to impeach and it is likely that the Senate Republicans will vote to acquit. A narrow majority of Americans think that Trump should be impeached. The House Democrats still need to define what it is that Trump did they are impeaching him for and do it in such a way that doesn’t undermine the ability of future presidents to negotiate with other countries. Most negotiations with foreign countries, involve the exchange of something tangible, e.g. monetary aid to the country, for something intangible, including things that may have political benefit for the president, e.g. fulfilling a campaign promise. They will be interesting articles of impeachment.

And I return to something I have mentioned from time to time. I would not be upset if the president were impeached but I would be upset if, in their zeal to impeach Trump, the Democrats fail to remove him from office and instead succeed in ensuring his re-election with the presidency itself as collateral damage.

What is the “fair share” of taxes that the rich should pay? For that matter who are “the rich”?

I’ll answer the second question. Those who earn incomes three standard deviations (the top 1%) from the median income are well-to-do. Basically, somebody who earns $400K/year isn’t rich—I would say “well-to-do”. Those who earn incomes four standard deviations (the top .01%) from the median income are rich. That varies considerably from state to state but it’s no less than $4 million per year.

I don’t have an answer for the first question. I don’t think “so we have enough money to do whatever we want” or “so that incomes are more equal” are good enough answers.

The Wall Street Journal reports that Dean Foods, the largest milk company in the U. S., has filed for Chapter 11 bankruptcy:

 Dean Foods Co. , the biggest U.S. milk company, filed for bankruptcy protection, a fresh setback to a U.S. dairy industry struggling against declining U.S. milk consumption and rising competition.

Dean and dairy farmers for years have grappled with consumers’ decadeslong move away from traditional cow’s milk, as beverage sales shift toward bottled water, fruit juices and milk alternatives made from soy and oats.

Within the milk business, Dallas-based Dean’s brands have struggled as grocery chains push low-price store brands and in some cases build their own milk plants, reducing their reliance on Dean. A recent jump in milk prices, up 10% over the past three months, boosted costs while Dean has worked to close plants and reduce expenses.

The company said it has secured financing to continue operations and pay employees while it discusses a potential sale to Dairy Farmers of America Inc., the largest U.S. dairy cooperative.

I think there is an important factor in this that goes unmentioned in the article: demographics. Worldwide about 65% of the people are lactose intolerant. In Northern Europe it’s 10%. In parts of Asia and Africa the prevalence is as much as 95%. In Mexico although lactose intolerance is not a major factor, dairy malabsorption is and fresh milk just doesn’t play the same role in the diet that it has over the last century in the United States.

So I suspect that demographic factors including changes in tastes play a role in the decline of the dairy industry. It isn’t the only one. Retail is having similar problems. They’ve needed to adapt to the changes in the population and it isn’t easy.

This development will be inconvenient for me. Dean’s has been the only readily available source for real cream. The stuff that’s generally sold in the stores as cream is actually ultra-pasteurized which won’t whip unless you add thickeners to it which they do. The results in cooking aren’t the same as those when you use real cream. I’ll need to hunt around for another source.

Update

This article from Canada echoes the point I made above:

The overall decline of all types of milk since 2009 may be the result of more dairy milk substitutes available to consumers, such as soy milk and almond milk. Some people are also choosing frozen desserts with alternative bases, such as coconut oil, instead of ice cream. This rise in dairy alternatives may also reflect demand from people who are lactose intolerant or who have specific dietary preferences

The consumption of dairy milk started to tank seriously in 2009 and nobody seems to have a really good explanation for it. It can’t really be explained by alternatives and it doesn’t seem to be related to prices.