Grid

As part of the Infrastructure bill the government set aside $7.5 billion to build EV charging stations but only a hand full have been built to date. The reason for this lack of progress in not a surprise and could have been predicted years ago. The cost of a charging station and the location to place one is not a problem. The problem results from the fact that there is no power available at most sites along the grid. When people talked about the short comings of EV's they concentrated on charging time and distance traveled between charges but they never talked about the inability of the grid to support the power. This was well known by the experts but the excitement over EV's just overwhelmed their common sense. The big new kid on the block is AI and it faces the same shortage of power so many companies are trying to set up their own private electric power stations.

Reshoring

Reshoring is the big word in today's world and it means bringing jobs back home. From 1970 until 2010 the US transferred 7 million manufacturing jobs overseas mostly to China. This was a business boom for US companies but a disaster for factory workers. The CEO's saw their salaries sky rocket at the expense of factory jobs. Politicians, who publicly championed the workers, sat silently while these jobs disappeared. This problem was brought to the attention of the public by Trump who even before he decided to run for office complained about China's unfair trade practices which accelerated in 2001 when China was allowed into the World Trade Organization. Trump being a real estate developer was well aware of the methods that China used to gain advantage. Once in office Trump trumpeted his concerns which led to the passage of USMCA a free trade agreement between the US, Mexico and Canada. In 2010 only 5,200 manufacturing jobs were reshored but by 2014 that number rose to 95,000 and 150,000 by 2020. In 2021 that number increased to 240,000 and 360,000 by 2022. These figures continue to rise and were spurred on by the passage of the Inflation Reduction Act and the Chips Act. Many Asian companies are building in Mexico to escape import taxes and Mexico will be the fastest growing economy over the next ten years. As the US industrial economy doubles in the next ten years the more skilled jobs will be in the US and the lower skilled jobs in Mexico.

Income gap

Here is a bit if facetious blabber to illustrate a point. The government recognizing that the cost of healthcare rises precipitously after age 75 has decided to end these cost and pass on the savings to low income families. There are 10 million households that earn less than $40,000 per year and the savings in Medicare cost would be $600 billion so each household would receive $60,000. This is in line with government policies designed to close the income gap. These older folks have had a good long life and the younger families need assistance just to make ends meet. Many of these elderly people have a poor quality of life and many are not even aware of what's going on. It could be seen as a blessing. As a side benefit this would take care of the shortage in the social security fund. We could kill two birds with one stone. That is good planning.

Obamacare

One of the selling points for Obamacare, was that it got rid of the preexisting conditions clause in insurance policies. During WW 2 inflation was rising rapidly and FDR froze wages. Companies could no longer compete for the best employees with wages so they offered health insurance as an incentive. This led to company sponsored healthcare as a regular part of the employment contract. This benefit was continued after the war because congress declared the cost of healthcare to the company was tax deductible. This led to a problem. If a person got sick and lost their job they lost their health insurance and because they were sick they could not get new health insurance. They could continue with their plan after leaving the company but they had to pay the full cost and with being out of work this posed a big problem. With Obamacare this problem was solved. Many people choose not to purchase health insurance until they get sick and then they sign up for Obamacare. There is a danger here because you can only purchase Obamacare during special enrollment times which occur about 3 months out of the year but many still have no choice. But! You qualify for special enrollment times if you lose your health coverage (had to quit because you were sick) or because of moving, getting married, having a baby. Postponing the purchase of healthcare by healthy people should have been anticipated but it was ignored to promote the passage of Obamacare and since then the cost have risen above projections. The healthy people were to purchase Obamacare and help spread the cost but they chose instead to wait until they got sick and thus negatively effected the cost. Today there are 27 million people without health insurance and they are mostly low income minorities. They will attempt to get insurance when they get sick. Just five years ago, annual spending on Obamacare subsidies was $57 billion. In 2024, annual spending on Obamacare subsidies is projected to more than double to $125 billion.Jun 24, 2024

Trump

The dislike of Trump so dominates the thinking of many democrats that they pay little attention to his policies. The cold war ended with the demise of the Soviet Union in 1990 and the country had time to look around to see what was going on and they discovered globalization. Most people were not familiar with that term until Trump started talking about it a few years before he announced his first bid for the presidency. In 2015 the phrase gained some interest as Trump started complaining about China's unfair trade practices and how he would put a stop to it if elected but it still didn't register with the press because they didn't know what it meant. The people who were mostly effected by China's practices were the millions of hourly employees who lost their jobs as industry moved overseas. They had been experiencing the negative effects of globalization for 30 years but they didn't know what it was called. Trump, as a real estate developer, had a close working knowledge of what the trades people had been subjected to and quickly sized up the opportunity to come to their rescue. Today, Trumps base is largely composed of hourly paid tradesmen who used to be democrats. Trump has been and continues to be the leading voice in the push for reshoring our former manufacturing businesses. Globalization is now underway and there is no going back. Regardless of who is elected, the reigniting of Americas industrial base is alive and growing. This will be an economic boom over the next ten to fifteen years as good paying jobs for high school grads will become common place. In years ahead when looking back this will be Trumps big achievement.

Nuclear

The first nuclear reactor was developed in Tennessee at the Oak Ridge National Lab in the 1960's. It was a molten salt reactor using thorium as a fuel source. The thorium which is not fissile was activated by Uranium 233. It ran for 13,000 hours at full power at 7.4 MW. It operated at 1,200 degree F and used hot air to drive the turbine. The experiment was consider a success and recently small nuclear reactors are making a come back in the attempt to become carbon free. Later thorium was abandoned and replaced with uranium because the government needed plutonium for bombs and getting bomb material from thorium was too difficult. Experiments using small reactors are underway in several countries to move to carbon free energy.

Gap

Many people are concerned about the growing gap in wealth and income throughout the world and in particular in the United States. Whether you are rich or poor there is only four things you can do with your after tax money. You can save it, spend it, invest it or give it away. If you are poor you mostly spend and if you are rich you mostly invest. To save means to buy treasuries, money market certificates or certificates of deposit (CD's). If you invest it is mostly in stocks, bonds and or real estate. The government gets most of its money from individual and corporate income tax. The government spends all of its money and then some since it has been many years since any revenue was applied to the debt. The government invests some in the form of subsidies and research and development but most of the government money goes toward public assistance, primarily Medicare, Medicaid and social security. The rest goes mostly to defense and interest on the debt. This reveals that tax policy is not so much economic policy but rather social policy. How much money should the government take from one group and give to another group. Here is one example to illustrate the gap. The average income of the bottom 20% is $28,000 and the top one percent is $820,000. The bottom 20% have $4 trillion in wealth and the top one percent has $36 trillion. There are many things besides taxes that can be used to narrow this gap.