Agencies

Government agencies have the responsibility to carry out congressional laws. Over the years this has led to agencies expanding the laws based on interpretation by some bureaucrats. The Supreme Court recently reined in this power when it overturned the Chevron deference doctrine a precedent that required courts to defer to federal agencies reasonable interpretations of ambiguous laws. Yesterday the administration rescinded the 2009 declaration that said that CO2 endangered health. This placed restrictions on autos, power plants, aircraft and oil and gas operations. This will remove one trillion dollars in regulation cost. One of the more notable results of this interpretation led the way to California banning gasoline powered cars.

History

The criticism of the educational system usually centers around the three R’s but something is also lacking in social studies. It is said that history repeats itself so students can learn from history. A 2025 survey found that 62% of Americans aged 18-29 have a favorable view of “socialism”. Here is brief history since WW 2. Following World War II, Korea was liberated from Japanese rule but subsequently divided along the 38th parallel, with the Soviet Union occupying the north and the United States occupying the south. This division led to the establishment of two separate states in 1948. The north with an area of 122,000 sq miles and the south with 100,000. The south had 21 million population and the north 9 million. The country was somewhat like the US in that the north was the industrial area and the south more agrarian. Russia and China poured development money into the north while the south languished with a GDP per capita of $64. More than half the people suffered from absolute poverty. The north pursued a communist government while the south was democratic. By 2024 the GDP per capita rose to $36,000 in what has been called the Korean Miracle. Meanwhile the communist north economy only grew to $1,700 per capita. The Korean people were the same in both north and south in culture, history and religion. The difference is free market capitalism. China had been a poor country for thousands of years with most people just surviving and at the end of WW 2 became a communist country. The great Mao revolution took place in the 1960’s and 70’s when 50 million people starved to death. The government then opened the door to the free market. The GDP in 1990 was $360 billion and grew to $1.2 trillion in 2000. Then China was allowed into the World Trade Organization (WTO) and was opened to the worlds markets and the GDP surged to $18 trillion in 2024. The free-market economy can survive even under a communist political system. When people are allowed the fruits of their labor they work harder and smarter. The central planning communist governments take away the freedom of the individual and leads to a preferential treatment of a few in leadership positions. In 1960 the population of the USSR was 200 million but only 15 million belonged to the communist party and they had the best apartments, cars and other benefits. Like George Orwell said his book entitled “1984”, under communism everyone is equal but some are more equal. After WW 2 Germany was divided into East Germany under communism and West Germany as a democracy. Both sides were devastated by the war and by 1955 had started the slow process of recovery with the West having a GDP per capita of $3,000 and the East at $2,800. By 1990 when the wall fell the West was at $23,000 GDP and the East at $9,600. At that time Germany was reunited under the democratic West and today the GDP in $53,000.

Europe trade

Early reports suggest that the new trade deal with Europe will help lower the trade balance between the US and Europe which currently stands at $130 billion. Under the new agreement the US will charge a 15% import tax on goods coming from Europe and Europe will not have an import tax on goods coming from the US but Europe will still maintain its VAT which is 17% to 27% depending on the country. Other things being equal this will lower the trade deficit.

AI

One of the more dangerous areas in AI is something called predictive analytics which uses historical and current data to forecast future outcomes and trends. A simple example is a school where the teachers meet to discuss a particular student whose actions set off alarms. He may be the kind of student who will try to shoot up the school. On a larger and far more significant level is a company who collects large amounts of data and uses that to predict the future behavior of some individual or group. This can easily be misused. For example, a government who wants to silence some person can collect information which indicates this person is planning some kind of terrorist act and they then arrest him. The real story is that his speech is a threat but the cover story is that he is arrested because he is a terror threat. As more data is collected the opportunities for misuse increase.

Good jobs

The basic economic policy of the democratic party is income and in some cases wealth redistribution. Ten percent of the wage earners pay 72% of all income tax while the bottom 50% pay 3% with 76 million families paying no income tax. The policies are designed to take money from the top and give it to the bottom in the form of public assistance programs. This puts the government in control of who gets what and when. It leads to some low-income people becoming dependent on the government. Most everyone understands the need for a safety net for those who for reasons beyond their control need help. The discussion centers around the needy and those who are scamming the system. In a recent example, changes were made to Medicaid. One interpretation is that millions were cut from Medicaid. Many of these are able bodied adults who could maintain their insurance if they agreed to work 20 hours per week. Others are losing coverage because they don’t know how to fill out the paper work. What these programs need is oversight by congress to prevent abuse but congress turns this over to groups who have a vested interest in keeping the programs going and growing. Some of the wasteful spending has recently been exposed but it is only the tip of the iceberg. The bureaucracy has become so large it is unmanageable. The emphasis must shift from providing benefits to providing good paying jobs so people will not need public assistance. Bringing back manufacturing jobs is a start in this direction.

VW

As the US economy grows, companies around the world are planning on increasing their US production and the new tariffs will accelerate this process. Using Volkswagen as an example. VW is planning on doubling its Tennessee facility’s capacity to 600,000 units per year. VW backed Scout Motors is building a $2 billion EV plant near Columbia, SC. In 2023 VW produced 2 million cars in Germany and only 150,000 per year in the US while exporting 350,000 cars to the US. VW is closing three of its ten VW plants in Germany. Even though Germany has dropped its tariffs on US auto imports the number of exports to Germany will likely not increase since they still have a 19% value added tax (VAT). All European countries have a VAT and until that is resolved exports to Europe will not increase. One of the main reasons to introduce tariffs is to reduce the $1.2 trillion trade deficit. This is accomplished by having foreign companies produce more of the exports here in the US. This avoids the tariffs. Under the new plan the tariffs on import of cars to the US will increase from 2.5% to 15%.

Gas exports

US natural gas exports have doubled since 2018 and most of the increase is going to Europe which stopped buying gas from Russian when the Ukraine War started on Feb 2022. Since 2016 the US has built 8 natural gas export facilities with 8 new sites under construction and a dozen more have receive approval. The US is the worlds largest natural gas exporter and that will double in the next three years. In 2024 these exports contribute $50 billion to the US GDP and support 222,000 good paying jobs. During these years the cost of heating the average US home using natural gas has remained steady at $600 per year. The increase in natural gas production was largely due to fracking for oil. Natural gas is the cleanest of all fossil fuels and using this for transportation would reduce CO2 emissions by 30%. This would reduce US CO2 emissions to 1960 levels when the population was 180 million vs today’s 330 million.