Tariffs raise $30 billion per month, but haven’t affected inflation

Leave a reply

Economic experts claimed the tariffs would raise no signifiant money, would bring in no jobs, and would be so inflationary that the damage would far exceed any benefit. President Trump instituted them anyway, claiming they would benefit workers, raising wages, returning manufacturing to the US, and serving as a tool of diplomacy. Based on data so far, it appears the experts were completely wrong, and that Trump was right on all counts.

As an average, for the last nine months, our tariff rate has been about 17%, as shown in the chart above, bringing in about $30 billion per month. That tariff rate is as high as it’s been since the 1940s, but far lower than it was in the early 20th century. Chinese products are taxed more, at 47.5% on average, while goods from Mexico and Canada are taxed less, about 5%. High or low the tariffs generate complaints all around. Strangely, those complaining, in the US and out, see nothing amiss with the tariffs that our trading partners have placed on US products. The money from these tariffs came in handy, for example during the recent government shutdown, when we could not borrow money. This tariff money allowed us to pay the military and has helped reduce the annual deficit.

Despite the dire inflation prediction, there has been no noticeable uptick. Inflation has held constant for the last year, at about 2.7%. This is the same as during the last months under Biden, see chart, and is far lower than the 4-8% we saw for most of the Biden term. Basic commodities, in particular, remain cheap, with the price of gasoline and beer lower than in 2024, and luxury imports somewhat more expensive. Lower and middle income Americans don’t seem to mind since most of us don’t buy these goods. This year of inflation data supports Milton Friedman’s claim that taxes are inflation neutral, and that the cause of inflation is government overspending, as he says here. Liberal experts disagree, but the data says otherwise. I suspect the experts are blinded by overly simple theory, of Keynes, that they refuse to abandon. Alternately, they may be willfully lying to promote the agenda of university heads and all others who fund them. I noticed this pattern with global warming experts too. They don’t change their models and dire predictions though it’s way past 2014, and the arctic isn’t ice free.

There has been some job growth, but less than hoped for. There was a decrease in the tech sector and in government employment, but an uptick in services and healthcare. Unemployment has changed little, remaining at 4.4%. Several foreign businesses have moved manufacturing to the US. These include BASF, Volkswagen, LG, and Hanwha to name a few. Hanwha just completed its purchase of the Philadelphia shipyard, and committed $5B to its modernization. I consider this very important. It provides jobs, but beyond this, improved shipbuilding will help us commercially and militarily.

The reason that employment has not gone up as much as hoped seems to be that we’re still buying the same amount from abroad as before, containerized are the same as in the pre-COVID years, see chart below. There’s been some switching of sources, with more coming from Mexico, Taiwan, and Vietnam, and less from Canada and India. Import volumes from China have hardly changed though, since last year, nor have the prices that Americans pay risen. This suggests that China is “eating the tariffs”. I suspect they’ve undervalued their currency to make this happen. We’re selling a little more too, causing the trade imbalance to narrow, but the sales increase are largely precious metals (gold) to China, about 1000 tons in 2025. I’m not sure what China achieves by this; they’ve raised the price of gold to $4,675/oz currently, about double in 1.5 years, and kept the price of Chinese currency low. Perhaps that’s the intent — to keep their currency devalued relative to the dollar. Maybe they have some other idea, like to switch to a gold-backed currency? Who knows? Their purchases increase the value of our gold in Ft. Knox.

Trump’s other justification for the tariffs was as a tool of diplomacy. Trump is using tariffs somewhat this way, as a non-military stick to encourage friendly nations to do what he wants. He got Mexico to stop immigrants and drugs, encouraged the same from Canada and Columbia. He got the EU to spend more in their defense, and got them deal a little less with Russia. They’re still the biggest buyer of Russian natural gas. He also used tariffs to nudge for peace in the Middle East, and between Cambodia and Thailand. Recently, he’s using them to support the Iranian rebels by threatening countries that buy from Iran, or that help the mullahs launder their money and oil. All in all, the tariffs seem to be working for us. The experts are not impressed.

Robert Buxbaum, January 19, 2026

EDDS chelation for electroless coating, solar cells and soil remediation

Leave a reply

Among the products our company sells is a non-toxic chelating agent, EDDS (ethylenediamine-disuccinic acid), typically sold as a purified salt in ammonia solution, see here. The main use of EDDS is to stabilize heavy metal ions in solution. We use it, for example, as an aide in electroless Palladium coating, to stabilize palladium ions, helping us produce a smaller grain, more continuous coat. The structure, shown below, is similar to that of EDTA (ethylenediaminetetraacetic acid), and the behavior is similar too. EDDS is more stabilizing in the presence of the other ions and we like that it is non-toxic.

Structure of EDDS, it binds metals by way of four OH groups. While each binding is weak, the total is strong.

The popular literature use for chelating agents like this is as a treatment for heavy metal poisoning by lead, arsenic, cadmium, nickel or copper. The TV series “House” featured patients with all these metal-poisoning problems, problems. Chelation treatment was important in Flint Michigan, 2015 when thousands got low-level lead poisoning and legionaries disease after the water department put insufficient phosphate and hypochlorite into the water and lead leached from pipes. Typically, EDTA is used for humans here, while EDDS is used by farmers and ranchers to treat animals. EDDS is less toxic, and removes fewer essential light minerals: magnesium, calcium, and zinc, so I’d think it would be better for humans too.

Effect of 300ppm SX-E in DI water, compared to standard DI water and acid wash. The biggest difference is with copper.

Our EDDS has been used to make cleaning solutions for silicon wafers, Sunsonix SXE, for example. Sunsonix SXE behaves as a soap, removing Fe, Cr, Ni, and Cu from solar cells, see reproduced figures at right. These metals will diffuse into surface of a silicon wafer, forming defects that absorb light and decrease solar cell performance by an average of 0.28%, see below.

Solar cell efficiency improvement with EDDS washing from a baseline of 16%. Occasionally 1.65% improvement was seen, but 0.28% on average

This is, based on a baseline efficiency of 16%. For more details see “Surface Contamination Removal from Si PV Substrates Using a Biodegradable Chelating Agent and Detection of Cleaning Endpoints Using UV/VIS Spectroscopy” ECS Transactions, 41 (5) 295-302 (2011). See also this article in Wikipedia.

This is the normal treatment regime for solar cells

At a different pH, EDDS and EDTH are used in remediation of metal-contaminated soils, see here. This can be done ex-situ, with the soil taken out to an external site and then washed. Alternately, for less contaminated soils, remediation can be done in-situ with the chelating wash applied to the soil. Plants, like vetiver grass (Chrysopogon zizanioides) then extract the heavy metals, concentrating them in their leaves. EDDS is more suitable for this as it is biodegradable and shows a high extraction efficiency in mineral rich soils, see here for comparison to EDTA.

Moving to another area of extraction. It seems that EDDS or EDTA solutions can be used to profitably extract rare earth metals, perhaps sending them to plants before final concentration. A standard methods of rare earth extraction uses chlorine and high temperatures. Alternate methods use ion-exchange extraction of liquid-liquid extraction. I suspect that chelation treatment might turn out to be more effective and cheaper. The price of rare earths has risen in recent years as China restricts sales so that the need for a new source has become a national priority.

Robert Buxbaum, January 13, 2026

Trump’s battleships, right size, perhaps too late

1 Reply

Donald Trump has announced his intent to build at least two battleships, the first built for our navy since the USS Missouri, 1944. The press has been largely negative on this, claiming that these ships are obsolete already, and will be more-so when they are completed — assuming they are completed. My sense is these are useful, overdue really, and I’d like to explain why.

The George Washington Carrier with nine surface support ships.

The centerpiece of America’s military power lies in our aircraft carrier groups, currently. We have 11 carriers in service: two modern, Ford class, and nine older, Nimitz class. Each of these weighs 100,000 tons, is 1100 feet long, and carries some 6000 men and women, 3200 navy crew, another 2500 in the air wing, and perhaps 300 support staff of doctors, nurses, and marines. Because they are vulnerable, each carrier travels in a group with six to ten other ships carrying an additional 3000 people, see photo. Without the support ships a carrier is deemed to be too vulnerable for use. Even with the support ships, Swedish and French submarines successfully “sank” U.S. carriers during exercises in 2005 and 2015. 

The support ships are typically slower than the carrier and difficult to maintain. Many are old with relatively short range. Our carriers can go around the world, 30000 miles, traveling at 30+ knots, but the main support ships, Arleigh Burke destroyers, 9000 tons, 350 crew, have a range of only 4,400 nmi  at a slower, 20 knots. They require regular refuelings for any major mission, like patrolling the Caribbean. Still, they’re “cheap,” about $2.5B each, capable, and work relatively well. We have some 75 in service, built since 1991, with more on order.

We also have nuclear missile submarines, but these are blunt instruments of policy, not suited to most navy missions, like keeping open shipping lanes in the Red Sea or stopping ISIS, or for blockading Venezuela. The mostly hold weapons of last resort.

The navy has recognized the need for a larger support ship for better carrier protection and more flexible roles, a cruiser likely, with good range and weapons, and with enough speed to keep up with a carrier crossing the Pacific. We’ve built many cruisers over the years, but these are old. Our latest are the Ticonderoga class  guided-missile cruisers built from 1980 onward. They have good speed, 32.5kn, and good range, 6000nm, but are well past their retirement date, and break down a lot. Only 7 are still in service.

The USS Zumwalt at sea. Trump said it was “Ugly as F.”

The supposed replacement, was a cruiser-size, stealth ship, the Zumwalt destroyer, 17,000 tons and 600 feet long. It is reasonably fast, 33.5kn, and carries a small crew, <100. We’ve managed to build three of these since 2008, but have cancelled the project due to operational problems and costs that rose to $8B per ship. Zumwalts have inward-sloped sides that deflect radar, but they become unstable in turns. Its main weapons are expensive, too: Aegis missiles and CPS hypersonics costing $28-$50 million each. That’s uneconomical compared to French Aster missiles, Mach 3, 80 mile range, $1.1 million. Originally, Zumwalt destroyers carried a rail gun, but it required so much power that you could not move the ship and fire at the same time. The rail guns were eventually replaced by conventional 5″ cannon with a 24 mile range. The three Zumwalts we have are hardly used today, and no more are on order. Something cheaper was needed at least for support, and that was supposed to be the Constellation Frigate, approved by Trump in 2017.

A frigate is smaller than a cruiser, in this case about half the weight. The Constellation was a proven Italian design, 492 feet long and only 7,291 tons. It had good speed, 26 kn, good range, 6000 nm at 16kn, and cost only $950 million, at least when built in Europe. The contract was awarded to Fincantieri Marinette Marine (FMM) of Marinette Wisconsin, the US division of the Italian company. What could go wrong? The problem was that the navy kept adding capabilities and weight. As of November 2025, eight years on, the weight had increased by 700 tons, the cost to $9 B for two, and no design has been finalized. The first Constellation frigate is only 12% built! Trump has not quite cancelled the program, but has reduced the order to two from the original eight.

Trump-class battleship, as envisioned, with a rail-gun, lasers and two, conventional 5″ cannon.

And that brings us to the current, Trump class battleship, shown above. It’s long, 840-880 feet, and heavy, 39,000 tons, or 2.5 times the weight of the cruiser-sized, Zumwalt. As was intended for the Zumwalt, the offensive weapons are missiles and a rail gun, 32 MJ, but now there is enough power run the ship and fire the weapon. Japanese versions of the rail gun have launched cheap shells at hypersonic speeds, ~5000 mph (hypersonic) at a distance of over 100 miles and a fire-rate of ~one per second. The shells cost only $85,000 each, a bargain compared to hypersonic missiles.

For defense, these battleships are to carry two, 300kW, Helios lasers, similar to Israel’s “Iron beam,” but 3 times as powerful. They are augmented by smaller lasers, by four, 30 mm chain guns (Gatling guns), and two, 5″ conventional navy guns of 24 mile range. Engines are estimated to be two gas turbines, perhaps 50MW each of for acceleration and to power the weapons, plus ~100 MW in diesel power for cruising at good speed and mpg. I thus estimate a total of ~200 MW, about as much as on a carrier. There is plentiful space for missiles and fuel, so it should provide some resupply of support ships. The crew size is bigger than on the Ticonderoga, 600 to 800, but far less than on a carrier, and the look is impressive. A Trump goal is that it should be an attractive, command ship. Still, there are objections.

A main complaint is vulnerability as discussed here, the claim is these ships are “bomb magnets,” not stealthy, nor as heavily armored as the Iowas. Detractors claim that lasers and chain guns are insufficient for defense from drone swarm attacks. They note that the Bismarck, Yamamoto, and Arizona have been sunk, typically by air attack. What the detractors don’t mention is that it took a lot of bombs and torpedos to sink these battleships nor that these battleships will travel with support ships, while the Bismarck travelled alone.

Detractors also question the rail gun. Can it shoot down an airplane? can it sink a ship? The tests I’ve seen suggest that the rail gun can take out an airplane, but that it can not sink a ship, at least not with one shot. That still needs a missile, but the battleship does have missiles. The gun seems appropriate for shore bombardment too, even against hardened targets, and for dissuading actions by a Chinese navy that is already bigger than ours. As for the defense against drones, the battleship is to have high-powered lasers that have been shown to stop drones and cruise missiles at a cost of only ~$10 per shot. That’s nothing compared to a harpoon missile ($1.4 million each) or Aegis ($28 million). These are great weapons, and I don’t see a smaller ship being able to power them. Also it’s nice to have extra room for expansion — like adding a nuclear reactor.

The time-line is what worries me most. These will take ten years at least. Until then, we will have to rely on our short-range Arleigh Burkes that did not have the firepower to bombard the Houthis effectively on land, nor effectively defend US shipping in the Red Sea. Those ships had to use million-dollar missiles to shoot down $20,000 drones. I expect us to really need the battleships, even if it takes us ten years to get one.

Robert Buxbaum, January 5, 2026. As a totally side issue: some claim this isn’t a battleship. It carries only one gun, admittedly a powerful gun. I half agree, you need at least two big guns to be a battleship, IMHO.

Is China really a smaller economy than the US, but twice as efficient

Leave a reply
The Economist has run this burger-metric of currency valuation for 40 years or so. I find it instructive.

One can buy a new electric car in China for US $20,000, roughly half of what it would cost in the US. Similarly, a good phone is cheaper in China, or clothes, or a Big Mac. A McDonald’s Big Mac in China costs, effectively $3.55, 59% of what it costs in the US, slightly less than 3/5 the US price. The Chinese explanation is that China is nearly twice as efficient as the US at most every type of manufacturing. I don’t believe this explanation, though there is some truth to it: Their electricity is cheaper, in part because they burn mostly coal for electric power. Meanwhile we have shut-down our coal plants, and have hardly built nuclear since the 1970s.

Another source of efficiency is that China arranges its manufacturing into dedicated cities for different products, one city for toys, another for luggage, others for cars, planes, hair driers… This helps efficiency but I’m not sure how much, and I don’t see these advantages applying to McDonald’s. There is no way I believe their workers are 5/3 as efficient as US workers when it comes to making burgers. It’s not like they ship the burgers from a central factory, and they buy gain and meat from us. My sense, then, is that it’s not efficiency that keeps prices low, but that the Chinese currency, the yuan is undervalued.

It’s hard to estimate how much their currency is undervalued, but I will use the burger-metric, above and say the yuan selling for about 3/5 its true value, and that this explains most of why Chinese shoes, cars, and clothes are so cheap. The rest of the price difference is efficiency, I’d guess. China isn’t the only country with an under-valued currency; Japan’s currency seems even more undervalued. Similarly India, Taiwan… The China is a bigger economy, though, and correcting the Chinese GDP by 5/3, I find their economy is yet bigger, about 111% as big as ours. By a similar correction, European economies appear smaller than they are given credit for.

Chinese electricity is cheap, in part because they burn coal. Also, their currency is undervalued; ditto for India, Indonesia, Turkey.

China’s undervalued currency helps propel its growth, I think, and provides us with cheap goods, but our industry suffers. Also troubling, China will likely surpass us militarily in 3-5 years. One way of slowing this is through tariffs. Trump’s tariff formula, as I understand it, was designed to preserve some China trade, allowing US consumers to benefit, but also taxing the exchange. I think this is a good idea.

Another proposal is to lower the US interest rates. Currently our prime interest rate is 6.5% while China’s is 3%. This provides an incentive for the Chinese industry to invest in the US, maintaining its undervalued currency. The benefit isn’t quite as large as it might seem since we have a 2.7% inflation rate and China has a 0.7% inflation rate. Correcting for this, our bonds return an effective 3.8% and Chinese bonds return 2.3%. The difference is about 3/5 similar to the mismatch in our currencies. Trump has been pushing the Federal Reserve to lower our interest rates, and The Fed has grudgingly agreed, slowly. A lower interest rate would also spike US industry and inflation, and help reduce the government deficit. Trump has also proposed new ships for the navy. Too little, too late, I think. Things should get dicy in the next decade between the US and China.

Robert Buxbaum, December 30, 2025. I started this post not knowing where it would lead. As I research and write, I learn. Perhaps you will too,

Drying hydrogen with polymeric membranes

Leave a reply

Generally, when you make hydrogen, you make wet hydrogen, hydrogen contaminated with water. Usually you want to dry the hydrogen before you use it or compress it. if you compress the hydrogen for transport or storage without drying it, the water will condense and perhaps freeze, clogging valves and fittings.

Water contamination of hydrogen is also a problem for brazing. Hydrogen is a good, cover gas for brazing because of its high heat transfer properties and its reducing chemistry. When the hydrogen is contaminated with water vapor it is unstable for use with stainless steel and similar metals as it will cause oxidation of the surface, resulting in a grey-green surface, and preventing good brazing. Some other contaminates can be problems, e.g. CO2 but water is the main problem in brazing environments.

One more example where drying hydrogen is important, is for its use in high altitude balloons. At high altitudes, water can condense, changing the lift characteristics, and perhaps freezing and puncturing the balloon. For all these applications, I suggest use of a silicone polymeric membrane operated as dryers, using a counter current flow as shown below. We sell these at REB Research, see here. These membranes also remove CO2, silanes, and H2S.

The dryer shown in the figure above has two extraction modules in series. for small flows, one module will suffice. As shown, wet hydrogen enters at left, typically at a slightly elevated pressure, 2-4 atm. The bleed stream must be at lower pressure. One atm will work for the bleed stream, but for efficient removal of the water and CO2, you will want mild vacuum, perhaps 1/3 atm. A small amount of dry hydrogen should be directed into the sweep stream as shown for efficient impurity removal. The amount directed to the bleed flow is large determined by the ratio of pressures and by the selectivity of the membrane. At a pressure ratio of ten, for example, you can show that you need at least a leaving bleed flow of 10% of the H2 to remove all the water in the hydrogen, leaving it perfectly dry. In practice, you’ll want a larger exit bleed flow, perhaps 15%, suggesting that you want a recycle stream of ~5% of the dry hydrogen. This will be joined by 10% more hydrogen that comes through the membrane modules. The membranes are 30x more selective to water than to hydrogen.

A silicone module of 0.1m2

Our silicone membranes remove CO2 too, but not with as high a selectivity. For mobile use, you might want to power the vacuum pump by a fuel cell that runs on the waste, wet hydrogen of the bleed stream.

For many applications you need to remove all the impurities, including all the nitrogen and CO2. This is true for diamond making, semiconductors, and nuclear fusion. For this, you want a metallic membrane, e.g. palladium-silver. We sell hydrogen purifiers based on palladium-silver membranes for these applications. Palladium-silver membranes remove all impurities, see why here. You still need a bleed flow, but it can be much lower than the pressure ratio because, with metallic membranes, the hydrogen goes through the membrane, and the impurities stay behind. Of course, palladium costs more than plastics. See our products at www.rebresearch.com.

Robert Buxbaum, December 19, 2025

Banned books, promoted books, basically no oversight

Leave a reply

For better or worse, the folks who run for library board and school board are a bizarre lot of political weirdos. It takes a lot of work and time and money to run for these boards, and you have to endure endless insults. For what? If you win, there’s no pay, and you get to sit through long, boring meetings. Because of this, almost everyone, who choses to run for these positions is a weirdo with a bering desire to either ban some book or idea, or to promote them. The rest are little better: developers who want to expand buildings and grounds. I don’t think this problem is unique to the US, or new. That’s just the way it is, and has always been. Noah Webster complained about this in the early 1800s. The net result is large schools – larger than they have to be – and many banned books, plus a preponderance of really perverted books.

In terms of teaching, I find myself on the side of classic books that are fairly non-sexual. That’s because I read them. Many people find them dull. I suspect that the students would prefer more modern and racier fare, or no books at all, but what do I know. In terms of library purchase, I like variety, but virtually no library works that way, either the board are a band of perverts pushing weird sex on under-age kids, or they are blue-noses who want to keep Shakespeare from the shelves. I also claim to prefer a diversity of opinions both in the classroom and in the library, but I suspect that, I’m likely to favor my own opinions over others. Below is the selection of banned books that the “don’t censor” organization wants on all shelves, all gay or transgender, as best I can tell. .

These books are banned in some counties K-12 public schools all are gay or transgender. While I’m not a fan of banning, I’m doubt these are the books to push. Pecksniffs on every side.

Sometimes very good books get banned, for no reason, or modified. This was done with Bowdlerized Shakespeare, for example. Once banned, it’s a lot harder to un-ban a book than it is to ban it. You’d have to get an unbanning committee together, almost impossible, and get them to read all the books. They’d have to make a coherent argument for their merits, and then have some vote. It would help to have balanced boards, but I fear that’s not likely/ possible. If nothing else, I’d like a time limit to banning: any banned book stays banned for only 12 years, or so.

I ran for school-board one year, by the way, and lost. I campaigned on math and science education, and less money for ever larger buildings and grounds. Against AI teaching of math and reading, claiming that math education suffers,. I also like cursive handwriting, something I consider an art form. I lost. You can find my Ballotopedia page if you’re interested.

Robert E. Buxbaum, November 28, 2025

Rich folks aren’t taxed because they have no income; you can do some of this too.

Leave a reply

Two tax questions: (1) How do the top rich people manage to pay such low taxes, e.g. Warren Buffett paying at 0.1%. and (2) why do these rich folks campaign for higher taxes. Warren Buffett has campaigned for higher taxes for 50 years. These questions seem perhaps related.

I got my tax data from a public tax advocacy group, ProPublica. In 2021 they received the tax filings for many important people including the 25 US richest from the years 2014 to 2018. They find that these individuals paid a total of $13.6 billion in federal income tax while their wealth rose a collective $401 billion, go here for more. Dividing the numbers, we see an average income tax rate of only 3.4%, with Warren Buffett paying the least, 0.1%. This is far less than the “half of the rate that my secretary pays,” that Buffett likes to claim.

The reason these people pay so little tax is that their taxable income is zero. They use a very wide variety techniques to do this. Among these are charitable foundations, including those that lobby for higher taxes and against climate change. The foundations buy private planes and send the founders (and their families) to climate change events in the South of France or Davos, Switzerland. “Pro-tax” foundations hire tax accountants to research ways that the rich avoid taxes, often the founders then use these methods while speaking out against others who do the same. Bezos was so successful at avoiding income that he got welfare payments in two of the five years, ProPublica found. Soros and his son got $2,400 in COVID payments. They had almost no income. The one tax all these folks hate is tariffs because it is almost impossible to buy new, expensive things from abroad while avoiding them. See my essay, “Tariffs are inflationary, but not on you.”

Another advantage of a charitable foundation is that 74% of your donation can offset capital gains. You have to itemize your donations, but If you give $1 million to your foundation, you can use it to offset $740,000 of stock appreciation earnings. Not a bad deal. You can also use any stock losses against gains. Thus, it’s a good idea, if you itemize, to sell some losing stocks when you sell gainers (while holding on to other gainers, of course.) All of this is only available to those who itemize, and it’s only the rich who benefit by itemizing.

Borrowing money against your assets is another popular tax avoidance scheme, one that ordinary folks could use (but don’t over-do it*). The scheme is often called “Borrow, Buy, Die.” You borrow a large sum against your assets (your home, your stocks, or options –Musk has lots of Tesla options, etc). You then use the borrowed money to purchase property, typically: a vacation home, rental properties, a hotel, or a car. If you structure the purchase right, the interest can be deducted from any other earnings you have including rents. You then have no taxable income, or a lower income while the property appreciates. You can often structure the purchase so that depreciation can be deducted against income as well. Meanwhile, you get to drive the car, live at the vacation home, or rent it as an Air B&B, or stay at the hotel for free.

You live this way until you die. When you die, your heirs get the asset, but they are not taxed on the appreciation. The asset is transferred at its value at the time of death. You’ve avoided paying all the income tax you’d have to pay if you were to sell before death. Most home-owners do this on a small scale: They borrow to buy their home or the building where their business is. Or borrow to buy a vacation home or income property. They use through their life-time, deducting the interest, then leave it to their kids. There is no inheritance tax on most homes or small businesses, and the asset appreciates year to year. Both Nixon and Obama proposed eliminating this loophole by taxing appreciation at death. This would be a lot fairer than the current inheritance tax that is full of loopholes, and unfair when it works. If your parent bought a $10,000,000 item with taxable income, and it remains at that value, why should it be taxed a second time at death?

For a small businessman like me, it made sense to borrow to buy the building that my business operates out of and pay myself a normal rent. It’s income, as real as salary, but taxed at a lower rate, Besides there is no payroll tax on rental income. Another advantage of renting to myself is I can be trusted to fix the building and pay the rent, and I will not throw myself out if there is a downturn, nor will I raise the rents exorbitantly. My car is owned by my business, another plus. I pay a fee for personal use, but this is cheaper than using my own taxed income. When I die, the building (and car) will go to my heirs, tax free.

One last change I’d like to see is in the payroll tax. I’d like to see it tax the entire taxable income, but at a lower percent than the current 15.2 or 7.6. Currently the first $150,000 of income is payroll taxed at 15.2% for a self-employed individual, a plumber or office cleane, even before he/she pays income tax. An office worker is taxes at half this rate, 7.6% before income tax, with the company making up the other 7.6%. A CEO making $10 million pays this rate too, but only on the first $150,000. This amounts to $11,400 in payroll tax, or less than 0.11% of salary. I consider this disparity a bigger scandal than the fact that the richest 25 Americans paid only 3.4% in income tax.

Robert Buxbaum, November 25, 2025. *Trump presents a cautionary tale about property investing; if you invest at the wrong time, you can lose your shirt. In the late 80s, the property market in NY collapsed briefly, and he really was less than penniless. Don’t over-extend. The property market doesn’t collapse often, but you don’t want to be wiped out if it does.

What causes innovation? is it worth it?

Leave a reply

Innovation is the special sauce that propels growth and allows a country to lead and prosper. The current Nobel prize believe that innovation powered the Industrial Revolution, causing England to become rich and powerful, while other nations remained poor, weak, and stagnant. Similarly, Innovation, they believe is why 19th century Japan rose to defeat China, and propelled China’s 21st century rise. But why did they succeed when others did not. What could the leader of a country do to bring power and wealth through innovation. Improved education seems to help; all of the innovation countries have it, but it is not the whole. Some educated countries (Germany, Russia) stagnate. An open economy is nice, but it isn’t sufficient or that necessary: (look at China). That was the topic of this year’s, 2025 Nobel prize in economics to Mokyr, Howitt, and Aghion, with half going to Joel Mokyr for his insights, historical and forward looking, the other half going for economic modeling. I give below my understanding of their insights, more technical than most, but not so mathematical as to be obtuse the normal reader..

The winners hold that innovation, as during the industrial revolution, is a non-continuous contribultion caused by a particular combination of education and market opportunity, of theoretical knowledge, and practical, and that a key aspect is depreciation (destruction) of other suppliers. Let’s start by creating a simple, continuous function model for economic growth where growth = capital growth, that is dK/dt. K, Capital, is understood to be the sum of money, equipment, and labor knowledge, and t is time with dK/dt, the change in K with time modeled as equal to the savings rate, s, times economic activity, Y minus a depreciation factor, δ, times capital, K.

growth = dK/dt = sY − δ K.

Innovation, in the Howett model, is discontinuous and accumulative. It builds on itself.

For the authors, Y = GDP + x, where x is the cost of outside goods used. They then claim that Y is a non-linear function of K, where K is now considered a product of capital goods and labor K = xL and,

dY/dK = AKα + γ where 0< α <1, and where γ is the contribution of innovation and/or depreciation. The power function, as I understand it, is a mathematical way of saying there are economies of scale. The authors assume a set of interacting enterprises (countries0 so that the innovation factor, γ for one country is the depreciation factor for the other. That is, growth and destruction are connected, with growth being a function of monopoly power — control of your innovation.

According to the Nobel winners, γ is built n previous γ as shown in the digram at right. It can not be predicted as such, but requires education and monopolistic power. The inventor-manufacturer of the typewriter has a monopolistic advantage over the makers of fountain pens. Innovation thus causes depreciation, δ K as one new innovation depreciates many old processes and products. If you add enough math, you can derive formulas for GDP and GDP growth, all based on factors like A and α, that are hard to measure.

GDP = α(2α/1−α) (1-α2)A L,

Thus, GDP is proportional to Labor, L and per-capita GDP is mostly an independent function related to economies of scale and the ability to use capital and labor which is related to general country-wide culture.

The above analysis, as I understand it, is in contrast to Kensyan models, where growth is unrelated to innovation, and where destruction is bad. In these Kenysean models, growth can be created by government spending, especial spending to maintain large industries with economies of scale and by spending to promote higher education. The culture preferred here, as I understand is one that rewards risk-taking, monopoly economics, and creative destruction. Howitt, and Aghion, importantly codify all this with formulas, as presented above that (to me) provide little specific. No great guidance to the head of a country. Nor does the math make the models more true, but it makes the statements somewhat clearer. Or perhaps the only real value of the math is to make things sound more scientific see the Tom Lehrer song, Sociology.

This insight from movie script by Grham Green suggests to me that progress may not be the greatest of advantages, perhaps not even worth it.

This work seems more realistic, to me, than the Keynesian models Both models are mathematically consistent, but if Keynes’s were true, Britain might still be on top, and Zambia would be a close competitor among the richest countries on earth. Besides these new fellows seem to agree with the views of Peter Cooper, my hero. See more here.

Writing all this reminds me that the fundamental assumption that progress is good, in not necessarily true. I quote above a line that Orson Wells, as Harry Lime, ad-libbed for the movie, “The Third Man.” Lime points out that innovation goes with suffering, and claims that Switzerland had little innovation because of its stability. Perhaps then, what you really want is the stability and peace of Switzerland, along with the lack of domination and innovation. On the same note, I’ve noticed that engineering innovators often ruin themselves dining in ruin, while the peaceable, stable civil engineers live long pleasant lives of honor.

Robert Buxbaum, November 16, 2025. A note about Switzerland is that was peaceful and stable because of a strong military. As Publius Vegetius wrote, Si vis pachim para bellum (if you wish of peace, prepare for war).

What car did Jesus drive, or God, or Moses..

Leave a reply

So, as is little known, Jesus drove a car, a large Honda, but didn’t publicize the fact: “I did not speak of my own accord.” (John 12:49) You can tell it was a large Honda, likely a wagon, as it says “the apostles were in one accord” (Acts 1:14). It is appropriate that He drive a modest car. I would have expected him to drive an F150, as he was a carpenter, single, 30 years old. That’s the perfect demographic for an F150.

David also drove a small vehicle, “In a Triumph, I will divide Shechem, and measure out the valley of Succoth.” Similarly, Isiah, (13:3), but he was proud of it:  “I have called my warriors who exult in my Triumph.”

As for God, it’s clear he drove muscle cars, “He terrifies them in his Fury. (Ps. 2:5) “Behold, I will gather them out of all countries where I have driven them .. in My fury… ” (Jeremiah 32:37). He also had a Tempest: “You snatch me up and make me ride in the Tempest.” (Job 20:32), “Pursue your enemies with your Tempest.” (Ps. 83:15).

Moses, like God drove a large vehicle, a Ram with a loud horn, “… when the Ram’s horn sounds a long blast, they can approach the mountain. (Ex 19:13). Even so, he gave a Mazda to Eliezer, “Moses gave the Tribute to Eleazar the Priest. (Numbers 31:41).

My claim is that the people of the Bible had good senses of humor, even if those today seem rather glum.

Robert Buxbaum, November 5, 2025.

Smoking as a preventative for Parkinson’s disease

Leave a reply

I’d previously written on the ability of coffee to reduce the risk of Parkinson’s disease (PD). Coffee is not a cure, but a strong preventative for PD, reducing the risk by about 50%, assuming you drink 5+ cups per day, and proportionally for less coffee consumption. Similar to this, smoking reduces PD risk by as much as 50%. As with coffee, this is not a cure, but a prevention, smokers vs. never-smokers that is not explained by mortality, duration, or recency. It’s also confirmed by family-based studies including twin studies suggesting that genetics isn’t part of how this works. The figure below from the journal of Neurology gives a sense of this.

This is not to say that you should start smoking. Cigarettes have tars that are definitely bad, cancer causing. Still, perhaps one needn’t be as anti smoking or vaping as the public has gotten. It’s also a starting point for research.

It seems that there are two things in cigarettes that protect against Parkinson’s. The first appears to be nicotine. We know this because chewing tobacco is shown to be protective at a rate similar to smoking. Another protective component appears to be carbon monoxide. Here is a study showing that low concentration carbon monoxide protects against Parkinson’s. The Michael J foundation is funding further studies on CO because low level CO seems promising as a treatment. There are also drugs that release compounds similar to CO that might treat, or prevent Parkinson’s.

Reduced rates of smoking has been cited as an explanation for the increasing PD rates world-wide. Similar to coffee and smoking, there are also health benefits for small amounts of radiation, sunlight, and chocolate. What is a healthy food has never been settled science; the data is entirely contradictory. All this is to say, that wide bans on big sodas, smoked meats, chewing tobacco, or e-cigarettes probably are misguided. For all we know they may be good for public health, and certainly aren’t sot bad as to justify wide bansand condemnations.

Robert Buxbaum October 28, 2025.