Monthly Archives: March 2023

Gainful Employment

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In her Wednesday Wall Street Journal op-ed, Judy Shelton wrote extensively about the Federal Reserve Bank’s spotty performance in combatting the latest round of inflation, effort in which the Fed has been engaged for the last year.

Then she concluded her piece with this:

In other words, when capital is allocated through meaningful price signals that reward long-term investment in productive economic opportunities, people become gainfully employed and real growth leads to greater prosperity.

True enough as far as it goes. However, the Fed’s impact on capital allocation isn’t the only factor.

Congressional/Presidential—which is to say our elected representatives—spending and taxing policies are equally important, if not more so, factors. Our current welfare structure, based on high and increasing taxing and high and increasing spending, pays too many able-bodied to not work, and that reduces the number of folks ready to become gainfully employed. With the number of workers artificially reduced, the ability to allocate capital is limited.

Biden Courts

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Last Wednesday, Magistrate Judge and Biden nominee to a Federal judgeship in the US District Court of Colorado Kato Crews was asked about a legal procedure and then a Supreme Court ruling that any first year law student would have known the answers to. Senator John Kennedy (R, LA) asked Crews

how he would “analyze a Brady motion,” with Crews answering that he had not “had the occasion to address a Brady motion” during his four and a half years on the bench.

Kennedy followed that with a question of whether Crews remembered the Supreme Court case Brady v Maryland and what the case held. Crews:

I believe that the Brady case involved something regarding the Second Amendment. I have not had an occasion to address that.

Here’s a snippet of that exchange.

A Brady motion is a move to require the prosecution in a criminal case to turn over to the defense any information favorable to the defense that the prosecution’s own investigation turns up. The motion is one of the outcomes of Brady v Maryland, which was decided 60 years ago. Those first-year students wouldn’t have had an occasion to address either of those, either, but they would have known the answers, anyway.

This failure comes on the heels of Spokane County Superior Court Judge Charnelle Bjelkengren, nominated to a Federal judgeship in the US District Court for the Eastern District of Washington, who could not answer Kennedy’s even more basic questions of Articles V and II of our Constitution do. Neither article, Bjelkengren said, come to mind.

Breathtaking as these two Federal judge nominees’ ignorance about laws, legal procedures, even our Constitution is, what’s far worse is the quality of “judges” President Joe Biden (D) is choosing to nominate to our Federal judicial bench. It’s like the 40-year lawmaker cum President is himself entirely ignorant of American law and of our Constitution. Or like he doesn’t care.

Studying for the Test

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Instead of studying the material. In a Monday Wall Street Journal op-ed, Michael Faulkender and Tyler Goodspeed, University of Maryland Finance Professor and Fellow at Stanford University’s Hoover Institution, respectively, wrote about bank stress tests and their resulting uniformity of banks’ risk management techniques. Citing a Boston Federal Reserve study, they noted that

banks that performed poorly on the mandated Dodd-Frank stress tests subsequently adjusted their portfolios such that they more closely resembled the portfolios of banks that performed well. The average institution’s portfolio is more diversified, but the system is more uniform. By requiring all of the biggest financial institutions to adhere to the same measures, pass the same tests, and follow the same practices, America has lost diversification in the entire banking sector.

Dodd-Frank, in essence, required individual banks to do better at diversifying their individual portfolios. But that business of all of them having to pass the same test means that all the banks have much the same portfolios, diversified over much the same instruments.

This is the complement of teaching the test rather than teaching the material and then testing that knowledge. Banks are (regulatorily pushed into) learning the test rather than learning the material and then acing the test.

Uniformity is dangerous for species in a biological ecology, and uniformity is dangerous for categories of businesses in an economical ecology.

Courage

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Republic of China President Tsai Ing-wen is making a formal diplomatic trip to Belize and Guatemala. En route, she’ll make “transit stops” in New York on the way out and in Los Angeles on the way back.

While in New York, Tsai is expected to meet with House Speaker Kevin McCarthy (R, CA).

The People’s Republic of China’s government men are dismayed. No mind. If President Joe Biden (D) had any courage, Tsai would make an additional transit stop, this one in DC, in the Oval Office, to meet with Biden.

But he doesn’t, so she won’t.

Mistake

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Treasury Secretary Janet Yellen wants to extend the Federal government’s intrusion into our banking system.

Our intervention was necessary to protect the broader US banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion[.]

No, it wasn’t. No, it would not be.

Businesses thrive or fail on their managers’—individual Americans acting in concert with other individual Americans—performance or failure to perform. We individual Americans thrive, or not, on our own decisions, made out of our own obligations and determination to get ahead.

It isn’t government’s job to inure us individual Americans or our businesses from the vagaries of the marketplace or—especially—from our own poor decision-making. It’s government’s job to create and enforce a framework within which our free market can operate freely, and within which personal responsibility, whether as individuals or as business managers, can operate freely.

If our decisions are without consequence, we are neither operating freely nor in accordance the requirements of our personal responsibility.