Category Archives: Economics

Miscellaneous economy stuff

91%

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That’s the outcome of a Freedom Economy Index survey of 70,000 small businesses, of whom 905 responded, producing a survey with a 3% margin of error and a 95% confidence interval for the outcome.

And having delayed the lede, here is that outcome.

Fully two-thirds of the respondents think college graduates have educations that are useless to business needs, and another quarter of them think those graduates don’t have very useful educations. Here are some of the comments from respondents, which the survey reported verbatim:

  • The Talent shortage will just get worse because high schools and colleges produce no talent.
  • The skills should be taught in highschool [sic].
  • A good work ethic would be a good place to start!
  • They don’t show up to an interview, and work is too hard, 9-5 is such a struggle.

And this:

Four-fifths of the respondents’ positions range from don’t care about hiring a graduate of a “major” school to strongly less likely to hire such a one. Some more verbatim comments:

  • I found that graduates with the aforementioned scholastic achievements typically have an incompatible ideology with my business culture.
  • We would hire someone with hands-on experience over someone that read about it in a book.
  • I only care about skills. If you ain’t got the skills you ain’t got a job.

And these two, which pretty much speak for themselves:

Businesses—small businesses, anyway—are catching on to the utter failure that is our current generation of colleges and universities.

The survey itself covers a broad range of items of concern to the small business community; it’s well worth reading in its entirety.

So It Should Be with General Infrastructure

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The subheadline outlines part of the problem:

Companies often need to show progress to get government cash but struggle without it

In the body of the Wall Street Journal article at the link is this:

Some of the companies are in Catch-22 situations. Washington won’t issue them loans until they raise outside money and move ahead with projects.

It’s true enough that big, established companies are better able to game the situation. It’s also true that high interest rates—especially after an extended period of no- to low rates—and inflation have hurt, but these only emphasize my point in this post.

It isn’t just “clean” energy: the problem is both broader and more narrowly defined.

What needs to happen regarding Federal funds transfers needs to happen all across the infrastructure terrain, whether the transfers are to individual businesses or to States more generally. Contracts must be let and particular projects must have a minimum of six months of concrete, publicly measurable progress before any taxpayer money can be transferred to the individual business executing the project.

Regarding States in particular, any taxpayer money must be sent directly to the business carrying out the State-identified infrastructure project (and only after the business has satisfied the above criterion), and the State must have already transferred State taxpayer funds to the particular business. Finally, before any Federal taxpayer funds can flow, the business must have a minimum of six months of concrete, publicly measurable progress with the State’s taxpayer money before any Federal taxpayer money can flow to the business.

Sent directly to the business: it’s important, too, that Federal funds entirely bypass the State and go directly to the business in question. Even in honest circumstances, the State’s middlemen siphon off entirely too much of the Federal taxpayer’s money.

Only Reliable Way to Enforce Lease Sales

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The 5th Circuit has ruled—correctly IMNSHO—that the Biden administration must sell oil and gas leases in the Gulf of Mexico as existing law requires and get it done within the next 37 days.

That’s good news, but it’s insufficient since it lacks an enforcement mechanism. The only reliable enforcement mechanism under this Biden administration is to deem the leases currently applied for to be sold under the parameters provided in the lease applications and to deem future lease applications, until the 73 million acres in question are committed, similarly sold after 37 days, the court’s mandated time limit for getting the Gulf’s acreage leased out.

The court’s ruling can be read here.

Jayjuz

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Here’s a pretty dispositive demonstration of the destructiveness of Progressive-Democratic Party economic ideology policies. The Transparency Foundation notes that

Our methodology calculates that a typical middle-class family of three earning $130,000 a year faces a “Cost of California” penalty of $26,478.72 versus if they simply paid the national average of cost in each category[.]

And

In California, renters pay 47% more than the national average, while homeowners pay 32% more, healthcare services cost 42% more, and state and local taxes are 14% higher[.]

Even areas where California citizens supposedly pay less than the national average, health insurance and homeowner’s insurance, the claims of lower costs are deceptive.

Health insurance is heavily subsidized by taxes on all Californians, and those taxes generally are elided when State officials calculate the insurance cost.

With homeowner’s insurance, costs to California’s citizens are artificially suppressed by State government mandated rate change limits. With insurers not allowed to charge risk-based premiums—risks that include State officials’ interference with forest and water management practices, interference that then runs up the likelihood of fires and broadens the extent of damage caused by those more frequent fires that do occur—insurers are leaving the State. Those departures, in the medium- and long-term, make Californians increasingly dependent on the State’s government for homeowner’s insurance.

$26,478.72. The 2023 Federal Poverty Guidelines for a family of 3 puts the 100% Guideline at $24,860. The 250% Guideline, used by so many government welfare programs as their upper bound, is $62,150, just a bit over twice that California Penalty.

Progressive-Democrats are actively inflicting poverty on American citizens, and the only rationale (I do not say moral or ethical) motive for this is to create dependency in order to control votes and to preserve Leftist political power.

Contract Discipline

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Amtrak is in the hole to the tune of $140 million in maintenance costs for its current fleet of trains because the contractor Amtrak hired to build and deliver uprated replacement trains is having trouble with testing requirements and production defects and so is nearly three years late on delivery.

Amtrak is also losing even more revenue in anticipated ticket sales from the new, larger trains that were supposed to enter service in 2021. And the railroad is missing out on other revenue because some older Acela units have been pulled from service to be cannibalized for spare parts.

One way for our government to deal with such things is with fixed price contracts, under which the contractor gets a sum of money and must satisfy the production requirements of the contract within that sum. These contracts, though, don’t make the contractee whole from the contractor’s failure.

Here’s another way: write into the contract that the contractor is responsible for the contractee’s maintenance and other costs attributable to the contractor’s failure to meet deadlines. Such a move would make future contractors, e.g., France-based Alstom in the Amtrak case, responsible for Amtrak’s $140 million, and more, inflicted on it by Alstom’s failure to perform. If no contractor is willing to incur that risk, that contractor need have no business from the government at all.