Category Archives: Economics

Miscellaneous economy stuff

It’s Not Even That

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The Wall Street Journal thinks President Joe Biden’s (D) write-off of $10,000 worth of student loan debt is a “forgiveness coup.”

It has that effect, but I don’t think Biden is operating that deviously. This is nothing more than Biden and his Progressive-Democratic Party syndicate nakedly buying votes for this fall and 2024. It’s the bread part of bread and circuses, with the circuses being staged by his Party supporters in Congress alternately touting his having bypassed Congress to do this and bleating that he didn’t go far enough in the doing.

But at what cost is Biden buying those votes? Purely fiscally, he’s forcing us taxpayers to pony up $300 billion to make good on Biden’s largesse, according to Penn Wharton, and as much as twice that according to the Committee for a Responsible Federal Budget.

Politically, the move seriously angrifies a major fraction of us American citizens and voters. Perhaps chief among these are the majority of us who have no student debt to pay off: we never went to college/university; we went to work, instead, vis., in the trades, without which no house, no office building, no road, no mine or well, no part of our nation’s infrastructure gets built. Or we went to other than Ivy League schools to get quality educations in marketable areas of study, didn’t borrow to do so, and got jobs. Or we went to Ivy League or those Other Than schools, borrowed, and paid off our loans—because we got degrees in marketable areas and so got jobs.

We are the folks Biden and his syndicate are explicitly tapping to cover his forgiveness. We’re the folks who have demonstrated a grand capacity to pay off debt, so Biden is calling on us to use that skill some more.

Morally, it’s costing those bailed-out students the practice of actually keeping their own commitments, and it’s trapping them into the welfare cage of being too used to government welfare to get out of it. Because that’s the easy way out for them, and that’s what this sort of “forgiveness” teaches them.

There’s also the potential financial cost to these bailed out persons: now they have money to buy their first house, start a family, buy a car, …? Who’ll lend them the money? Are they now too great a credit risk, expecting as they might, simply to be able to walk away from that loan, too, when repaying it becomes inconvenient to them? Who’ll be willing to hire them, with potential employers looking askance at their willingness to walk away from inconvenient commitments.

The answers to those last questions will unroll only over the next few years—possibly to no serious effect, possibly to the great detriment of these persons, and thence to our economy.

One other thing is certain: colleges and universities will raise their tuition and other charges to absorb this Progressive-Democrat donation. That will leave none of us in the real economy better off.

Logistics Matters…

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…far beyond the process of getting soldiers and consumables to a battlefield and to the battlers.

In the aftermath of Germany’s—and much of Europe’s—considered decision to make themselves dependent on Russian natural gas and Russian President Vladimir Putin’s equally considered decision to limit and cut off natural gas supplies to Europe to try to coerce behaviors acceptable to Putin, Germany, et al., are (re)discovering the need for better logistics and logistical execution.  The lessons are available to the US, too, if the government is willing to learn.

Europe’s energy crisis has unleashed a global battle over natural-gas tankers….

And [emphasis added]

European countries ramped up their purchases of liquefied natural gas from the US, Qatar, and other sources this year as Russia cut supplies to the continent. They are competing with peers in South Korea and Japan—where gas demand has surged during a heat wave—for a finite amount of supply ferried by a limited number of vessels.

LNG-capable tankers are long-lead items that take specialized equipment to keep the natural gas cooled and under pressure. They’re also expensive, hence the interest in only limited inventories of such ships—they’re expensive even simply to have, if they’re just sitting around in port unused.

It’s not just the complexity of the ships, though, that contribute to the present long-lead times.

Shipmakers in South Korea, the world’s biggest producer of LNG tankers, don’t have free capacity for new orders until 2027[.]

However, the wonders of Europe have known for some time that they needed more LNG tankers.

LNG and the tankers that carry the fuel were in high demand even before the conflict, as extreme weather curtailed hydropower, and many economies sought to ditch coal to reduce carbon emissions.

The complexity of these logistics is further illustrated by this little fillip: the price of steel is rapidly rising, an accelerated increase driven by demand from a broad reach of needs in addition to simply making boats.

The lessons for the US?

The need for more natural gas (and oil) production, more flexible production, better and expanded distribution grids to refiners, and in the present context, expansion of port facilities able to convert natural gas to liquid natural gas and then to transfer that LNG to LNG-capable tankers.

And maybe build some of our own LNG tankers. And get rid of the Jones Act.

She’s Right

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But for the wrong reasons.

US Energy Secretary Jennifer Granholm says billions of dollars in upgrades are needed to the power grid in the US to prepare for widespread electric vehicle adoption.

If that’s the spur needed to get the upgrades started and seriously underway, then cool. However, our power grid badly needs upgrade and strengthening in its own right. It’s old, near capacity under normal draw, and highly fragile—as the California portion of the grid demonstrates continually, and as the Texas grid demonstrated a couple of winters ago.

Indeed, nothing has been done since the Northeast blackout of 2003—which itself was a geographic repeat of the blackout of 1965. The proximate causes of these actually were quite trivial, but the fragility of the grid was demonstrated by how fast and far the effects spread: throughout the American northeast (and deep into Canada, which illustrates, also, international implications for strengthening, or continuing to ignore, the decrepit state of our grid).

It’s a national security matter, too, beyond the economic aspects of security.

We also need to drop some dimes (though not as many as might seem) on hardening all of our power grids (plural: not only electricity, but grids distributing natural gas and oil from the well through refiners to end users) against EMP attacks—which needn’t be nuclear weapon-originated, or even large, but merely carefully targeted—and against being software-hacked, as the Russians did when they shut down Colonial Pipeline.

Export Controls Regarding the PRC

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It has come to light that we really don’t have any serious export controls covering technology-related exports to the People’s Republic of China.

Of the US’s total $125 billion in exports to China in 2020, officials required a license for less than half a percent, Commerce Department data shows. Of that fraction, the agency approved 94%, or 2,652, applications for technology exports to China. The figures omit applications “returned without action,” meaning their outcomes were uncertain.
The result: the US continues to send to China an array of semiconductors, aerospace components, artificial-intelligence technology, and other items that could be used to advance Beijing’s military interests.

Why is this being allowed to occur?

Some warn tighter restrictions on US tech sales to China will backfire because allies such as Germany, Japan, and South Korea will step in to fill the void. For export restrictions to be effective, “we need our allies to have the same controls,” said Kevin Wolf, a senior Commerce official during the Obama administration, while testifying on Capitol Hill last year. “It is that simple and logical.”

That would be silly if it weren’t, at bottom, rankly defeatist. We shouldn’t be waiting around on putting curbs on technology transfers to an enemy nation. Instead of looking for consensus first, we need to act, to lead, to let the consensus build as we go, and to give our allies something to follow and a consensus to join. After all, if we don’t care enough to do, there’s no reason anyone else should care enough to do.

Beside that, if we stop exporting our technology to the PRC and our putative allies step in to fill the gap, at least we’ll be stopping our own transfers, and our allies’ technologies, for the most part, aren’t as good as ours. The PRC would be getting second best, continuing to trail us, and that would be to the good for our security.

Government Spending on Fast Internet Service

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The Federal government has a $42+ billion program for expanding broadband Internet access to Americans who don’t currently have that access. In a rare application of sense, the law has an entry criterion:

The broadband plan, part of the $1 trillion infrastructure bill signed by President Biden last November, stipulates that money to improve service can’t be doled out until the Federal Communications Commission completes new maps showing where homes and businesses lack fast service.

Like I said, an application of sense. But there’s one more little fillip that’s necessary. That’s the need to define “fast Service.” Absent that, the maps won’t necessarily be useful.

Such a definition is needed because Internet speed is constantly increasing as the underlying technology is constantly improving. We’ve gone, after all, in just three decades, from 300baud dial-up access to the Internet at the start to today’s 100s of gigabit/sec access, and that’s getting faster as 5G access spreads and subsequent xG accesses are developed.

What’s the speed for which the FCC’s maps are required to indicate the need on the part of those of us who don’t currently have it? Will that be a static requirement, or will the speed be required to increase along with the general population’s access speed?