Government Imperative to Regulate

This time in the commercial space industry. There is a bill slowly wending its way through the House that would limit—or not—regulation of the nascent commercial space industry. This is a bill that would

…extend and update federal protection for commercial launches from some potential liability involving property damage or personal injuries and fatalities on the ground. The legislation [also would bar] the Federal Aviation Administration from closely regulating fledgling space-tourism ventures for up to 10 more years….

There’s a hint about the wrong mindset there. The hint is clarified by the bill’s supporters’ attitude. They [emphasis added]

What’s in Your Food?

It’s not PC to ask or to know, according to the World Trade Organization.

The World Trade Organization (WTO) just ruled that America’s popular country-of-origin labeling law (COOL) enacted in 2008 violates global trade standards because it erects a trade barrier to US meat imports from countries like Canada and Mexico.

Japanese customers don’t get to know that the beef they’re thinking about buying came from the US. Nor do PRC diners. Nor do American customers get to know that their beef is coming from Canada.

Such knowledge constitutes a trade barrier, don’t you know.

Featherbedding?

To paraphrase a Democrat’s remark, never let a tragedy go to waste.

The union for Amtrak’s locomotive engineers urged the railroad on Tuesday to put a second crew member at the controls of trains on the busy Northeast Corridor, where a derailment killed eight people and injured more than 200 others.

Of course. Never mind that an existing technology, cheaper than adding an unneeded employee, should have been in place, and will be in place after this accident.

The featherbedding contained in this union urging is made manifest in the union’s own statement:

“How Much Should a Currency Be Worth?”

That’s the title of Ian Talley’s piece in a recent Wall Street Journal online edition. The question arises from the People’s Republic of China’s open manipulation of its currency through its control of the yuan’s exchange rate in the currency markets. The PRC executes this manipulation by limiting the range of values within which the yuan is permitted to trade in those markets.

The question gains currency (sorry) as Congress contemplates adding an anti-currency manipulation clause to the Trans-Pacific Partnership free trade pact or to the fast track trade bull currently in progress of a sort. But that’s currency manipulation from the other side of the matter: instead of a country manipulating its own currency, this clause says the currency must be manipulated according to our imperatives:

Market Disruption

…is what happens in a free market, and one result is wealth redistribution, not by inefficient, politically motivated government mandate, but morally and efficiently by voluntary exchange among market participants—folks like you and me. One example of this is the price of taxi medallions.

…leading cabbies and fleet owners throughout the USA worried that their industry will be decimated if local and state government doesn’t intervene.

In Chicago, which has the country’s second biggest fleet with roughly 7,000 taxis, the median sale price for a medallion hovered around $70,000 in 2007 before reaching a median sales peak of $357,000 in late 2013.

Those Are Some Bills, Bill

“I gotta pay our bills,” says Bill Clinton about his $500k per speech fees. That’s nice work, and I don’t begrudge him a penny of it or the easiness of his earning it.

But is it really just to pay some bills?

Hillary Clinton and former President Bill Clinton earned more than $25 million combined in speaking fees since January 2014, Fox News confirmed Friday.

Hillary, by the way, gets upwards of 200 large for her gigs.

Those are some bills.

Interest Rates and Economic Recovery

The Fed has been actively suppressing interest rates, keeping them near zero, for a long time. This is in addition to the Obama administration’s economic policies, and the two attitudes have combined to produce an economic recovery from the Panic of 2008 that is one in name only. See this graph, adapted from one in a recent Wall Street Journal to see just how bad the current “recovery” is. The numbers other than the two first quarter 2015 are average annualized rates of increase.EconomicRecovery_Cropped-Resized

Banks, Government, and Risk

Fed governor Jerome Powell, in remarks prepared for a conference of community bankers in New York, said banks under a certain asset level, “perhaps $10 billion,” should be exempt from Dodd-Frank compensation restrictions. The restrictions, which are being developed by the Fed and other agencies, are designed to remove encouragements for bankers to take excessive risk.

Couple things about this. Why $10 billion? Why not $20 billion? Why not $5 billion? Based on what logic is this limit chosen? Based on what logic is any limit chosen? How is “system risk” from bank failure, the putative rationale for Dodd-Frank at all, a lesser risk than government’s intervention into the market place?

Overseas Cash Hordes

The [Financial Times] reports that just “five US companies are hoarding nearly half a trillion dollars as the country’s tax code and a tepid global economy deter businesses from spending their overseas cash piles. Apple, Microsoft, Google, Pfizer, and Cisco are sitting on $439bn of cash—accounting for more than a quarter of the total $1.73tn being held by US groups, according to Moody’s Investor Services.”

How to get this money back into the United States? Let’s see: lower the tax rate on foreign money being repatriated? Currently, we tax those funds at existing domestic tax rates; moving to a more territorial system where we tax only domestically earned income would lower the total rate some, giving some encouragement to repatriation of those overseas caches.

The Ex-Im Bank

The Export-Import Bank’s charter is up for renewal in our Congress this spring. The bank is alleged to help American companies by lending money to foreign buyers of and American company’s products so that buyer can afford the purchase, which in turns helps the US company, and its employees.

That’s a pretty good deal, right?

Maybe not so much. It’s American taxpayers who are on the hook—not just the one American company and its employees—if the foreign buyer defaults on the loan. But that’s not all. American companies trying to compete with that foreign buyer also are harmed, whether or not that foreign buyer defaults. See the graph below, from AEIdeas:ExImBank