Category Archives: political economy

There’s a Separate Problem

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The People’s Republic of China’s debt-fueled economic growth is threatening to hinder continued growth, even to cause serious contraction for the PRC’s economy. Much of that debt is local government off-the-books lending and, especially,

The deterioration of China’s real-estate market in the past three years meant local governments could no longer rely on land sales to real-estate developers, a significant source of revenue.

There’s another problem with that last, though, that makes off-the-books debt issuance even dicier for those local jurisdictions. The local governments own, or owned, only a finite amount of land, and so there is an upper bound to the amount they can sell to those developers. It’s very much akin to feudal Europe, where parents, over a very few generations would subdivide their land to give some to their eldest sons to use and profit from—and then ran out of land to subdivide. It was worse for the kings, who gave away royal lands to eldest sons and to nobles as rewards or loyalty purchases. The kings ran out of land, also.

Kings and local PRC governments could repossess those lands on one or another pretext, but such moves were, and are for the PRC governments, fraught with political danger. In the PRC’s case, the land limits, as much as any market for real estate, meant that borrowing against that collateral becomes even more risky, as the land collateral becomes smaller, along with the constructed buildings becoming expensive to hold on inventory pending sales that aren’t happening.

All the more Reason

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The People’s Republic of China is continuing to manipulate the price of rare earths and of rare earth production and ore refinement. The nation is exploiting its current overwhelming monopoly of rare earths to hold those prices below the cost of their mining, production, and refinement elsewhere in the world, possibly below their own suite of costs.

That’s a security threat carefully aimed at the US and at Europe, since those rare earths are so critical to military equipment, computing equipment, and a host of other equipment throughout the general economy.

The US, Canada, regions in Europe, and the floor of the South China Sea each have ample supplies of the ores that, when exploited, would eliminate the PRC’s stranglehold on rare earths.

It’s time for the US and Europe, at the least, to suck up and go through the expense of developing our own rare earth resources and wrest that control away from our common enemy nation. It’s long past time to move to take back from the PRC the South China Sea, returning ownership of the islands to the nations with legitimate (if disputed among them) ownership and to return the waters to freely international status with their long-established economic zones which are held by non-PRC nations rimming the Sea. Regaining access to the Sea’s resources on and under the floor is one more critical reason for doing so.

A Campaign Platform

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I’ll be brief. The Progressive-Democrat Presidential candidate and current President Joe Biden, has a legislative and administrative history of

  • open to nonexistent borders, epitomized by his failed effort to codify the entry of 1.4 million or more illegal aliens per year (assessed at weekly intervals) before a President would be authorized to do anything toward closing our border
  • enormous inflation that’s only just abating, although the new price levels remain much higher than extant in the prior administration, with no sign those elevated price levels are abating
  • real wages falling relative to those extant in the prior administration as nominal wage increases, with some excursions to the topside, in the main have been smaller than price increase increases due to inflation
  • denigrating Israel as it fights for its survival against the terrorists Hamas and Hezbollah—and against their masters, Iran—while moving to protect Hamas by demanding cease fires that only benefit Hamas
  • encouraging continued butchery in Ukraine by slow-walking and blocking weapons Ukraine needs while coddling the invader barbarian as sanctuary against serious counterattack by Ukraine
  • appeasing Iran in its desperation to get Iran to let this administration back into the failed Iran nuclear weapons development deal
  • appeasing the People’s Republic of China regarding that nation’s seizure and occupation of the South China Sea and its threats against the Republic of China
  • meekly accepting PRC military and spy bases in Cuba, elsewhere in the Caribbean, South American, in even more meek abrogation of our erstwhile long-standing Monroe Doctrine
  • active deprecation of our energy production and energy independence through constant attacks on and blocks of coal, oil, natural gas—even liquid natural gas export—in favor of unreliable wind and solar farms

Those are just the high points; the full list is quite extensive.

This is why Biden and Harris won’t run on policy and how their policies for the next term would benefit Americans. Instead, their campaign platform is personal; it’s focused against a man. They don’t even argue against his policies, past or future—only that the man himself is bad.

This lack of a coherent, reasoned platform is instructive of the capacity of the Progressive-Democratic Party to govern.

Yes, But It’s Not Enough

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Leon Panetta and Mike Gallagher are on the right track in sounding the alarm regarding our nation’s lagging behind our enemies in military strength and in the pace of scientific and weapon technology development.

They closed their op-ed, though, with this:

To prevent cold-war competition from devolving into a hot war, it’s time to innovate as if the free world depended on it. The path forward must be paved with investments in technology and undergirded by infrastructure built for innovative national-security research and education.

Innovate, certainly. Develop an infrastructure conducive to producing the scientists, engineers, and other researchers necessary for innovation, absolutely. That’s not enough, though. Panetta and Gallagher also emphasized that we are unlikely to adopt industrial policy or match our enemies in sheer production volume.

That’s the Critical Item remaining leg of our rebuilding: we have to produce the things we innovate, and we have to produce them in sufficient numbers that they can overcome the numerical superiority of our enemies’ production. That requires rebuilding the manufacturing facilities and building new such facilities that are necessary for us to produce our innovations. We can no longer expect our automobile manufacturers simply to adjust their assembly lines to produce tanks instead of trucks—both of those today are too complex and too different from each other.

The war(s) we fight against Russia and the People’s Republic of China will be fought with the men and equipment in being and on scene. The pace and weapons effectiveness of modern war will not allow much at all in the way of American reinforcements from overseas, and it will not allow any—zero—combat loss replenishments from our factories, whether extant or starting to be built when the first enemy bullet is fired at us.

A Major Defense Contractor…

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…and powerful defense lobbyist…skates?

Boeing, whose pair of 737 MAX software-related crashes and a range of aircraft manufacture/assembly failures have cost or endangered lives, is being allowed to plead guilty to a single count of conspiracy to defraud the US.

In truth, many of the assembly failures being laid off on Boeing in the rush of negative publicity are maintenance failures by the airline companies that own the aircraft involved. And, the manufacture/assembly failures are not factors (at least officially) in the plea agreement in progress—that’s limited to the MAX software-related crashes.

It’s also the case that the second MAX crash was more pilot error than it was a Boeing failure, though Boeing’s handling of the software failure involved in both MAX failures figured in the pilot screwup.

Those notwithstanding though, the plea—offered by the government, not by Boeing—seems a wrist slap.

[P]rosecutors have asked the company to pay a second $244 million criminal fine and spend $455 million over the next three years to improve its compliance and safety programs. Boeing also must hire an independent monitor for three years to oversee those improvements.

On the other hand,

The deal also does not cover any current or former Boeing officials, only the corporation.

The wrist slap in the present case compares to a 2021 “settlement” between Boeing and the government over the same MAX software question in which Boeing was fined a similar $243.6 million and paid an additional $2.5 billion to settle the case.

This, too:

Pleading guilty creates business challenges for Boeing. Companies with felony convictions can be suspended or barred as defense contractors. Boeing is expected to seek a waiver from that consequence. The company was awarded Defense Department contracts last year valued at $22.8 billion, according to federal data.

Getting the whole case boiled down to a single felony count, combined with the small fine and the pro forma business about compliance and being monitored, make it much easier for Boeing to get the waiver. The magnitude of the just signed defense contracts—who would the government get to replace Boeing on the tasks contracted?—also give Boeing leverage in getting the waiver.