Tag Archives: economics

“Our Question is: Why?”

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That’s The Wall Street Journal editors’ question, and it’s mine, too, regarding further interest rate cuts. The editors posit a number of reasons for not cutting further, but mine is simpler. It’s a refrain I’ve done before.

Inflation, which is the Fed’s Directed Operational Requirement, already is within noise distance of its longtime 2% target, and now is bouncing around noisily. The Fed’s target benchmark interest rate setting already is at a level historically consistent with its 2% target. It’s time for the Fed to sit down and be quiet and let the market bounce around, as it does and as it self-corrects. The bouncing, within very broad limits, is just the noise of a free market operating normally and prosperously.

Blame Someone Else

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Safeway is closing one of its San Francisco stores due to concerns about high crime rates and employee and customer safety in that store’s neighborhood. Oh, the hue and cry.

The Reverand Erris Edgerly, for instance, is crying foul.

It’s obvious the community has been struggling, but to just up and leave without calling a meeting, with no alternative for groceries, is upsetting. There was no community outreach at all.

It’s obvious that the crime rate in Edgerly’s community has been out of control for quite some time and the safety of his community members has been in the wind for all that time. From that, it’s just as obvious that community “leaders,” like the good Reverand, have contributed nothing useful to mitigating the situation (in truth, the city has done nothing, also, but that doesn’t excuse the community’s “leaders”).

Outreach would have been just more chit-chat and worse than pointless: advance notice of the store’s closing would have been too likely to trigger an accelerated spate of break-ins and lootings, exposing the store’s employees and customers to even more danger in that end game.

Maybe the Edgerlys of the neighborhood should look in a mirror to find some of the folks with whom to…outreach.

Prop Up That Industry

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German Chancellor Olaf Scholz wants more government pressure on support for battery cars, their manufacture, and their sale to an uninterested public.

German chancellor Olaf Scholz has called for the introduction of Europe-wide measures to increase uptake of electric vehicles, in a speech at Ford Motor Corp’s factory in Cologne, just weeks after the US car maker outlined plans to lay off 4,000 of its European workers.
In the speech at Ford’s EV factory on Tuesday, Scholz argued Germany should work to facilitate the “leap forward” towards “electromobility” by providing “support” for the country’s car industry, including by subsidizing energy costs for EV battery makers.

And this bit of contradiction:

Scholz said the support for the car industry should also aim to protect worker’s jobs….

He can’t have it both ways, except through government-mandated featherbedding. It takes fewer workers to build an electric motor and a battery car than it does an ICE motor and an ICE-powered car. It takes fewer suppliers to supply fewer parts, and fewer employees at each supplier, to provide the simpler components of a battery car than the more complex components of an ICE car.

The ripples go on from there: secondarily, all those mom-and-pop stores—diners, grocery stores, bars, entertainment venues, and so on—will get fewer customers from those smaller work forces at the EV factories and supplier plants, resulting in fewer mom-and-pops and fewer employees in surviving mom-and-pops.

No. If the battery car industry still needs overt government fiscal subsidies and mandates aimed at pressuring consumers to spend their own money on even subsidized battery cars, those vehicles and that industry aren’t ready for operation.

The only legitimate support for battery cars is the consumers’ interest in buying them in a free, competitive market shorn of government pressures. That interest isn’t yet there.

Yet Another Reason…

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…for moving our supply chains out of the People’s Republic of China, and for no longer doing economic business at all with the PRC. In response to the Biden administration’s lately decision to further restrict the export of advanced computer chips to the PRC, that nation has restricted the export of critical computer-related minerals to us.

China announced Tuesday the banning of exports to the United States of chemical elements and other essential high-tech materials, in apparent retaliation for the US limiting semiconductor-related exports.

Those elements include gallium, germanium, antimony and certain other extremely hard materials to the US. So far, that’s just the ordinary progress of war, including the economic war the PRC has been waging against us for years.

However.

We shouldn’t be dependent on an enemy nation for materials critical to our economic function or our national security. That we are was driven home by the supply chain disruptions caused by the Wuhan Virus Situation; that this administration has chosen to do nothing about it, that our private enterprises have chosen to do nothing about it—each is shameful in its own right. That continued dependency only facilitates the PRC’s war against us and our economy.

We have these elements, along with nearly all of the rare earth elements and other extremely hard materials, in the ground within the political boundaries of our nation as well as within the boundaries of friendly nations. If it costs more to supply from those sources—and it will cost a pretty penny at this stage to guts up the necessary mines—that’s the cost of national defense and of our status as a free and sovereign nation.

Erroneous Analysis

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John Cogan, a Senior Fellow at Stanford University’s Hoover Institution, has one. In his Tuesday Wall Street Journal op-ed regarding a suggestion for fiscal federalism in government spending—an otherwise sound idea for leaving State and local projects to be funded solely by the States and local jurisdictions doing the projects—he had this:

My analysis of federal budget data shows that the chronic federal budget deficits since the 1950s are due to the federal government’s failure to raise tax revenues required to finance its spending on state and local activities.

No. The chronic federal budget deficits have been caused by the Federal government nationalizing the spending on those State and local activities, not by any failure to raise taxes to pay for spending that ought not to have been done in the first place.

It’s not too late to go back to the restraints that federalism places on government spending, but let’s not lose sight of the fact that that federalism never should have been abandoned in the first place. That’s how we have a chance to learn the lessons of that error, rather than repeating it in future.