Tag Archives: markets

Domestic Protectionism

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Illinois State Congressman Michael Zalewski (D), after consulting heavily with General Motors, wants car makers to be able to operate self-driving taxis—which, of course, those same car makers would make.

However.

His bill, introduced February 8, would limit access to the business to companies that make their own vehicles. That means GM would be eligible, but not tech companies like Uber Technologies Inc that are developing their own self-driving cars and don’t make their own vehicles.

Nor would Google be allowed in.  Or Lyft, were they to want to get into the business.  Or an IBM, should it want to build a Watsonmobile.  Or….

After falling behind in self-driving cars, GM has unleashed its powerful lobbying team to cultivate relationships with statehouses. The largest US vehicle maker by sales has a long history of backing legislation to preserve its interests, including a bill in Indiana last year that would stop electric-vehicle maker Tesla Inc from operating its own stores there.

What a surprise.

Of course, GM is denying ulterior motives, but this is just internal protectionism—anti-competitive and monopolistic.  Rather than competition pushing car companies to produce better cars, including self-driving ones, the fearful ones like GM are pushing to squelch competition.

It’s no wonder that a bare nine years ago GM was facing bankruptcy up close and personal.

Immigration—Whose Rights?

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Here’s Mexican Secretary of Economy, Ildefonso Guajardo, on the question of whether NAFTA should be renegotiated:

Logically, there wouldn’t be incentives to continue collaborating on the issues most important to national security in North America, such as the issue of migration[.]

And this:

[T]he Trump administration’s effort to step up deportations have already prompted an aggressive campaign by some Mexican officials, governors and public figures to fight the policy by jamming up US immigration courts.

That particular bit of business has been noted earlier.

Because foreign individuals or those who are part of a flow of migrants have their own right to enter another country, or to be in another country, just because they want to or are on the move?

This is, in many respects, the obverse of my piece yesterday: does a foreign national retain his home country’s rights when he’s inside the US (for instance, Mexico has made it illegal to prevent a Mexican citizen from leaving Mexico)?  Does a foreign national have an intrinsic right to be in our country, independently of our wishes, even our law?

Note to Self: Delete notes to self before publishing a piece.

A Thought on a Thought on Bank Reserves

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Neel Kashkari, President of the Federal Reserve Bank of Minneapolis and active member of the Federal Open Market Committee, had the thought that’s the object of my thought in a recent op-ed in The Wall Street Journal.

…increase capital requirements on the biggest banks—those with assets over $250 billion—to at least 23.5%. It would reduce the risk of a taxpayer bailout to less than 10% over the next century.

No.  Have the banks publish their reserve holdings and the total of the loans outstanding in their portfolio together with the per centages of the latter that are current, late, or in default.  Let each bank’s creditors—depositors and other lenders—and investors make their own assessments of the bank’s viability.  Government need not be involved.

Beyond that, we have a bankruptcy court system that’s entirely adequate to the problem; there’s no need to excuse banks from the system.  Moreover, by doing this much, we would eliminate the too-big-to-fail monstrosity of Dodd-Frank, and we would reduce the risk of a taxpayer bailout by far more than Kashkari’s timid 10%: that risk would be reduced by 100%.

Beyonder than that, we have this seeming conflict.  Bank of America CEO Brian Moynihan recently asked,

Do we have [to hold] an extra $20 billion in capital? Which doesn’t sound like a lot, but that’s $200 billion in loans we could make.

To which Kashkari quite legitimately replied,

Borrowing costs for homeowners and businesses are near record lows. If loans were scarce, borrowers would be competing for them, driving up costs. That isn’t happening.

However, leaving aside the regulatory state that’s holding back our economy and with that depressing demand for big ticket items and so demand for loans (and interfering with the process of loan making, as described by Kashkari in his piece), the loan rates/demands vs freeing up those loanable funds is a chicken and egg thing.

I vote for the egg: free up those restricted funds in the private sector instead of freeing up funds via the Federal printing press.

A Carbon Tax Proposal

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No less a pair of lights than George Shultz and James Baker III have one regarding atmospheric carbon emissions.  They’re prefacing their case on their then-boss, President Ronald Reagan’s successful negotiation of the Montreal Protocol to rein in the failures of atmospheric CFCs that were destroying the ozone layer.  Not that the two have anything to do with each other, but it makes for good obfuscation.

Shultz and Baker have four “pillars” to their proposal:

First, creating a gradually increasing carbon tax. Second, returning the tax proceeds to the American people in the form of dividends. Third, establishing border carbon adjustments that protect American competitiveness and encourage other countries to follow suit. And fourth, rolling back government regulations once such a system is in place.

Their first pillar echoes ex-President Barack Obama’s (D) promise to let electricity generators use all the coal they wanted; Obama’s policies just would put them out of business.  No carbon emissions. Period.  Never mind that there’s very little need to reduce carbon emissions.  Atmospheric CO2 used to generate acid rain, but that pollution is long since reduced to the point of elimination.  Beyond that, the EPA’s pseudo-science “finding” notwithstanding, atmospheric CO2 is plant food, not a pollutant.  We eliminate that plant food at risk.

Return the tax proceeds to us as dividends?  That’s just wealth redistribution by government fiat.  Haven’t we had enough of Progressive redistribution failure already?  Not to mention the cynically internally illogical mechanism for the redistribution.

A $40-per-ton carbon tax would provide a family of four with roughly $2,000 in carbon dividends in the first year, an amount that could grow over time as the carbon tax rate increased.

How could the dividend grow—isn’t the tax supposed to reduce emissions significantly?

Border carbon adjustments?  Pit importers against exporters again.  That’s the outcome of the existing border adjustment tax being proposed in the House today.

Roll back the regulations once “such a system is in place?”  Really?  Can Shultz or Baker name two programs that have been rolled back once they’ve been enacted?  They’re not that naïve.

This is just more Progressive foolishness, now being spouted by two fine gentlemen who’re past their age of usefulness.

What Should a Health Plan Cover?

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Anna Wilde Mathews wondered about that in her piece in The Wall Street Journal.  First, a couple of asides.  Notice the tacit acknowledgment that we have no health insurance plans available.  That industry was eliminated in toto by Obamacare, which replaced the industry with a Federally mandated, publicly/privately funded health coverage welfare program.  Next, notice the tacit assumption in the piece’s subhead: that the law should mandate business decisions.

To the piece itself:

The 2010 health law created a new set of federal requirements for plans sold to individuals and small businesses, including a list of 10 benefits, among them prescription drugs, mental-health services and laboratory tests. It also mandated that plans cover preventive services such as vaccinations at no cost to enrollees.

Along with women’s contraceptives (but not men’s…) at no cost to enrollees or the businesses providing the plans.

Trimming certain benefit categories from the required list could sharply raise the cost of those benefits for consumers who opt to have them.

That’s Mathews’ claim, anyway.  What she’s chosen to ignore is that a competitive, free market would sharply reduce the cost of most of those “benefits.”  What she’s also chosen to ignore is that eliminating the mandatory nature of the coverages would sharply lower the cost to millions of others who don’t need those “benefits,” but who must pay for them anyway—even if they’re included in a plan at “no cost to enrollees,” a fiction cynically foisted onto us by the Obama administration.  Enrollees certainly are paying for them; the added cost is simply hidden in a higher overall price.  And the rest of us are paying for them, too, in premiums similarly elevated to pay for that required coverage and/or in the taxes we must pay to pay for the subsidy.

It’s certainly true that other, rarer or more expensive to treat problems would have higher prices, but there’s never been a case made for why Government should pay for these ahead of family, friends, charity, church, local community—the usual suspects.

Plans with skinnier coverage can carry lower premiums, actuaries say. But as with everything in health care, that comes with a trade-off.

NSS.  But those trade-off decisions belong to the individual, not to Government.