Tag Archives: markets

A Thought on Brexit

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Supposedly, Great Britain and the EU are close to agreement on a deal governing the former’s departure from the latter. Absent a deal, Great Britain will leave the EU on its own terms.  That last is, I maintain, the best way out.

However.

There remain, as of Wednesday morning, three sticking points to any sort of deal, according to EU Chief Negotiator Michel Barnier.

  • Customs arrangements for the island of Ireland
  • The issue of giving Northern Irish authorities a greater say over regulatory arrangements, and the ability to veto them
  • Guarantees of a level playing field—that Britain will not be at an unfair advantage when it comes to business regulation

Customs arrangements for the entire island—even though one part of the island is a sovereign nation and EU member and the other part is a member country of the United Kingdom.  There should be nothing to discuss here. A major reason for the successful Leave vote was for Great Britain to regain control over its own borders—including its national border across the island of Ireland.

Giving Northern Ireland—that part of Great Britain—veto authority over the national government’s “regulatory arrangements”—devolution hasn’t gone that far, nor should it. This sticking point is nothing more than a naked early step in dismantling Great Britain in punishment for its effrontery in voting to leave the Holy Brussels Empire.

Guarantees of a level playing field—Great Britain is justified in seeking such guarantees, but it won’t get them, unless it accedes to what Brussels will define as “fair.”

These…sticking points…illustrate with crystalline clarity the EU’s bad faith in dealing with Great Britain—and they illustrate with equal clarity why a no-deal-Brexit is optimal for Great Britain.

Unfortunately, British PM Boris Johnson, in an agreement just concluded with Barnier, appears to have surrendered to the EU on the matter of Great Britain’s border with the Republic of Ireland:

Northern Ireland will remain part of the UK’s customs territory and will be an entry point into the EU’s single market. No customs checks will be done on the border between [the Republic of] Ireland and Northern Ireland.

Johnson surrendered on the second sticking point, also:

The Northern Irish assembly will have to give consent after Brexit for the region’s continued alignment with the EU regulatory regime every four years.

This cedes control of the British border to the EU, with all that that portends for the nation’s future. British sovereignty now hangs, ironically, on whether Labour MFWIC Jeremy Corbyn can deliver his party’s no vote.  Nigel Farage, Brexit Party head and strange bedfellow of Corbyn’s on this, also has come out against the deal, as have the Democratic Unionist Party, which in coalition with the Tories give Johnson a one-vote majority on most things, and the Scottish National Party, which have been NeverLeaveNoWay all along.

It could be, of course, that Johnson has included these poison pills so as to get this last minute agreement rejected by Parliament, and he can get his no-deal exit from the EU. That raises the question, though, of whether Johnson is that Machiavellian.

Johnson wants an up-or-down vote from Parliament Saturday.

Lack of Understanding

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This is demonstrated in the lead paragraph of a recent Wall Street Journal article.

Chief executives are taking vocal stands on issues like gun control, climate change, and immigration, but global affairs bring a different complexity and calculation, especially for companies doing business in China*.

After all,

In the aftermath of Houston Rockets general manager Daryl Morey’s now-deleted tweet, the National Basketball Association has found the consequences of even implicitly criticizing Chinese policy can be swift and sizable.

Not to pick on the NBA in particular (although its behavior has been especially public, cowardly, and so reprehensible), Apple and Alphabet, among lots of others, also have sacrificed principle for company “security” in the PRC, while favoring yuan, also, over principle.

No, taking principled positions don’t get complexified by the environment in which they’re taken. The fundamental tenets of ethics, of morality, are universal and constant; the only adjustments are in the manner of their implementation.  There’s nothing at all complex about that. Company personnel are either principled, ethical, moral, or they are not. These are not matters of situation or convenience.

And this:

Executives have to thread a needle when a company’s commercial and financial interests clash with the CEO’s personal values and the cultural values of an enterprise and its home country, said Jeffrey Sonnenfeld, a leadership expert at the Yale School of Management. “One of the rarely discussed downsides of globalization is you get caught in those crosscurrents,” he said.

Those “cross-currents” are irrelevant. Either the CEO or the enterprise have principles worth standing by and sacrificing for, or the CEO or the enterprise have no principles. It’s that simple.

Another misunderstanding is this one by Paul Argenti, Dartmouth College’s Tuck School of Business Professor of Corporate Communication:

The job of a CEO is not to save the world or make the world safe for democracy[.]

No, but it is a core part of his job to be, at all times and in all circumstances, ethical, moral, and not hypocritical.  An example of business’ glaring hypocrisy: the Business Roundtable. That group is carefully and with deliberation silent on the NBA’s, et al., meek acquiescence to the PRC’s tyrants.

One last misunderstanding, this one by Rick Wartzman, Drucker Institute’s Director of the KH Moon Center for a Functioning Society [paraphrased by WSJ]:

The fracas sparked by ephemeral statements can distract from more substantive questions of social responsibility[.]

And

“What concerns me is whether statements, while important, become a substitute for the more meaningful work around what it means to be a responsible company and take care of all your stakeholders[.]”

Again, no. The only way such things can distract is if the statement maker chooses to be distracted. Staying focused on the business of the company in such a circumstance may be hard to do, but being hard means it’s eminently possible.

 

*The WSJ, like most of the NLMSM, refers to the People’s Republic of China as though it were the one and only. They ignore the nation just across a narrow straight from the mainland, the Republic of China that sits on the island of Taiwan.

In Which Zuckerberg is Right

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Attorney General William Barr has taken up ex-FBI Director James Comey’s battle for government backdoors into private citizens’ encrypted private messages.  Apple MFWIC Tim Cook won a similar fight regarding iPhone passwords and a demand that government should be allowed backdoors into those, and Comey’s FBI was shown to have been dissembling about that difficulty by the speed with which a contractor the FBI hired successfully broke into an iPhone the FBI had confiscated.

Now Barr has broadened the fight, demanding Facebook give Government backdoors into Facebook’s planned rollout of encryption for its messaging services.  He wants Facebook, too, to hold off on its rollout until Government is satisfied it has such backdoors.  Barr’s cynically misleading plaint includes this tearjerker:

Companies cannot operate with impunity where lives and the safety of our children is at stake, and if Mr Zuckerberg really has a credible plan to protect Facebook’s more than two billion users it’s time he let us know what it is[.]

Zuckerberg has been quite clear on what it is.  It’s facilitating private citizens’ ability to encrypt their private messages on Facebook’s platform.  Many of whom live in outright tryannies, others of whom live in so-far free nations, but whose government officials want to be able to pierce the protections of enforceable privacy at will.

The concern that bad guys, terrorists as well as common criminals, will take advantage of such encryption to evade government law enforcement facilities is entirely valid.  Two things about that, though. First is Ben Franklin’s remark about the relationship between safety and security.

The other is for law enforcement to do better with their own IT skills and with their own human policing skills.  Just as the FBI did in cracking that iPhone after Apple refused to give break-in assistance to Government.

“Stand for Something”

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Howard Silver, commissioner of the National Basketball Association, in the aftermath of a tweet by Houston Rockets General Manager Daryl Morey,said in a CNN interview cited by The Wall Street Journal‘s Notable & Quotable,

I think in this day and age, you really do have to stand for something[.]

This is after Rockets players apologized to the PRC for their GM’s tweet, Rockets owner Tilman Fertitta ran away from his GM’s tweet,

Listen….@dmorey does NOT speak for the @HoustonRockets.

and the NBA as a whole affirmed their preference for PRC money over honor.

The NBA really does have to stand for something.

Absolutely.  Except when the NBA comes in for opprobrium from the PRC over a tweet supporting the citizens of Hong Kong. Then the league and its players and team management cower down.

Stand for freedom for the citizens of Hong Kong? They can’t: there’s no headroom under the bed.

WTO, Tariffs, and the EU

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The WTO ruled in favor of the US regarding a 15-yr-old dispute over French subsidies of Airbus that directly harmed The Boeing Company, to the tune of $7.5 billion.  The ruling allows the US to impose those $7.5 billion as tariffs, and the Office of the US Trade Representative says that we’ll apply

a 10% tariff on aircraft imported from Europe and apply a 25% import tax on other agricultural and industrial items on October 18….

France says they’ll respond with retaliatory tariffs if we go through with this.  French Finance Minister Bruno Le Maire:

If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions[.]

EU Trade Commissioner Cecilia Malmstrom agrees with Le Maire:

If the US decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same[.]

Couple things about that.  One is that the US has already proposed both no-tariff-at-all and no-tariffs-on-autos trade régimes, but the EU has refused to discuss either, despite then-European Commission President Jean-Claude Juncker’s promise to take the matters up.

The other thing is that, under WTO rules, it’s illegal to apply retaliatory tariffs in response to tariffs applied pursuant to a WTO judgment.  The French and EU threats regarding the WTO-permitted tariffs on the Airbus affair clearly demonstrate EU (and French) bad faith by themselves. Coupled, though, with the Eu’s refusal to discuss the no-tariff offers already on the table, it’s clear that the EU has no intention at all in dealing honestly with us on trade.

Our own effort at good-faith negotiation is just as clear:

The WTO had approved up to 100% tariffs, but the US decided to limit the tax.