Tag Archives: markets

Trade and the People’s Republic of China

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The Wall Street Journal wrote in its Thursday edition that the US was “refusing” to resume trade negotiations with the PRC until the latter made a formal offer to us.  That’s a bit of a misnomer, though, since there’s nothing about which to negotiate until the PRC makes an offer.  Absent that, any discussion about trade would be just idle musings over an afternoon tea, a whiling away of some time between more important things.

A couple of other things jumped out at me in that article, too.

For Beijing, making a formal offer presents a number of risks, according to individuals briefed by the Chinese. First, it would reveal their negotiating position. Second, Beijing fears that Mr Trump could make any offer public in a tweet or statement as a way to lock in any concessions by China.

First, honest negotiating requires positions being known to both participants.  If the PRC wants to keep its position hidden, it could only be to keep moving its demands, keep adjusting its goals as we make offers more and more in its direction.

Second, if the PRC doesn’t want to commit to this or that concession—or to any other aspect of its negotiating position—it doesn’t matter whether any of that is public.  The nation wants to be able to walk away from any of its negotiating commitments at its convenience, and that makes the PRC untrustworthy.

As the WSJ noted,

There is history behind Beijing’s concerns. During negotiations over China’s entry to the World Trade Organization in 1999, President Clinton turned down an offer by China’s premier at the time, Zhu Rongji, that included deep concessions and a reorganization of the Chinese economy. The Clinton administration made Mr Zhu’s offer public, hoping to prevent the Chinese from backsliding. Instead, Mr Zhu was pilloried at home by hard-liners, and it took months of negotiations to finally convince China to accept a deal similar to the one it initially offered.

There are two lessons from this bit of history that we still need to learn.  The first is that the PRC’s intent of walking away from its commitments even as they’re made—that hardliner pillorying—is a long-standing policy of dishonesty.  The second lesson is that, in the realization, the PRC walked away from that “similar deal;” it has no concessions from the deal extant and no serious reorganization of its economy even tried.

The Trump administration is wise to waste no time on empty negotiations over a chimera.  It’s chancy enough to negotiate a hard proposal with them, but that’s still infinitely preferable to negotiating PRC fog.

A Health Care Coverage Step

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Alexander Acosta, Steven Mnuchin, and Alex Azar, respectively Secretaries of Labor, Treasury, and Health and Human Services, are in the process of offering one.  They’re putting together a rule that would expand HRAs, Health Reimbursement Arrangements.  These are plans that allow employers to reimburse employees for certain qualified health expenses.  Their expansion consists of two parts:

  • permit[ting] employers to offer HRAs to reimburse employees for health insurance purchased in the individual market—allowing employers to provide a contribution as significant as they would have made for the premiums of a traditional employer-sponsored plan.
  • allow[ing] employers that offer a traditional group plan to offer an HRA of up to $1,800 a year to reimburse an employee for certain qualified medical expenses such as stand-alone dental benefits.

Both of these parts would be done on an income tax-free basis for the employee.

Of course, this would compete against Obamacare, and that’s anathema for the Progressive-Democrats in the House and Senate.

Their ire notwithstanding, the rule would be that step toward competition, and competition is one of the ways of making health care and health care coverage less economically onerous to a family.

Carbon Dioxide and Bias at the EPA

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Cass Sunstein thinks there’s bias in the Trump EPA in the way the agency handles CO2.  He’s right, but not in the way he thinks.

The only way to solve the climate-change problem, and to prevent massive harm in the US, is for all the world’s big emitters [of CO2] to agree to take account of the global damage.

There’s the heart of the political concern and a demonstration of Sunstein’s bias.

Carbon’s role in the environment is its contribution to acid rain through its role as a constituent of CO2. That problem has been solved, years ago.

CO2’s role in climate is demonstrated by ice cores that show atmospheric CO2 rises after planetary warming has begun and by longer records that show, over geologic time, a lack of correlation between atmospheric CO2 and planetary temperature. That problem does not exist.

Finally, there is some overlap between environment and climate, but they are not interchangeable terms, even though Sunstein uses them so.

Pharma and Drug Prices

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The Trump administration has proposed a rule that would require companies advertising drugs to provide the list prices of those drugs in their advertising—including their television advertising.  Big Pharma is opposed, and wants instead to be left to voluntarily provide pricing information by having links in their advertising that would guide folks to a separate Web site.

I sympathize with Big Pharma on this. Government regulation already is out of hand; the Trump administration is reducing that, and this is an unnecessary addition.

There is an alternative.

The FDA could compile a list of drug list prices; region-by-region retail prices at places like Walgreens, CVS, Walmart, amazon (note that this is not an exhaustive list of retailers); and the tier within which each drug sits.  This list then could be made available on the FDA’s Web site home page above the fold.

This more central source, in addition to encouraging competition among drug companies, would encourage more competition among retailers.

Exxon’s Carbon Tax

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Exxon Mobil Corp is throwing $1 million at the move to produce a national carbon tax.

Exxon’s move is an attempt to manage what it sees as the risk of a similar movement in the US, in ways that it hopes will simplify requirements on its industry….
Exxon sees a carbon tax as an alternative to patchwork regulations, putting one cost on all carbon emitters nationwide, eliminating regulatory uncertainty….

On the contrary, Exxon is looking for short-term competitive political advantage at the expense of long-term economic—real—advantage.  That’s unfortunate.

It’s also unfortunate because, leaving aside the question of whether a carbon tax even would work as claimed, the scheme is based on the false premise that increasing atmospheric CO2 somehow is bad.  Atmospheric CO2 is, in fact, critical—as in can’t live without it—plant food.  In addition to that small fact, ice core samples from both ends of the earth—Greenland and Antarctica—reaching back 400,000 years indicate that rising atmospheric CO2, far from being a harbinger of bad warming to come, lags planetary warming by several hundred years.  The rise confirms that a cold planet is warming out of its Ice Age, and life is recovering and exhaling increasing amounts of CO2 into the atmosphere.