Monthly Archives: January 2012

Made in Germany

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The EU is at it again, still trying to manage economies, and this time they’re taking on the German powerhouse whose piggy bank they want to raid directly to bail out the rest of Continental Europe.

Spiegel International Online reports

Whether it’s attached to a car, a dish washer or a pepper grinder, the “Made in Germany” label is key to selling products made in the country. But if the European Union has its way, goods carrying the tag will soon have to comply with higher standards….

EU Commissioner Algirdas Semeta plans to restrict the sought-after “Made in Germany” label to products where at least 45 percent of the value content comes from Germany. Until now, EU rules defined the country of origin as the place where “the last substantial, economically justified processing” took place.

Spiegel reports further that a part of the beef is that, under the current regulatory régime,  products could be produced almost entirely outside of Germany (for instance), and only the finishing touches applied in the domestic factory.  This is an exaggeration, or it would be in a truly open, information-flowing free market—something that’s been anathema to the Europeans for decades, and which lack underlies the current European economic malaise.

In the modern globally integrated economy, “Made in Germany/France/United States/etc” has been a bit of a misnomer for a long time: “Assembled in…” would be more accurate.  German—and American—automobiles, for instance, are built up from parts made in a number of foreign locations where labor is cheaper and necessary supplies, especially commodity supplies (iron, plastics, and so on), are nearer by and so cheaper to obtain.  Then the parts are shipped for final assembly in Germany or the US.  To do the whole thing overseas, only applying the last coat of paint in the domestic factory, and claiming that to be domestically made would, at best, irritate an informed market’s public, and it would eliminate the value of any “Made in” claim.  Businessmen aren’t smarter than their customers, nor need they be better informed.

Moreover, in the near term, and in perpetuity, bureaucratic imperatives involved in the record keeping needed at all “production stages to establish where most of the value of the product was created,” assuming “most of the value” could be defined adequately, will only increase production costs—and so costs to the consumer who’s being “protected” by this foolishness.

EU leadership is both exposing its jealousy of German success and demonstrating once again how the euro zone is too fractionated to support a common currency and how the EU itself is too fractionated to support the tighter integration that many want and that the Brits have correctly eschewed.  And the European political class is demonstrating once again its contempt for the intelligence and wisdom of the common man whom it purports to represent.

On Shrinking Government

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This should be, in principle, an Obama move that we can support.  Of course, the devil will be in the details, and this “shrinkage” is pretty trivial—only a reduction of 2,000, or so, civil servants out of a total Federal work force of nearly 4.5 million, and a cost reduction of walking around money—$3 billion over 10 years.  But it’s a start, and if we wait until the last step has been mapped out to a gnat’s patootie, the journey will never start.

What the President wants to do in the present case is consolidate some unnamed Commerce “core business functions” with the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency.

His idea has been under consideration for some time, but one objection to it is one that this poor, dumb Texas boy doesn’t understand.  Those earlier thoughts had also included moving the NOAA from Commerce to Interior, but there was “resistance internally to moving it to the Interior Department.”  The boss said to move, so off they go.  Where’s the problem?

Maybe, while we’re at it, we could also eliminate the EPA and the President’s Office of Legal Counsel.  Oh, wait….

The mechanics proposed are interesting, too, and are the real reason for my initial support (subject to satisfaction with the details, as always).  With this initial consolidation permission, the bill if passed, would let the President propose other reorganizations of his Executive Branch and require the Congress to give it an un-amended, up or down vote within 90 days.  Thus, the President gets more flexibility over the structure of his Branch, and the Congress retains its present power over the structure of the Federal government, including the Executive Branch.

However, the ability for either party to stall and to posture for political gain would become much more difficult.  And the members of Congress would have to be on the public record, in front of their constituents, for their individual decisions on the reorgs.  Moreover, amendments remain eminently possible: the pre-proposal dickerings that should be occurring anyway would get objections worked out, and the necessary modifications to satisfy the reasons for a down vote would constitute such amendments as well.

This wants a close look, devoid of political imperatives on both sides.

Progressive “Fact” Reporting

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It would seem that Progressives and facts only cross paths accidentally.  Power Line has this exchange between the evil Koch Company’s Director of Corporate Communication for Koch Companies Public Sector, LLC, Melissa Cohlmia and The New Yorker‘s Deputy Editor, Pamela Maffei McCarthy.  It’s a long-ish post, but it’s well worth the read.

In summary, though, The New Yorker seems incapable of recognizing a fact, even when confronted with one in short, simple words.  Moreover, while pretending to be willing to correct another error, The New Yorker openly refuses to do so, unless the victim of their error supplies other facts to satisfy the magazine’s disinegenuous fishing expedition.

I have to wonder why anyone would waste the money on a The New Yorker subscription.

Federal Subsidies

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The Department of Education, in its First Year Progress press release concerning the Federal Race to the Top subsidy program, asserts

The 12 state-specific reports provide summaries of accomplishments made and setbacks experienced by states in pursuing reforms around Race to the Top’s four assurance areas—raising academic standards, building robust data systems to improve instruction, supporting great teachers and school leaders….

That’s a lot of bureaucracy, without a lot of actual performance.  To be sure, the rest of the claim from the DoE excerpt above includes “…and turning around persistently low-performing schools.”  Let’s look at DoE’s own individual reports to see how accurate that claim is, along with their introductory claim that

[t]hese twelve states have acted with courage and commitment in taking on ambitious education reform. Their year one work has helped lay the foundation for long-term, statewide improvements centered on doing what’s best for students.

DoE’s assessments of the first year belie those rosy words.  The Wall Street Journal reports that three of those 12 states have been explicitly called out for failure to perform in accordance with the promises they made in order to get this Federal subsidy.

U.S. Secretary of Education Arne Duncan warned New York state…to deliver its promise to overhaul teacher evaluations and develop a comprehensive student data-tracking system or risk losing hundreds of millions of dollars in federal grants.

and

…Hawaii…is now required to get federal approval before spending any of the $75 million it won.

and

Florida has also been criticized.

Florida was criticized for being seriously behind its promised time and budget schedule for getting on with its promised actions.  In fact, Florida has simply issued a string of excuses so weak that even Duncan couldn’t look past them.

I don’t expect perfection out of a government program, or any other human endeavor.  But I do expect far better performance from a government program, funded as it necessarily is, with our money—in this case, with $700 million of our money.  However, as Joy Pullman notes in The Weekly Standard, “the federal government isn’t good at a great many things—particularly education.”

Or at getting efficient results through subsidies generally.

Incompetence

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I’ve written before on Federal racism.  In the present case, though the racism may seem apparent, it looks a lot like plain and simple incompetence, instead.  Eric Falkenstein offers this hors d’oeuvre, quoting from a Wall Street Journal article:

Justice says that out of 4.4 million loans approved between 2004 and 2008, 525,000 went to African-American or Hispanic borrowers, of which some 210,000 paid higher fees or rates than the average paid by similarly situated “non-Hispanic White Borrowers.”

It goes without saying large numbers of white borrowers also paid higher than the average of all whites. It also goes without saying large numbers of minorities didn’t pay higher rates, though Justice isn’t interested in the average of what minorities paid, only that some minorities paid higher than the average of whites.

If this sounds like statistical malpractice, it’s apparently habitual. In a rare instance where defendants fought back, two Los Angeles car dealers recently won dismissal of a complaint accusing them of favoring Asian over Hispanic car buyers because 600 of 1,300 “non-Asian” buyers were charged higher loan terms than the average of Asian buyers. Notice that 600 is about half of 1,300. As the dealers noted, Justice’s claim amounts to an assertion “half of one group is above average, which means that the other half is below average.”

The WSJ article itself (also linked to in Falkenstein’s post) goes on:

…experiments…suggest salespeople make generalizations about which groups are likely to bargain hardest.  Even black salespeople have been found to lead off with a higher quote when meeting a black shopper.  Women are said to be less aggressive bargainers than men.  Other generalizations suggest themselves….

Who knows why these differences turn up in the data, but no law of nature says every cultural subgroup must be equal in its determination to cadge every nickel of advantage in every transaction.

What’s the outcome of these sorts of things?  Taking a just concluded DoJ beef against Bank of America’s Countrywide bank as an example,

Bank of America (without admitting fault) will hand over $335 million so Justice can distribute money to African-Americans and Hispanics (though not whites) who were charged more than the white average, with any surplus funds explicitly reserved for donations to…groups that typically align with the Democratic Party.

However, it’s not just DoJ idiocy.  This is the stuff on which affirmative action programs are built.  And it’s quite apart from the soft bigotry that says the victimsbeneficiaries of affirmative action programs are simply, of their nature, so incapable themselves that they must be given preferential treatment in order to keep up.

Is this actually evidence of deliberate nefariousness?  The cynic in me is conflicted.  On the one hand, it’s plainly racism by DoJ.  But on the other hand, DoJ seems entirely too incompetent to be this racist.