Monthly Archives: January 2016

More Regulations

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Jason Godsil, founder and CEO of Godsil Motorcars, is building a new car that will run on natural gas; he’s in the design and prototyping stage. Joel Feder, of MotorAuthority, asked this question and got an answer that should be embarrassing to the Obama administration and its predecessors.

What’s the largest unforeseen issue you’ve encountered?

Crash tests and EPA certifications will need to be done but the level that will be required for a fully certified vehicle was an eye opener. … Do you want to use a custom headlight that isn’t used currently? Sure, we can look at that for $300,000. Do you want to have multiple options for seat belt colors? Sure, that will be $30,000 for the test of each color. It’s crazy! That is why other countries get some car models that are never for sale here in America.

Indeed.

There was this little tidbit in that conversation, too [emphasis added].

When do you realistically think the first production car will hit the street?

The ideal timeline is that we could debut a prototype, using the prototype engine we are working on now, in about eight-to-ten months after we finalize with our investment partners. With the development and testing of the powertrain and all the certifications that will be needed, we envision a production car hitting the streets about three-to-four years later.

This is just…amazing.

Right Idea, Wrong Answer

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Congressman David Jolly (R, FL) had a piece on Fox News in which he lamented the amount of time Congressmen spend raising money for their future campaigns for Congress.

He’s right. Congressmen do spend too much time doing this.

The Democratic Congressional Campaign Committee recently greeted an incoming crop of freshmen with a prescribed schedule that highlighted fundraising “Call Time” of four hours a day as the chief priority for any new member of Congress. The actual time they suggested working in Congress each day: just two hours!

It’s not just Democrats, though; Republicans do this, too.

However.

I’m introducing legislation called “The Stop Act.” It simply says that that no member of Congress may personally ask you for money.

This does not mean that you as a citizen cannot choose to contribute to a candidate. It is your constitutional right of political speech to do so.

And

We can’t have a part‐time Congress in a full‐time world.

He’s mistaken here. Congressmen don’t need to be banned from personally asking me for money. If they were, each Congressman would only hire a staffer to do it for him—driving up the need for money. What does need to be addressed, and not necessarily with a new law, is the incentive to raise money.

Why is it so expensive to be a Congressman? A couple reasons, far from the only ones (I’m eliding inflated campaigning costs), are the high cost of living in DC and the surrounding area, and the cost of travel. Modern communications technology, though, greatly reduces (though it does not eliminate) the need for Congressmen to be personally present all the time.

Another reason is the existence of a full-time Congress. We don’t need a full-time Congress, even in a full-time world, though Congressmen do need to be fully present and fully focused during part-time Congresses. Congressmen think the only way to measure how much they’re doing for their constituents is by the number of laws they get passed. A full-time Congress simply emphasizes that pressure.

In fact, though, the best measure of what they’re doing for their constituents is how many law proposals they successfully block. The best measure is how effectively they’re keeping government out of the lives of their constituents, not how successfully they’re injecting government into those lives via another law. Changing their mindset would greatly reduce the incentive to raise money.

This proposed law is an example of misplaced incentive.

EU Stimulus

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Mario Draghi, of the European Central Bank, wants to keep stimulus efforts going, even with low oil and gas prices (even in Europe) having a dragging effect on inflation. Here’s the kicker, though:

Central bankers sometimes ignore falls in oil and food prices, arguing they are highly volatile and often beyond their influence because they are formed by global market forces. But Mr Draghi said the governing council is worried that a long period of low oil prices may lead to declines in the prices of other goods and services, and perhaps wages, through what central bankers term “second-round effects.”

I’ll disregard the premise that a long period of low oil prices is inherently deflationary, rather than just leading to a period of adjustment to a new, lower-cost equilibrium. My question for Draghi is what’s the down side of wages falling in a deflationary environment, even one that is merely a move to a lower-cost equilibrium?

Sure, no one likes to see a smaller paycheck, but this is a political question, not an economic one. However, if prices of goods and services are falling, no buying power is lost with that smaller paycheck. On the other hand, if wages don’t fall more or less along with those other prices, the outcome is a higher wage cost for the employer than the market value of what he and his employees produce. And that leads to job loss. Now we have a (new, relatively) high paycheck that has no value at all because the out of work ex-employee isn’t getting it.

Further, if I’m wrong, and a long period of low oil prices is, in fact, inherently deflationary, the producers can’t sell at all, as the buyers simply wait for prices to fall further before buying. If wages don’t fall commensurately in this environment, not only will jobs be lost, but many producers, unable to sell, will go out of business. And all of that company’s jobs will be lost.

In either case, employment is the second-round effect with which bankers like Draghi should concern themselves.

Well, Of Course

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…the Environmental Protection Agency’s Office of Inspector General on Wednesday effectively cleared the EPA of allegations of bias in its quest to preemptively kill a proposed mine in southwest Alaska.

The EPA’s IG—which works for the EPA’s Administrator—reached this conclusion even though it was “unable” (it claimed) to get hold of two years’ worth of emails from a key, carefully unnamed, retired employee. The IG claims in the report to have subpoenaed that worthy, but there’s no indication the IG ever bothered even to try to enforce the subpoena.

What else could we expect from an “inspection” function that works for, and is beholden to, the head of the agency it’s putatively inspecting?

Arrogance of the PRC

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Tsai Ing-wen, of the staunchly pro-independence Democratic Progressive Party, resoundingly won election to be President of the Republic of China. The People’s Republic of China was not happy; the PRC has long wanted to get the island nation back under the mainland’s thumb.

In keeping with that, Li Zhenguang of the PRC’s Beijing Union University’s Institute of Taiwan Studies is insisting that

Beijing would be in no rush to engage with Ms Tsai. Rather…”It’s up to Tsai Ing-wen to decide whether she needs to initiate dialogue with the mainland. It’s up to her to find a formulation on cross-Strait ties that’s acceptable to the mainland.”

PRC arrogance has led them to get this backwards. It’s up to Xi Jinping, PRC President, to decide whether he wants honest relations with the RoC. It’s up to Xi to develop a cross-Strait policy that works for the RoC.