Monthly Archives: July 2016

The Other Supreme Court That’s in the Election Balance

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This one is the National Labor Relations Board, a Democrat/union-dominated entity that is nearly the last word on what employers are allowed and required to do.

It’s the NLRB that threatened Boeing with labor unrest expensive lawsuits for its effrontery in wanting to build an aircraft manufacturing plant in the right-to-work state of South Carolina and forced Boeing to keep primary manufacturing in the union state of Washington.

It’s the NLRB that decided that franchise employees actually are jointly employed by the franchise—a McDonald’s burger joint, for instance—and the franchisor—McDonald’s corporate headquarters, for instance—a complete rewrite of the prior NLRB view of franchise employment.

It’s the NLRB that keeps pushing for card-checks at union elections whose purpose is to have the employees decide whether they want a union to represent them, a move designed solely to eliminate heretofore secret ballots in those elections.

It’s the NLRB that has pushed through, regarding those elections, the right of unions to demand an election within 30 days of the start of their public efforts to “organize” a company but without the company’s opportunity to respond in those 30 days—or even to begin to respond to the unions’ non-public efforts to organize.

It’s the NLRB that pushed through its “Persuader” Rule which requires employers to identify publicly all sources of consultation or advice the employer might have contacted—however peripherally—for thoughts on how to deal with unions.

The list goes on.  And on.

The NLRB already is dominated by a Democrat/union majority, and it will only get worse with a Democratic Party President and a Democratic Party-owned Senate making the appointments to the five-member board.

Labor Costs Up, Prices Up

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Starbucks is sharply raising its total compensation for its employees in the Seattle area.  Total compensation from wages and stock options is going up some 5% to 15%.  Carefully buried in the very last paragraph of The Seattle Times piece is this little nugget:

Last July, Starbucks raised its prices 3.5 times as much in Seattle as in the rest of the country.  It raised the price of its typical coffeeshop purchase across the U.S. by 1%, but in Seattle by 3.5%.

Hmm….

Economy and Integrity

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The PRC is demonstrating the relationship between integrity and a centrally managed economy.

When China let Dongbei Special Steel Group default on a bond payment this spring, it was supposed to mark a new determination to allow long-coddled state industries to suffer the consequences of their bad decisions.

Three months later, the result has been…nothing. The ailing steel mill has missed five more payments on its $6 billion in debt, but has yet to formally file for the equivalent of bankruptcy protection, close unproductive units, or start a restructuring of its operations.

Nothing has happened here because the PRC has chosen to let short-term concerns about employment and what the government’s ruling Communist Party of China defines as “growth” to take precedence over concerns about integrity, contractual commitments, and actually paying creditors what’s owed them.  Which destroys anything that might flow from the short-term into long-term growth and prosperity.  This is all so that Xi Jinping and his CPC cronies can look good for the near term.

These business decisions not to pay, coupled with the government’s decisions not to allow market consequences and to not apply government sanctions for such unilateral contract abrogations, give a clear indication of the level of integrity extant in this particular centrally managed economy.

The reputation that results from such systemic lack of integrity, too, can only make it harder for any funding source to lend any more money, and it can only drive up the cost of such loans and borrowings as may still occur.  Such costs must rise in order to account for the high likelihood of continued consequence-free reneging defaulting on debt agreements.  After all, “default” in this kind of environment is a misnomer.  Refusal to pay is less a default than it is a playing of the lender for a sucker.

Permanent Court of Arbitration Demurs

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This Hague Court has been hearing the Philippines’ complaint about the People’s Republic of China’s invasion and seizure of the South China Sea, an invasion that occurred at the direct and deliberate expense of the Philippines, Vietnam, Brunei, and other nations rimming this Sea.  It ruled against the PRC, publishing its unanimous ruling last Tuesday.  In its essence, the Court has ruled that the PRC’s Nine-Dash Line, which the PRC used to define the extent of its manufactured historical claim…couldn’t hold water.

China’s claims to historic and economic rights in most of the South China Sea have no legal basis….

And even further,

China [isn’t] entitled to an exclusive economic zone, or EEZ, extending up to 200 nautical miles from any outcrop in the Spratlys archipelago including the largest, Itu Aba, which is claimed by China but controlled by Taiwan.

The EEZ aspect of the ruling is important in another way, too: it renders the PRC’s terraforming, including its military base building illegal.

This will have implications, too, for the legality of PRC behavior and military buildup in the Paracel Islands off the Vietnamese coast and which are claimed by Vietnam and for PRC occupation efforts in Scarborough Shoal, which are Philippine islands.

With the PRC’s Foreign Minister’s office officially rejecting the Court’s ruling, we now can expect an accelerated military buildup throughout the Sea and more aggressive behavior by the PRC’s navy and air force.

Need More Regulation

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That’s the meme of Federal Reserve Board Governor Daniel Turillo, the Fed’s reputed point man for regulation.  Turillo is claiming that

the lessons of the 2008 financial crisis won’t be complete without better regulation of short-term funding both inside and outside the banking system.

Naturally, the regulatory point man is going to see everything as a regulatory need.

OK, since more regulations are the solution, here’s a suggestion.

How about some regulations prohibiting the Federal government and the Federal Reserve Bank from using credit and lending as social engineering tools?