Author Archives: eehines

The Editors Miss Again

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This time, the editors of The Wall Street Journal waxed excited over President Donald Trump’s (R) responses to the People’s Republic of China President Xi Jinping’s export blocks controls on rare earths and related materials aimed at the United States.

First things first.

None of this [trade war] is good for the US and global economies.

The editors appear to be writing from a fantasy garret office. In what war do they imagine that one side suffers no harm at all? In the real world, wars damage all participants.

Then there’s this from the editors’ swampish imaginations.

Mr Trump started the fun by announcing on social media midday Friday that “some very strange things are happening in China!” He said Beijing has turned “very hostile” and is sending letters to the world announcing tighter controls on the export of “every element of production having to do with” rare-earth minerals.

There’s that fantastical editorial garret world again. This latest round was begun by the PRC’s Xi when he imposed those controls on rare-earths, processed rare earths, and any product from wherever exported that contains rare earth materials comprising 0.1% or more of the product’s value. Trump is merely responding to that attack rather than meekly lying down and forcing us to accept it.

But back up a bit, too, to a time of which the long-term memories of the editors seem broadly deficient. The PRC has been inflicting its trade war on us for years and years. It has been stealing our technologies through espionage and hacking.

It has been forcing technology transfers from private enterprises as a condition of their doing business in the PRC, a condition only slightly eased over the ensuing years.

It has been forcing private enterprises to accept as partners PRC-domiciled companies as a condition of those foreign enterprises doing business in the PRC, a condition only slightly eased over the ensuing years.

It has demanded PRC government-approved back doors into foreign companies’ operating software as a condition of those foreign enterprises doing business in the PRC, a condition only slightly eased over the ensuing years.

It has demanded PRC apparatchiks in foreign companies’ management teams operating PRC-domiciled arms, a requirement only slightly eased over the ensuing years.

The PRC has begun dumping its industrial output on the international market at below production cost pricing nominally to shore up the economic malaise of its own overproduction, but in truth to bankrupt other nations’ domestic industrial producers—including in the US—and so gain market share to the point of other nations’ dependency, especially ours, on PRC output.

Trade wars aren’t easy, as the editors noted in their headline. But trade wars are made the harder when folks who should know better don’t even understand the war actually progress.

30-Year Mortgages

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Patrick Brenner, Southwest Public Policy Institute President, thinks these have been terrible ideas. I disagree. Central to his thesis this:

The 30-year mortgage locked families into a lifetime of interest payments that cost the borrower far more than the original price.

However, he never mentions a Critical Item that also obtained throughout his period of interest, the post-WWII mobility, both geographically and economically upward, of the American working force/homeowner population.

Two personal examples illustrate, and I claim our examples are typical, not unusual.

When my wife and I were starting out, as Lieutenants in the USAF, we were able to buy our first house courtesy of one of those “dangerous” shorter term balloon payment loans. We were highly mobile as USAF officers, but that mobility, as I claim, wasn’t unusual—the civilian work force also was highly mobile, and that mobility allowed homeowners to sell their homes, pursuant to their mobility, before the balloon came due, and buy another home in their new location, now with a variable rate loan (fixed for a period of years, then floating with the market), 15-year fixed mortgage, or an evil 30-year mortgage, with interest rates favoring the variable rate and the 30-year. Again, mobility allowed most homeowners to sell their homes before the variable rate reset, along with selling their 30-year mortgaged homes long before being “locked in for life.”

It also was the case that many of these balloon mortgage homeowners refinanced into a new variable rate loan or into a 15-year or 30-year mortgage. Banks expected these sorts of refinances and smoothed the path.

Many years later, as my wife and I were long established civilians and approaching retirement, we bought our current house with a 30-year mortgage. We’ve since refinanced that mortgage a number of times as interest rates went down, and currently have a monthly payment a bit over half that original payment.

So much for ever being locked in for life with a high-rate mortgage. With that mobility, very few homeowners actually paid more in aggregated principal and interest than the value of their homes—they refinanced down, or they sold and moved on.

The only thing in the way now is a greatly reduced mobility in our homeowner population. There are a number of reasons for that reduction in mobility, but the key here is that reduced mobility. Being “stuck” in some way with a 30-year mortgage is a symptom of relative immobility, not a cause of affordability. That immobility also contributes heavily to the lack of houses on the market while demand for homeownership remains high—that’s excess elevated pricing for homes.

“Democracy Wanes in South Asia”

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Sadanand Dhume uses as his canonical examples Nepal, Sri Lanka, and Bangladesh, wherein riots forced the removal of despotic governments and their replacement by popularly chosen leaders. In Nepal in particular, new elections have been set for next March.

Dhume did point out popular failures in Pakistan and Myanmar; however, his apparent concept that popular uprisings are, of necessity, antidemocratic is badly flawed.

This is what our own Declaration of Independence has to say about such popular violence.

[W]henever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

A government deciding unilaterally and with little to no warning to censor—abolish!—major communications systems, a government that has had a single Prime Minister for 15 years during carefully controlled elections with opposition candidates routinely jailed, a government dominated for 17 years by a single pair of brothers whose government did little to protect its population from routine violence—each of these governments with their long train of abuses and usurpations… would seem to be prime candidates for the people to decide that their governments’ evils are sufferable and so to move to exercise their right…their duty, to throw off such Government, and to provide new Guards.

What must Dhume think of the Color Revolutions in Ukraine, Georgia, Kyrgyzstan, Armenia, or the People Power revolution in the Philippines, each of which involved the successful popular overthrow of Despotic governments and their replacement with more democratic institutions?

We’ll see what happens in the subsequent elections, particularly in Nepal. Dhume may be correct vis-à-vis his examples, but it’s much too soon to tell.

Apologize?

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Recall Progressive-Democratic Party candidate for Virginia Attorney General Jay Jones’ overt threat of murder against a political opponent and his family. Now Virginia Progressive-Democratic Party Senator Tim Kaine is making clear his enthusiastically continuing support for Jones.

Jay has apologized[.]
I’ve known Jay Jones for 25 years. I think those statements were not in character, and he has apologized—I wish other people in public life would sincerely apologize for stuff.

Jones has apologized, and that makes everything all better. That’s Party’s view of taking full responsibility. Just say some words and call it a day.

No.

Words of apology, no matter how sincerely they’re offered, are nothing but that—words—absent any accompanying corrected behavior, behavior that lasts for a substantial period of time.

Jones has demonstrated no corrected behavior. He’s staying in the race for State’s AG, and he’s doing nothing to atone for his call for murder, nor is he showing any altered behavior regarding his fellow State citizens, political opponents or otherwise.

Short-Sighted and Narrow-Viewed

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The good editors at The Wall Street Journal opined on the leaked-to-the-press Compact for Academic Excellence in Higher Education. They’ve missed on a couple of their points.

Where the compact goes too far is with its demand that schools freeze tuition for five years….

The editors noted that Mitch Daniels succeeded in this for more than just five years, and they insist that the matter should be left to the schools. The editors missed the simple fact that the matter is still left to the schools: they still can set their own tuition rates; they don’t have to sign the Compact, which is an entirely voluntary thing. They’ll still have access to Federal funding, too; they just won’t get preferential treatment.

…cap the enrollment of international students at 15%.

The editors worried about where that threshold came from, since they couldn’t understand it. The short answer, and the long answer, is Who cares? It’s a cutoff point easily achievable that leaves predictable room for (qualified) American students. As this graph shows, there are plenty of schools that would create that room were they to similarly cap their international enrollment:

The only serious question here is whether international enrollment should be capped at all, not quibbling over limits.

The editors’ rationalization for their beefs are that

Limiting tuition and international students at the same time could leave schools with a budget shortfall.

This would be just silly if the editors hadn’t tacitly accepted the Left’s penchant for spending as sacrosanct. The schools always can reallocate their spending, and they always can reduce their spending to fit the revenues coming in. There’s nothing in the proposed Compact to prevent that exercise in fiscal responsibility.

And this:

Well-intentioned but hard to implement is the compact’s effort to combat grade inflation. The compact demands that schools “commit to grade integrity and the use of defensible standards for whether students are achieving their goals.” Good luck trying to figure that out. Will a fleet of auditors investigate if slackers really deserved an A- in Econ 101?

What, then, is the editors’ solution? Just roll over and give up on solving a difficult problem? Their silence on this speaks volumes. It also demonstrates that their comfort zone is up on the porch, whence they can yap in complete safety.