Author Archives: eehines

Occupying Gaza

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Israel has developed a plan to do this as a necessary step to finally destroying Hamas. Israel had done that some decades ago, but it was an incomplete occupation, and so it ultimately was a failure. One of the reasons for the failure  was that Israel intended only on controlling Gaza with no intent to destroy Hamas, hence it was an incomplete occupation.

The current plan has that as the goal and purpose of the planned occupation. I think the plan could work and not even be very long-term, if a couple of additional factors are included (and I have no idea whether they are or are not).

The IDF would need to completely isolate Gaza along its borders and seacoast to keep the terrorists from escaping out the sides and back. If they can do that, then occupying successively seized territory, whether contiguously seized or in separate chunks as the tactics and real-time situation require, then the Israel wouldn’t need to maintain the occupation of all of Gaza for any longer than it would take to satisfy themselves that all the arms and supply caches have been seized, the tunnels plugged, and Hamas functionally exterminated rather than leaked away.

The other factor is the formation of an Abraham Accord collection of Arab states plus Egypt that would emplace a governance function in Gaza. At that point, Israel could withdraw from the strip.

Tariffs and Reindustrialization

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This seems to be my day for letter-writers. Another writer in The Wall Street Journal‘s Sunday Letters section wrote about the current lack of effectivity of (protectionist) tariffs in stimulating moves toward reindustrialization in our economy.

Through initiatives such as Operation Warp Speed and strategic invocation of the Defense Production Act, the government took risk out of domestic production through substantial direct investment, guaranteed purchase agreements, prioritized allocation of critical materials and equipment, and streamlined regulatory processes.

He then proposed a similar program to spur reindustrialization.

He’s right as far as he went, but it’s too one-sided, lacking as it does any requirement for the targeted industries to do their part. Aside from the addictive nature of protectionist tariffs, it’s far too often the case that the “protected” industry companies merely take advantage of the increased prices of tariffed imports to raise their own prices accordingly, collect the increased revenue, and do nothing to improve their own competitiveness.

What’s also needed, as a part of these tariffs, is a requirement that the “protected” industry companies use the large majority (60%-75%, say, just to have a starting point for discussion) of the increased revenues accruing from the increased sales at their immediately pre-tariff prices to achieve the following:

• increase market share via their largely unchanged price
• increase spending on innovation
• increase spending on capital plant maintenance, improvement, and expansion
• increase spending on line worker wages
• increase spending on line worker hiring

And one more fillip: a hard expiration date of the protectionist tariff, in the range of 5-10 years, that cannot be extended except by Congressionally enacted statute.

That’s the route to actually reindustrializing: doing concrete things to achieve concrete goals.

Why Must They Be Mutually Exclusive?

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A letter-writer in The Wall Street Journal‘s Sunday Letters section objected to an op-ed whose writer touted Federally mandated IVF insurance provided by private economy insurers as a means to elevate our nation’s too low birth rate.

The letter-writer proposed, instead, a tiered cash baby bonus: bigger for married women, smaller for unmarried women.

My question: why must it be one or the other? Why not both?

Follow-on question: why not consider the system of which these are just two components? If the Federal government, or at least the Republicans in the government, are going to work for increasing our birth rate and against the related universal and easily obtained abortion rate—and they should, on both—and on the underlying economic situation of the middle and lower class individuals and families, why not provide women—married or not—in parallel with a range of incentives to have more babies, with financial, educational, and medical support during their pregnancies and in the period surrounding birth, and in the first years (until kindergarten?) of the baby’s life, expanding that to include the baby/toddler/child in the support mechanisms?

If our government and us are going to be serious about birthrates and about right to life, government and we need to get serious about achieving those goals.

A New US International Trade Regime

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As thought of by me.

The beauty of it, if I do write so myself, it that it’s wholly independent of tariffs, whether foreign policy or protectionist.

The idea, at a level of generality, is this. Congress, the President, and his Cabinet Secretaries develop a list of all goods and services critical to our national defense. The list must necessarily include dual use goods and services, those items that can serve both the private economy and our defense systems.

Then Congress and the President draw a hard line and require that 15% (to pull a number from the æther) of everything needed for production of those critical goods and services, from ore through intermediate components to the last components needed for final assembly or service provision, be produced entirely domestically. This would serve two purposes. One is that it would relieve our dependence on other nations, particularly enemy nations, for any of those goods or services, the denial of any one of which would stop our economy and our ability to defend ourselves beyond stocks already in place—a few weeks to a couple of months worth in an active shooting conflict.

The other purpose is that it would give us an extant production core from which we could surge production and expand production facilities much more quickly than if we had to attempt to start from scratch just to begin to surge.

The last step is to require a review of the list of goods and services every five years, de novo, adding to/removing from the list as necessary to keep it current. Every five years to relieve the review cycle, at least a little bit, from political cycles while keeping the update rapid enough to keep up with evolving technologies.

Of course, this will cost more than a classical Ricardian free trade, Smithian free market environment, but that’s the cost of national security. If we can’t protect a capacity for self defense, we’ll pay a far higher price.

Price Fixing

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And this time it’s by the Republican caucus in the House. Among the moves they’re making in the reconciliation bill currently being debated in the various House committees is a badly needed move to reform the cost of college/university education and so improve the value of that education. The goal is to hold colleges accountable for student outcomes and curb the open-ended loan buffet.

The specific plan under consideration, though, is a terrible idea.

The House would reduce the aggregate limit for undergraduate loans to $50,000 from $57,500. The bill would also impose a $100,000 borrowing limit for master’s degree and doctoral programs and $150,000 for professional programs like law degrees. Graduate student loans are currently uncapped.

This is just price-fixing by another name, though, and worse than not addressing the underlying problem, it hides—like any price-fixing scheme does—the true costs and gains of the services being offered.

Better, and more efficient, would be to let free market forces solve the problem. I’ve offered this alternative before; it bears repeating, with a couple of additions.

• statutorily require colleges and universities to publish the average, median, and range of income at the five years employment mark for their graduates in each of the major fields offered
• [added] statutorily require colleges and universities to publish their graduates’ employment percentages at the five year post-graduation mark for each of the major fields’ graduates
• statutorily require student loans to be originated by private lenders or colleges and universities
• statutorily require colleges and universities to guarantee at least 50% of each loan granted their students [added:] by private lenders
• [added] bar any government or government-affiliated entity from guaranteeing any part of any student loan
• statutorily allow current and future student loans to be discharged in “ordinary” bankruptcy proceedings

With private lenders and colleges/universities having skin in this student loan game—and being the only players in the game—loans and their borrowers would be carefully screened for repayment risk. Just as importantly, prospective students and parents could better evaluate which majors to pursue and which schools best teach those majors. A happy side effect of that will be better use of us taxpayers’ money.