Category Archives: Economics

Miscellaneous economy stuff

Obstructionism

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…for the sake of obstructionism.  And now the Progressive-Democrats in the Senate are getting blatant about it.  They don’t want to help reform the health care coverage disaster of the last eight years, so to block Republican and Conservative efforts at reform, these Progressive-Democrats have decided to block everything in the Senate.  Here’s Senator Chris Murphy (D, CT) o the overall attitude:

What more could we do—hold Republican Senators by the arms to stop them from getting to the chamber?  I think we’ll use every tool at our disposal.

Senate Minority Leader Chuck Schumer (D, NY) even arranged to force cancelation of all committee meetings last Monday, regardless of the subject or purpose of those meetings.  No business was allowed to be conducted—all to block health care coverage reform.

Meanwhile, these Progressive-Democrats are ignoring the millions of Americans who are about to lose all coverage as coverage provider after coverage provider leave the Obamacare markets and withdraw from the ObamaMarts in the States.  Iowa, for instance, is about to lose all providers of individual plans—every single one of them—and no Iowa citizen will have access to market coverage.

This blanket obstructionism while the health coverage industry burns stinks, it’s damaging to Americans who need or want health care insurance, and it’s destructive of our democracy.

More on Foolish

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Federal Reserve Bank of Chicago President Charles Evans said Tuesday that the U.S. central bank can wait until the end of the year before making the decision to raise rates again, while adding it could start reducing the size of its balance sheet before that.

Indeed.  We could wait a decade, too.  Both delays are about equally foolish.

Increasing interest rates on debt, whether market rates of Federal Reserve benchmark rates, are inherently inflationary.  Thus: the Fed needs to set its rates to levels consistent with target inflation, and then sit down, and be quiet.

Mr Evans also said in the interview that even if the Fed does hold off on rate rises until very late in the year, that needn’t stop the institution from pressing forward with its plans to allow its balance sheet to start shrinking at some point this year.

Indeed.  The Fed needs to take this separate step, regardless, and get rid of the massive amount of Treasury debt it bought as part of its failed stimulus policy.  The Fed isn’t a stimulus institution: its role is strictly the maintenance of stable market pricing and full employment (the latter which shouldn’t be a mandate as full employment will fall out of long-term price stability).

The Nub of the Thing

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In a Deutsche Welle piece on the likelihood of Emmanuel Macron being able to reform French labor and pension law, is this statement by Julie Hamann, a political scientist with the German Council on Foreign Relations in Berlin.

The French have high expectations of the state, for it to fulfill its protective function with regard to social welfare.  As soon as reforms are announced that may lead to cuts in social services or labor market insecurity, this very quickly gives rise to very great and very emotional fears.

It doesn’t get any clearer than that.  The French people—French society—expects government to play the major role in doing for them; individual personal responsibility for a Frenchman’s own future is secondary and operable only within a Government provided framework.

Macron and his La République en Marche! party may well fail as resoundingly as did Alain Juppe, who had the major French labor union on his side 22 years ago but couldn’t do the deed, and as resoundingly as did Dominique de Villepin, whose plan already had passed through Parliament 11 years ago when he folded and canceled reforms similar to Macron’s.

Macron is a younger man, and his party is populated by newcomers still fired by their idealism and disdain, if not disgust, for the establishment.  But he will need to go directly against the forces of the people—the popular establishment of a sort—if he’s to succeed.

Macron will change the foundation of French social thinking with his proposals.  He and a sufficiency of his party must have the courage to lead in order to enact his proposals—and to face the consequences if his policies, rammed through and held to, do not lift the French economy into prosperity-generating dynamism.

Another Example

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…of the failure of government intervention in “green” energy.  And of the lack of understanding of the problem by the participants.  This four minute video via Deutsche Welle tells the tale.

A group of Spanish farmers, in order to “improve their pensions and to do something for the environment,” banded together to build a solar farm, Spain’s biggest cooperative solar park, an operation of solar cell collectors at roughly €90,000 per module.

The central takeaway:

[T]he modern facility is currently losing money because the conservative government has drastically cut the subsidies for solar power.

The solar farm is not economic viable, it cannot compete in the market place, without those subsidies, without OPM.  The thing simply is not market ready.

The lack of understanding is in the plaints that this is someone else’s fault; it can’t possibly be a poor business decision to rely on a technology that can’t compete and that isn’t ready for prime time.

I feel swindled by my own government, by the politicians we Spaniards voted into office.

And

The big energy companies regard us small investors as enemies because we threaten their monopoly on the market.

Except that these “small investors” don’t have anything with which to challenge them without all that OPM to prop you up.  Their enemy—and the small investors’—is that government subsidy.

One bit of slanting by DW: there is a vague reference to a tax on solar cell installations on private homes in that region of Spain.  However, DW chose to provide no context for that reference: what the tax is for, how much it is, what is actually being taxed, and so on.

It’s About Time, Ollie

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In a move met by applause from at least one congressman, the Energy Department announced a pilot program for research into domestic mining of rare earth elements.

Rare earths are minerals critical to computing technologies and to various military and civilian sensor technologies.  China currently dominates the production and market for these elements, with about 85% of the world’s production from its domestic mines.

Another major source for rare earths, not yet exploited, is the South China Sea floor.  Part of the purpose of the PRC’s seizure of the South China Sea and of its island-building and militarization of those constructs is to control access to those rare earths and to reserve them for itself.

The US has about 13% of the world’s total reserves, but very little of this is in production: mining efforts aren’t extensive because it hasn’t been economically feasible (or yet politically necessary) to mine seriously.  Instead, we’ve been buying our rare earths almost exclusively from the PRC.

We’re very late to this production party, but with Secretary Rick Perry’s announcement, we need to jump in with both feet.  This is another area where we have to cease our dependence on our enemies for our own prosperity.