Category Archives: Economics

Miscellaneous economy stuff

Fiat Chrysler, the EPA, and Diesel Engines

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The EPA has decided to accuse Fiat Chrysler Automobiles NV of using software to cheat on diesel emission limits during tests, sort of reminiscent of Volkswagen’s peccadillo.

The problem for the EPA, though, is that

the EPA is not yet accusing Fiat Chrysler of installing illegal software patches on its diesel engines, but of failing to disclose potentially legal ones.

Never mind that if the software is legal, there’s nothing to disclose.  Not to fear, though, the problem with Fiat Chrysler is that

[i]t’s the company’s finances that make it vulnerable.

The company in the hole with a debt pile of some €6.5 billion ($6.9 billion) as of last September.  And the EPA knows that.

With any other agency, this might be a legitimate beef.  With this EPA, though, it smacks of legal blackmail.  “Nice business you got there; be too bad if something were to happen to it.  I know you’re short of cash; maybe there’s something we can do for each other to help you out.”

Linkages

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They didn’t work when Nixon and Kissinger tried it, even though the Soviet Union generally complied, because the revolutions that the USSR was fomenting continued to occur apace after the Soviets stopped fomenting in return for nuclear and economic concessions.

Treasury Secretary Jacob Lew warned ignoring recent steps by Beijing to liberalize its economy would endanger Chinese cooperation on other major geopolitical issues, particularly containing North Korea’s nuclear program.

They’re not working now with the People’s Republic of China, but for a different reason.

And

The departing Treasury secretary further warned against steps that would prompt China to withdraw its support for tougher sanctions against North Korea.

The PRC still isn’t taking steps to “liberalize its economy,” not when it’s actively interfering with its cross-border yuan flows, manipulating domestic interest rates with a view to control who gets to lend or borrow rather than an effort to maintain a stable monetary policy, manipulating its domestic stock markets as it did in 2015 and today with manipulating the legal environment, and on and on.

Nor has the PRC ever cooperated in any meaningful way with respect to sanctions connected to northern Korea’s nuclear weapons program.  The PRC routinely slow walks its agreement to sanctions (which is why their occasional prompt agreement is such news), and it ignores sanction violations as those occur across its border with northern Korea.

And—ignored by Lew—the PRC is accelerating its aggression in the East and South China Seas and increasing its pressures on the nations rimming the South China Sea to deal with them exclusively and one at a time on trade questions.

Before today’s linkages can have effect, the parties at both ends of the lever must be willing to be responsive.

Polemics vs Reasoned Argument

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As the Congress considers import taxes as part of its general tax reform agenda, toy sellers are expressing their concern: they import most of what they sell; their products are manufactured overseas.  Import taxes are surely a thing worth discussing and debating thoroughly, whether they’re essentially cost of goods sold neutral, as Doug Holtz-Eakin argues (the dollar will rise from the tax change and economic growth, and so the dollar cost of imports will fall; the cost of goods sold will simply emphasize taxes more and import costs less), or they’re dangerously like protectionist tariffs, as others argue.

Arguments that are carefully emotion-laden while devoid of facts, though, are inappropriate.  Here’s an example from Steve Pasierb, President of the Toy Industry Association:

We are fully prepared to work productively or be a royal, boisterous, media-friendly pain in the backsides of people who would take away children’s happy birthdays, steal Christmas, and destroy quality US-based jobs.  And no one wants to have to explain to their children why Santa was put out of work.

Such Leftist “feel my pain” three-hankie argument has little credibility and less validity in the sort of reasoned discourse necessary in an economic debate.

Growing Irrelevance of the World Economic Forum

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The rising income gap and growing rifts in Western societies that led to the election of Donald Trump and the Brexit vote are the main global risks, according to a report by the World Economic Forum ahead of its annual forum in Davos next week.

Climate change and technological disruption were also listed as important risks in a survey of 750 law makers, business leaders and academics carried out by the WEF….

No, the rising income gap isn’t why President-Elect Donald Trump was elected, nor was it why Great Britain voted to go out from the European Union.  Quite the contrary: it was because those on the bottom and in the middle were being held down by the policies of the Know Betters and by the latter’s desperation for votes—votes bought and paid for by handouts that trap folks in the Know Betters’ welfare cages.  That that contributed to a rising income gap is only a side effect.  The bottom and middle class folks simply wanted their opportunity to get rich, too.

Climate change isn’t a risk at all; it’s a certainty.  The Earth is illuminated and warmed by the sun, the sun has been heating up for its entire four billion year existence, and it’ll continue to heat up for the next several billion years.  Global warming—which is what climatistas mean when they changed the name to and talk about “climate change”—is a pseudo-science whose sole industrial function is to transfer government funds to the “industry.”

Technological disruption is a good; it’s how progress and prosperity happen in a free market—and without a free market there is neither progress and prosperity nor any technological change at all.  It’s a risk, too, but it’s one that’s well understood by everyone who’s had a high school economics class.

And there’s this nonsense from Cecilia Reyes, Chief Risk Officer at Zurich Insurance Group, speaking at the gathering:

The momentous political changes in 2016 raised worries about the health of liberal democracy that has underpinned global prosperity[.]

No, the health of liberal democracy took a dramatic turn for the better, exemplified by the repudiation of the policies of eight years of the Obama administration and the Progressive-Democratic Party’s control over the Congress as a whole and then of the Senate.  That repudiation was broader than just a rejection of those policies, though: the real turn for the better was the repudiation of the increasingly authoritarian behavior of the Progressive-Democratic Party and of the Left in general.

No, the WEF is just getting a bit too far out of touch with the world.

Repeal and Replace

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…the Food and Drug Administration.  I’ve written before about the FDA’s shameful obstruction of an experimental drug that showed great promise—before the FDA’s obstruction, so those persons knew all about it—in mitigating Duchenne Muscular Dystrophy to the permanent detriment of the boys who have that ultimately fatal disease.

Here’s another shameful example of the FDA’s lethal obstruction, provided by Marc Thiessen in an end of the year piece for The Washington Post.  Amyotrophic lateral sclerosis, Lou Gehrig’s disease, is another fatal disease of the nervous system, this time one that destroys motor neurons in the spine so that muscles atrophy, including ultimately those that power the lungs, and the victim dies.  ALS is 100% fatal—or was until an experimental procedure was developed by the folks at the Center for ALS at the Emory University School of Medicine.  The procedure those folks developed involved injecting neural stem cells directly into the spinal regions where masses of the motor neurons affected by ALS are located.

Thiessen’s friend, afflicted with ALS, was fortunate to be able to have access to this procedure—which was so early in its development that the friend’s participation was in a trial stage whose purpose was nothing more than to show that the procedure was safe; it wouldn’t kill the receiving patients.  The procedure didn’t kill Thiessen’s friend.  Maybe it cured him (he died of brain cancer six years after his diagnosis of ALS, a post-treatment life span too short to say “cured” but plainly long enough to say “positive effect in putting the ALS into remission.”

That remission was the watchword is demonstrated by the fact that the man went from being unable even to walk to his mailbox for his mail to being able to walk Atlanta’s two-and-a-half-mile Walk to Defeat ALS four years in a row, and to do each with no problem.

Slam dunk for the procedure to go to final stage testing and production, right?

No.  Not with our FDA.  Thirty-two ALS victims have been allowed by the FDA to try the procedure in a time span during which 24,000 Americans have died of this disease.  Because the FDA demands proof of effectiveness through a Byzantine “testing and trial” sequence of experiments that only bureaucrats could find useful before it will approve a drug or a medical procedure.

It’s time to disband the Food and Drug Administration altogether and replace it in toto with an agency that will oversee such things, but that will approve on a showing of “does no harm.”  The efficacy of a drug or procedure belongs solely in the free market, with the doctor and patient making the use decisions.  This is not an area for Government, or Government’s bureaucrats, to interfere.