Category Archives: markets

Union Threat

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The American Federation of Teachers doesn’t like guns, gun owners, gun manufacturer, or those who support them.  That’s fine; this is America.

The union’s President, Randi Weingarten, has taken a typically union follow-on step: threatening a union boycott of Wells Fargo if the bank doesn’t end its relationship with the National Rifle Association and with those manufacturers.

We’re issuing Wells Fargo an ultimatum.  They can have a mortgage market that includes America’s teachers, or they can continue to do business with the NRA and gun manufacturers. They can’t do both.

The rest of us, including banks, have rights, too.  Wells Fargo is resisting Weingarten’s ultimatum, which if widely acceded to will leave the very people she pretends to want to protect utterly defenseless.  Wells should advise her and her union supporters to not let the door hit her in the fanny on the way out.

And the rest of us should push the harder for schools that aren’t unionized.  Wells’ products, along with the NRA’s and manufacturers’, are quality products.  The same can’t be said for the AFT’s products.

Government Surveillance by Regulation

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Loosely related to a nearby post, now it seems the government is getting worried about the size of the “private” capital market, where folks can place investments in enterprises, particularly startups, without having to go through the public—stock—markets and government regulations that are broadly extensive and deeply intrusive.

The boom is transforming how companies grow, concentrating investing in fewer hands and raising concerns about oversight

The linked-to article’s subhead lays out the whole misunderstanding. Government doesn’t need to be in the business of regulating every little thing we do.  We can manage our investments just fine without Government’s “help.”  And we can suffer our own outcomes if we choose badly or fortune moves against us despite our otherwise correct decisions.

[Some] private placements require no disclosure at all, said Anna Pinedo, a partner at law firm Mayer Brown. “It’s impossible to know who’s raising money this way or from whom.”

It’s none of government’s business to know unless it’s prepared to allege specific crimes.

Michael Piwowar, a[n SEC] commissioner, questioned “the notion that nonaccredited investors are truly protected by regulations that prevent them from investing in high-risk, high-return securities….

It’s not government’s job to protect us from ourselves. That’s our job.

The way to entice investors back to the publicly traded markets is to reduce those regulations and their intrusiveness.

Standards and Markets

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The EPA has decided to revisit, revise, and lower fuel efficiency standards for cars sold in the US for the model years 2022-2025.  The Obama administration EPA had mandated that overall fleet fuel efficiency—averaged across all models of cars built by a manufacturer—be raised to 54.5 miles per gallon by 2025 from 35.5 miles per gallon in 2016.  This would have represented a greater than 50% increase in fuel efficiency in just 10 short years.

Environmentalists are up in arms over the move.  Fred Krupp, Environmental Defense Fund President:

Designing and building cleaner, more cost-efficient cars is what helped automakers bounce back from the depths of the recession and will be key to America’s global competitiveness in the years ahead.

And Jon Foley, California Academy of Sciences Executive Director, tweeted

This move wastes energy, and makes more dependent on foreign oil.

Both misunderstand.  Krupp is right that building better cars helped automakers recover from the Panic of 2008, but he missed two Critical Items.  One is that American automakers, pre-Panic, were churning out junk and losing market share to better manufacturers.  When they stopped building junk, they got competitive again.

That brings me to the second Critical Item.  It was free market competitive forces—and the Panic to drive that home—that enabled the American automakers, building better cars, to get back into the game.  It was free market competition, in response to changing consumer demands, that pushed automakers to build more reliable, more fuel efficient cars (and trucks), with competition moving to hold prices down.

Neither of those had, or have, anything to do with government mandates.

Foley just seems to have not been paying attention over the last few years.  New technologies for locating oil and gas and for extracting those have lowered the cost of oil and gas for a whole host of uses, including car and truck fuel, and those technologies have led the US to be a larger producer of oil and gas than any other nation, save Russia—and we expect to surpass Russia in a couple of years.  There’s not much dependence on foreign oil here.

Oh, and one last thing.  The cost of buying a car won’t be so great now that manufacturers don’t have to waste capital on crash courses in engine development and can instead move at the pace of market competition.

Now, if only we could get rid of the ethanol mandate, too, so car maintenance and food costs could be reduced.

A Fiduciary Rule

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The Obama Labor Department, under the suzerainty of Tom Perez who is now the Progressive-Democratic National Committee Chairman, enacted a rule that allowed individuals to hale into court principals of employer or union retirement plans for the crime of charging commissions for their actions.  The rule also redefined “investment advice fiduciaries” to include broker-dealers and financial-insurance agents whose activities are limited to selling financial products.

The 5th Circuit struck the rule as illegal.  That’s good news for all of us.

However.

The Trump Labor Department has said it won’t enforce the rule and is working with the SEC on a new one….

The first part of that is good (and to be expected, since it’s unsavory to enforce an illegal rule).  However, with respect to the second part, it would be better if the Labor Department just sat down and shut up on this. This matter has nothing to do with Labor or with labor.

The PRC and Intellectual Property Theft

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In the absence of any serious legal protections against intellectual property theft in the People’s Republic of China, businesses operating there are engaging more and more in sweeping conference rooms there for bugs and equipping personnel with sanitary burner phones for use while in the PRC.

That’s a start for those willing to put their proprietary information at risk through a business venture inside the PRC or with a PRC-based business anywhere, but it’s inadequate by itself, as illustrated by this bit of naivete by the linked-to piece’s author:

Mr Trump wants China to unwind policies that require auto makers, cloud service providers and others to share technology with Chinese partners for the right to operate here. …for example, operate in 50-50 joint ventures with Chinese partners.
Those technology transfers, however, are distinct from the outright theft some companies say they face.

The distinction is little different from the distinction between extortion and robbery.  President Donald Trump needs to take concrete action to encourage the PRC to eliminate those policies.

Where national security information would be at risk, CFIUS needs to get more active.

Congress needs to take complementary action: perhaps barring companies from sharing their proprietary information, perhaps requiring companies wanting to do business with PRC-based companies or within the PRC to retain a controlling share of any partnership, perhaps other steps, also.