Category Archives: markets

Weasel Words

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The People’s Republic of China’s governing claque of men and women are engaging in them. Again. Or still. This is The Wall Street Journal‘s lede:

China will loosen its export restrictions on semiconductors made by Nexperia, its Commerce Ministry said….

However.

China will allow exports of Nexperia chips for eligible cases, the Commerce Ministry said Saturday, without specifying the criteria.

Meaning, I fearlessly predict, that Nexperia’s exports from the PRC will be slow-walked, blocked, and otherwise interfered with for the foreseeable future. Just as with any other non-PRC company doing semiconductor business from inside the PRC. Lacking export criteria, the PRC has left itself wiggle room for blue whale pods in which to employ those weasel words. The PRC’s Commerce Ministry also made no mention at all regarding loosening export restrictions on rare earth magnets or rare earth ore.

Nexperia—and everyone else outside of the PRC—would do well to move their raw material production, assembly, and manufacturing facilities—all of them, not just those related to rare earths—entirely outside of the PRC.

That, too

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Progressive-Democrats are keeping the government shut down over their demand to extend—permanently, no negotiations—the Obamacare subsidies that the Progressive-Democrats during the Biden reign had scheduled to expire in November of this year, pretending at the time that the subsidies were just temporary, to tide people over during the Wuhan Virus situation. Their core claim on this aspect is that Obamacare premiums, as paid by the policy holder (carefully excluding, per those same Progressive-Democrats, the premium costs paid for by us taxpayers via those subsidies), will explode.

What the press, with equal care, ignores is that the purported need for those subsidies is a direct result of the cost of the government-run health care coverage program that is the Affordable Care Act. Government-run because these are coverage policies whose coverage suites are mandated by government, including the worst mandate of them all: the requirement to charge premiums (within narrow government set bands) for ailments and potential ailments without regard for the risk of the ailment being covered, and for some of those ailments at no cost to the policy holder at all.

The Wall Street Journal has pointed out an additional price to us average Americans:

If Republicans don’t extend the turbocharged subsidies, she [Minnesota Progressive-Democrat Senator Amy Klobuchar] warned, “early retirees like Bill & Shelly [who live in Meridian, ID] will see their health insurance premiums increase nearly 300%—from $442 to $1,700.”

And [emphasis added]

This is a tacit admission that ObamaCare encourages Americans to stop working. The Biden subsidies turbocharged that incentive by making subsidies larger and available even to those with incomes above 400% of the poverty line. The couple in Ms Klobuchar’s example had north of $130,000 of income in 2024….

This demand for permanentizing the ObamaCare subsidies is just one more aspect of big government taking over our lives, reducing individual liberties (the health coverage industry does not exist in a free, competitive market where individuals can make their own choices of what coverages they want, at prices that competition would make possible) and taking the flip side of individual liberties, individual responsibilities, away from the individual and, instead, spreading them across all of us together, as brokered by Government.

The editors offer some solutions that would be a good beginning toward correcting the failure that is the ObamaCare essay into socialized medicine.

  • codifying association health plans that let small businesses join up to form a larger risk pool to improve the economics of offering insurance
  • continuing to expand plans that can be paired with tax-preferred health-savings accounts
  • fix[ing] some ObamaCare regulations like the medical-loss ratio that obliges insurers to spend 80% of premiums on claims, which in practice is a profit cap

Also needed, I claim:

  • allowing health coverage plan providers to sell policies that cover preexisting conditions at premiums consistent with the risk involved. The risk here is not certainty since the preexisting conditions will not all flare up and require medical intervention simultaneously; the risks can be amortized across time, if government only got out of the way
  • allowing individuals to choose from, and insurers to offer, tailored coverages: only primary care—annual exams, for instance, and the occasional flu or broken bone
  • coverages only for catastrophic health potentialities
  • reducing the regulatory burden on doctors who want to eschew being reimbursed via health coverage providers by doing cash reimbursements, perhaps by annual subscriptions

But to do any of that, it’s necessary for the Progressive-Democrats to end their extortionate demand on subsidies as a condition or reopening, so those discussions can begin; it’s necessary for the Progressive-Democrats to release from their basements us American people, especially the poor and their children, whom they’ve taken hostage against their demand.

A Compromise for the SEC?

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A letter-writer to The Wall Street Journal‘s Wednesday Letters section offered a compromise for the SEC’s proposed change to company reporting from all of them reporting quarterly to all of them reporting semi-annually.

Large companies should continue to report quarterly so that stakeholders have timely signals for pricing and risk management. Micro-caps, by contrast, could move to semiannual reporting without leaving investors in the dark if a few safeguards stay in place. Material developments should still be disclosed promptly between reports; companies should provide a short, standardized mid-period update with such core metrics as sales trend, liquidity and interim financials. Whatever the frequency, they should retain a light auditor review to discourage aggressive accounting.

Aside from ignoring the myriad of companies whose sizes are intermediate between micro-caps and large, most of his suggestions are not materially different from the current quarterly reporting requirements. Quarterly reporting, after all, is quintessentially intermediate to semi-annual periods, and his standardized mid-period updates are those quarterly reports.

The only concrete suggestion, material developments reporting, already is required by law: that’s what Form 8-K is for.

And this from the letter-writer:

This approach targets the real pain point—fixed compliance costs that bite hardest at the smallest issuers….

Moving to semi-annual reporting would be a boon for all companies, large, micro, and intermediate. That large companies “can afford quarterly reporting” while smaller companies cannot is a tired and useless trope used to harry the rich and successful in too many milieus already. The trope doesn’t need to be expanded here.

Tipped Wages or Not?

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McDonald’s is insisting that every restaurant—especially fast food restaurants—should be required to do away with tip-based wages and pay servers at least the Federal-level minimum wage. There are a couple of major disingenuosities in the surrounding argument.

McDonald’s Chief Executive Chris Kempczinski:

Right now, there’s an uneven playing field,

because casual-dining restaurants, bars, and other establishments to pay below the typical minimum wage to tip-earning workers. If he thinks so, he should push for getting his restaurant able to similarly pay his workers rather than demanding that others kowtow to his business model.

Kempczinski went on:

If you are a restaurant that allows tips or has tips as part of your equation, you’re essentially getting the customer to pay for your labor[.]

This is an especially blatant bit of disingenuousness. The customer already is paying for the restaurant’s labor. The customer also is paying for the restaurant’s cooking, food and food preparation inputs, rent, management salaries, every cost the restaurant incurs. Those costs are included in the prices the restaurant puts on its menu. Tipping is just a customer-facing line item on the bill.

This is nothing but a regulated business manager venally and self-servingly trying to capture the regulators and impose added costs on his smaller and weaker competitors.

Regulation vs Regulation

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In an article centered on a so-called balancing act by Big Oil in an environment in which the Trump Administration is rolling back a broad swath of climate regulations, the news writers had this:

The industry’s biggest trade groups have said they support effective and reasonable regulations. Nixing the programs, the lobbyists said, would create an impossible choice for the industry—ask the administration to reinstate some rules, or walk back its previous support for some regulations.

This is timidity writ large. If the trade groups and the managers of the groups’ constituent companies really think this, that, or those rules are good ideas, then they should self-regulate along those lines. There’s nothing to stop them; there’s nothing forcing them to render themselves dependent on government diktats.

Lobbyists have signaled to the EPA that creating a regulatory vacuum could invite new lawsuits.

The proper response to those lawsuits is to stop being so desperate to settle and to stop hiding behind Government apron strings. With the climate regulation roll back, there are fewer grounds on which to base a lawsuit, and the proper response to those remaining that are brought is to refuse to settle, push the pace on the trials, and burn the suers to the ground in open court. That’ll be expensive in the early stages, especially as they’re forced by activist district judges to go through the appeals process, but it will reduce long-term legal costs far more by obviating a large number of lawsuits in the aftermath of those early ones.

It’s past time for business managers, especially including those running energy producing businesses, to recall the nature of their management roles.

The central imperative of a management position in the United States is to manage a company in a way that satisfies the company’s owners. There is nothing in that imperative that requires a manager to manage his company in a way that satisfies the demands of Government beyond simply following law. Those managers who are that timid that they need to be told what to do by Government need to be replaced; they’re unfit for their management positions.

This is America. Business managers are free to act on their own initiative; they are not required to wait on Government.