Category Archives: political economy

Wrong Answer

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House and auto insurers’ profits and the rate increases they charge policy holders are coming under political scrutiny, but politicians’ proposed solutions are badly counterproductive.

New York Governor Kathy Hochul (D) this month became the latest state lawmaker to advocate profits caps on insurers, to tackle escalating home- and “crushingly expensive” auto-insurance rates.
Her plan would require home insurers with “outsized profit margins” to lower or justify their rates, and review the profits threshold at which auto-insurers are required to refund customers.
Also this month, lawmakers in states including Oklahoma proposed profit caps targeting insurance.

No.

Government definitions of “outsized profit margins” have nothing to do with business imperatives or what happens in a free market. Those definitions serve only the personal political ambitions of the politicians doing the defining, and they’ll vary across politicians and their political parties.

Beyond that, all price caps do is limit the availability of the product being capped—whether oil and natural gas and gasoline, rental housing availability and quality…or insurance policies. The limit on supply, too, hurts those on the lower economic rungs of our economy first and hardest.

Requiring insurers to justify their rates and the profit levels at which policy holder refunds are paid is a good idea, but government is the wrong crowd that must be satisfied.

Better simply to require insurers to disclose their profit margins and the basis on which they arrive at their definitions of profit. Their policy rates already are publicly available; making both sides of that process public would let the public more effectively shop for policies that suit their individual needs.

Doing that within an increasingly deregulated (not unregulated) insurance market environment would move the industry closer to a truly competitive market within which insurers would reap fair profits and insurees would pay fair premium amounts for the policies they want. And the Critical Item: “fair” would be defined within that competitive market by those market participants, not by any government.

An Overstated Case

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A couple of Wall Street Journal news writers have laid out the concerns in the Supreme Court’s consideration of whether President Donald Trump (R) can fire Lisa Cook, a Federal Reserve Bank governor.

It will test whether the court’s conservative majority, which has spent years eroding the independence of regulatory agencies, is willing to make an exception for the institution that controls interest rates, inflation, and the stability of the global financial system.

One out of three isn’t all that terribly bad, but the first and third items are of critical importance.

[E]roding the independence of regulatory agencies…. What independence? They were created as instruments of the Executive Branch. As such, under our Constitution, they cannot be independent, for all that Congress averred it so. That would be a violation of our Constitution’s carefully constructed separation of powers. Those agencies are entirely under the authority of the President as the Chief Executive of the Executive Branch. Far from years of eroding the independence, the Court has been glacially slow in recognizing the agencies’ lack of independence.

The stability of the global financial system? Really?

It’s certainly true that the US, with our enormous economy and the size of our market for the global economy, even in today’s tariff regime, exerts outsize influence on the global economy.

However, it exerts influence only, not control.

The impact of our central bank on the global economy is as much—at least—the outcome of other nations’ government decisions as it is that of our own decisions. They don’t get to hide behind us or our central bank in their decision-making, nor do they get to blame us or our central bank for the poor outcomes of their decision-making. The stability of the global financial system is an affair of collective responsibility, not one of unilaterality.

Too Typical

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The Wall Street Journal‘s editors had it down pat in their editorial of last Wednesday. The opening sentence of their lede laid it out:

As federal pandemic largesse ebbs, Democratic-run states are eyeing higher taxes rather than reform spending programs.

The rest of their piece expanded on that theme.

Nor does it get any clearer than this bit. In a nation overrun with Federal debt and with Progressive-Democrat-run States joining in on climbing the forest of trees in their world on which money grows, Progressive-Democratic Party politicians still cannot even conceive of cutting spending. Nor do they feel the need to; it’s not like they’re spending their own money. It’s all OPM.

Now it’s Rhode Island that’s fixing to get up into one of those trees. Rhode Island is another of those Progressive-Democrat-run States, this one with a Progressive-Democrat governor, a 38-seat Senate containing 33 Progressive-Democrats, and a 75-seat House filled with 65 Progressive-Democrats.

This is what we can expect nationwide if Party wins control of the House and Senate this fall, and it’ll get far worse if Pary wins the White House in the 2028 election cycle.

Contradictory and Foolish

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The lede lays it out, with Valero, California’s major refinery operator, at the center of the contradiction and foolishness.

A refining company proceeding with its plans to idle its gasoline refinery in California announced Tuesday it will help out California consumers by importing gasoline, which will help shore up the state’s dwindling supply.

The refining company is Valero, and it’s being forced to close its refinery by California’s hostile regulatory environment for oil and natural gas production and for gasoline and ICE engine-powered vehicles in particular. The contradiction is Valero’s decision to close its gasoline-producing refinery as no longer economically viable while deciding to import gasoline from outside the State.

The foolishness is Valero’s decision to import gasoline into the State after closing its refinery in the State.

As Tim Stewart, US Oil and Gas Association President, put it as quoted by Just the News,

Governor Newson trumpeting his leadership is like the captain of a sinking ship taking credit for handing out life jackets after he’s crashed the ferry on the rocks. It was the lack of leadership on energy policy that got California to this point….

It’s not entirely Newsom’s fault, though; he had help from his Progressive-Democrat-run State legislature, which passed the laws he signed, and from his regulators, who wrote the implementing regulations.

Much more than that, though, the fault lies with California’s citizens. If those folks really were concerned about their gasoline availability and pricing and their ICE vehicles, they’d stop electing representatives and governors who are overtly hostile to gasoline and local production of gasoline supplies and to ICE vehicles.

An Executive Order Worthy of the Name

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President Donald Trump (R) issued an Executive Order—actually, it’s a MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES—that follows up on his EO 14199 (Withdrawing the United States from and Ending Funding to Certain United Nations Organizations and Reviewing United States Support to All International Organizations) which he issued last February.

The current order puts into effect many of the withdrawal recommendations which SecState Marco Rubio reported out to him. The length of the list is an…impressive…list of Woke and otherwise Leftist froo-froo.

It’s good riddance, and we’ll save quite few of our tax dollars.

Non-United Nations Organizations:

(i)       24/7 Carbon-Free Energy Compact;

(ii)      Colombo Plan Council;

(iii)     Commission for Environmental Cooperation;

(iv)      Education Cannot Wait;

(v)       European Centre of Excellence for Countering

(vi)      Forum of European National Highway Research Laboratories;

(vii)     Freedom Online Coalition;

(viii)    Global Community Engagement and Resilience Fund;

(ix)      Global Counterterrorism Forum;

(x)       Global Forum on Cyber Expertise;

(xi)      Global Forum on Migration and Development;

(xii)     Inter-American Institute for Global Change Research;

(xiii)    Intergovernmental Forum on Mining, Minerals, Metals, and Sustainable Development;

(xiv)     Intergovernmental Panel on Climate Change;

(xv)      Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services;

(xvi)     International Centre for the Study of the Preservation and Restoration of Cultural Property;

(xvii)    International Cotton Advisory Committee;

(xviii)   International Development Law Organization;

(xix)     International Energy Forum;

(xx)      International Federation of Arts Councils and Culture Agencies;

(xxi)     International Institute for Democracy and Electoral Assistance;

(xxii)    International Institute for Justice and the Rule of Law;

(xxiii)   International Lead and Zinc Study Group;

(xxiv)    International Renewable Energy Agency;

(xxv)     International Solar Alliance;

(xxvi)    International Tropical Timber Organization;

(xxvii)   International Union for Conservation of Nature;

(xxviii)  Pan American Institute of Geography and History;

(xxix)    Partnership for Atlantic Cooperation;

(xxx)     Regional Cooperation Agreement on Combatting Piracy and Armed Robbery against Ships in Asia;

(xxxi)    Regional Cooperation Council;

(xxxii)   Renewable Energy Policy Network for the 21st Century;

(xxxiii)  Science and Technology Center in Ukraine;

(xxxiv)   Secretariat of the Pacific Regional Environment Programme; and

(xxxv)    Venice Commission of the Council of Europe.

United Nations (UN) Organizations:

(i) Department of Economic and Social Affairs;

(ii) UN Economic and Social Council (ECOSOC) — Economic Commission for Africa;

(iii) ECOSOC — Economic Commission for Latin America and the Caribbean;

(iv) ECOSOC — Economic and Social Commission for Asia and the Pacific;

(v) ECOSOC — Economic and Social Commission for Western Asia;

(vi) International Law Commission;

(vii) International Residual Mechanism for Criminal Tribunals;

(viii) International Trade Centre;

(ix) Office of the Special Adviser on Africa;

(x) Office of the Special Representative of the Secretary General for Children in Armed Conflict;

(xi) Office of the Special Representative of the Secretary-General on Sexual Violence in Conflict;

(xii) Office of the Special Representative of the Secretary-General on Violence Against Children;

(xiii) Peacebuilding Commission;

(xiv) Peacebuilding Fund;

(xv) Permanent Forum on People of African Descent;

(xvi) UN Alliance of Civilizations;

(xvii) UN Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries;

(xviii) UN Conference on Trade and Development;

(xix) UN Democracy Fund;

(xx) UN Energy;

(xxi) UN Entity for Gender Equality and the Empowerment of Women;

(xxii) UN Framework Convention on Climate Change;

(xxiii) UN Human Settlements Programme;

(xxiv) UN Institute for Training and Research;

(xxv) UN Oceans;

(xxvi) UN Population Fund;

(xxvii) UN Register of Conventional Arms;

(xxviii) UN System Chief Executives Board for Coordination;

(xxix) UN System Staff College;

(xxx) UN Water; and

(xxxi) UN University.

 H/t Grim’s Hall