Category Archives: political economy

I Have a Question

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President Donald Trump (R) wants to set up financial accounts for children, initially funded with $1,000 of government money—taxpayer money redistributed. Wall Street wants in on the action. This bit is what raises my question:

Participating financial firms likely would earn lower management fees than their typical rates, but the program would be a potential gateway to acquire millions of new customers the companies hope will stay with them into adulthood and grow their accounts over time.

And this:

One priority for the government is to offer low-fee investment options.

Who will pay those fees? Would they be one-time set up fees, or would they be ongoing account maintenance fees? If the latter, and if they’re paid by the account holder, which is the usual case, even low fees would sap the accounts over time just as thoroughly as even low management fees on mutual funds do.

On the other hand, there’s this:

The Treasury Department is considering choosing an exchange-traded fund or working with firms to potentially create a market-tracking fund with no fees, one of the people familiar with the matter said.

That’s the firms betting on the account holders becoming future broader account holders/investors with those firms, and that would be a good bet.

No-fee (as most brokerages do for DIY investors) or (very) low fee, these accounts would seem like a good idea—give children a leg up on investing and thereby give them a long-term level of game skin for their betterment and their better judgment and interest in our economy.

Except.

How strong would that skin be if handed to the children (even if managed with the assistance of, or by, their parents)? Possibly, the benefits would outweigh that risks, given the size of the proposed seed money.

The far greater danger, though, is the Progressive-Democratic Party, with its penchant for Know Better Government intrusions, returning to power. At that point, the accounts will become permanently and annually government funded in ever increasing amounts—so long as the accounts invest in Party-approved vehicles. See, for instance, Party’s demand for continued (and increasing) subsidies for their unaffordable Affordable Care Act policies.

Japan is Learning the Reasons

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Reasons for ceasing doing business with and within the People’s Republic of China, that is. In response to Japanese Prime Minister Sanae Takaichi’s remarks that a PRC attack on the Republic of China (Takaichi referred to “Taiwan”) would trigger a Japanese defensive response,

China has unearthed its old playbook of informal coercive moves. Unlike clear-cut export controls, these disguised measures are harder to manage and pose escalatory risks. Governments and companies must grapple with how to respond.
Since Nov. 14, China has issued a series of escalating restrictions: cautioning tourists and students against travel to Japan; postponing the release of at least two Japanese films; and reinstating a blanket ban on Japanese seafood imports.

The WSJ‘s op-ed authors, Victor Ferguson and Audrye Wong, Hitotsubashi University Assistant Professor of International Relations and USC Assistant Professor of Political Science, respectively, claimed

It is hard for governments and companies to respond to such disguised measures effectively and cohesively.

It’s only hard politically. It’s completely straightforward as a practical and economic matter. It’s time for the Japanese to suck up and grunt through the unavoidably disruptive period of disruption and discontinue doing business with PRC-domiciled companies, with the PRC government, and business of any sort inside the PRC.

No Government Bailout

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Not even by city governments, and not even for this.

The Wall Street Journal‘s editors noted that

The New York Housing Conference, a nonprofit that promotes so-called affordable housing, warns in a new report that landlords will need $1 billion in government aid to avoid default. “A significant number of affordable housing buildings in New York City are experiencing operating deficits, where rents are not covering expenses,” the report says.

The buildings are publicly financed, and their costs are skyrocketing—costs ranging from insurance to maintenance to unpaid rents.

This is the problem with government paying for stuff, no matter how glitteringly wonderful the intent might seem.

The city government, the State government, the Federal government—none of them—should be forking over any more of the taxpayers’ money for this sort of thing. The best way to solve this kind of shortfall does not include throwing ever more money into the ever expanding maw of city resident dependency.

Instead, cut the buildings’ costs: get out of the way of rent collections, greatly reduce insurance regulations, property taxes (even public housing must pay these), zoning requirements. Lower sales taxes that drive up the cost of maintenance supplies. Let the market determine wage rates, not bureaucrats snug in their government job sinecures.

Globalism

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New York City Mayor-elect and Progressive-Democrat and Socialist Zohran Mamdani has laid it out quite clearly. In his renewed statement that he would uphold an International Criminal Court (to which the US is not signatory) arrest warrant for Israel’s Prime Minister Benjamin Netanyahu, Mamdani said this:

I’ve said time and again that I believe this is a city of international law, and being a city of international law means looking to uphold international law[.]

No. New York City is an American city, and so it is bound by American law. And that means that at the city level (at the State level, come to that), international law is irrelevant. In the case of the ICC, this is doubly so. With the US not being a part of the ICC or the treaty that created it, neither the ICC nor any of its warrants or rulings have any standing in the US.

Whatever one thinks of globalism, this is globalism run amok. This is how far to the left the Progressive-Democratic Party has gone.

If They Depend on Subsidies…

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…then they shouldn’t be in business. The subheadline laid it out:

Republicans want to shift subsidies away from some of the frailest companies in the industry

In this context, “the industry” is the health care coverage industry, and the subsidies are those paid health coverage providers in the Affordable Care Act. I claim, though, that “private” companies that require government handouts are neither all that private nor deserving of staying in business. If they cannot survive without taxpayer money as anything more than a shortish-term loan to survive a catastrophe, they should be left to go out of business.

The news writer at the link made a big deal out of the need for the subsidies to those coverage providers in order to hold down the prices—the premiums—the customers pay for the policies, jerking tears especially for the lower income customers. What he does not address, though, is the deductibles and the out-of-pocket caps those Obamacare policies have. The deductibles and caps each separately represent significant fractions of those lower income customers’ income. They, especially, had better not get sick. If they do, their strait is not much different from that of those folks who are uninsured at all.

The subsidies paid into their hands directly would at least give them a little relief, but that’s only a stop gap. The real solution is to eliminate the ACA altogether and free up the health care coverage industry, restoring it to a health insurance industry in a free market with policies marketable nationwide, rather than limiting them to intrastate sales with the permissions and regulations of fifty different States.

Companies providing health care coverage or insurance should see their prosperity in how well they treat their customers and how well they serve them. Their prosperity should not come from government handouts—transfers from us taxpayers who don’t use their services.