Category Archives: political economy

The Editors Miss Again

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This time, the editors of The Wall Street Journal waxed excited over President Donald Trump’s (R) responses to the People’s Republic of China President Xi Jinping’s export blocks controls on rare earths and related materials aimed at the United States.

First things first.

None of this [trade war] is good for the US and global economies.

The editors appear to be writing from a fantasy garret office. In what war do they imagine that one side suffers no harm at all? In the real world, wars damage all participants.

Then there’s this from the editors’ swampish imaginations.

Mr Trump started the fun by announcing on social media midday Friday that “some very strange things are happening in China!” He said Beijing has turned “very hostile” and is sending letters to the world announcing tighter controls on the export of “every element of production having to do with” rare-earth minerals.

There’s that fantastical editorial garret world again. This latest round was begun by the PRC’s Xi when he imposed those controls on rare-earths, processed rare earths, and any product from wherever exported that contains rare earth materials comprising 0.1% or more of the product’s value. Trump is merely responding to that attack rather than meekly lying down and forcing us to accept it.

But back up a bit, too, to a time of which the long-term memories of the editors seem broadly deficient. The PRC has been inflicting its trade war on us for years and years. It has been stealing our technologies through espionage and hacking.

It has been forcing technology transfers from private enterprises as a condition of their doing business in the PRC, a condition only slightly eased over the ensuing years.

It has been forcing private enterprises to accept as partners PRC-domiciled companies as a condition of those foreign enterprises doing business in the PRC, a condition only slightly eased over the ensuing years.

It has demanded PRC government-approved back doors into foreign companies’ operating software as a condition of those foreign enterprises doing business in the PRC, a condition only slightly eased over the ensuing years.

It has demanded PRC apparatchiks in foreign companies’ management teams operating PRC-domiciled arms, a requirement only slightly eased over the ensuing years.

The PRC has begun dumping its industrial output on the international market at below production cost pricing nominally to shore up the economic malaise of its own overproduction, but in truth to bankrupt other nations’ domestic industrial producers—including in the US—and so gain market share to the point of other nations’ dependency, especially ours, on PRC output.

Trade wars aren’t easy, as the editors noted in their headline. But trade wars are made the harder when folks who should know better don’t even understand the war actually progress.

30-Year Mortgages

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Patrick Brenner, Southwest Public Policy Institute President, thinks these have been terrible ideas. I disagree. Central to his thesis this:

The 30-year mortgage locked families into a lifetime of interest payments that cost the borrower far more than the original price.

However, he never mentions a Critical Item that also obtained throughout his period of interest, the post-WWII mobility, both geographically and economically upward, of the American working force/homeowner population.

Two personal examples illustrate, and I claim our examples are typical, not unusual.

When my wife and I were starting out, as Lieutenants in the USAF, we were able to buy our first house courtesy of one of those “dangerous” shorter term balloon payment loans. We were highly mobile as USAF officers, but that mobility, as I claim, wasn’t unusual—the civilian work force also was highly mobile, and that mobility allowed homeowners to sell their homes, pursuant to their mobility, before the balloon came due, and buy another home in their new location, now with a variable rate loan (fixed for a period of years, then floating with the market), 15-year fixed mortgage, or an evil 30-year mortgage, with interest rates favoring the variable rate and the 30-year. Again, mobility allowed most homeowners to sell their homes before the variable rate reset, along with selling their 30-year mortgaged homes long before being “locked in for life.”

It also was the case that many of these balloon mortgage homeowners refinanced into a new variable rate loan or into a 15-year or 30-year mortgage. Banks expected these sorts of refinances and smoothed the path.

Many years later, as my wife and I were long established civilians and approaching retirement, we bought our current house with a 30-year mortgage. We’ve since refinanced that mortgage a number of times as interest rates went down, and currently have a monthly payment a bit over half that original payment.

So much for ever being locked in for life with a high-rate mortgage. With that mobility, very few homeowners actually paid more in aggregated principal and interest than the value of their homes—they refinanced down, or they sold and moved on.

The only thing in the way now is a greatly reduced mobility in our homeowner population. There are a number of reasons for that reduction in mobility, but the key here is that reduced mobility. Being “stuck” in some way with a 30-year mortgage is a symptom of relative immobility, not a cause of affordability. That immobility also contributes heavily to the lack of houses on the market while demand for homeownership remains high—that’s excess elevated pricing for homes.

Short-Sighted and Narrow-Viewed

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The good editors at The Wall Street Journal opined on the leaked-to-the-press Compact for Academic Excellence in Higher Education. They’ve missed on a couple of their points.

Where the compact goes too far is with its demand that schools freeze tuition for five years….

The editors noted that Mitch Daniels succeeded in this for more than just five years, and they insist that the matter should be left to the schools. The editors missed the simple fact that the matter is still left to the schools: they still can set their own tuition rates; they don’t have to sign the Compact, which is an entirely voluntary thing. They’ll still have access to Federal funding, too; they just won’t get preferential treatment.

…cap the enrollment of international students at 15%.

The editors worried about where that threshold came from, since they couldn’t understand it. The short answer, and the long answer, is Who cares? It’s a cutoff point easily achievable that leaves predictable room for (qualified) American students. As this graph shows, there are plenty of schools that would create that room were they to similarly cap their international enrollment:

The only serious question here is whether international enrollment should be capped at all, not quibbling over limits.

The editors’ rationalization for their beefs are that

Limiting tuition and international students at the same time could leave schools with a budget shortfall.

This would be just silly if the editors hadn’t tacitly accepted the Left’s penchant for spending as sacrosanct. The schools always can reallocate their spending, and they always can reduce their spending to fit the revenues coming in. There’s nothing in the proposed Compact to prevent that exercise in fiscal responsibility.

And this:

Well-intentioned but hard to implement is the compact’s effort to combat grade inflation. The compact demands that schools “commit to grade integrity and the use of defensible standards for whether students are achieving their goals.” Good luck trying to figure that out. Will a fleet of auditors investigate if slackers really deserved an A- in Econ 101?

What, then, is the editors’ solution? Just roll over and give up on solving a difficult problem? Their silence on this speaks volumes. It also demonstrates that their comfort zone is up on the porch, whence they can yap in complete safety.

Disingenuousness in Health Coverage

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David Merritt, of the Blue Cross Blue Shield Association, demonstrates some in his Wall Street Journal Letters letter. He wrote to dispute the WSJ‘s opinion piece that Obamacare tax credits help those who don’t need help.

Consider a family of four that earns $64,000 a year. If the tax credit expires in December, it will see its premiums rise by more than $2,500 in 2026.

Merritt chooses not to say why his, or any other, health coverage company charges such high premiums in the first place. Neither does he specify to which of the several policies on offer in the Obamacare exchanges for this family this premium “spike” would apply.

You add that “making these plans ‘free’ has allowed insurers to get paid for people who may not even know they’re enrolled. Some 40% of those in fully subsidized plans had zero claims in 2024.” But the presence of enrollees with few or no medical claims is the sign of a healthy market. It is common in all insurance markets to find young adults who use less healthcare and therefore file fewer claims.

This is a cynical deflection from the fact that health coverage providers make their money off those unused (by the policy holder) premiums, which the providers invest in order to both make their profit and to fund their payouts. None of that is illegal; it’s even a smart use of those premiums. Merritt’s deflection is real, nonetheless.

Thanks to targeted efforts by the Centers for Medicare and Medicaid Services, enrollment integrity has never been stronger.

Except that, under the Biden administration, far too many illegal aliens have access to taxpayer-funded health coverage. More, those hard-working families of which Merritt pretends to be worried, are untouched by letting the subsidies expire. The only families whose coverage might be imperiled are those who are able to work but make no effort to do so.

Whose Shutdown Is It?

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The Progressive-Democrats in the Senate—nearly all of them, led by Minority Leader Chuck Schumer (D, NY)—have closed the Federal government over their demands to get their minority party way entirely. Senator Tim Kaine (D, VA), as cited by The Wall Street Journal,

said he could vote for a spending bill with a promise to extend the ACA subsidies later, provided that he could get a commitment from the White House to impose a moratorium on firings and spending cuts.

So much for Party’s blather about demanding negotiations on the subsidies as a condition of reopening the government. Now, it’s Party demanding an outright guarantee of the extension, no negotiation at all.

So much, too, for any possibility of the Progressive-Democratic Party ever being interested in cutting spending, only constant increases.

Senator Angus King (I, ME) made even more explicit who is responsible for closing the government:

the vote’s result (Friday’s Senate vote on the House-passed clean CR) “demonstrated that a vague promise about conversations about the ACA isn’t going to be enough to induce my colleagues to end the shutdown.”

This is King’s acknowledgment that it’s Party that has shut the government, and it’s Party that insists on keeping the government shut. With their determined closure, it’s Party that’s harming ordinary Americans with their cutoff of project funding that leads to private sector jobs being HIAed, even as Party bleats that it’s Republicans who are responsible.

Party ignores the fact that the Republicans in the House, despite Party’s best efforts, passed a clean Continuing Resolution—no pork for either party, just funding for seven weeks of government operations—and sent it to the Senate. It’s Party in the Senate that is demanding a Christmas tree worth of Party pork be added to the CR or they’ll leave the government closed, those projects unfunded, and those jobs HIAed.