Category Archives: political economy

Win Customers, Raise Revenue

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That’s the Post Office’s goal. Doesn’t seem like they have a viable plan for that, though.

Postmaster General Louis DeJoy is preparing to put all first-class mail onto a single delivery track, according to two people briefed on his strategic plan for the US Postal Service, a move that would mean slower and more costly delivery for both consumers and commercial mailers.
[They plan to] eliminate a tier of first-class mail—letters, bills and other envelope-sized correspondence sent to a local address—designated for delivery in two days. Instead, all first-class mail would be lumped into the same three- to five-day window, the current benchmark for nonlocal mail.

And

The plan also prevents first-class mail from being shipped by airplane….

After all,

The Postal Service spent more than $457 million flying first-class mail in 2020, according to data it filed with the Postal Regulatory Commission, and spent $314 million transporting mail by truck.

Of course, putting all that air cargo onto trucks won’t increase truck transport cost. Uh, uh.

Oh, and the Post Office is planning to raise postage rates in order to make up for this degradation of service.

Brilliant.

The Biden Budget

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Carol Platt Liebau, Yankee Institute for Public Policy President, wrote in her Friday Wall Street Journal op-ed about President Joe Biden’s dangerously expensive Wuhan Virus “relief” bill. A truly Pyrrhic relief it would be, too, even were it not occurring on an already dangerously expensive pair of “relief” bills enacted over the prior year.

She had one statement, though, that particularly jumped out at me, perhaps because it centers on a matter I’ve been on about for a bit already.

President Biden wants to send $350 billion in unrestricted cash to state and local governments to fill their budget holes.

Money is fungible. It doesn’t matter whether a dollar is “restricted” or unrestricted in its use. Even if it is, its mere existence frees up another dollar for the supposedly restricted-from use.

Aside from that, the States don’t need the Federal (which is to say our taxpayer) money. State revenues are much higher than initially expected, even in Progressive-Democrat-locked down and -run States.

In addition, the public union shakedowns of which Leibau wrote further demonstrate the lack of need.

A Treasury Climate Czar

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That’s what new Treasury Secretary Janet Yellen wants to set up. That’s not necessarily a bad idea.

A climate risk office inside Treasury actually could be useful—were its purpose properly targeted.

The risks that are worth assessing and which realizations worth planning for, though, are political and economic, not climatic.

The political risk is from government overreacting with laws and regulations to the overhyping of climate.

The economic risk is from businesses overreacting in anticipation of such political overreactions.

Somehow, though, I doubt that’s Yellen’s intention for her new office.

Cent Wise and Euro Foolish

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Barron’s has an example, centered on Europe’s very own Wuhan Virus situation.

The EU economy shrank last year by 6.3%, according to the latest EU forecast, published on Thursday. That amounts to about €877 billion ($1.1 trillion) of lost gross domestic product last year. Or about €17 billion a week.
Compared with this, the total bill of vaccines procured until now by the EU—based on contracts signed, and vaccine prices confidential in principle but tweeted last December by the Belgian health minister—would amount to €20.5 billion.

The finally agreed vaccine bill amounts to a bare day-and-a-half over a week’s lost GDP—and how many lives.

While Barron’s writes its own price-is-no-object foolishness—When dealing with the pandemic, vaccines are quite literally priceless—the EU plainly wasted ‘way too much time, money, and lives, quibbling over relative pennies.

An outcome of the European Union’s foolishness:

20% of the UK population has already received at least a shot of one of the three [EU- and British-]approved inoculations—the Pfizer-BioNTech, AstraZeneca-Oxford, and Moderna vaccines. More than 13% of Americans are in a similar situation—but barely more than 4% of Europeans[.]

Another Example

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…of the folly of doing business with companies domiciled inside the People’s Republic of China.

The particular company is Ant, a financial institution that PRC regulators lately decided its owner Jack Ma was getting too impudent regarding government actions—was getting too big for his britches—so the regulators blocked Ant from going public unless and until it massively reorganized and at least to significant extent downsized.

Now let’s back up in time a little bit.

In 2018, an exclusive group of global private-equity firms and mutual-fund managers including Silver Lake, Warburg Pincus LLC, Carlyle Group Inc, and T Rowe Price Group Inc took part in a coveted fundraising by Ant that raised $14 billion and minted the financial-technology giant as the world’s most valuable startup.
More than $10 billion of the money came from international investors, which bought shares in an offshore shell company set up by Ant to raise funds in US dollars. The unusual arrangement came about because in order to secure a payment license to operate Alipay, its highly popular mobile app, Ant had to be domiciled in mainland China. But that also limited the company’s ability to raise funds directly from foreign investors.

That’s the why. Now the what.

The global investors agreed to terms that were highly favorable to Ant, and which limited their ability to cash out if the company didn’t end up going public, according to people familiar with the matter. Ant also didn’t provide a listing time frame or guarantee investors a return while it stayed private, the people added.
The foreign investors didn’t receive any voting rights in Ant…. None was given a seat on Ant’s board.

They can’t recoup their investment; they didn’t even get a say in the governance of the company. Just “Here’s a boatload of money. Y’all have a gud time, y’hear?”

Now that was an exceedingly dumb thing for those investors, supposedly experienced in investing, in international finance, and in investing in PRC businesses, to agree. But the larger thing is demonstrated by the PRC government men’s behavior: investing in a PRC business, or investing inside the PRC, is exceedingly dumb.