Category Archives: political economy

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.

Oil Producers in a Difficult Spot?

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That’s the central thrust of a couple of news writers in Wednesday’s Wall Street Journal. Their lede:

Big Oil has a tough balancing act: help further President Trump’s “energy dominance” agenda and stick to its climate goals at the same time.

And

The escalating assault on climate initiatives puts large drillers such as Exxon Mobil, Chevron, and Occidental Petroleum in an awkward posture. They have pledged to curb their emissions—and unveiled plans to spend billions of dollars on low-carbon technologies such as carbon capture and storage, hydrogen and biofuels.

This whole idea of a “tough balancing act” is utter nonsense. The Trump administration simply is moving to take the shackles off American energy production.

Nor is there anything at all in the Trump administration’s assault rolling back of climate initiatives that make no economic or climate sense that prevents those and other businesses from continuing those pledges. On the contrary, in the present and improving environment, “Big Oil,” natural gas producers, coal miners, wind and solar energy producers—all of them—are better able to make their production decisions, including those concerning their emissions, based on sound business decision-making and not in response to government pressures to produce only certain types of energy.

Nationalizing Companies

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The Wall Street Journal editors are badly mistaken here.

Mr Trump accused Kamala Harris of being a socialist, but the Biden Administration never nationalized companies.

Routine political polemics on the first part of that; functionally, and obviously, wrong on the second part.

Nationalizing individual companies is piffle. The Obama reign nationalized a whole industry—our health care “insurance” coverage industry via Obamacare, which required all of us to buy an Obamacare policy whether we wanted to or not, whether we needed one or not.

It’s true that the Biden administration didn’t formally nationalize any companies, but it functionally nationalized far more industries than that piker Obama with the Biden administration’s excessive regulation: ICE-powered vehicles and our energy production industries, our banking industry with its pressure to lend to these types and refuse to lend to those types, and even our press with its pressure to spike these news reports and to push those news reports, all the while pushing for editorials that favored administration ideologies while panning or ignoring policies of which Biden and his minions disapproved.

None of this is to suggest that the Federal government taking an ownership stake in Intel or any company is a good idea or even an acceptable one. It isn’t. But it’s telling that these opinion writers can make such an obviously wrong claim at the outset of their piece.

Vast Rightwing Conspiracy?

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Nah. Just a vast force out there. That’s the view of some venture capitalists who are launching PACs to support political candidates who favor as little AI regulation as possible and to oppose candidates who want strong regulation of AI and of AI development regimes. Josh Vlasto and Zac Moffatt, for instance:

There is a vast force out there that’s looking to slow down AI deployment, prevent the American worker from benefiting from the US leading in global innovation and job creation and erect a patchwork of regulation[.]

The polemics from the other side are just as extreme: AI will be the death of society, even the death of us all.

It’s certainly true that AI—like all sharply new technologies—carries risks for the current order of things in our economy, as well as benefits for us all on the other side of the disruption, but the extremes from either side and both sides’ ignoring those benefits do none of us any good.

There does need to be serious discussion and debate regarding the appropriate level of regulation of AI and of AI development, and serious discussion and debate regarding how that regulatory setup should itself evolve as AI and AI development evolve.

Notice that word “serious,” though. That takes the discussion and debate, or should, out of the realm of politics and into the realm of tech experts and, critically, us citizens who must live with the outcomes of regulatory decisions. Especially, us citizens must have the final decision regarding these (and all other, come to that) regulations.