Category Archives: political economy

Go to Trial

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In the “legal” battle between Larry Ellison’s Paramount on the one hand and California, et al,, on the other over whether Paramount’s acquisition of Warner Brothers amounts to an anticompetitive monopoly, as California AG Rob Bonta claims, Ellison is pushing for a 4 November trial start date while Bonta and his fellow attorneys general in this case are holding out for a 5 April of next year start date.

Consider, though: Paramount, as part of the acquisition deal, agreed to pay Warner Brothers $650 million per quarter for every quarter the deal stays unclosed after 7 September this year, and a final payment of $7 billion, if the deal collapses or remains unclosed by June of next year. That’s what put the quote marks around the legal part just above.

If the defendant is ready to go to trial in early November, then that’s when the trial should start. That the defendant shall enjoy the right to a speedy and public trial, by an impartial jury is explicit in our Constitution for criminal cases, but the principle holds just as firmly in civil cases. California, et al., don’t get to delay the trial at government’s convenience.

Aside from that, they were ready to go to trial, tautologically, when they filed their suit. Delaying five months is nothing but an unethical effort to delay, delay, delay for the sole purpose of running up the costs to the defendant—hoping, perhaps to spend the defendant into giving up—for its impertinence in insisting on defending itself.

Markets and Refs

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Greg Ip has a problem with Kevin Warsh’s so-far performance as the new Fed Chair.

Warsh’s analogy of the Fed simply calling balls and strikes, borrowed from future Supreme Court Chief Justice John Roberts, doesn’t work. The Fed isn’t a neutral umpire, it is the most important player in the game.

I have a problem with Ip’s problem. He went on.

Markets respond not just to data but how they think the Fed will respond to data. Investors plug each new bit of information into the Fed’s assumed “reaction function,” which then spits out the appropriate interest rate.

That’s part of what needs to change: “markets”—which is to say investors and business management teams—need to respond to the actual economy, not what one or another arm of government (however independent or not that arm might be) is doing. They need to stop playing the ref so much and work from the economy a whole lot more. It’ll take a bit for them to learn that and then how to do that.

The Fed doesn’t have a role refereeing the markets, in any event. The Fed’s job is to maintain price stability and employment stability, which it does by setting its benchmarks at levels consistent with its long term inflation goal. Its role does not include manipulating the market’s response to those benchmark rate moves.

What He Said

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A letter-writer in WSJ‘s Wednesday Letters section had this:

China’s consumer economy is bound by families’ overinvestment in property. In the absence of a thriving retail stock market, the life savings of two or three generations are poured into housing.
With grandma’s nest egg and mom and dad’s retirement tied up in a young couple’s first home, even a slight chill in property valuations causes an arctic frost on consumer sentiment.

Yep.

Compare and contrast that with John Adams’ definition of Happiness.

An Alternative Extinguishment

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Federal District Judge Araceli Martínez-Olguín has ordered Paramount and Warner Bros. Discovery to halt their merger process for two weeks—ostensibly, the judge claimed—to give States challenging the deal more time to see their case through in court. The silliness of that order is in the claim that two whole weeks is enough time for such a complex case to wend its way. Any Federal judge worthy of his black robe is well aware of the implications of such a short time frame. This is nothing more than judicial interference in a business decision.

The States’ argument also is risible. The merger would “extinguish competition” in Hollywood and reduce choices for consumers. This can be rendered irrelevant in a straightforward manner. Paramount and WB should move their operations out of Hollywood, out of California altogether. Then there would be no concern about Hollywood at all. There also would be no reduction in consumer choice from the move.

Likely locations for the two companies include Virginia, New Mexico, Texas, and Alabama, each of which has an environment favorable to making movies and television shows. Any of those environments also would lower the costs of production, which could only enhance consumer choice by making movies and TV shows easier and faster to bring off.

Who Can Afford Obamacare?

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The lede:

Rates for many Affordable Care Act plans rose by double digits this year. Insurers want to do the same next year.

It’s especially bad in Progressive-Democrat-run States. For instance:

In Washington state, Centene is asking for a 28% hike, after boosting rates by 35% in 2026. Blue Cross & Blue Shield of Illinois wants 15%—on top of a 28% increase this year.

Who can afford Obamacare? Nobody. Not the individual, not the nation at large. That’s what those unconscionable Federal subsidies, only recently cut back, kept hidden for so long, at the Progressive-Democratic Party government dependency pushers’ behest. Dependency is votes, as they’ve long known.

It’s time the Republican Party stopped dithering and cowering. The party needs to get rid of Obamacare and replace it with an interstate commerce-centric, lightly regulated (which would entail rescinding a double potful of regulations) free market for health insurance, one in which insurers could offer plans that customers actually want, and at competition-driven prices and deductibles, and coverages. Especially that last would drive costs down. Plans that don’t try to cover everything, unless that’s what enough customers want to make a market, plans that cover only a few things, that cover only catastrophic medical events, and every coverage level in between—whatever the customers want in sufficient aggregate to make a market.