Tag Archives: economics

More Interference

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The Obama administration is proposing to spend nearly $4 billion in a decade to accelerate the acceptance of driverless cars on US roads and curb traffic fatalities and travel delays.

No. The Congress needs to refuse to provide the funding for this.

Leave aside whether we want driverless cars on our roads. There’s an arguably positive role for government to actively support, even help fund, basic research. However, once the theory from such basic research has been developed sufficiently (a private enterprise-defined criterion), bringing any related concepts to market is purely an engineering matter and so must be solely a free market/producer/consumer decision. The work, then, should be funded only by private enterprise.

Government has no business picking winning or losing technologies, and that’s what it does when it funds bring-it-to-market schemes. That’s unavoidable, no matter the intentions of the politicians pushing such an expense.

President Barack Obama’s proposal here is intended to facilitate the development of regulations to govern driverless cars. Leave aside here the Progressives’ idea that Americans and our businesses need a government rule for every aspect of what we do, or don’t do. This…regulation development…is nothing more than another bring-it-to-market scheme.

The EU and Taxes

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Competition Commissioner [sic!] Margrethe Vestager called foul on a Belgian tax law the commission says unfairly saved 35 companies—most of them European—some €700 million ($763.3 million) in taxes since 2005. Belgium will now have to collect those taxes if it doesn’t appeal, or loses in court.

How terrible it is that a company should keep the money that belongs to its owners by following applicable sovereign law. For shame.

Here’s the thing, identified by the WSJ at the above link:

EU leaders and tax-happy populists are frustrated with slow political progress toward EU-wide, and maybe global, tax rules that would raise taxes on large companies. Ms Vestager thinks she’s found a way to push things along using antitrust law.

Indeed. Never mind that it isn’t the EU’s money. She and her EU government corporate cronies want it.

More Spending, More Foolishness

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It’s a two-fer that only President Barack Obama could propose with a straight face.

The Obama administration is proposing to extend a financial sweetener the federal government offers states that expand their Medicaid programs, in a bid to persuade more to do so before the president leaves office.
White House officials said President Barack Obama will ask Congress to include three years of full federal funding of expansion for any state that extends eligibility for the program to most low-income residents. Officials said the proposal will be made in Mr Obama’s fiscal 2017 budget, to be released Feb 9.

More Federal spending. Billions of dollars of spending to persuade States to expand their Medicaid programs, an addictive “offer”—addiction to Federal dollars.

And that’s the foolishness. Obama is promising to do this for three more years. Three years in which to get the suckered States hooked on the Federal government’s street corner product.

This move of his hasn’t anything at all to do with low-income citizens. It has everything to do with vote pandering.

In an election year.

Oil, the Saudis, and Iran

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As global oil prices plunge to levels not seen in more than a decade—and Saudi Arabia and Iran threaten to further flood the market with cheap crude as part of their ongoing feud—the possibility of rock-bottom fuel prices appears to be a blessing for consumers.

What’s the downside of that? With our own restriction on exporting oil lifted, we’re also in a position to keep producing and keep selling. The low prices are good for American consumers; they’re an opportunity to expand our own market (the Saudis’ logic in maintaining production rates in the face of falling prices is sound), and thereby wean Europe off dependence on Russian oil exports; and low prices hurts…whom?

Low prices hurts our own oil producers, but an advantage of free market competition is that it leaves producers generally, including in particular oil producers, well positioned and well experienced in dealing with pricing vagaries. We’ll do fine in the price-competitive markets. The Saudis will survive the competition; their pricing needs against their population demands are rather small.

On the other hand, both Russia and Iran need $100+ oil (against last week’s close below $35, and a more stable $40-$50) to fund their adventures.

Keep the oil flooding. Throw us into that tar patch.

The Feds getting out of the way of natural gas exporting would pay similar, and similarly large, economic and political dividends.

“China Loses Its Grip on the Yuan”

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That’s the title of a Wednesday Wall Street Journal article at the time I write this, and I’m not sure it’s far wrong. This is the currency, too, that the IMF decided belonged in its basket of reserve currencies.

The yuan is having quite a number of troubles, courtesy of the PRC’s efforts to retain its (non-market) control. Two of these include

“People are losing confidence [in the yuan],” said Cynthia Wong, head of emerging Asia trading in Hong Kong and Singapore at Société Générale. “Positive hopes diminished with the stock-market crash at the beginning of the year…. She described the flow in the currency market as “one-way,” with investors betting on a weaker yuan.

Here’s another:YuanGap

What’s that devaluing currency going to do to the PRC’s economy as raw materials for its stagnating production base get more expensive? As imported goods for its (now stagnating) consumer sector get more expensive?

What opportunities for mischief accrue from the wide and increasing spread between the controlled yuan’s domestic value and the freely moving value as the yuan is traded (mostly sold) in the Hong Kong currency market? Arbitrage, for one. More and less trackable capital flight for another.

Hmm….