Tag Archives: political economy

Another Brief Thought on Responsibility

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A WSJ Letters letter writer representing Share our Strength wrote to protest the paring back of Federal outlays to State SNAP programs. He had this early in his missive, and he was right:

We can agree that states should ensure eligible families get the proper benefits.

In the very next sentence, though, he had this contradiction:

But penalizing states without providing the resources to improve administration leaves more children hungry by pushing more parents away from SNAP.

The latter part of that may be true, but it’s not the Federal government’s responsibility to improve any State’s SNAP administration, nor is it the Federal government’s responsibility to provide resources for that improvement. Both of those requirements lie strictly and solely with the State involved.

And, using New York as his example, he offered this naked excusal for States’ failure to perform:

Honest mistakes can happen when overworked caseworkers using outdated technology to calculate benefits have to factor in a gig worker’s fluctuating income or a parent picking up occasional extra shifts.

If [New York] truly were serious about those error rates, it would satisfy its own (not the Federal government’s) responsibility and hire more (well-trained) caseworkers and upgrade the technology those caseworkers must use.

At bottom here is a State’s own decision regarding its own spending allocations. Nothing is stopping any State from changing what it chooses to fund and what set of Federal dollars it chooses to try to freeload off of.

All the Federal government can do, all it should do in our federal republic, is provide incentives to States to carry out their own responsibilities. Withholding financial transfers from States that choose to shirk their own responsibilities is a perfectly fine incentive, and one the Federal government should apply more broadly regarding money transfers to States.

The Price of Doing Business in the PRC

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Take Driscoll’s, a grower of fruit—blueberries in particular here—that chose to expand into the People’s Republic of China. Driscoll’s invested in the PRC in a big way, sending experts over to expose PRC farmers and consumers to blueberries, to help the farmers learn to grow them, and to set up Driscoll’s own growing facilities, based on a modern, technologically based hydroponics method.

The intellectual property underlying those techniques and Driscoll’s proprietary plants were bought under false pretenses, propagated, and spread across a plethora of PRC farmers for them to grow unlicensed blueberry bushes.

Even though PRC courts do often rule against domestic growers in many of the cases Driscoll’s, and others, have brought, the damage has been done, and it’s permanent. The intellectual property associated with the berries and with growing them has been stolen and cannot be given back. The proprietary berry plants have already been proliferated without licensing and cannot be eradicated.

Competing growers, both using stolen intellectual property and unlicensed plants and those using legally obtained technologies and plants, are heavily subsidized by the PRC government and by local governments. The artificially low prices resulting from those subsidies, driven even lower by that exploding competition, have begun crowding out foreign growers like Driscoll’s, even though the latter, in particular, still thinks it can successfully chase the chimera, now by growing off-season blueberries.

Until PRC growers start using inexpensive state-backed financing to scale up—and sometimes play fast-and-loose with intellectual property regulations in this off-season venue, too, to enter the game.

Count me entirely unsympathetic.

Other American businesses, large and small, need to take this lesson to heart. It’s a big world. There’s no need to do business with the PRC. Africa beckons. South America beckons. Non-PRC Asia beckons.

There’s Another Way, Also

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Environmental Protection Agency Administrator Lee Zeldin has submitted to Congress a number of California “climate” waivers for repeal under the Clean Air Act. This is a necessary step, and the Republicans in the House and Senate need to find the personal courage to take them up without delay and rescind them, an action that’s straightforwardly doable with simple majority votes in both houses and the President’s signature.

There’s another way, a parallel path, though, and it’s the responsibility of We the People and our businesses and enterprises.

One EPA waiver lets California mandate “zero emission” commercial vessels, including ferries and whale-watching boats. Another allows California to require that container ships and oil tankers docked at California ports plug into the state’s electrical grid or install technology to capture their emissions.

And

Another EPA permit lets California mandate that new lawn mowers, leaf blowers, chain saws, and other “small off-road engines” sold in the state must be electric.

And

[An EPA] waiver approved by the Obama team…allowed California to impose EV quotas through 2025.

It’s straightforward, also, for our private enterprises to adjust their supply chains and sales paradigms to avoid doing business in California altogether. These businesses need to do so promptly and broadly.

One More Pitch

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In their editorial about the success of the Republican reform of the Federal Food Stamp program, the WSJ editors had this remark toward the end:

Congress ought to reduce the 90% federal payment match for the ObamaCare expansion population on Medicaid….

That would be a small first step, though useful in its way, and it prompts me to push again for something I’ve touted over the years: make Federal transfers to the States, not just for Medicaid, but all Federal transfers, block grants on a declining basis.

Designate the year of enactment as Year0, and tot up the total of all transfers to each State in that year. In Year1, send that amount to each State as a single, no strings attached, block grant. In each year of the interval Year2-Year11, reduce the size of the block grant by 10% of Year1, so that from Year11 on, there are no more Federal funds—which are the tax remittances of all of us American citizens—being sent to the States.

The citizens of each State should not be required to fund the profligacy of other States; those taxes sent to the Federal government should be for the sole purpose of funding the constitutionally mandated expenditures of the Federal government, those expenditures enumerated in Article I, Section 8. Each State’s governing politicians should be required to justify the tax levels and expenditures they want directly to their own constituents.

Of course, there’s one exception to this end of Federal transfers. In the event of a natural disaster that’s beyond the capacity of a State or a region to handle from its own resources, Federal transfers to the State or region would be justified. To hold down the incidence of manufactured emergencies (for instance, excessive spending leading to a risk of fiscal failure), a significant fraction of the transfer, or all of it, should be in the form of loans due in full within, say, five years of the onset of the claimed disaster.

They Know the Answer to This

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There is a growing recognition around the world of the economic dangers posed by the People’s Republic of China’s export dominance, achieved as it has been through its domestic overproduction and overseas sales at below-cost prices of that overproduction, with the losses to the PRC’s businesses made good by PRC government subsidies.

A Group of 20 statement implicitly criticizing Beijing for its overreliance on exports for growth marks a new stage in international pressure. The statement, issued Tuesday at the G-20 meeting of finance ministers and central-bank chiefs in Asheville, NC, was a striking example of agreement in an otherwise-fractious affair that featured disputes over Russia and President Trump’s policy toward Canada.
Countries across Europe and Asia worry domestic industries in areas such as autos, electronics, and heavy machinery won’t survive China’s push to export its way out of domestic economic troubles.

The US Treasury issued a statement summarizing the matter, although Treasury Secretary Scott Bessent shied away from mentioning the PRC by name.

It said “countries with excessive and persistent external surpluses” should end policies that “result in an overreliance on exports for growth” and cause harmful spillovers around the globe.
Those countries should “eliminate nonmarket policies” and “remove distortions that constrain domestic consumption….”

Of course all of the G-20 players know full well that the PRC won’t do anything of the sort. Those exports are too important an economic weapon for the PRC to lay them down.

Last year, China responded to American tariffs by restricting the export of rare earths to every country, pummeling global manufacturers. Beijing also cut off certain mineral exports to Japan after a spat over Taiwan.

These world “leaders” know this weaponization. They just need to stop importing from the PRC, whether by serious tariffs, or complete refusal to buy PRC products. The doing would correct the economic damage, and from that, greatly reduce the political risk to their national sovereignty (a risk those “leaders” still don’t seem to see). The doing in the longer run also would more than pay for the disruption of shifting their supply chains. They just lack the courage to do it, satisfying themselves, instead, with yapping about it from the safety of their porches, and so they’re failing their people.