Tag Archives: political economy

Wrong Distinction

Posted on by
Reply

There’s a new challenge, allegedly, for grocers and their junk food sales; although their problem is whether, and if so how much and where, they should stock junk food on their shelves. This is suggested by the headline:

Is a Cookie a Type of Candy? Supermarkets Have a New Food-Stamp Conundrum

This is a trivial question, though, one that awaits only a government definition of what foods are eligible for food stamps. The larger, and the far more serious problem is posed by this claim, buried in the middle of the article:

Critics said that limiting grocery options ignores the real causes of poor diets, such as low incomes, high food prices and access to healthy food. Studies, they said, show little difference between what SNAP recipients buy and the purchases of non-SNAP households.

Say the critics are correct, and food stamp food eligibilities don’t address those root causes. Say, further, that those studies are accurate in their conclusions.

Those criticisms are wholly irrelevant. The fact remains, and it remains unaddressed, as well, that there is no reason for the rest of us to pay with our tax dollars for the poor diet choices those eating on our dime—those food stamp programs—make. If they want those junk foods, let them pay for them on their own dime, just as the purchasers in non-SNAP households do.

How dare we presume so, some might bleat. It’s a simple dare. We’re the ones paying and with our money. We’re the ones who should be determining how our tax dollars are spent.

It’s that straightforward, and it should be that simple.

Electricity Price Controls

Posted on by
Reply

New Jersey’s newly elected Progressive-Democratic Governor, Mikie Sherrill wants them.

Ms Sherrill used her maiden speech to lay out her plans to ease electric rates. “In short, you are sick of the status quo,” she said, “Well, guess what, guys, so am I.” Guess what: Her proposals are more of the same progressive policies that have fueled higher prices: Subsidies, mandates, and price controls.

Especially those price controls.

Her worst idea is a pause on utility “rate increases or cost recoveries to the extent permitted by law.” This is a price control that will reduce grid investment, including in new supply. ….
If utilities can’t pass on their costs, they will skimp on maintenance. It’s that simple.

Of course, those rate increases or cost recoveries permissions are specified by State laws, and Sherrill and her legislature can alter those laws at will. Her “extent permitted” is disingenuous.

Maintenance skimping is well-known to renters in rent-controlled apartments.

If the provider—landlord or utility (or any other)—can’t recoup his costs as those increase, whether they’re supply costs, regulatory compliance costs, or taxes, he has less money to spend on procuring the items he needs to produce electricity or rental housing or… and especially critically, he has less to spend on simply maintaining what he has. Rental homes/apartments and power generators deteriorate, those residences become badly substandard to the point of uninhabitable, and power generation becomes unreliable. That last is bad in a hot summer, and it’s deadly in a cold winter.

With unreliable power generation, we get rolling blackouts where broad areas in succession see the lights go out; oil, natural gas, and coal generators, all of which depend at bottom on electricity, stop; and electric heating (or cooling) systems stop. On-off cycling from those rolling blackouts, even if in longer intervals than shorter, adds to the wear and tear on the generators, and on the heating and cooling systems, requiring increased maintenance for which those price controls, and rent controls, severely limit the money available to pay.

But never mind. Progressive-Democrats want those price controls because that’s their exercise of political power.

Housing Affordability

Posted on by
Reply

A letter-writer in The Wall Street Journal‘s Wednesday Letters section offered a number of ways to break the housing cost problem for folks on the lower end of our economic ladder, folks that include established families and newly graduated young adults. The most cogent way IMNSHO is this one:

The market badly needs deregulation to unlock capital. Tax regulations have frozen large swaths of our existing housing stock. And state and local land use regulations lock millions of acres of land out of higher and better uses by making it illegal to build starter homes on smaller lots.

Especially those starter homes on those smaller lots. Tax regulations, mostly on existing homes up for inheriting, can be handled directly and immediately by the Federal government. The land use regulations consist primarily of State and land use laws and local zoning ordinances, and those are the primary responsibility of the State and local governments. Still, the Federal government has considerable influence that it can bring to bear, from jawboning to financial carrots and sticks.

These starter homes and smaller lots are reminiscent of the Levittowns that were built right after WWII to open up housing for returning white GIs, and their rapid take-up both fired up the housing market and contributed heavily to the nation’s economic reconversion from war to peace and the associated private economic revival. The first Levittown house sold for $7,900, about $80,000-$85,000 in today’s money.

Today’s analog would be shorn of the racial bars and should be shorn, also, of ethnic and religious bars. But that larger target market would only enhance the salability and thereby contribute heavily to breaking the existing cost barrier.

Call them TrumpTowns.

Hardly Defiance

Posted on by
Reply

The Centers for Disease Control and Prevention has reduced its vaccines for children recommendation from a schedule of 18 diseases to a recommendation of 11. The American Academy of Pediatrics still recommends children be vaccinated against 18 diseases. The Wall Street Journal calls the AAP defiant.

No.

HHS Secretary Robert Kennedy, Jr, and HHS’ CDC have all along recommended patients and parents of child patients consult with their physicians on ailments, treatments, and vaccines. Kennedy has emphasized that recommendation while he has had CDC scale back the recommendations.

Parents are heeding that CDC recommendation and are consulting. Pediatricians and their medical association are acting like physicians and treating their child patients rather than parroting those ancillary CDC recommendations.

Wrong Answer

Posted on by
Reply

House and auto insurers’ profits and the rate increases they charge policy holders are coming under political scrutiny, but politicians’ proposed solutions are badly counterproductive.

New York Governor Kathy Hochul (D) this month became the latest state lawmaker to advocate profits caps on insurers, to tackle escalating home- and “crushingly expensive” auto-insurance rates.
Her plan would require home insurers with “outsized profit margins” to lower or justify their rates, and review the profits threshold at which auto-insurers are required to refund customers.
Also this month, lawmakers in states including Oklahoma proposed profit caps targeting insurance.

No.

Government definitions of “outsized profit margins” have nothing to do with business imperatives or what happens in a free market. Those definitions serve only the personal political ambitions of the politicians doing the defining, and they’ll vary across politicians and their political parties.

Beyond that, all price caps do is limit the availability of the product being capped—whether oil and natural gas and gasoline, rental housing availability and quality…or insurance policies. The limit on supply, too, hurts those on the lower economic rungs of our economy first and hardest.

Requiring insurers to justify their rates and the profit levels at which policy holder refunds are paid is a good idea, but government is the wrong crowd that must be satisfied.

Better simply to require insurers to disclose their profit margins and the basis on which they arrive at their definitions of profit. Their policy rates already are publicly available; making both sides of that process public would let the public more effectively shop for policies that suit their individual needs.

Doing that within an increasingly deregulated (not unregulated) insurance market environment would move the industry closer to a truly competitive market within which insurers would reap fair profits and insurees would pay fair premium amounts for the policies they want. And the Critical Item: “fair” would be defined within that competitive market by those market participants, not by any government.