Tag Archives: political economy

Isn’t This Interesting

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There’s an oil tanker traffic jam at the Turkish Straits junction with the Black Sea. That jam is being caused by tanker insurers’ refusal to honor a Turkish demand that the tankers produce letters from their insurers assuring Turkey that the tankers’ Protection and Indemnity Insurance policies remain in effect following the G-7’s, EU’s, et al., imposition of a price cap on Russian oil that bars insurers from covering oil tankers carrying Russian oil for sale above the cap. The International Group of P&I Clubs provides 90%, by tonnage, of the policies covering the world’s oil tanker fleet.

That Club’s problem with that demand for proof of effectivity of its policies post-cap is this:

The insurers said they couldn’t agree to the Turkish request because it could lead them to violate sanctions….

Isn’t that rationale for the Club’s reluctance interesting. What sanctions do Club insurers think they might violate if their policies comply with the requirements of the cap? It’s certainly possible that Russian oil shippers and/or traders could lie to the insurers about the prices of their oil, but that just puts a premium on the insurers exercising due diligence before they issue their policies. And on refusing to insure further if the Russian shippers/traders are discovered after the fact to have lied.

Economic Failure

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An example is in the housing market, provided by this bit in a Wall Street Journal article centered on housing costs as a major component of our current economic inflation. The article suggests, among other things, that housing cost inflation may be abating.

If shelter inflation does drag overall inflation closer to 2%, that doesn’t mean the inflation problem is over. Economists assume increases in rents and home prices will remain subdued, given the slowing economy and high mortgage rates.

Say that the shelter inflation is easing and that it does, indeed, drag overall inflation down. Inflation is a measure of the rate of price increases, it is not a measure of prices themselves. If shelter prices stop rising so fast, the cost of shelter—rent, house purchase (and associated interest rates on those mortgage), rent/housing utilities—and of fuel, food, and on and on all will remain at their current levels; they most assuredly will not fall back.

But those prices must be paid out of a household’s income, and that income—wages and salaries—has increased only at half to three-quarters the rate of inflation. That means that in real, practical, terms, a household has less money with which to pay those costs: a larger per centage of monthly household income will be absorbed by those monthly rent/mortgage payments and those monthly household utility, fuel, food, etc bills than was the case before this inflation explosion.

That’s the failure of the Biden administration’s and Congress’ fiscal policy of throwing trillions of dollars at our economy with no means for it to absorb that money though increased production and productivity. That failure is exacerbated by the Powell Federal Reserve’s monetary policy failure in artificially suppressing interest rates for so long, and in printing dollars like the presses would run out of ink tomorrow through its bottomless purchases of Treasury debt instruments.

Shouldn’t Be Anyway

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In a Fox News piece on the refusal of Russia to continue negotiations on the mutual inspection clause of the current New START treaty that purports to limit the size of the Russian and American nuclear arsenals, there was this from Arms Control Association Executive Director Daryl Kimball regarding the breakdown:

If there’s not a negotiation on some sort of replacement treaty, there will be no agreement for the first time since 1972 that limits the world’s two largest nuclear superpowers arsenals[.]

Kimball is ignoring—worse, President Joe Biden (D), his Secretary of State, and his Secretary of Defense are ignoring—the absence of the world’s third largest nuclear superpower in any sort of nuclear arms control negotiation.

If the People’s Republic of China, which is expanding its nuclear arsenal and modernizing with state-of-the-art equipment its delivery systems for that arsenal, is not an active and good faith participant in any such negotiation, than any arms limitation treaty between the US and Russia will amount only to the US’ unilateral disarmament relative to the PRC—and relative to Russia, which is rapidly becoming economically dependent on the PRC and which can rely on it in any nuclear war.

That growing disparity in military capability between the US and the PRC, keep in mind, comes against the backdrop of PRC President Xi Jinping’s avowed goal of “supplanting” the US as the sole world power.

We need to accept Russia’s decision, via its current refusal, to begin a new arms race. It’s a race that our survival as a free and independent actor in the world depends on winning, and it’s a race that we can win with our—so far—economic and technological superiority, just as we did vis-à-vis the Union of Soviet Socialist Republics.

The time is now, though, to join and to push that race—the PRC already has been in it for lots of years, and that nation is far more economically and technologically capable than the USSR ever was.

American Energy Production

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In a piece centered on Texas’ role in our nation’s electricity production and especially on Texas’ role in our nation’s oil and natural gas production, there sat this nugget of information:

Fossil fuels—petroleum, natural gas, and coal—accounted for roughly 79% of total US energy production in 2021, according to the EIA.

This is the magnitude of destruction the Progressive-Democratic Party wants to wreak on our ability to heat our homes in winters, cool our homes in summers, travel to/from work or stores, or produce much of anything at all from food to manufactured products to communications facilities—all of which take energy as the first input. They don’t care about the destruction they intend to inflict on our economy in general.

No more drilling.
There is no more drilling. I haven’t formed any new drilling.

That’s President Joe Biden’s (D) solemn promise to do right now. All in the name of converting us to “renewable” energy sources…sometime. All without regard to those sources being entirely unreliable.

In Which Rubio is Mistaken

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The Senate passed a bill mandating a labor agreement agreed by railroad companies, management teams of a dozen rail unions, and the rank-and-file of most of those unions be imposed on all of those unions and railroad companies. The bill also barred a rail union strike.

In a separate vote, the Senate failed to pass a bill imposing a number of paid sick leave days for union employees on the rail companies.

Senator Marco Rubio (R, FL) is dismayed.

When workers are treated as little more than line items on a spreadsheet, they become indistinguishable from the freight cars they service….

And

…the measure only granted rail workers one day of paid sick leave all year—a stipulation that Rubio said “underwhelmed and alienated the men and women doing the hard work.”

And

Congress…told rail workers to suck it up and be grateful. We should have worked to meet the demands of the workers instead of appeasing labor leaders and companies.

Most, if not all, of that likely is true.

However.

It doesn’t matter how much any of that might seem like a good idea, or might even be a good idea, over the duration of a contract. It’s not government’s job to set the work compensation parameters for employers and their employees. Most especially, it is not government’s job to meet the demands of the workers. It’s government’s job to set the market conditions within which employers and employees can negotiate those parameters freely.

Senator Bernie Sanders (I, VT) wasn’t far off with his dig at Rubio: I always knew you were a socialist.

Government is a system of men and women, not an entity in itself. What those men and women might think is a good idea will vary over time for those men and women and certainly will vary as different men and women come into government from time to time. We need only see how government “good ideas” vary as Republicans or Progressive-Democrats are in ascendance from one Congress or administration to another.

At most—at most—where a national risk is in play (for instance, a steel worker industry-wide strike or lockout, or a nation-wide rail strike or lockout), government might require the two sides to settle through binding arbitration a disagreement they can’t settle through negotiation. With the arbiters chosen by the two disputants, not by government.