Tag Archives: political economy

Other Implications

Posted on by
2

Automakers are starting to adjust their level of dependence on Just in Time manufacturing, a technique whereby manufacturers vastly reduce inventory holding costs by having the relevant inputs—car parts, for instance—arrive at the factory just before they’re needed. In some of the more extreme cases, that includes arriving on the moving assembly line just before it’s needed for addition to the growing product.

The hyperefficient auto supply chain symbolized by the words “just in time” is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in demand, freak weather, and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them.
“The just-in-time model is designed for supply chain efficiencies and economies of scale,” said Ashwani Gupta, Nissan Motor Co’s chief operating officer. “The repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.”

That’s true, and it’s also good that that fragility finally is being taken seriously.

There are two other factors in JIT supply chain fragility beside those largely innocent ones. One is the fact that an enormous amount of trade goods, including raw materials and components for assembly into larger components or finished products, passes through the South China Sea. A large majority of Japan’s inputs and trillions of dollars of value for the US pass through the that Sea. Those shipping lanes are at increasing risk from an increasingly aggressive and acquisitive People’s Republic of China.

The other source is supply chain disruption by union strikes. Strikes generally and supply disruption by strikes are ways in which unions extort concessions out of manufacturers.

Inventory on hand, rather than on trucks or rail cars, helps manufacturers get through those deliberate disruptions.

C Boyden Gray vs NASDAQ

Posted on by
Reply

I know who should be winning. I know how the matter should be resolved.

Recall that NASDAQ wants to require companies, as a condition of being listed on the NASDAQ exchange, to have quotas of particular groups of Americans on those companies’ boards of directors:

“at least one director who self-identifies as female,” and “at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, two or more races or ethnicities, or as LGBTQ+.”

And

Noncompliant firms must publicly “explain”—in writing—why they don’t meet Nasdaq’s quotas.

Gray’s and his colleague, Jonathan Berry’s, summary of their Comment filing before the SEC is spot on.

Nasdaq’s discriminate-or-explain rule is unlawful, unconstitutional, and unsupported by the evidence. Quota systems like this unjustifiably classify people by arbitrary categories of sex and race in violation of equal-protection principles, and the “alternative” of explaining why a firm won’t discriminate compels speech in violation of the First Amendment.

Yet, this is the damage the social justice warriors that infest our government at all levels would inflict.

“How to Save the Post Office, Maybe”

Posted on by
Reply

That’s the headline of a Monday Wall Street Journal editorial.

In response to which I ask, why do we need to?

After all, using the Editors’ own numbers,

the USPS says in 2006 there were 5.6 daily pieces of mail per delivery point. Last year: three. By 2030 the estimate is 1.7.

Why? It’s a shrinking need; the Internet is supplanting mail delivery. In-person communication is done by telephone, Skype, Zoom, and a plethora of other applications. Written correspondence is handled, in among other ways, by a plethora of email facilities.

The Postmaster General, and the Editors, think it would be a good idea to extend the delivery time for long distance first class mail from three days to as many as five. The horror.

They also want to boost the price of using the mail system—the stamps we use.

Here’s a thought about an alternative, though, and one that has a chance of saving both our taxpayer dollars and reducing our consumer costs.

Our Constitution mandates only that the Federal government establish Post Offices and Post Roads. There’s no requirement that the Federal government—or any other level of governance—run the post office and post roads. The latter especially are everywhere, from the Interstate highway system and Federal highways to State highways, County roads, Farm to Market roads, etc, etc, etc.

Let private enterprise run the post offices, too, and handle all mail delivery.

Everything other than first class mail and junk mail and advertising fliers (but I repeat myself) already is handled competitively and efficiently (because competition) by private enterprises.

There’s no reason those private enterprises, or others that would appear in the competitive market, can’t handle first class delivery and junk mail and advertisements, also. And in the latter case, digital junk and ads already are ubiquitous. The paper needn’t be. Think of the trees.

Josh Hawley Has This One Wrong

Posted on by
Reply

Senator Josh Hawley (R, MO) is planning to introduce a child tax credit bill that would grant $6,000 to a single parent family with children less than 13 years old, and $12,000 to two-parent families with children in that age group.

We need a plan to help working parents that is pro-family and pro-work. I’ll be proposing legislation this coming week that gives a major tax cut to working parents to help them afford to start a family and raise their kids[.]

I have no doubt that Hawley’s heart is in the right place, but he’s badly mistaken on this.

For one thing, stipulating his underlying premise that tax gerrymandering is a good idea, he misses the point that kids cost the same to raise no matter how many parents they have, and regardless of how many of those parents work. The idea, predicated as it is on giving two-parent families a choice in how many of the parents work, also ignores the simple fact that a single parent not only has no such choice, but she (yes, I’m assuming. Sue me) has no support from a second parent, working or not.

For another thing, his underlying premise is badly flawed. Our tax code has no business being used for social engineering, whether for family support or for any other purpose. The same (tax) cost break could be given to those families, along with all American families and individuals, by limiting our tax code to covering the three—and only three—spending purposes enumerated in our Constitution, and then by setting that tax code to a single, low, flat rate shorn of all credits, subsidies, deductions, on all income, regardless of source, that leaves more of our money in the pockets of each of us.

A Brazilian Extortion Move

Posted on by
Reply

The headline of a Wall Street Journal piece regarding the Amazon forest, its putative role in Earth’s climate, and Brazil says it all: Brazil’s Climate Overture to Biden: Pay Us Not to Raze Amazon. The article’s lede lays it out in crystalline terms.

Brazil’s government, widely criticized by environmental groups as a negligent steward of the Amazon rainforest, has made an audacious offer to the Biden administration: provide $1 billion and President Jair Bolsonaro’s administration will reduce deforestation by 40%.

The article closed with a question for readers:

Should the US give the Bolsonaro government in Brazil $1 billion to slow deforestation in the Amazon?

No, I say. No, in spades.

Here’s my counteroffer to Bolsonaro: slow deforestation of the Amazon by 50%, and we won’t cut our imports of Brazilian goods and services by $1 billion. End your deforestation by 2030—your proposed goal—and we’ll continue, after that date, to import Brazilian goods and services at rates consistent with market demand.

Here are the Brazilian terms starkly articulated by Bolsonaro’s Minister of the Environment, Ricardo Salles:

If we don’t give these people this economic support, they will continue to be co-opted or incentivized by illegal activities.

Cute. Those are “activities” the Brazilian government condones with its own passivity. Hence the Bolsonaro/Salles threat: “Nice forest you guys got here. Be too bad if something was to happen to it. Be better if you was to pay up.”