Tag Archives: political economy

For Whom Does He Work

Posted on by
Reply

For whom do they work, come to that? “He” is Dr Marty Makary, the FDA Commissioner. “They” are the bureaucrats of the FDA.

[C]hanges are coming so swiftly, and often without input from career scientists, that Makary faces declining staff morale threatening to stymie his efforts. He must also contend with the administration’s staff cuts at the FDA….

Career scientists—that’s the press’ euphemism for entrenched bureaucrats who happen to have medical or science degrees.

Lowering employee morale, as opposed to bureaucrats’ morale, is an important problem. It is, however, most optimally solved by either or both of two items:

  1. the bureaucrats figure out that they’re not the ones in charge, they must work within an operational hierarchy and either follow the instructions of those placed above them or resign their positions
  2. the remaining bureaucrats and those newly hired, the latter whom lack the habits of entrenchment, get actually productive and do their jobs more efficiently, which can be facilitated by astute use of AI
  3. That last, of course, requires that Makary implements AI as a tool and not as a decision maker itself

Regarding the opening question, “he,” Makary, works for the HHS Secretary, who in turn works for the President, who works for us American citizens. Makary, thus, works through his chain of command for us average Americans and for our benefit, not that of those bureaucrats. Neither the FDA nor government at large are jobs welfare programs; the incumbents are there for our weal, not their own benefit.

I’m not too worried about the morale of entrenched bureaucrats. I’m concerned about their actual performance of their duties.

Tariffs and the Fed

Posted on by
Reply

The Federal Reserve Bank is facing a conundrum:

First, they [tariffs] raise prices, which weakens the case for cutting interest rates. Second, they sap confidence and demand, which strengthens the case.

There’s this, too:

In May, the Treasury Department collected roughly $15 billion more in customs duties than in February. That is equal to about 3% of total consumer spending on goods. Some goods prices have risen, but not by that much. And in May, prices fell on some obvious tariff targets such as apparel and new cars.
This is a head scratcher. If consumers aren’t paying the tariffs, who is? Not foreign producers, at least through April, when import prices excluding fuel rose. Not, apparently, retailers and wholesalers, whose margins took a hit in April but bounced back in May, according to the producer price report released Thursday [12 June].

For me, though, the head scratcher is straightforward: it’s been so long since we had significant tariffs, and economies have evolved so much in that interim, that we don’t yet understand the lags that are involved between the onset of tariffs and allegedly associated price increases. This is further contaminated by the confusion by folks who should know better of highly variable tariff rhetoric with actual tariffs in place.

And a second contaminant: how much do tariffs raise prices, really, in a global economy that has supply chains that are much more mobile (or at least much less fixed in place) than in those prior economic environments?

And a third: a measure of flexibility in cost transfer techniques: keeping prices stable while doing away with free shipping or raising existing shipping charges, for instance.

Oh, and energy costs are down; lowering prices here counterbalances, in the larger scheme, price increases there.

Resist

Posted on by
Reply

That’s what the tech industry honchoes are doing vis-à-vis Republican moves to cut or eliminate altogether clean energy tax credits. They want to maintain their handouts.

The Data Center Coalition, a group that includes Microsoft, Alphabet’s Google, Amazon.com and Meta Platforms, recently made its pitch in a letter to Senate Majority Leader John Thune (R, SD), according to a copy viewed by The Wall Street Journal. The group asked him to preserve tax credits and loan funding that would be aggressively phased out in the version of the bill passed by the House of Representatives last month.
The bill is fueling industry concerns about rising prices and power shortages if planned investments don’t materialize.

There’s this, too:

The House bill would require solar, wind, and other projects to begin construction within 60 days of the measure’s enactment to receive tax credits. It would also require the projects to come online by 2028, setting a hard cutoff for any projects placed in service after that year. Under current law, the tax credits phase out over four years, starting in either 2032 or when the US power sector’s greenhouse-gas emissions fall to a quarter of their 2022 levels—whichever comes later.

Here’s the thing, though. This isn’t so much a rescission of the tax credits or removal of “loan funding” as it is a requirement that recipients not dilly-dally about their performance. To get/keep the credits and funding, they actually have to start doing the things—begin construction, for instance—required to “earn” the handouts. Then they have to stop slow-walking their performance, pocketing the money money without anything to show, and instead complete their promised project and bring their “clean-energy” facility on line by a date certain.

Their worry about rising prices and power shortages is a valid concern, but that’s not effectively addressed with tax credits or government loans for their projects. That’s effectively addressed by getting government regulations out of the way of fossil fuel-sourced energy. Natural gas is about as clean as it gets, even counting the fiction that atmospheric CO2—plant food—is a pollutant. Oil-based energy production is nearly as clean, as is modern coal-based energy. The actual pollutants from burning coal have long been cleaned up be well-established technologies.

Fossil fuel-sourced energy is lower priced in no small part because it’s utterly reliable, producing energy whether or not the sun is shining or the wind is blowing, and those fossil fuel facilities need no expensive, themselves polluting from mining through disposal, battery storage that lasts only a very few hours into a long-term weather or night-time outage.

Clean energy facilities don’t need the tax credits or artificial government loans any more than do fossil fuel facilities. When they’re ready for market, the market will call for them without taxpayer money being donated to them. The proper resistance is a pushback and retention of the tax credit cuts and rescissions.

Is Harvard Worth Saving?

Posted on by
Reply

That’s the question The Wall Street Journal asked, ironically, on D-Day. The news outlet also asked “How?” but I’m setting that aside as irrelevant: Harvard doesn’t need saving, at least not financially.

Harvard has that $53+ billion endowment, with its annualized return on that endowment of roughly 11% over the last 50-ish years. The question proceeds from the false premise that it needs saving.

Harvard doesn’t need our taxpayer money. More than that, if it no longer gets our money, it’ll be free of government strictures on what it does with the money it receives—the school can do whatever it wants, politically and scholastically, including reforming itself and ridding itself of its institutional antisemitic behavior and ridding itself of those in its employ or student population who act overtly on their own antisemitic behavior, illegalities like seizing and occupying buildings, denying its owners their own property; vandalizing those buildings and others on campus; openly denying Jewish students access to their classes; overtly threatening Jewish students with violence and delivering that violence; and actively denying those who disagree with them their own rights to free speech. That’s the short subset of a very long list.

Or Harvard can choose to continue those bigotries, absent government funding and attached strings. With either choice, though, it cannot continue—must not be allowed to continue—the illegal behaviors in which so many of the school’s bigots openly engage. A school that chooses to continue those behaviors and to condone them among its population doesn’t deserve saving, even with its own money.

A Reason to Help the PRC

Posted on by
Reply

President Xi Jinping set a goal, which he called in typical PRC cutesy fashion, Healthy China 2030, to raise PRC citizenry life expectancy to 79 by 2030, a goal he achieved in 2016. He also wants to improve health care so that all mainland Chinese can live longer, healthier lives in their dotage.

This is a goal well worth us supporting the PRC on.

This is, after all, a nation with a fertility rate of 1.55, which compares with a replacement birth rate—the rate needed just to maintain a nation’s population at its current level, but not growing or shrinking—of 2.1.

This is a nation with a currently aging population, and that will continue to age due to that broadly inadequate fertility rate.

This is a nation with an elderly dependency rate—the ratio of the elderly population per 100 people of working age—of 20.7 and growing rapidly.

The is a nation with a potential support ratio—the number of working-age people for each elderly person—of 4.8 and shrinking rapidly, the inexorable effect of that very low fertility rate.

Helping the PRC to help its elderly to live longer and more healthily not only is a moral imperative, it’s a strategic political objective, too. The growing old folks population with its increasing longevity, coupled with that shrinking labor force, makes the aging population increasingly dependent on government handouts. That shrinking labor force, though, produces increasingly less output and so sends increasingly less revenue to government to redistribute to its aging population. It’s an open question whether automation and robots can maintain or increase production enough to produce the revenue needed for that redistribution.

We should be helping that population grow ever older, healthier, and longer-lived. That will speed the economic dislocation from that aging, and possibly push it into economic collapse. That’s an outcome for an enemy nation that wouldn’t be all bad for us.