Tag Archives: political economy

Go Ahead On

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IBM was interested in buying the Israeli chip maker, Tower Semiconductor, and the acquisition might have raised antitrust concerns in Israel, the US, the EU, and elsewhere around the world. Each of those antitrust concerns, if acted on, would have had effect only inside the nation raising the concern, however, making the matter purely a business decision whether to go through with the merger and simply not do business in the objection nation. Nobody objected, though, except the People’s Republic of China.

The PRC’s State Administration for Market Regulation balked and withheld approval, so IBM meekly quit the deal altogether, apparently in order to appease the PRC and preserve—IBM hoped—its other business concerns there.

Slow walking or outright blocking tech and other mergers with, or acquisitions by, American companies is part of the PRC’s economic aggression against us as that nation objects to our objecting to the PRC’s economic aggressions and to its tech and intellectual property extortion and theft. IBM is working, it seems, at cross-purposes with our struggle against the PRC.

Other moves by the PRC have included blocking

  • Qualcomm‘s acquisition of Netherland’s chip maker NXP Semiconductors
  • DuPont‘s acquisition of electronics-materials specialist Rogers Corp, an Arizona-headquartered company
  • certain PRC domiciled companies from buying memory chips from US chip giant Micron

It would have been better for IBM—and those other companies, too; IBM‘s managers don’t have a lock on timidity—to proceed with the acquisition and to eliminate the PRC’s antitrust concerns by not doing business associated with the acquisition’s chips inside the PRC or with businesses domiciled inside the PRC. Or for IBM, et al., to stop doing business with the PRC altogether.

It would have been a beneficial twofer had IBM gone ahead on with the acquisition: IBM and Tower merge, Israel, the US, the EU, and most of the rest of the world would reap the benefits of the merging, and IBM and Tower would be out from under the PRC’s regulatory thumb.

It would be beneficial for our nation, too, if the managers of our businesses had the courage to stand up to our enemies and walk away from them.

Chip Manufacturing

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The Biden administration is bent on bringing computer chip manufacturing back into the United States. On its face, that would seem beneficial. However, the administration team he’s formed to oversee the matter and its $39 billion of taxpayer dollars allocated to the program is populated with

investment bankers, private-equity investors, and management consultants.

And apparently no chip engineers or anyone familiar with supplying chip factories.

Uh, huh.

The Manhattan Project and the crash program to develop treatments for the Wuhan Virus were populated, strongly preferentially, with experts in the field, and they just as strongly deemphasized the moneybags experts.

That’s not the case with Biden’s nightmare dream team of money allocators. This isn’t a true crash program, certainly, but it’s still an effort to rapidly guts something up. It needs experts in the field to do the gutsing, it does not need politically connected money handlers.

“Progress on the Horizon”

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Former Biden economic advisor Brian Deese claims us ordinary Americans are skeptical about the economy because we’re too stupid to see what’s before our eyes and draining our wallets. After all,

the president’s low approval numbers on the economy likely come from Americans feeling wary about accepting “progress on the horizon.”

Progress. We’re only just recovering the millions of jobs lost during the Wuhan Virus Situation, a slow recovery that President Joe Biden (D) and his cronies (Deese is just one of them) claim has been one of job creation.

Progress. Inflation remains higher than it was before Biden took office. Inflation is down from its peak a year-and-a-half ago, but it’s starting back up.

Progress. Prices for our goods and services are not coming down; they’re 16%, or more, higher than at the start of Biden’s term in office, and they’re continuing to rise as a result of that continued higher inflation. Food and energy, in particular, remain much costlier to us consumers than before Biden took office.

Deese is just insulting our intelligence with the nonsense he’s spouting.

Buy These Backup Electric Power Stations

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California is moving against the fossil-fuel energy generation industry, along with making its gasoline and diesel fueled vehicles meet ever more extreme mileage and emission criteria in the State government’s effort to run ICE vehicles off the road and…encourage…Californians to buy battery-powered cars and trucks.

Now California’s captive, if not outright State-owned, utility PG&E is proposing a new electricity feed into its greed to supplement its wind and solar generated electricity.

Using electric cars to charge the power grid.
PG&E…sees “great potential” for EVs to act as power grid backup generators. “The grid needs those electric vehicles. We need to make it available, and it can be a huge resource[.]”

And

PG&E believes in a future where everyone is driving an electric vehicle (EV) and where that EV serves as a backup power option at home and more broadly as a resource for the grid[.]

And especially,

The company also said tapping electric cars eliminates “the need for non-renewable resources” like fossil fuels.

Is this the reason California’s governing politicians are pushing so hard for—almost to the point of requiring—Californians to buy all-electric vehicles? Those vehicles are, in fact, intended to be used as distributed power (re)generating stations?

Biden’s Attack on American Free Markets

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The Biden administration’s OMB is moving to eliminate consideration of opportunity costs from the administration’s estimates of the costs of proposed regulations, a move that would make those regulations seem cheaper than they are.

Opportunity costs are at the core of free market economics, and The Wall Street Journal‘s editors offer a succinct definition [emphasis added].

Consider a business that spends $1 million obeying a regulation by making an upgrade, installing new equipment, hiring lawyers, and whatever else compliance entails.
[O]pportunity cost is what the $1 million would have been used for absent the regulation. It might have been spent on research and development, hiring, increasing output, or paying bonuses to employees, who in turn would spend it on something else.
An accountant would say the cost of this regulation is $1 million, and this is basically how President Biden’s OMB wants regulators and the public to think as well. A good economist knows better and would account not only for the dollars spent but also the forgone rate of return on activities never taken up due to regulatory compliance.

Thus, opportunity cost estimating is a critical way in which businessmen—not just economists—estimate the value of a variety of potential moves in an effort to identify the one (or two in concert with each other) that make the most business sense/provide highest and most likely return(s) on the actual dollars that would actually be committed.

Biden’s move is not just an attempt to…mislead…us ordinary Americans regarding the costs of the Biden regulatory state, it’s an outright attack on our free market economy and an attempt to replace it with his regulatory state, economic decisions from the center, economy.