Saturday, December 24, 2016

MAYBE THINGS AREN'T SO BAD. A lot of people look at labor costs as a reason to move manufacturing out of the United States. Cao Dewang speaks of the advantages U.S.-based manufacturers have over China
The latest to enter the fray is Cao Dewang, one of China’s richest tycoons and a leading philanthropist. Over the past 10 days, his interview with a mainland newspaper in which he suggested the investment climate was more favourable in the US than in China has become the talk of the town.

Cao certainly speaks with authority. The founder of Fuyao Glass, the car glass manufacturer which supplies the world’s leading automakers from BMW to GM, has invested nearly US$1 billion in the United States including a US$600 million car glass manufacturer in Ohio.

In the interview, he said manufacturing costs in the US were much lower than in China because electricity cost half as much, natural gas a quarter, and transport even less (because US highways are free).

Although he said an American blue collar worker’s salary was at least eight times higher than that of a Chinese worker, he also said US corporate income tax was much more favourable than that of China. The official American corporate income tax rate is 35 per cent, rising to about 40 per cent when state taxes and other fees are added.

By comparison, China’s corporate income tax rate is 25 per cent but the overall tax burden is much higher due to the 17 per cent value added tax (VAT) and a litany of other taxes on vehicle use, urban construction, education and stamp duty.

By Cao’s estimates, a Chinese firm needs to pay 35 per cent more in taxes.

As far as manufacturing is concerned, according to Cao, everything is cheaper in America apart from manpower.

Saturday, December 10, 2016

CHICAGO SCHOOL WOES. The Chicago Public School system is in serious financial trouble
Chicago's public school (CPS) system plans to sell a new type of bond issue in an attempt to separate the debt from the district's severe financial woes and protect it in a potential bankruptcy filing, according to a document released by the district on Tuesday.

The preliminary prospectus for the debt indicates the Chicago Board of Education will issue $500 million of bonds secured solely by a capital improvement property tax and not by the district's general obligation pledge.

That pledge currently covers about $6.8 billion of existing bonds that are rated junk by Moody's Investors Service, S&P, and Fitch Ratings.

CPS, the nation's third-largest public school system, is struggling with pension payments that will jump to about $720 million this fiscal year from $676 million in fiscal 2016, as well as drained reserves and debt dependency - factors that have pushed its GO credit ratings deep into the junk category and led investors to demand fat yields for its debt.

Illinois Governor Bruce Rauner last week vetoed a bill to give CPS a one-time $215 million state payment to help cover pension costs.

Friday, December 9, 2016

BE CAREFUL WHAT YOU WISH FOR. Jill Stein's call for a recount in Michigan in order to "protect the integrity" of the election system wound up inspiring legislation. And Democrats are not happy:
Michigan’s Republican-led House on Wednesday night approved a strict voter identification proposal over strenuous objections from Democrats who argued the plan could disenfranchise properly registered voters.

Michigan voters without photo identification could still cast a provisional ballot under the controversial legislation, but they would have to bring an ID to their local clerk’s office within 10 days of an election in order for their vote to count.

The legislation seeks to “protect the integrity of every single Michigan citizen’s vote, because every vote is diluted if fraudulent votes are cast,” said Rep. Gary Glenn, R-Midland.

Current state law allows registered voters to cast a ballot without photo identification if they sign an affidavit affirming their identity under threat of perjury, an option 18,388 residents used in the Nov. 8 election, according to the Michigan Secretary of State.

Nearly half of those voters were in Wayne County, including 5,834 in Detroit.

Trump's margin of victory was less than 11,000 votes in Michigan.
CONTINUING OBAMA'S PIVOT TO ASIA. Obama leaves Trump a crumbling position in the South China Sea and South-east Asia. Austin Bay explains what Trump is up to
A month after the presidential election, U.S. president-elect Donald Trump has executed his own political "pivot to Asia."

Trump's pivot consisted of two phone calls, one with Taiwan's president and the other with the president of the Philippines.

The explicit topics discussed matter, but the critical fact is that Trump spoke with the Asian leaders. Taking the personal calls sends a diplomatic message. In Taipei and Manila, it is a message of reassurance and support. Taiwan, the Philippines and several other Asian nations confront a China pursuing increasingly militant and expansionary policies in the South China Sea and northeast Asian littoral.

Beijing had a different take on Trump's conversations -- particularly his chat with Taiwan. The Chinese government appeared to be shocked. Beijing regards Taiwan as a province of China, not a separate country. China insists on a "One China" policy. Since the U.S. recognized the Communist regime in Beijing as China's government, American presidents have deferred to Beijing's wishes and avoided overt contact with Taiwan's leaders.

Trump isn't president -- not yet. His phone calls, however, indicate he may not practice "business as usual."

Trump's decision to speak with Taiwan's president should be what I'll call an "expected surprise." Surprise is a component of Trump's "art of the deal." (Advice to Beijing: Go brush up on Sun Tzu's "Art of War.")

Frankly, China's Communist government has earned a mild shock or two, perhaps two dozen mild shocks.

Read the whole thing.
SHOULD WE CALL IT MATRYOSHKA NEWS? The Washington Post ran a story about fake news that itself relied on a source some would call fake news. Here's the editor's note:
Editor’s Note: The Washington Post on Nov. 24 published a story on the work of four sets of researchers who have examined what they say are Russian propaganda efforts to undermine American democracy and interests. One of them was PropOrNot, a group that insists on public anonymity, which issued a report identifying more than 200 websites that, in its view, wittingly or unwittingly published or echoed Russian propaganda. A number of those sites have objected to being included on PropOrNot’s list, and some of the sites, as well as others not on the list, have publicly challenged the group’s methodology and conclusions. The Post, which did not name any of the sites, does not itself vouch for the validity of PropOrNot’s findings regarding any individual media outlet, nor did the article purport to do so. Since publication of The Post’s story, PropOrNot has removed some sites from its list.
IS THAT WALL GETTING BUILT? When I listened to Trump speak in Fayetteville, NC, I wondered if he referenced a guest worker program. With his pick for Labor Secretary, Andrew Puzder, I wonder how pissed off Trump supports will get. The National Review's Mark Krikorian explains:
Finally, there’s the Labor Department. Labor is central to the process of certifying and importing all the various categories of guestworkers that undermine the bargaining power of American workers – H1-Bs for the tech industry, H-2As for agriculture, H-2Bs for non-ag cheap-labor employers, and more. In addition, prior to the Obama administration, Labor Department inspectors were a force multiplier for immigration regarding worksite enforcement – coordinating with ICE (and before that, INS) on worksite problems the immigration people weren’t aware of.

Trump’s pick for Labor secretary is perhaps the worst person imaginable for that role: Andrew Puzder, CEO of CKE Restaurants, the parent company of fast-food chains Carl’s Jr., Hardee’s, and others. He is one of the nation’s most outspoken business voices for Gang of Eight-style immigration policies. He didn’t just sign an open letter once as a favor to a friend; he’s been a high-profile champion of amnesty and huge increases in immigration and guestworkers. This op-ed in Politico, timed to coincide with the launch of the Gang of Eight effort in 2013, could have been written by Jeb Bush. Here he is at AEI in 2013 making the case for importing more low-skilled workers. Here he joins with the Bloomberg-Murdoch Billionaires for Open Borders outfit and Grover Norquist in an effort to “push 2016 presidential candidates and congressional Republican leaders to support immigration reform this year.” There’s plenty more.

Now, Trump has been waffling and contradictory on the worker side of immigration (among other things) all along – I’ve written about it here, here, and here, for instance. Nor is it the case that Trump’s simply a liberal con man – Sessions could be one of the best Attorneys General we’ve ever had, Price and DeVos are solid conservative picks, and there’s every reason to think his Supreme Court nomination will be sound.

But for the most important job that involves protecting American workers, Trump has opted for someone who thinks there are jobs Americans won’t do. Andrew “Gang of Eight” Puzder would have been a better fit for the Jeb Bush administration, though even Jeb might have blushed at the idea of appointing him. Assuming he’s actually nominated and confirmed, the Labor Department will go from being run by a post-American socialist to a post-American capitalist. So much for putting American workers first.
Suckers. Then again, I thought Gary Johnson's guest worker program was a good idea.

Thursday, December 8, 2016

HE HAS THE BEST WORDS. Jonah Goldberg lays out the case that Trump's way of communicating as a candidate is inadequate for a president
What’s the trick? All you have to do is take Trump seriously, but not literally.

The formulation is credited to reporter Salena Zito, who, in an article for The Atlantic last September, noted that the news media take Trump’s more outlandish statements literally but not seriously, while his supporters do the inverse.


The non-literal approach to Biden is safe for two reasons. Because he is a well-known character in the Washington establishment, the public knows more or less what to expect from him. And, as a vice president, there’s only so much harm he can do. (In other words, we don’t have to take him too seriously.)

Trump is different. On his own terms he’s an outsider and a “disrupter” who claims that political elites range from stupid to malevolent. He also has zero experience in foreign or domestic policy. What he says — and how he says it — takes on greater importance precisely because he lacks a track record in public office to put his language in context.

This seriously-not-literally thing is a great analytical insight into how then-candidate Trump communicated with his supporters. But it is fairly ridiculous hogwash as a prescription for how to treat an actual president, or president-elect, of the United States.