Topic: General

Union Reforms to Improve Seaports

International trade boosts our economy, but U.S. seaports need major improvements to maximize the benefits of trade. Bloomberg reported a couple months ago that congestion at West Coast ports is so severe that shippers are diverting a growing share of traffic to Canada. The Wall Street Journal reports today that the problems are continuing.

One issue is the aggressive labor union that controls the West Coast ports:

For more than a month, a rotating cast of about a dozen container vessels, bulk ships and tankers has sat anchored just outside the ports of Los Angeles and Long Beach, some waiting as long as eight days to berth.

… Uncertainty over contract negotiations between terminal operators and the West Coast Longshoremen’s union has further aggravated the congestion, local officials and economists say.

Businesses up and down the West Coast that rely on the ports for importing and exporting goods have expressed concern over the protracted negotiations between the International Longshore and Warehouse Union, representing workers at West Coast ports, and the Pacific Maritime Association, which represents carriers and terminal operators. ILWU members have been working without a contract since a six-year pact expired July 1.

In recent weeks, the PMA has accused the union of slowdowns at the ports of Seattle and Tacoma, Wash., and withholding some critical workers in Los Angeles and Long Beach, contributing to the current congestion. Some longshoremen walked off the job Oakland, Calif., last week, aggravating concerns over a widespread labor disruption during the holiday shipping season.

Port employers as well as retailers and manufacturers say their greatest fear is the possibility of a total shutdown across West Coast ports—similar to a 10-day worker lockout in 2002 after labor talks failed. The shutdown cost the U.S. economy several billions of dollars, industry groups say. Mr. Louttit of the Marine Exchange said the disruption at one point left 65 ships sitting at anchor off the Southern California coast.

The solution to these labor problems is straightforward: Congress should repeal “collective bargaining,” which is a euphemism for monopoly unionism. In other words, it should repeal the National Labor Relations Act (NLRA), which confers unjustified powers on unions and encourages them to disrupt workplaces.

The share of the private-sector workforce that is unionized has plunged for decades because unions make no sense in the modern fast-paced economy. But the unions that hang on in some industries cause a lot of trouble, as we’ve long seen with the high-paid longshoremen on the West Coast. I don’t imagine that NLRA repeal is on President Obama’s agenda, but it is a reform that policymakers should pursue down the road.

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Growing Prosperity and Knowledge Aid Space Exploration

There has never been a better time to be alive on this planet. While many measures of wellbeing are already on a positive trajectory, humanity’s innate curiosity and enterprising spirit continue to push many individuals to seek the stars. The Rosetta mission’s successful comet landing was just the latest development. Privately-funded initiatives, such as SpaceX and Mars One, are taking the lead on a bolder project: a mission to Mars. Greater availability of knowledge and resources is enabling ever-more ambitious space exploration.

Successful space exploration requires expertise. Today, more people pursue advanced degrees globally, many of them in critical fields like physics, math, computer science, geology, and engineering. Furthermore, scientific knowledge compounds over time, and so each generation understands more than the last.

With a higher quantity and quality of scientists, mathematicians, and engineers than at any point in history, humankind is better equipped than ever to tackle the complex challenges of extraterrestrial travel.

Space exploration also requires a tremendous investment of resources. Throughout most of history, even if humankind had possessed the technical knowledge for space travel, scarcity would have prohibited the endeavor. Fortunately, wealth and prosperity are rising rapidly while poverty is in decline. Increasing abundance makes it possible to take on previously unthinkable projects like space exploration. 

Increasing abundance and scientific advancement are expanding humanity’s capacity to pursue ambitious undertakings. Not only has there never been a better time to be alive on this planet, but, thanks to growing prosperity and knowledge, there has also never been a better time to attempt exploration beyond Earth.  

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Krugman vs. Krugman on Statutory Interpretation

To follow-up on my colleague Walter Olson’s earlier post on the Paul Krugman piece on King v. Burwell, what struck me was Krugman’s flexible approach to statutory interpretation.

Here he is in today’s piece:

Last week the court shocked many observers by saying that it was willing to hear a case claiming that the wording of one clause in the Affordable Care Act sets drastic limits on subsidies to Americans who buy health insurance. It’s a ridiculous claim; not only is it clear from everything else in the act that there was no intention to set such limits, you can ask the people who drafted the law what they intended, and it wasn’t what the plaintiffs claim. …

 if you look at the specific language authorizing those subsidies, it could be taken — by an incredibly hostile reader — to say that they’re available only to Americans using state-run exchanges, not to those using the federal exchanges.

As I said, everything else in the act makes it clear that this was not the drafters’ intention, and in any case you can ask them directly, and they’ll tell you that this was nothing but sloppy language. …

So, don’t worry so much about the specific language; instead, look at the drafters’ intent and the surrounding context. Got it.

On the other hand, here’s Krugman from January of 2013, writing about the idea of a platinum coin:

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So in this situation, you should stick to the “letter of the law,” and not worry so much about the drafters’ intent.

Hmm, how to reconcile those two Krugman assertions about the proper approach to statutory interpretation?  That’s a tough one.  Wait, I got it!  We’ll call this the Krugman canon of construction: “Interpret statutes in whatever way makes them consistent with your policy preferences.”

How to Repeal ObamaCare through the Same Process that Gave Us ObamaCare

From my latest at Darwin’s Fool:

Republicans won an impressive number of victories last night, including a larger and more conservative House majority and enough wins to give the GOP at least a 52-seat majority in the Senate. As Jeffrey Anderson and Robert Laszewski have noted, Republicans made ObamaCare a major issue in the election  (the New York Times’ denials notwithstanding). Senate Republicans will fall several seats short of the 60-vote super-majority needed to overcome a Democratic filibuster of an ObamaCare-repeal bill, though. ObamaCare opponents are therefore debating whether and how Republicans could repeal some or all of the law via the Senate’s “budget reconciliation” process, which allows certain legislation to pass the Senate with only 51 votes. Some opponents have proposed getting around these difficulties by getting rid of the filibuster entirely. I think there’s a more prudent, targeted way Republicans could put ObamaCare repeal on the president’s desk, give Democrats a taste of their own majoritarian medicine, and convince Senate Democrats of the virtues of restoring the filibuster on legislation and judicial nominations.

It goes like this…

Read the whole thing.

The World Misery Index: 109 Countries

Every country aims to lower inflation, unemployment, and lending rates, while increasing gross domestic product (GDP) per capita. Through a simple sum of the former three rates, minus year-on-year per capita GDP growth, I constructed a misery index that comprehensively ranks 109 countries based on “misery.” Below the jump are the index scores are for 2013. Countries not included in the table did not report satisfactory data for 2013.

The Costs of Ebola: Guinea and Sierra Leone

For a clear snapshot of a country’s economic performance, a look at my misery index is particularly edifying. The misery index is simply the sum of the inflation rate, unemployment rate and bank lending rate, minus per capita GDP growth. 

The epicenter of the Ebola crisis is Liberia. My October 15, 2014 blog reported on the level of misery in and prospects for Liberia.

This blog contains the 2012 misery indexes for Guinea and Sierra Leone, two other countries in the grip of Ebola. Yes, 2012; that was the last year in which all the data required to calculate a misery indexes were available. This inability to collect and report basic economic data in a timely manner is bad news. It simply reflects the governments’ lack of capacity to produce. If governments can’t produce economic data, we can only imagine their capacity to produce public health services.

With Ebola wreaking havoc on Guinea and Sierra Leone, the level of misery is, unfortunately, very elevated and set to soar.

Bulgaria: Liquidate KTB, Now

The long-awaited audit of the Corporate Commercial Bank’s (KTB’s) assets has been released by the Bulgarian National Bank (BNB). In its wake, a debate has arisen about the future of the KTB: Should it be recapitalized? And if KTB is recapitalized, should the Bulgarian or the European authorities be responsible? However, it is clear from the results of the audit that, once the obscurity of the technocratic arguments is stripped away, there can be no debate. KTB should be liquidated as soon as possible, and whatever proceeds can be obtained in liquidation should be used to reimburse guarantees to depositors paid from the Bulgarian Deposit Insurance Fund (BDIF).

KTB should be liquidated because it is not, and apparently never has been, a commercial bank. Had KTB been operated according to commercial banking principles, it would be virtually impossible for KTB to destroy value on the scale witnessed by the independent auditors. As of September 30, 2014, the auditors estimate that 76% of the asset value in KTB’s non-financial loan portfolio, which accounts for 80% of KTB’s assets, has been lost.

Losing 76% on a commercial loan portfolio must be put into perspective. In making loans, commercial banks generally require a senior secured position. This means that in the event of default, the bank may take collateral from the borrower and use the proceeds from selling the collateral to recover the bank’s principal, prior to any other creditor. From 2003 to 2012, Standard and Poor’s found that European lenders recovered 78% of their principal, on average, from defaulted loans with these characteristics. Even where defaulted loans were not secured by collateral, European lenders averaged a 48% recovery rate. Compare these recovery rates to KTB’s pathetic implied recovery rate of 24%, and it becomes clear that KTB was not operating as a real bank.

The KTB audit report tells a story in which KTB blatantly ignored the basic pillars of commercial lending. According to the report, there is little evidence that initial loan underwriting and subsequent credit monitoring ever took place at KTB.

If KTB’s management were just grossly incompetent, it would be bad enough. But it appears they were also criminals. The BNB is forwarding the audit results to the Sofia City Prosecutor’s Office. The auditors state that KTB lied to and misled BNB banking supervisors, and engaged in transactions with no evident commercial purpose. The suspicion of criminal activity is just another reason why KTB should be liquidated, now.

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