Uber and Lyft's beef with Minneapolis

    

A couple of weeks ago, the Minneapolis City Council passed an ordinance to increase ride-share driver pay to $1.40  per mile, and despite Mayer Jacob Frey’s attempt to veto the measure, the council was quick to override the veto in an overwhelming 10-3 vote. 

The decision to increase the driver pay of Uber and Lyft drivers continues the long debate on minimum wage and how a government can influence decisions regarding the minimum wage. More specifically, the debates and struggles on balancing capital, labor, and the government and its intervention. Capital would like for labor costs to be as low as possible, while labor wants wages to be the highest it can be. And finally, politicians are always looking for ways to look as if they are doing the right things, to gain votes. Because of the long ongoing debates and government intervention, citizens not only in Minneapolis but in the entire country working minimum wage must choose between accepting the new wages proposed or finding a different job with different pay. 

In a shocking turn, what seemed to be a positive government impact and intervention soon turned out to be the opposite, as in response to the new plans from the council, Uber and Lyft announced that they would stop offering rides in the city starting May 1, 2024. This poses a huge issue as it will lead to over 10,000 drivers losing their jobs, along with the loss of a huge public transportation option for the millions living in the Twin Cities. 

The cause for this sudden change is simple, the wage plan that the council proposed is nothing near the actual minimum wage, which would be a point of concern for drivers. However, the primary issue stems from government involvement, and it's that neither the Minneapolis City Council nor the state should be the one setting the minimum wages. 

Class connections: In economics, we have recently been talking about the debate on whether or not minimum wage is good for the economy, and how beneficial is it to workers as well. I feel like after reading this article, I feel like a city council or state shouldn’t be the one deciding on the wages of ride-share companies. This is because it's a voluntary job, where drivers from the ride-share companies can benefit from a wage and customers can benefit from an affordable way of fast transportation. On top of that, nobody, let alone the city has any idea how much each driver is making. However, the balance of opportunity cost between drivers and customers as explained earlier would be destroyed if City Council members simply put a “just” and “fair” wage on the drivers. 

sources: 

https://www.aier.org/article/uber-and-lyft-drive-out-of-the-twin-cities/ https://www.cnn.com/2024/03/15/business/uber-lyft-minneapolis-minimum-wage/index.html 

 Closure of the Port of Baltimore causes delays

    The Dali, a cargo ship had planned to leave the Port of Baltimore to go to Sri Lanka. As the Cargo ship headed towards the direction of the Francis Scott Key Bridge, they experienced a blackout and lost power in the engine. The ships backup generators managed to turn on but the propulsion system were still offline. Once they realized that they had lost power, the crew had tried to turn the ship as much as possible while also dropped their anchor to slow down and steer away from the bridge. They also requested that the bridge be shut down to traffic. Despite the crew's efforts, the ship still collided with the bridge.

    Traffic in the Port of Baltimore has been shut down until it is safe for passage. Baltimore is one of the largest ports for vehicles and containers, which "ranks first among US ports for autos and light trucks, handling a record 850,00 vehicles last year." Most of the traffic can be rerouted to two tunnels likely causing delays. However some vehicles carrying hazardous items will need to be rerouted even further. Similarly cargo ships would have to dock either philadelphia, norfolk, or New York/New Jersey. On the other end, because of attacks on ships in the red sea, vessels are forced to take different paths around Africa to finally reach Asia.

    The congestion will increase costs of shipping due to the delays in transportation. Mark Zandi, chief economist at Moody's Analytics states that the disruptions to the shipping of the goods are unlikely to cause large problems for the US economy as a whole. But because the port had been shut down indefinetly, many people have temporarily lost their jobs and the cost of the closure can't be calculated. President Joe Biden has stated that he wanted the federal governemnt to pay for they rebuilding of the bridge with funds from the Federal Highway Administration, Bipartisan Infrastructure law, and fudning from congress if needed.

 

    In my opinion, not only should the bridge be funded, but the people left jobless and others effected should be subsidized. Do you guys think the federal governement should provide funds for people along with the bridge? If not, how should they be supported, if at all?

https://www.cnn.com/2024/03/26/business/baltimore-port-autos-cruises/index.html

https://www.nytimes.com/live/2024/03/26/us/baltimore-bridge-collapse

https://www.usatoday.com/story/news/nation/2024/03/26/inside-francis-scott-key-bridge-collapse-baltimore/73105201007/

https://www.cnn.com/us/live-news/baltimore-bridge-collapse-03-26-24-intl-hnk/index.html

Trump's commitment on tariffs if reelected

 

Ever since former President Trump announced his decision to run for a second term, he has been a big believer in tariffs and has indicated that he would “reinstitute duties on foreign goods” if he were to win back the white house. 

In an interview with CNBC, Trump mentions the economic and political benefits of the tariffs that he plans to reinstate. The former president claims that tariffs would not only benefit the economy but would also help give the U.S. the power and leverage to make deals with other foreign nations. This is something that Trump heavily wants, as he believes that the U.S. has long been the victim of being “taken advantage of by other countries.”  

Trump claims that he will institute tariffs on most foreign goods and that penalties would increase if the foreign nations that the U.S. is trading with manipulate currencies or engage in corrupt or unfair trading practices. On top of that, If reelected, he will urge Congress to pass a “Trump Reciprocal Trade Act”, which would give the president the power to impose a reciprocal tariff on any country that imposes the U.S. 

Proposed acts like the Trump Reciprocal Trade Act are mainly targeted at the U.S.’s “biggest rival” as claimed by Trump, China. According to Trump, “China was taking advantage of us on steel. They were destroying our entire steel industry, which was never doing very well over the last 25 years anyway ... because it’s been eaten alive by foreign competition.” Trump plans on putting a 50% tax on all of the steel coming in from China, and on top of that, With China producing about 30 million vehicles in 2023 which resulted in about a 50% year-over-year increase, Trump has claimed that he would impose tariffs in order to get China to manufacturer more of its cars in the U.S. With all this economic tension, Chinese US trade relations could further detrioriate with the election on the horizon.

With the election season coming, the polls are predicting a tight contest in November between Trump and incumbent President Joe Biden. With Trump dominating the republican primaries, his future goals regarding tariffs could play a huge role in whether or not he gets elected, as the economy will be a huge topic for millions of Americans looking to vote.  

Class connections: Trump’s intended tariff policies clearly show concerns about demand. For the last 20-30 years, foreign competition from rival nations such as China has resulted in the decline of US manufacturing as well as goods, such as steel and car manufacturing. In Trump's ideas, Tariffs would limit foreign competition and would give a greater market share to the US, which would increase demand over foreign competitors. An increase in demand would mean the demand graph would shift to the right. 

sources: 

https://www.cnbc.com/2024/03/11/trump-pledges-to-get-tough-with-tariffs-again-if-elected.html 

https://apnews.com/article/trump-policies-agenda-election-2024-second-term-d656d8f08629a8da14a65c4075545e0f 

UN Resolution for Cease-fire in Gaza Passes as the U.S. Abstains

    Today, the United Nations Security Council (UNSC) unanimously approved a resolution calling for a cease-fire in the Israel-Hamas war until the end of Ramadan, which concludes on April 9th. Additionally, the resolution called for Hamas to release all of the hostages taken during the surprise attack on October 7th of last year that kicked off the conflict that has already taken over 30,000 lives. However, Israel’s Foreign Minister Israel Katz quickly stated that they will not cease fire (this is coming from Twitter/X so we’ll have to wait to see if this is actually true).

 

 https://twitter.com/Israel_katz/status/1772299601770389510

    Interestingly, the UNSC consists of 15 member nations and yet the vote to pass the resolution was only 14 - 0. Who was missing? None other than the United States, who decided to abstain from the vote. In fact, the U.S. “vetoed” three past cease-fire resolutions brought to the UNSC, and the two resolutions our country’s delegation has put forth were vetoed by Russia and China. What made this most recent resolution different is that it met the U.S. delegation’s request for a ceasefire demand to be attached to a hostage deal. Simultaneously, it satisfied China and Russia by not outright condemning Hamas. This omission is one reason why the U.S. decided not to vote on the matter.

    For those interested in the process of a “veto” in the UNSC, it is similar, in ways, to that of the power held currently by Joe Biden. Any of the five permanent members of the council (China, France, Russia, the U.K., and the U.S.) can block the adoption of a proposed resolution outright, but there is a method to circumvent a veto: an emergency special session of the United Nations General Assembly. The UN General Assembly grants all 193 members a single vote (Senate-esque), and this specific scenario would arise from either a simple majority of UN Member States or at least nine UNSC members voting to convene. Although this may seem less demanding than having to gather a two-thirds vote from two house of stubborn politicians, it is even less common than the the latter as the emergency special session has only seen the light of day a total of 11 times (one of those being for the Israeli-Palestinian conflict in 1997, which has been subsequently reconvened multiple times, including in the weeks after the surprise attack last October).

    As for my thoughts, I am glad to see the powers of the world acknowledge the damage the ongoing violence has done to civilian populations on both sides, and that the fighting continuing on would be unlikely to produce a decent outcome. There are talks within the UN about extending this cease-fire past Eid and even making it a permanent truce, to which I doubt will come to fruition in the foreseeable future seeing Israel’s response to this preliminary pause. Regarding this response, I am somewhat disappointed in Israel's statement (could they not at least see if Hamas leaders carry through with the hostage release?) but also realize I am not fully aware of all of the nuances of the conflict playing out right now. 

For any prospective commenters: 

 

Do you think the ceasefire will be upheld? 

Do you agree with the United States abstaining from the vote? 

What are your thoughts on the veto system in the United Nations Security Council?

 

Sources:

https://www.aljazeera.com/news/2024/3/25/world-welcomes-unsc-resolution-calling-for-ceasefire-in-gaza#:~:text=Many%20officials%20around%20the%20world%20have%20welcomed%20the%20resolution.&text=Many%20world%20leaders%20have%20welcomed,Palestinian%20group%20Hamas%20in%20Gaza.

https://www.aljazeera.com/news/longform/2023/10/9/israel-hamas-war-in-maps-and-charts-live-tracker 

https://apnews.com/article/un-gaza-ceasefire-resolution-vote-ramadan-b7985fede65e5477aba2c8d2e62a6632

https://www.axios.com/2024/03/25/gaza-ceasefire-resolution-un-security-council-veto 

https://en.wikipedia.org/wiki/Emergency_special_session_of_the_United_Nations_General_Assembly 

https://en.wikipedia.org/wiki/United_Nations_Security_Council_veto_power#Bypassing_the_veto 

 

Quincy Teng  

Beeper Mini, Windows, and the DOJ’s New Apple Antitrust Lawsuit in Context

 

Image credit: Mike Segar, Reuters, via NYT

        22 years ago, Microsoft settled an antitrust lawsuit with the U.S. government, which had accused it of monopolizing the web browser market for Windows for its browser, Internet Explorer. The settlement stipulated that Microsoft would share its application programming interface (API) with third parties, allowing for greater third-party interoperability with Windows products and easing the monopoly Microsoft held over web browsers. 

The antitrust suit Apple faces today (which Katie introduced in the preceding post) isn’t identical (it targets the smartphone market as a whole, not primarily a market for software), the DOJ certainly sees a similarity, with “Microsoft” occurring 26 times in their complaint, according to the New York Times. Windows was criticized for providing access to Internet Explorer more easily than other browsers could be accessed; similarly, Apple has been criticized for favoring its own software (App Store, Apple Wallet) and forcing third parties to accept Apple’s solutions rather than developing competing software — though a piece from the New York Times is fair to point out that this case is more ambitious, given the idea that Apple ought to ease cross-platform communications, and that the iPhone’s market share is less than Windows’ back in 1998.

There are also concerns that Apple has a legitimate interest in building its monopolistic walled garden — Dave Lee, in an opinion piece for Bloomberg, opines that if Apple loses the lawsuit, it will result in a more complicated, insecure, and overall worse phone. Framing Apple’s role as a sort of natural monopoly, he describes how it uses “its maniacal control over the user experience on the iPhone to make it a vastly superior smartphone,” going on to explain that while Android phones are more open, they are also more complicated and less easy to use. Comparing the forced use of Apple Wallet for apps on the iPhone to physical wallets, Lee asks "How many physical wallets does the typical person carry?” While this is a fair point, it's also worth considering the fact that computers allow for passwords and payment information to be stored in different places — different browsers, password managers, and more — and yet this freedom of choice does not seem to confuse or negatively impact most users. 

Apple’s conduct isn’t only to improve or simplify its phones, though. Beeper Mini, an Android app, allowed for users to send texts to iPhones using the iMessage protocol, which allowed for end to end encryption, or E2EE (supported by the iMessage protocol but denied to Apple–Android communications), higher resolution photos and videos, and other perks. Yet Apple shut down Beeper by repeatedly making access to their iMessage protocol more difficult on grounds of it posing a “security and privacy risk.” Given that, without Beeper, the presence of a single Android device in a group chat would prevent any communications in the chat from being encrypted, the claim that Beeper posed a security risk seems odd. Moreover, users can use iMessage on Mac computers without need for an iPhone, an intended feature, yet when Beeper allowed for users with Android phones to communicate over iMessage via their Macs, Apple revoked their Mac computers’ access to iMessage — penalizing these users by disabling a feature available by default.

Dave Lee, for Bloomberg, argues that limited Apple-Android texting isn't inherently illegally anticompetitive — users can still use services like Signal and Whatsapp that allow for end to end encrypted messages to be sent between devices — though he does concede that arguments against the dreaded “green bubble” have some credibility. Yet, to echo the arguments against Microsoft two decades ago, a company can be anticompetitive even without fully blocking competition — thus, as Microsoft’s video showing the process of installing a rival web browser did not make up for the process being slow enough to be considered anticompetitive, and the fact that it is possible to install other E2EE messaging software may not excuse the hurdles that Apple puts along the way. 

But the changing political context around Big Tech antitrust suits is also worth considering — David McCabe, for the New York Times, describes the head of the DOJ’s antitrust division, Jonathan Kanter: “a lead architect of the most significant effort to fight the concentration of power in corporate America.” Along with antitrust suits against Google and suit to stop JetBlue from buying Spirit Airlines, this case is another effect of a growing willingness in the government to press antitrust law more heavily. This sentiment isn’t only in America — recently, the European Commission fined Apple $1.8 billion for unfair practices regarding its dominant App Store, and it’s due to the EU’s Digital Markets Act that Apple has to allow third party app marketplaces in the EU. 

We know from class that monopolies aren’t inherently illegal. Natural monopolies, in which a single producer can supply a good more efficiently or cheaply, make economic sense, and Apple’s control over the iPhone has made it, if restricted, a functional and easy to use device, especially given that the phone market serves as an economy of scale. But have anticompetitive practices imposed a cost on the users? Does the 30% share Apple takes from all App Store purchases — the only way for developers to distribute apps unless they’re in the EU — drive up prices for apps in a way a more competitive market wouldn’t? Do green bubbles, and their limitations, discourage people from moving to Android regardless of the iPhone’s merits? We’ll have to see what the courts decide, but I don’t think it’s too wrong to look at a few specific issues (i.e. the Beeper Mini saga) and the overall shift in political context with regards to Big Tech antitrust and predict that we might get some change. 

Sources:

https://www.nytimes.com/2024/03/23/business/dealbook/apple-microsoft-antitrust.html

https://www.nytimes.com/2024/03/22/business/dealbook/apple-justice-antitrust.html

https://www.nytimes.com/2024/03/22/technology/jonathan-kanter-apple-antitrust.html

https://bloomberg.com/opinion/articles/2024-03-21/apple-antitrust-suit-us-shouldn-t-force-company-to-make-a-worse-iphone

https://www.justice.gov/opa/speech/attorney-general-merrick-b-garland-delivers-remarks-lawsuit-against-apple-monopolizing

https://www.nytimes.com/2023/12/22/technology/apple-iphone-beeper-mini.html

https://www.nytimes.com/2024/03/21/technology/apple-regulators-world.html

https://www.nytimes.com/2024/01/26/technology/apple-messaging-crackdown-beeper.html

Is Apple a Monopoly?

Many know and love Apple, and can applaud the company for its major success and innovation throughout the years. Yet the almost $2.75 trillion company may be in trouble as upsets arise about a potential monopoly on its most popular item, the iPhone. The Federal Government has had rising concerns with the major tech companies and wants to include an antitrust lawsuit against Apple, claiming they are responsible for keeping customers reliant on their iPhones, not believing they could easily switch. 

The reason Apple has been accused of being a monopoly is how closely it controls the user experience, making it hard to duplicate on another phone. An example of this is ApplePay and the ability to have your iPhone and Macbook/Apple Watch be cohesive. The government in their lawsuit claims this only leads to higher prices and less innovation. Attorney General Merrick B. Garland passionately speaks on how Apple is doing more than just staying ahead of competition, instead they are violating the federal antitrust law and the consumers and developers are the ones suffering. He says that the company itself is relying on exclusionary, anticompetitive conduct. 

The Justice Department has been investigating Apple for a while now, building a large case on their entire existence as a company. They additionally have the right under the law to ask for a structural change in the company as the court decides its thoughts on the subject. However, some argue that all companies are allowed to promote and favor what they create, so the government will have to be extra specific for Apple. 

Apple is trying to fight back by saying that they have these practices to ensure security, yet many are skeptical. The lawsuit will ask the company to stop engaging in the current practices of blocking cloud-streaming apps, undermining messages across smartphone operating systems (creating the green bubbles when texting someone with an Android), and preventing digital wallet alternatives. Many fear that this may hinder Apple's reputation, and stop them from making what people expect them to. Apple is attempting to file a motion to dismiss the case in the next 60 days and continues to argue that people chose not to switch phones out of their loyalty. Additionally, Apple is trying to defend itself by highlighting how many new businesses were able to open from their App Store. 

In Econ, we have recently learned a lot about monopolies and the barriers of entry that come with them. I agree that many people do believe there is no comparable phone companies, which isn't true, especially with how advanced technology is. Also, with Apple creating the price points and making them so high, many consumers believe they have to pay for great quality. 

This isn't the first time this has happened, and in the past the government has felt the need to put government regulations on other big tech companies such as Microsoft, making sure they don’t have too much market power. So, what do you guys think is Apple creating a Monopoly?

Sources: 

https://www.nytimes.com/2024/03/21/technology/apple-doj-lawsuit-antitrust.html?ugrp=u&unlocked_article_code=1.eU0.QC5G.v0IcFUfnMIDz&smid=url-share

https://www.cnn.com/2024/03/21/tech/america-apple-monopoly/index.html

https://www.justice.gov/opa/pr/justice-department-sues-apple-monopolizing-smartphone-markets

Supreme Court to Hear Case About Abortion Drug Mifepristone on March 26

(image from Yahoo News)

Despite the overturn of Roe v. Wade and subsequent abortion bans in 14 states, more abortions were performed in 2023 than there have been since 2011. Abortions have risen in almost all states where it’s legal, and especially in states such as New Mexico that border those with bans. Medication abortions, which rely on the pills mifepristone and misoprostol that can be administered at home, are also rising. 

However,  the availability of mifepristone is threatened by the Supreme Court case FDA v. Alliance for Hippocratic Medicine, which is set to be heard on March 26. 

The case started in Trump-appointed judge Matthew Kacsmaryk’s Northern Texas district court, where a conservative legal group challenged FDA approval of mifepristone. Kacsmaryk issued a ruling to suspend FDA approval of the drug, relying on remarkably faulty reasoning, including retracted studies and anonymous blog posts from an anti-abortion website. The United States Court of Appeals for the Fifth Circuit (a mostly Republican court) allowed mifepristone to keep FDA approval, but supported Kacsmaryk’s challenges to changes the FDA made to the protocol for prescribing mifepristone. The actual changes seem minor: reducing the dose and allowing the drug to be used before 70 days of pregnancy instead of 49, but they would lead to several months where the drug could not be prescribed as its manufacturer scrambled to recertify and revise.

The Alliance for Hippocratic Medicine argues that the FDA’s changes to the mifepristone protocol should be overturned because the FDA conducted multiple studies of different changes to the drug’s use, instead of one study in which they examined the combined effects of all the changes they would eventually implement. It’s an utterly precedentless argument that many other FDA-approved drugs wouldn’t pass. 

The plaintiffs don’t even strictly have standing for their case. There has been no concrete injury to the Alliance for Hippocratic Medicine, other than the nebulous possibility that some of their members might “feel complicit” in an abortion if they had to provide care to someone who took mifepristone, according to Vox. It shows just how far our judicial system, a supposedly legal institution, has been abused for political ends. 

The Supreme Court passed an emergency stay on all restrictions of mifepristone and will probably strike down all of Kacsmaryk’s decision. Should they rule in favor of the Alliance of Hippocratic Medicine, they’ll be unleashing chaos where many medications currently in use can be challenged and restricted because they didn’t fulfill the Fifth Circuit’s criteria that the FDA conduct one all-encompassing study. Justices often argue that they shouldn’t be concerned about the consequences of their rulings, but undermining the FDA’s authority is probably going too far even for our current conservative court. Moreover, given how much the Democrats will use abortion to rally their supporters, it’s probably politically smart to keep the drug. 

Sources:

https://www.nbcnews.com/health/womens-health/map-pills-medication-abortions-are-legal-rcna70490

https://www.nytimes.com/interactive/2022/us/abortion-laws-roe-v-wade.html

https://abcnews.go.com/538/ivf-abortion-access-shape-2024-election/story?id=108301112
https://vox.com/scotus/2024/3/21/24105984/supreme-court-mifepristone-abortion-pills-fda-alliance-hippocratic-medicine 

https://www.vox.com/2024/3/20/24106109/dobbs-roe-abortion-reproductive-rights

https://www.thecut.com/article/how-many-abortions-in-us-2023.html

Biden Announces $8.5 Billion Grant to Intel, Advocating Expansion of Domestic Computer Chip Industry

 

 

(image credit: AP News)

This Wednesday, President Biden announced a grant of up to $8.5 billion to Intel in order to invest in domestic semiconductor production. 

The U.S. used to be a leader in semiconductor chip production, but has fallen behind Asian countries — Taiwan and South Korea, for instance — in recent years, with the flaws of a reliance on chip imports seen in the shortage over the pandemic. With COVID-19 interfering with industries and logistics and introducing uncertainty into the market and supply chain for chips, products dependent on semiconductors suffered from a shortage in chips. In late March of 2021, near the start of the shortage, Bloomberg reported on an “unprecedented global shortage” — noting increased demand and supply chain uncertainties due to the pandemic as well as the effect of increased wait times for chip orders and losses in industries like automobile manufacturing, later estimated to be a lost $210 billion in automobile revenue as reported by Reuters. 

Biden, announcing the new Intel grant, cited this issue as a cause for the expensive investment in the domestic industry. “When the pandemic shut down chip factories overseas, prices went up, and for the first time Americans began to realize how important they were,” Biden explained. “Unlike my predecessor, I was determined to turn things around to invest in America, in all Americans — and that’s what we’ve been doing.” 

As explained by CNN, this measure, in addition to its economic effect, serves as a way for President Biden to appeal to voters, particularly those in battleground states like Arizona, host to one of the planned Intel projects. In Chandler, Arizona, a suburb of Phoenix, the funding is expected to create 7,000 construction jobs and over 3,000 manufacturing jobs, “among the largest private sector investments in the state’s history,” according to the White House. While Arizona voted Democrat in the 2020 election, the state has voted Republican in most other recent presidential elections, and thus investment in the state, creating new job openings, may win more undecided voters to Biden’s favor. The prospect of securing a better chance for a Democrat in Arizona would explain why Biden chose to announce the grant there — while the White House predicts roughly equal numbers of jobs provided in Ohio, Ohio strongly backed Trump in 2020, and so appealing to Arizona voters seems more likely to have an effect. 

David E. Sanger, however, writing for the New York Times, suggests another reason for Biden’s proud rhetoric about this grant: that it might be to draw less attention to the fact that federal grants to chip manufacturers may not go much further. Sanger describes that there is a “significant risk it could be the high point of the effort,” citing Congress’s unwillingness to spend billions of dollars that were authorized to be used for the industry but never properly allocated. Seeing as how the proud rhetoric around this investment is tailored for its political gain despite Intel’s own acknowledgement to CNN that the company won’t meet its “aggressive 2025 production goal,” the economic effect of this grant does not seem prioritized as much as the political one. Money is certainly needed to establish the plants and infrastructure for chip production, but there’s also a cost to training the skilled workforce necessary that may not be adequately addressed with this investment. Morris Chang, head of Taiwanese chip manufacturer TSMC, has critiqued the skills of American workers — albeit from a biased perspective — at matching the productivity of Taiwanese factories even when spurred on by money. Given Business Insider’s report on employee experiences at TSMC — “unmanageable workload,” “12-hour working is normal,” and “workers were discouraged from applying for overtime pay” — it seems reasonable to assume domestic labor costs may be higher than those in countries like Taiwan. Whether it be due to the expensive training required for the new workers or to a difference in work ethic (or labor standards), a truly significant increase in domestic chip production may take a larger investment than Congress may be willing to provide, making the long term efficacy of this plan unclear. 

In class, we’ve learned about the factors that can shift supply and demand, and we’ve seen that when the government steps into the market, the typical purpose is to add regulations that often raise input prices and lower supply. Here, however, we have an instance in which the government is investing in an industry to reduce input prices, shift domestic supply to be greater — and if successful investment in the domestic chip market lowers prices in the long run, this may even reduce the demand for a substitute good (imported chips) in favor of a greater quantity of domestic chips. That said, a properly trained skilled workforce is an inelastic quantity in the short term (it takes time to train new workers, even if there is money for it), and while it can be simple to predict the direction of shifts in supply, the actual numerical values of these changes are more complex and variable, so the extent of this investment's effect — as well as the future of the U.S. chip industry — remains to be seen.

Sources: 

https://www.cnn.com/2024/03/20/politics/chips-act-intel-funding-biden/index.html

https://www.nytimes.com/2024/03/20/us/politics/chips-act-grant-intel.html

https://www.bloomberg.com/graphics/2021-semiconductors-chips-shortage/

https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/20/fact-sheet-president-biden-announces-up-to-8-5-billion-preliminary-agreement-with-intel-under-the-chips-science-act/

https://www.reuters.com/business/autos-transportation/automakers-chip-firms-differ-when-semiconductor-shortage-will-abate-2022-02-04/

https://www.nytimes.com/2024/03/20/us/politics/biden-chip-manufacturing.html

https://www.businessinsider.com/tsmc-jobs-taiwan-semiconductor-chip-worker-skills-work-ethic-2023-8

TikToks Potential Ban

Earlier this month, members of Congress introduced a bill attempting to “protect the national security of the United States from the threat posed by foreign adversary controlled applications, such as TikTok…”. Despite the 170 million Americans on this app, its existence is threatened. 

There has been a rising concern from lawmakers on the continued use of TikTok due to its owner being a Chinese company, ByteDance. According to the New York Times, concerns have been raised about all user data (including location) as well as if misinformation can spread on the platform. I thought it was interesting to bring up concern specifically on TikTok for misinformation, as we learned in Gov how many other platforms have the same problem, even connecting to bias on specific news sources and narrowcasting. I guess you could argue that fewer news sources, will create a streamline, but I still believe any other social media is just as bad as TikTok. TikTok has been denying that it collects data on its users and states that 60% of ByteDance is owned by international investors anyway. However, it already has faced potential bans in many states and has been banned for 4 years already on US devices being used in the military. Our First Amendment right of free speech may be the reason to keep this app safe from the ban, especially considering how many users share news/information daily. The court agrees, saying this could be overstepping the power that states have and unless there is solid evidence of a national threat, there is not much that can be done by the government either. This is similar to what we previously have learned with the court cases and how far each Amendment right can go. For example, with Tinker v. Des Moines, the decision was that kids did have the right to express their First Amendment rights at school, and I believe it will probably be a very similar decision in this scenario. So, will a ban happen? I am not sure how likely that is, but currently, one goal (and what the Biden Administration hopes to do) is to sell TikTok to a new owner. Overall, I think the idea of TikTok being deleted altogether is pretty interesting considering how large of a platform it has become. What do you guys think, would a ban be overstepping our First Amendment right?

https://www.nytimes.com/article/tiktok-ban.html

https://www.npr.org/2024/03/13/1237501725/house-vote-tiktok-ban

EPA Issues New Tailpipe Emissions Regulations to Cut Carbon and Boost EVs

(image from Newsweek)

Biden’s administration recently announced a new EPA regulation designed to boost the number of all-electric and hybrid vehicles, as a part of the administration’s efforts to reduce US carbon emissions by half by 2030. 

Starting with model year 2027 (which typically begins production in early 2026) the rule gradually limits manufacturer’s cumulative tailpipe emissions until over half of new cars in the US would be zero-emissions by 2032. Manufacturers can sell any mix of gas, hybrid, electric, or other vehicles to meet their cap. 

The EPA made some concessions to the auto industry when finalizing the rule — which now has relaxed emissions caps in the first few years, before severely restricting emissions after 2030. This change is meant to appease auto union workers who are worried about jobs lost from the switch to electric (EVs have fewer parts and therefore require fewer workers, and many new EV factories are in states that don’t support unions). 

Mitigating climate change requires drastic, immediate action, so it’s reasonable to see these concessions as fundamentally weakening the fight to cut carbon, especially when EPA regulations are the only way to get change through — without a trifecta, major climate change legislation likely won’t get through Congress. The Los Angeles Times editorial calls it “too weak and slow to respond appropriately to the gravity of the unfolding environmental crisis.” However, I see the concessions to the auto industry as a smart political move by Biden to ensure that he can win reelection. Auto workers were a major part of Trump’s voter base in 2016, so taking care not to alienate them will hopefully help him win reelection, and then enact more dramatic change. 

Although most of the auto industry acknowledges that electric cars are the future (just look at Tesla) and are satisfied with the final regulation, fossil fuel companies are obviously opposed. Republican General Attorneys are gearing up to attack the regulation, as we’ve seen in class that they’ve done with greenhouse gas regulations. Trump, naturally, promises to undo the regulation if he is elected. Biden’s administration must get their climate regulation passed over 60 days before the end of his term to prevent it from being overturned by a simple majority vote if Trump takes office. 

Some class connections: 

The EPA regulation determines what cars will be produced, but not what cars consumers will buy. As battery prices decrease (input costs going down), and the production process for EVs becomes more streamlined (technology improving), the price of an EV will become comparable to that of a gas car, and the supply curve will shift right, hopefully resulting in more EVs being bought at a lower price. The government can intervene on the demand side by expanding EV tax credit to lower the price of EVs for consumers. EV charging stations could also be seen as a complementary good to EVs, which means that with more EVs on the road, we’ll probably see more of them popping up. 

Sources:

https://www.nytimes.com/2024/03/20/business/new-rules-will-still-push-carmakers-to-sell-more-electric-cars.html

https://www.nytimes.com/2024/03/20/climate/biden-phase-out-gas-cars.html

https://www.latimes.com/opinion/story/2024-03-20/biden-electric-car-rules

https://www.npr.org/2024/03/20/1239092833/biden-epa-auto-emissions-evs

https://thehill.com/opinion/energy-environment/4534983-bidens-new-energy-rules-must-stop-an-existential-climate-threat-donald-trump/ 

How our Government Almost Shut Down This Week

On Friday March 8th 2024, the Senate passed a bill that would prevent part of the US Government from shutting down the next day; a 75-22 vote on a 670 billion dollar spending plan going to Congressional agencies, such as agriculture, transportation, housing, energy, veterans affairs, justice, and more.  But what are government shutdowns?

Government shutdowns happen when Congress fails to pass 12 annual Bills of Appropriation by specified dates.  Bills of Appropriations are what allows bureaucracies to spend and incur obligations.  Under the Antideficiency Act, these agencies are not allowed to continue operations until the bills are passed. This group of bills’ due date was set at March 8th, the day the Bill of Appropriation from last year was set to expire.  The next batch expires on March 22nd. 

Government shutdowns are when departments of government cease their operations, with only the most essential employees still hard at work.  Bureaucracies, who are unable to spend and operate without permission from Congress, are unable to provide the people with their needs.  Shutdowns are disruptive to the US economy if left that way for an extended period of time.  From inconveniences, such as passport applications being paused, to more serious cases, such as the inability for small businesses to apply for loans and the reduced number of food safety inspections for the government, active Americans will feel the shakeup of the shutdowns.  Recent shutdowns in the past occurred at 2018 and 2013, and costed the government billions of dollars

With this batch being passed like a last-minute-high-school-final-project by 435 of America’s top representative officials, what happened here?

With the recent polarization of America’s politics, especially on issues such as immigration and war, the two parties fighting for control of both houses have an incredibly difficult time negotiating on how to spend the budget for the next fiscal year.  From the conflict in Ukraine and Palestine, to the border down south, agreement just seems harder each month.  This holds especially true for Republicans’ iron stubbornness on border control holding up the vote, similar to House Republicans blocking the Senate Foreign Aid bill that was passed through Senate back in February.  Though the eventual success of the bill gives encouragement to some, it also harbors worries to others.

"To folks who worry that divided government means nothing ever gets done, this bipartisan package says otherwise," said Senate Democratic Leader Chuck Schumer after the long fought passage of the bill

“I would urge my colleagues to stop playing with fire here,” Republican Senator Susan Collins, the vice chair of the Appropriations Committee, expressed “ It would be irresponsible for us not to clear these bills and do the fundamental jobs that we have of funding government. What is more important?”

But we are not out of the woods yet with this problem.  The next bills, which feature important departments such as military, homeland security, healthcare, and more, must be passed to uphold our government.  As issues show little evidence of being resolved, more and more demands from Republicans start popping up on border control, abortion, and LGBT rights as an opportunity to take advantage of the desperation of the Democrats.  Policies such as ankle monitors on immigrants awaiting court, more restrictions on birth control, and a bill that prevents Planned Parenthood from being federally funded may all be on the table.

“I made it very clear from Day One and throughout the negotiations,” Democrat Negotiator Sen. Patty Murray said Thursday. “We will not accept any, not one, not tiny, not little, not big abortion rider on these bills.”

It seems clear that the gridlock on Congress is tightening as we approach our next Appropriation Bill. Whether the stubbornness and polarization will get the best of our government as compromises break down with increasingly pressing demands, time will tell.  To be specific, the time of approximately 3 units of Econ notes.  Go get 'em!

Sources:

Reuters

Washington Post

Brookings Institute

More information on Government Shutdowns