Red October
When bureaucratic organizations fear the consequences, they cover up. Every time.
China’s Newest Nuclear Submarine Sank, Setting Back Its Military Modernization
The submarine is salvageable, but the point here is the attempted cover-up.
The saying “success has many fathers, failure but one” is nowhere more applicable than in a bureaucracy. Everyone involved here is scrambling to avoid responsibility.
‘China’s newest nuclear-powered attack submarine sank in the spring, a major setback for one of the country’s priority weapons programs, U.S. officials said.
‘The episode, which Chinese authorities scrambled to cover up and hasn’t previously been disclosed, occurred at a shipyard near Wuhan in late May or early June.’
Raising the age for which a child must ride in a car safety seat sounds innocuous, even noble.
The linear thinking is that forcing people to put their children in car seats for longer will save lives. And it did save some lives, just not very many.
The non-linear thinking goes like this. Most normal cars cannot fit three car seats in the back seat. If you’re rich, well, you can afford the kind of massive SUV or minivan that can accommodate three car seats. But if you’re middle class, you’re out of luck.
Is it good policy to save 57 lives at the expense of 8,000 middle class and working-class lives that never were?
If we inverted the problem and asked ourselves, what was the policy goal of this regulation, we might conclude it was population control.
‘We estimate that these laws prevented only 57 car crash fatalities of children nationwide in 2017. Simultaneously, they led to a permanent reduction of approximately 8,000 births in the same year, and 145,000 fewer births since 1980, with 90% of this decline being since 2000.’
The Schumer Permitting Exception for Semiconductors
Bureaucracy is discretionary. It does not need to be applied universally.
The rules exist to slow things down. Until they don’t. They cease being applied if the interests of some influential groups decide that they are a hindrance.
‘But Democrats are breaking their usual NEPA habit. Senate Majority Leader Chuck Schumer has blocked multiple attempts at permitting reform, including a House proposal in May to speed up energy production and transmission. The green lobby sues and sues some more under NEPA to slow projects for years. The average wait is 4½ years, according to a 2020 review by the White House Council on Environmental Quality.
‘Without the exemptions, chip makers would likely face similar delays. A large fabrication plant can consume as much water each day as 300,000 people, and only 15% to 20% of it is recyclable, according to a study by the research firm Interface. That’s catnip for endless bureaucratic review and lawsuits. The climate lobby opposed the Building Chips act, and 112 Democrats voted no in the House.
‘So why did the chip exception pass? Local and election politics. Democrats have made manufacturing a main theme of this year’s campaigns and want to promote more projects before Election Day. Mr. Schumer is also crucial to this NEPA override. The new bill will likely speed construction for Micron Technology’s plant near Syracuse, N.Y., which was set to break ground this year but has been tied up by the environmental review process. It’s good to be the Majority Leader.’
Bureaucrat manipulates politician. Story at 11.
‘Deborah Birx from her memoir, explaining how "two weeks to flatten the curve" was just marketing for harsh, months-long lockdowns that she was really planning:
‘"On Monday and Tuesday [March 9th and 10th, 2020]…we worked simultaneously to develop the flatten-the-curve guidance I hoped to present to the vice president at week’s end. Getting buy-in on the simple mitigation measures every American could take was just the first step leading to longer and more aggressive interventions. We had to make these palatable to the administration by avoiding the obvious appearance of a full Italian lockdown. … No sooner had we convinced the Trump administration to implement our version of a two-week shutdown than I was trying to figure out how to extend it. Fifteen Days to Slow the Spread was a start, but I knew it would be just that. I didn’t have the numbers in front of me yet to make the case for extending it longer, but I had two weeks to get them."‘
The FTC’s Anti-PBM Suit Could Mean Higher Health Premiums
More regulatory conflict.
‘If rebates are a problem, why does Congress require them for government plans? Drug makers must pay Medicaid rebates that start at 23.1% of a medicine’s average price and can exceed 100%. The Trump Administration tried to ban rebates in Medicare, but the Congressional Budget Office estimated it would substantially raise senior premiums and increase government spending by $170 billion over 10 years. Congress blocked the rule. Yet now Ms. Khan wants to ban rebates in private insurance.
‘The political irony is that PBMs have grown in size and power owing to government policies. Their vertical integration is a byproduct of ObamaCare’s insurance regulation, including its cap on profits. No less than ObamaCare architect Peter Orszag recently lamented that “the stance of the antitrust authorities is directly and problematically opposed to the thrust of other policies.”’
Artificial Intelligence Regulation and the Uptick in AI-Related Federal Securities Class Actions
I’m not sure what this disclosure is supposed to be and how it is purportedly inadequate. Perhaps, companies haven’t been forthcoming about the risks to their existing business models from AI. Or maybe it’s that they have not disclosed clearly their exposure to regulatory risk related to their own AI efforts.
‘Cornerstone Research reported its 2024 mid-year assessment of U.S. securities class action filings, spotlighting that D&O litigation arising out of AI disclosures is increasing. Specifically, the report detailed that the six AI-related federal securities class actions filed in the first half of 2024 (6) are consistent with the annual AI class action filing levels of each of the preceding four full calendar years (between 6 and 8). As Cornerstone warned, “[w]hile AI-related filings are not new, the growing prominence of AI in the business models of many companies may lead to an increase of such filings in the future.” ‘
There isn’t enough talk about the extra costs imposed on the American household from regulation. Where there is no discussion of costs, there can be no cost-benefit analysis. The immediate benefit to the bureaucracy of enhanced control comes at the expense of a lifetime of inflated expenses for the American consumer.
‘“To cement radical left-wing priorities, the Biden-Harris Administration spared no expense and pushed a whole-of-government regulatory blitz on American businesses and consumers. Today’s report shows the Biden-Harris Administration imposed a historic $1.7 trillion in new federal regulatory costs to fundamentally change American life. We know what these new regulatory hurdles mean for the United States: higher costs of doing business, higher prices, and fewer choices in the marketplace. This economy simply can’t afford to be tied down with red tape or buried under heaps of federal paperwork. Economic prosperity comes with economic opportunity, but the Biden-Harris Administration’s extreme regulatory overreach has only suffocated the American dream,” said Chairman James Comer (R-Ky.).’
Google, Meta Criticise UK and EU AI Regulations
The EU risks being too cute by half and missing out on the benefits of AI with their amorphous regulation.
‘Representatives from Facebook’s parent company along with Spotify, SAP, Ericsson, Klarna, and more signed an open letter to Europe expressing their concerns about “inconsistent regulatory decision making.”
‘It says that interventions from the European Data Protection Authorities have created uncertainty about what data they can use to train their AI models. The signatories are calling for consistent and quick decisions surrounding data regulations that allow for the use of European data, similar to GDPR.
‘The letter also highlights that the bloc will miss out on the latest “open” AI models, which are made freely available to all, and “multimodal” models, which accept input and generate output in text, images, speech, videos, and other formats.’
Yellen calls for financial stability vigilance, warns against rolling back regulation
Silicon Valley Bank could not be reached for comment.
It’s entirely possible, Madam Secretary, that there is an optimal level of regulation and that there is such a thing is too much, especially if the regulators aren’t paying attention to basic risks, like I don’t know, say plain vanilla interest rate exposure, because they are distracted by sexier risks.
Sometimes you’re so busy fighting the last war that you forget what went wrong three wars ago.
‘"Work to build and maintain a resilient financial system is never over. We'll never be able to just declare victory," Yellen told the conference hosted by the Federal Reserve Bank of New York.
‘"A resilient financial system is critical to a strong economy. And strengthening it requires insisting on thoughtful regulation, including in the face of challenges from those who advocate to roll back policies and regulations," she added.’
CFPB’s Chopra: Consumers Need More Disclosure on Nonbank Risks
This is true.
Imagine what’s going to happen if/when non-bank deposit-taking institutions start to fail and deposit insurance isn’t available to the consumers who assumed it was in place. Disclosure needs to be accurate.
Practically, though, the FDIC would step in and make those depositors whole. You know, for the good of the system. A system into which the non-banks paid nothing.
‘Per Chopra’s concerns: “Disclosure requirements related to the intricacies of pass-through deposit insurance are woefully inadequate. Consumers should, at the very least, be told clearly and concisely that they could face delays or lose their money by banking with a nonbank.”
‘PYMNTS Intelligence reported in past coverage that 36% of U.S. consumers used these nonbank financial institutions (FIs), outpaced by millennials — where 44% of this demographic used non-bank FIs, while 43% of bridge millennials did so. And we found that 31% of consumers earning less than $50,000 annually used a non-bank FI in 2023 compared to 37% of those earning more than $100,000 annually.’