Its getting more expensive to die

Demand for funeral services is increasing as death rates climb, but supply is hampered by staffing problems caused by silly licensure requirements:

...the primary reason students reject a funeral career is the embalming requirement.

Fortunately, there is an easy solution: replace licensure with voluntary certification. Give consumers the option of paying for the embalming training.  If they want it they will pay for it.  

Historically, licensure was adopted as a barrier to entry that raised prices (a dirty way of creating a sustainable competitive advantage).  

HT:  KM

What happens when US interest rates rise?

A rise in US interest rates puts less developed countries with $ denominated debt in a dilemma: 

• If they don't raise rates, their currencies devalue as the US becomes a more attractive place to invest.  This resulting $ appreciation makes it harder to pay back $ denominated debt.
• If they do raise rates, their currencies don't change, but high interest rate slows their domestic economies.

Reuters reports that countries are raising rates to keep their currencies strong which means low inflation, but at the cost of lower incomes, and unemployment.
   

HT:  Cramer

Effects of gender preferences

 NBER working paper:

Currently, women are 3-15 times more likely to be selected as members of the AAAS [American Academy of Arts and Science] and NAS [National Academy of Science] than men with similar publication and citation records.

China directing banks to sell $ to buy ¥

Article: Such an increase in the supply of $ would reduce the price of a dollar, the exchange rate. This would help Chinese consumers by making domestic goods, including imports, less expensive; but hurt Chinese firms by making their exports look more expensive to Americans.

Good MRU video on Prinsoners' Dilemma

Will markets thwart Xi's plans for China?

Economist lead article on President Xi's "rejuvenation," and efforts to  "maintain authority",

When Mr Xi took over in 2012, China was changing fast. The middle class was growing, private firms were booming and citizens were connecting on social media. A different leader might have seen these as opportunities. Mr Xi saw only threats.

[Xi has] reasserted state control over the economy and hobbled some of China’s most successful firms. His plan to tame the property market lies in tatters and bad loans weigh perilously on the economy.

Ironically, he is forgetting the lessons of Xiaogang village, and harming his own economy much faster than he is harming ours (see post below).

Is Chinese Capitalism an oxymoron

I begin my management course by telling students how Xiaogang villagers defied their Communist rulers in 1978 by secretly instituting a system of private property.  By the time the authorities found out, it was too late as the system had already spread to neighboring villages due to its tremendous success.

China adapted and allowed the institution of private property to spread.  At the time, many people predicted China would continue to reform and they were let into the WTO. However, "...as even the most ardent defenders of China’s WTO accession now acknowledge, that did not happen." Today we are left with an integrated world with two very different systems. To explain the effect, we can use the metaphor of A/B testing:

...imagine that the Department of Justice randomly assigns half of U.S. corporations to be A-corps and half to be B-corps. For A-corps, nothing changes. But B-corps now enjoy special privileges and rules. They are exempt from laws governing intellectual-property theft. They receive more-favorable tax incentives. They are recipients of sizable subsidies, including some to buy their A-corp rivals. They are able to enlist the DOJ to win capricious legal claims against A-corp rivals.

The result of such an experiment would be dire: The best, most innovative A-corp firms would lose market share; A-corps would be loath to invest in research and development, given that B-corp rivals would be able to purloin it; and there would be massive waste as inefficient B-corp firms expanded more than market forces required. Now extrapolate that to the global economy and you get a sense of the harms the Chinese system has imposed on capitalist economies.

I did a search on all my posts in China and I came across this one from 2007: "Market Socialism" and China's new antitrust laws  in which I argued that unless China developed "... the kinds of Democratic institutions that provide checks and balances on state power," their economy could stagnate under the what i called "regulatory miasma."  It turns out that, I needed the caveat I closed with:

But China's oxymoronic "socialist market economy" has surprised us before. In the words of Deng Xiaoping, "I don't care if the cat is black or white as long as it can catch mice."

Is the Inflation Reduction Act, "False and Misleading Advertising?"

FROM WSJ:  

President Biden touts the Inflation Reduction Act, which lowers deficits by $240 billion over a decade, he has also signed into law increased spending on veterans benefits, infrastructure and semiconductors, while taking executive actions that vastly expand food stamp and Obamacare benefits and cancel student debt worth $400 billion to $1 trillion.

Increased Govt. spending increases Aggregate Demand for US Goods and Services, which increases price (inflation).

Someone tell the FTC.

How will the rise in interest rates affect Corporate Borrowers?

 

From the Economist:

...in aggregate the West’s corporate debt load looks manageable ... American public companies’ earnings before interest and tax are a healthy 6.7 times the interest due on their debts, up from 3.6 times in 2000. 

But 3 types of loans may be in for a "reckoning:"

• The first comprises businesses that have come to rely on less orthodox sources of credit, which are often those with the diciest prospects.
• The second area of vulnerability involves so-called zombie firms: uncompetitive enterprises, kept alive by cheap debt and, during the pandemic, government bail-outs.
• The third and biggest area of concern involves firms that are merely unfit rather than undead.

What happened when Oregon decriminalized drugs?

More evidence that Demand Curves slope downward: when you reduce the "price" of taking drugs (the expected penalty), quantity will increase. From AP:

“If there is no formal or informal pressure on addicted people to seek treatment and recovery and thereby stop using drugs, we should expect continuing high rates of drug use, addiction and attendant harm,” said Keith Humphreys, an addiction researcher and professor at Stanford University and former senior adviser in the White House Office of National Drug Control Policy.

Of 16,000 people who accessed services in the first year of decriminalization, only 0.85% entered treatment, the health authority said.

HT:  MarginalRevolution.com