Scott Lincicome shares his big questions for 2025. A slice:
We now know that this is basically what happened in 2024: China’s longstanding economic headwinds—demographics, productivity, debt, social/political control, etc.—combined with continued weakness in local property markets, depressed consumer sentiment, policy-driven industrial overcapacity, investor doubt, and heightened trade tensions to keep China’s economy in the doldrums. (Hooray, central planning!)
GMU Econ alum Dominic Pino reports that “price controls have made California wildfire recovery harder.” Two slices:
Another California policy decision will make recovery efforts from these fires more difficult than they otherwise would be: price controls on insurance.
Insurance price is supposed to be correlated with risk. Higher risk, higher price. Living in an area prone to wildfires is a risk for property insurance. Rather than allowing market prices to take account of that risk, California has heavily regulated the insurance industry for decades.
…..
After decades of strict price controls, the average price of insurance in California is well below the market rate. California’s rate suppression, the difference between the fair actuarial rate and the rate allowed by regulators, is 29 percent for homeowners insurance, the highest of any state. As economist Brian Albrecht put it, California “forces the biggest gap between rates and risk in the nation.”
“Oh, those greedy insurance companies are made of money, they can eat the losses,” some might think. The ICLE paper shows that from 1991 to 2016, California homeowners insurers made total cumulative profits of $10.2 billion. But in 2017 and 2018, they lost a total of $20 billion from wildfires. If an entire industry can lose twice as much money in two years as it made in total the 25 years prior, that’s not going to be sustainable.
Four Independent Institute scholars discuss the L.A. wildfires.
Far and away, the most common objection to international trade is the belief that it costs American jobs. But here’s a result that surprised her (and me!). She also looked at how American’s felt about foreign direct investment (FDI), where foreign companies invest in the United States, building their factories here and hiring Americans to work in those factories. What Mutz discovered was that voters opposed to trade because they believed it caused Americans to lose their jobs were also opposed to FDI, even when they believed it would create jobs for Americans.
In Disney, Fox and Warner, retrograde players were nevertheless trying to get ahead of the curve by repackaging their sports-heavy traditional channels—ESPN, TBS, Fox and Fox Sports, etc.—into a skinny bundle to be sold over the internet to sports fans who no longer are interested in being cable subscribers.
Enter U.S. District Judge Margaret M. Garnett. She issued a preliminary ruling last year in favor of online competitor Fubo and invented a new market category that Disney, Fox and Warner could be accused of “monopolizing.”
Antitrust survives on such market-definition sleight-of-hand. In every possible way, though, the category she invented is meaningless to consumers. She specified “nationally” broadcast games though sports fans mostly care about their local teams and don’t care who else is watching “nationally.” She cited traditional TV apparatus never mind that almost any game a customer craves to watch is available “nationally” now via an online provider.
