Politics and the US Economy

[RightField]

Government: The redistributionist behemoth
By George F. Will, Published: January 6

Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself.

Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage.

The left’s centuries-old mission is to increase social harmony by decreasing antagonisms arising from disparities of wealth — to decrease inequality by increasing government’s redistributive activities. Such government constantly expands under the unending, indeed intensifying, pressures to correct what it disapproves of — the distribution of wealth produced by consensual market activities. But as government presumes to dictate the correct distribution of social rewards, the maelstrom of contemporary politics demonstrates that social strife, not solidarity, is generated by government transfer payments to preferred groups.

This includes generational strife. Most transfer payments redistribute wealth from workers to nonworkers in the form of pensions and medical care for retirees. The welfare state’s primary purpose is to subsidize the last years of Americans’ lives, and the elderly are, after a lifetime of accumulation, better off than most Americans: In 2009, the net worth of households headed by adults ages 65 and older was a record 47 times that of households headed by adults under the age of 35 — a wealth gap that doubled just since 2005.

The equalizing effects of redistributive transfer payments are less today than in 1979, when households in the lowest income quintile received 54 percent of such payments. In 2007, they received 36 percent.

Because Social Security and Medicare are not means-tested, the share of transfer payments going to middle- and upper-income households tends to increase, for several reasons. The retirement age is essentially fixed, but people are living longer. And because the welfare state is so good to them, the elderly are unusually diligent voters and are especially apt to vote on the basis of protecting their benefits.

Beyond transfer payments, redistributionist government is itself governed by the law of dispersed costs and concentrated benefits: For example, sugar import quotas confer substantial wealth on a small cohort of producers already wealthy enough to work the political levers of redistributive government. The increased cost of sugar substantially penalizes consumers as a group but not so noticeably that individuals protest.

The tax code, government’s favorite instrument for distributing wealth to favored factions, has been tweaked about 4,500 times in 10 years. Generally, the beneficiaries of these changes are interests sufficiently strong and sophisticated to practice rent-seeking.

Not only does redistributionist government direct wealth upward; in asserting a right to do so, it siphons power into itself. A puzzling aspect of our politically contentious era is how little contention there is about the ethics of coercive redistribution by progressive taxation and other government “corrections” of social outcomes it considers unethical or unaesthetic.

This reticence, in an age in which political reticence is rare, reflects the difficulty of articulating principled defenses of these practices. They go undefended because they are generally popular with a public that misunderstands their net effects and because the practices are the political class’s vocation today. The big winners from these practices are that class and the interests adept at collaborating with it.

Government uses redistribution to correct social outcomes that offend it. But government rarely explains, or perhaps even recognizes, the reasoning by which it decides why particular outcomes of consensual market activities are incorrect. When taxes are levied not to efficiently fund government but to impose this or that notion of distributive justice, remember: Taxes are always coerced contributions to government, which is always the first, and often the principal, beneficiary of them.

Try a thought experiment suggested decades ago by University of Chicago law professors Walter Blum and Harry Kalven in their 1952 essay “The Uneasy Case for Progressive Taxation,” published in their university’s law review. Suppose society’s wealth trebled overnight without any change in the relative distribution among individuals. Would the unchanged inequality at higher levels of affluence decrease concern about inequality?

Surely not: The issue of inequality has become more salient as affluence has increased. Which suggests two conclusions:

People are less dissatisfied by what they lack than by what others have. And when government engages in redistribution in order to maximize the happiness of citizens who become more envious as they become more comfortable, government becomes increasingly frenzied and futile.

 

[RobDownSouth]

George Will will stop at nothing until America adopts a feudal government.
"Serf-in' USA", if you will....

 

[4est_4est_Gump]

Oh no, G. Will is wrong.



We've elected the smartest guy to ever be in the White House.

This time it's going to work because this time it's going to be fair to the working man...

 

[RightField]

The Income-Inequality Myth
by Michael D. Tanner
National Review January 10, 2012.

As we listen to President Obama, Occupy Wall Street, and much of the mainstream media working themselves into a lather over inequality in America, one thinks of Harrison Bergeron, the 1961 short story by Kurt Vonnegut that posited a society based on perfect equality, "not only equal before God and the law ... equal every which way." The government employed a "Handicapper General" to ensure that no one was smarter, more athletic, or more productive than anyone else. Beautiful people were forced to wear masks, athletic people had to carry weights, and intelligent people wore radios in their ears to interrupt their thoughts with loud noises.

Yet for all the sound and fury — and beating drums in Zuccotti Park — almost everything that people presume about inequality in America is wrong.

For example, nearly all reporting on income inequality in America has suggested that the incomes of the rich have been rising, while incomes for the rest of us have been stagnant or even declining. But that may represent a significant misreading of the data.

The gap between rich and poor may not be nearly as large as thought, and that inequality may not be growing at all.

Most studies of inequality, including the recent widely reported study by the Congressional Budget Office, rely on IRS-reported taxable income. But, as studies by the Cato Institute's Alan Reynolds and others show, reports of skyrocketing incomes among the top 1 percent of earners may be distorted by changes in the tax code that have resulted in more wealth being reported as taxable income. These tax changes caused businesses to switch from filing under the corporate tax system to filing as individuals, and executives to switch from accepting stock options taxed as capital gains to nonqualified stock options taxed as salaries. Simultaneously, the reductions in income-tax rates in 1986 caused much previously unreported income to show up on tax returns.

At the same time, incomes among lower- and middle-income workers have been shifting from cash wages to non-cash benefits such as health insurance and pensions. These non-cash benefits frequently do not show up as taxable income even though they have value to the worker. In fact, a recent study by Mark Warshawsky of the Social Security Advisory Board suggests that nearly all of the recent increase in earnings inequality "can be explained by the rapid increase in the cost of health insurance employee benefits, and that therefore [there] has not been as significant increase, if any, in inequality of compensation."

Similarly, many studies looking at low-income Americans fail to account for non-cash social-welfare benefits such as food stamps, housing subsidies, and Medicaid. Fully accounting for all of these factors suggests that the gap between rich and poor may not be nearly as large as thought, and that inequality may not be growing at all.

Studies also show that what inequality does exist is not the result of the Bush tax cuts or a failure to spend more on social-welfare programs, but on the transformation of the American economy from a focus on manufacturing to information and technology. This change puts a greater premium on education. As a result, the incomes of high-school dropouts or those with just high-school degrees have stagnated while incomes for many college graduates and those with graduate-level educations have increased significantly. The unfortunate fact is that despite massive increases in education spending, large segments of our society remain unprepared for a 21st-century economy. That is a tragedy, but it has nothing to do with tax cuts for the rich.

In the end, however, one has to ask a more basic question. Why do we care about inequality at all?

Poverty, of course, is a bad thing. But is inequality? After all, if we doubled everyone's income tomorrow, we would eliminate an enormous amount of economic hardship. Yet, inequality would actually increase. As Margaret Thatcher said about those who obsess over inequality, "So long as the [income] gap is smaller, they would rather have the poor poorer."

In what way does someone else's success harm me? Such a viewpoint stems from the misguided notion that the economy is a pie of fixed size. If one person gets a bigger portion of the pie, others of necessity get smaller pieces, and the role of government is to divide up the slices of that pie. In reality, though, the size of the pie is infinite. But to make it grow, we need people who are ambitious, skilled risk-takers. We need people to be ever striving for more. That means that they must be rewarded for their efforts, their skills, their ambitions, and their risks. Such rewards inevitably lead to greater inequality. But as Nobel Prize–winning economist Gary Becker pointed out, "It would be hard to motivate most people if everyone had the same earnings, status, prestige, and other rewards."

Another Nobel Prize winner, F. A. Hayek, concluded, "The rapid economic advance that we have come to expect seems to be in large measure a result of this inequality and to be impossible without it. Progress at such a fast rate cannot take place on a uniform front but must take place in an echelon fashion, with some far in front of the rest."

We should all seek a prosperous, growing economy, with less poverty, and where everyone can rise as far as their talent and drive will take them. Equality? Who needs it?

 

[RightField]

What Does Wall Street Do for You?

By ADAM DAVIDSON
New York Times
January 11, 2012


Hating Wall Street is an American tradition that dates back even to the days when Thomas Jefferson cursed that money lover Alexander Hamilton. And for centuries, the complaints about it have largely stayed the same: It does nothing! It creates chaos! It’s a parasite that sucks hardworking Americans dry! (Or something to that effect.) But these are distortions of a fundamentally beneficial business. The country’s largest investment banks, commercial banks and a few big insurance companies (what we generally refer to as Wall Street) play the crucial role of intermediation — matching borrowers with lenders. Most of the time, the industry does this extremely well (though in the case of matching homeowners’ debt to the global financial system, too enthusiastically). Perhaps the best way to really appreciate what Wall Street does is to imagine life without it.

THE POOR WOULD STAY POOR

In the U.S., we use credit cards, mortgages, credit scores, securitized loans and other Wall Street innovations to do the miraculous: to persuade some institution with a lot of money to hand it over to someone who doesn’t have that much. This happens even though we have laws that allow borrowers to declare they can’t pay the loans back.

Sure, we have too much household debt, but that’s a better problem than what most nations face. Most people in the world don’t have access to a modern financial system, and there is almost no way, other than through greedy loan sharks, for the surplus cash of the very rich to get in the hands of the poor.

THERE WOULD BE NO MIDDLE CLASS

Or at least it would look a whole lot different than it does today. One of the most striking facts of life in countries without a modern financial system is the near total absence of upward mobility. The financial-services industry, however, performs a kind of fiscal time travel by pooling the nation’s collective savings and transforming it into all sorts of loans. This allows people to spend money now that they won’t earn until later. When spent wisely, this money borrowed from the future actually makes the future quite a bit brighter.

There is a lot of appropriate anger about excessive student debt these days, but student loans have largely changed America for the better. Countless working-class kids were able to have educations they couldn’t otherwise afford. Many were able to start businesses because of easier access to credit. They were also able to sell their wares to other people who had ascended to the middle class.

LOTS OF AWESOME THINGS WOULD NEVER HAPPEN


Just about anything that makes you happy — whether it’s a lifesaving drug or just the artisanal goat cheese at the shop around the corner — was at one point a risky project. As you read this, your money is being pooled with that of millions of other people and institutions to finance risky projects (farmers, shopkeepers, tech developers) that would freak you out if you were asked to lend to them. Your 401(k) takes your spare cash and links it to thousands of companies, many of which are making bets that you might find ridiculous. But by pooling so much capital and spreading out the risk, Wall Street creates a safe space for failure, which is an essential part of capitalism.

HOW DOES WALL STREET DO THIS?

Wall Street’s core function is to perform a sort of financial alchemy, an incredibly complicated method of giving a lot of people what they want. Investors with extra cash want constant access to their money with little chance of losing any. Borrowers want to hold on to the loans for a long time and, sometimes, take big risks. Stocks, bonds, savings accounts and money-market funds are all ways of making twitchy, conservative lenders and dreamy, semi-reckless borrowers happy at the same time about the same pile of dough.

Meanwhile, consult the chart for a breakdown of how Wall Street makes money to pay for these transactions.

IS IT STILL O.K. TO HATE WALL STREET?

Absolutely. Wall Street firms enforce the cold rules of capitalism: hostile takeovers, foreclosures, fee increases, defaults. But those rules clearly do not apply to the largest banks themselves. A variety of economists (including, notably, several at N.Y.U.’s Stern School of Business) have mounted strong evidence that, over the past decade or so, a significant part of Wall Street’s business has shifted from serving the financial needs of the nation to profiting from “regulatory arbitrage” — making money by playing with the rules of the game. Reporting by my colleagues at NPR’s “Planet Money” shows that a dollar spent lobbying in Washington can have a return on investment of thousands of dollars.

Another reason: Wall Street’s central function is to make our financial system more robust and less susceptible to unexpected risk, but it did precisely the opposite while, maddeningly, avoiding paying the price. On the other hand, many of Wall Street’s toughest economist critics do not condemn the bailouts and generous policies of the Fed and Treasury Department. Most know that Ben Bernanke, Henry Paulson and Tim Geithner (like central bankers and treasury officials everywhere) were following the hallowed advice that Walter Bagehot, onetime editor of The Economist, set down in 1873: during a crisis, a country must do everything possible to preserve its banks. And while that has resulted in making the rich even richer, our economy would be much worse off if it hadn’t happened.

One lesson of this crisis is that regulation — no matter how well intended — cannot be trusted to rein in Wall Street. In fact, the largest financial firms have shown repeatedly an ability to take even the toughest of regulations and turn them into profit centers. So perhaps the biggest reason to hate Wall Street is that it has made so many Americans hate such an indispensable system.

 

[RightField]

An Imaginary Dustup? The Incalculable Harm of Regulation
By Blake Hurst
Sunday, January 8, 2012

Why surveys cannot begin to capture the cumulative damage of regulations. It’s not aggie paranoia or ‘right-wing nuttery.’

Timothy Noah writing in The New Republic. A column by David Brooks. A front-page news story in the Kansas City Star. All with the same theme: The regulatory actions of the Obama administration are nothing out of the ordinary, and new regulations cannot possibly be blamed for our economic problems.

Both Noah and a December article in the Huffington Post concentrate on the dustup over particulate regulation, or the so-called dust rule. Both point out that the Environmental Protection Agency never proposed a rule regulating farm dust. Both have some fun with Republicans and farmers complaining about what the Huffington Post calls the “imaginary dust rule.” Noah calls complaints about the rule “right wing nuttery” and accuses the GOP of demagoguery. That seems a little extreme (although I should admit my own complicity in this flap: see “All Ginned Up”).

Ah, well. Political pressure may well have prevented a new and stricter rule on fugitive dust. The lesson we farmers are likely to draw is that it pays to be early and to work hard. Not only that, but our concerns are well founded. This fall, one of the largest grain elevators in this part of Missouri was closed down for several days during the height of harvest because dust (particulate) readings on the EPA monitors in the area exceeded the limits required by the present rule. The trucks turned away were not imaginary, and the wages employees lost were not Monopoly money; local farmers lost a day’s harvest because of these all-too-real regulations. But if The New Republic says complaining about tightening these regulations is “special pleading,” and if the Huffington Post tells us that the problem is a figment of our collective imaginations, then I’ll tell my neighbors to quit their bitching. Wouldn’t want to be a right-wing nut, you know.

Yep, we are just imagining these regulations. That’s what I’ll tell one of the suppliers for my farm, who runs a very small fertilizer business. He was recently fined around a third of his yearly profit for failing to correctly complete his “Risk Management Plan.” He had hired a consultant, but his consultant neglected to complete the form in the prescribed manner. Even though the form was incomplete, the information he did file filled a three-ring binder three inches thick. The owner of the business has to re-file the plan online. The instruction form for the filing is 110 pages. Timothy Noah subtitled his article “Republicans surpass their own environmental absurdity.” My friend has been operating his business, without incident, for nearly 40 years. Absurd is no doubt how he would describe the new regulatory regime, if he was asked to do so without resorting to four letter words.

Similarly, the Department of Labor has recently released a proposed rule on child labor. The rule would end the learner exemption that allows farm kids to work with animals or operate machinery during their participation in a 4-H or FFA (formerly known as Future Farmers of America) project. The new rule would also prohibit children from working on their grandfather’s farm, or a family farm organized as a corporation.

That would be my farm, that would be my granddaughter, and you can rest assured, she wasn’t actually pushing that cart. Although she is always more than willing to “help.”

Tens of thousands of young people in their first two years of high school, the age range covered by the proposed rule, participate in what are called Supervised Agricultural Experiences as part of vocational training. The new rules would end their ability to work with livestock or operate machinery. My project when I was 14 and 15 years old was a couple of steers and 40 acres of corn. I fed the steers, helped to plant and harvest the corn, and kept a set of books for the whole operation. Only the bookkeeping would be allowed under the new rules.

After four years working as a young teenager, I’d saved enough money to pay for my college education. While corn prices today are at record highs, they have not increased as much as tuition has, so that path to a college education may not be available to my granddaughter.

Either way, the point is not ultimately about money. It’s about what constitutes an education. To those of us in flyover country, “learning how to work” is still a crucial part of growing up.

That faith in the value of work, even for kids under 16, is the sort of thing that causes our betters to lose patience with us. Secretary of Labor Hilda Solis has said that she refuses to “stand by while youngsters working on farms are robbed of their childhood.” A recent article in the Kansas Law Journal calling for stricter rules on farm labor attacked our old-fashioned beliefs head on: “Even today, many Americans believe in the value of labor intensive work, and that positive work experience can foster individual development, and a sense of responsibility.” Yes, we still believe those things. Even today.

Lest you believe that this is another example of aggie paranoia, I should mention the experience of some friends of mine, who just endured a visit from two Department of Labor inspectors to their greenhouse business. When the 15-year-old grandson of the owner flashed by on a skid loader, the inspectors warned that his days as a machinery operator were numbered. Imaginary rules, indeed.

David Brooks argues that the Obama administration is doing nothing out of the ordinary on the regulatory front, and that increased regulation is not to blame for our economy’s woes. But the first statement in that sentence does not necessarily imply the second. I’m afraid that Brooks is at least partially right: the Obama administration is much in keeping with the long-term growth of the administrative state.

According to Brooks, the Bureau of Labor reports that only 13 percent of employers answering a survey about employment changes credited regulation as a reason for layoffs. Brooks uses this figure to illustrate his contention that regulation isn’t causing our dismal unemployment numbers. I imagine that if you are part of that 13 percent your view is a little harsher than Mr. Brooks’s.

In any event, surveys cannot begin to capture the cumulative effect of regulations. I’m convinced that the economy has reached the Plimsoll line, and the economic boat can no longer stay afloat under the weight of the administrative state.

We can attempt to estimate the costs of regulations, but those estimates cannot capture the real burden of regulation. The problem is not the dollar amount of the fine my fertilizer supplier paid, or the loss of my grandchildren’s labor on our farm. We could quantify those things, but the number would mean very little. The true cost was described by the economist Bastiat when he wrote about the costs of the “things not seen.”

If you operate a grain elevator in St. Joseph, Missouri, or a fertilizer business in my home town, what incentive do you have to grow, to expand, to invest? You’re on notice that you are dangerous, that your activities are a threat to others.

If you are that fertilizer dealer, you’ve also learned something else. You’ve learned to be extremely cynical about the whole enterprise. The fine and the plan don’t really require him to do anything differently than he does now. The only thing the EPA really requires of him is paperwork. The cost to the economy is not the fines or the lost business during harvest, but rather the resignation to the bureaucratic yoke and the cynicism about the federal government. The real cost is the investment not made, the risk not taken.

My grandchildren have learned a lesson as well. They’ve been told that their work has no value, that their self-worth must be sacrificed to a small improvement in safety statistics. (Did I mention that the rate of farm accidents involving kids has fallen by half in the past two decades?) They’ll not have the opportunity I had to learn the values of work alongside my family and the sense of personal satisfaction I received for a job well done. They’ll know that nothing will be expected of them until they are much older than 16. In fact, if the Obama administration’s rules in Obamacare are any indication of when childhood ends, they won’t really be adults until more than a decade after I was doing a man’s work. What’s the economic cost of that? It certainly isn’t captured by any number compiled by Washington regulators.

Keynes taught that economic doldrums are caused by a deficiency in aggregate demand, a decline in “animal spirits.” Hence the stimulus, and the tendency to credit increased regulation with economic activity. (Remember the consultant my fertilizer dealer hired? In a Keynesian world, that cost contributes to economic activity and is a good thing.) We’ve had a decline in animal spirits, all right. The animal spirits that once led to new businesses and discovering new ways of doing things are now channeled into hundreds of pages of Risk Management Plans. That’s not imaginary, and that’s why we’re in the shape we’re in.

 

[4est_4est_Gump]

Are you becoming an Austrian?



One day, Obama hopes to speak it, but as of yet, he admits that he does not understand it.

Drop by Mises.org daily. I print the articles to ePub format, so I can take them with me everywhere in my reader.

 

[RobDownSouth]

Drop by Mises.org daily. I print the articles to ePub format, so I can take them with me everywhere in my reader.

Who explains the big words to you?

 

[RightField]

Bain Capital Saved America

In the 1980s, the resilient U.S. economy saved itself from becoming Europe. Bain was part of the rescue.

By DANIEL HENNINGER

Not only did Bain Capital save America, but no matter what turn Mitt Romney's political career takes, Bain Capital may stand as the best of Mr. Romney's lifetime contributions to the nation's economic well-being. If only he'd tell the story.

We are of course putting forth "Bain Capital" as not merely the Romney private-equity house but as the stand-in for the period of American economic history that ran from 1980 to 1989. Back then it was called the Greed Decade, with asset-stripping barbarians at the gate. Virtually everything about this popular stereotype is wrong. Properly understood, the 1980s, including Bain, were the remarkable years when an ever-resilient America found a way to save itself from becoming what Europe is now—a global has-been.

After centuries of First World status—and all the perquisites of prestige and power that came with it—Europe is watching its economic status slide inexorably toward new national powers in the East and elsewhere. Because of the modernizing change that Bain and others like it forced on U.S. corporations in the 1980s, we are not fading. Not yet.

Standard & Poor's credit downgrades aren't the biggest news about Europe's fallen status. A larger historic change became clear in the first two weeks of 2012, as national treasuries brought sovereign debt issues to market. The new world order was made plain in a Jan. 12 Wall Street Journal headline: "Reversal of Fortune in Debt Market." The story told how global investors who routinely bought the debt of Italy or Spain were now buying the 25- and 30-year bonds of Indonesia, Brazil, the Philippines, South Africa and other so-called "emerging market" nations.

Pimco global fund manager Curtis Mewbourne was explicit about the changing of the global guard in Barron's this past weekend: "There are a couple of very important changes going on. One, which is pretty broadly accepted, is that we are seeing a very significant shift of economic importance, away from the developed economies into the developing economies."

Read through S&P's justification for last week's downgrades of nine European countries. Along with the expected dumping on those countries' fiscal profligacy, one finds as well a blunt recognition of Europe's moribund "fundamentals," meaning their ability to produce "strong and consistent" economic growth.

If not for Bain Capital and the other, bigger players who commenced a decade of leveraged buyouts and hostile takeovers in the 1980s, the odds are that the U.S.'s "fundamentals" would be similarly weak. Instead, the U.S. corporate sector remade itself during the Bain years.

In a comprehensive 2001 re-examination of the buyouts and takeovers of the 1980s, economists Bengt Holmstrom of MIT and the University of Chicago's Steven Kaplan made clear (as have others) that the results were far from the stereotype of zero-sum pillage revived last week by economic historian Newt Gingrich and un-Texan Gov. Rick Perry ("vulture capitalism"), and sure to be promoted in grainy, tear-soaked campaign ads by the Obama team.

"When large-scale hostile takeovers appeared in the 1980s," Messrs. Holmstrom and Kaplan write, "many voiced the opinion that they were driven by investor greed; the robber barons of Wall Street had returned to raid innocent corporations. Today, it is widely accepted that the takeovers of the 1980s had a beneficial effect on the corporate sector and that efficiency gains, rather than redistributions from stakeholders to shareholders, explain why they appeared."

In the 1980s, the resilient U.S. economy saved itself from becoming Europe. Bain was part of the rescue.

Arguably, the primary force that set off the 1980s upheaval in U.S. corporate restructuring was the deregulation begun by Jimmy Carter and continued by Ronald Reagan. Airlines, ground transportation, cable and broadcasting, oil and gas, banking and financial services all experienced regulatory rollback. Meanwhile, a competitive, globalized marketplace was rising. Management at some of America's biggest companies, confused by these rapid changes, found themselves sitting on huge piles of unused or poorly deployed cash and assets.

Thousands of Mitt Romneys allied with huge pension funds representing colleges, unions and the like, plus a rising cadre of institutional money managers, to force corporate America to reboot. In the 1980s almost half of major U.S. corporations got takeover offers.

Singling out this or that Bain case study amid the jostling and bumping is pointless. This was a historic and necessary cleansing of the Augean stables of the American economy. It caused a positive revolution in U.S. management, financial analysis, incentives, governance and market-based discipline. It led directly to the 1990s boom years. And it gave the U.S. two decades of breathing room while Europe, with some exceptions, choked.

Every voter seems to sense that finding the answer to what comes next for America's economic fortunes makes this election huge. The Washington Post-ABC poll just out produced an extraordinary 57% disapproval of the economic stewardship of Barack Obama, whose life goal seems to be to reverse the policies of 1980-2000.

Mr. Romney's answer appears to be that voters want to keep hearing about him and his management résumé. Voters don't want one man's story. They want someone who understands how the next 10 years can produce an American economy that offers the opportunities for them that the 1980s produced for Mitt Romney.

 

[RightField]

In Keystone XL Rejection, We See Two Americas At War With Each Other
Joel Klotkin
Forbes
1/18/12

America has two basic economies, and the division increasingly defines its politics. One, concentrated on the coasts and in college towns, focuses on the business of images, digits and transactions. The other, located largely in the southeast, Texas and the Heartland, makes its living in more traditional industries, from agriculture and manufacturing to fossil fuel development.

Traditionally these two economies coexisted without interfering with the progress of the other. Wealthier gentry-dominated regions generally eschewed getting their hands dirty so that they could maintain the amenities that draw the so-called creative class and affluent trustifarians. The more traditionally based regions focused, largely uninhibited, on their core businesses, and often used the income to diversify their economies into higher-value added fields.

The Obama administration has altered this tolerant regime, generating intensifying conflict between the NIMBY America and its more blue-collar counterpart. The administration’s move to block the Keystone XL oil pipeline from Canada to the Gulf of Mexico represents a classic expression of this conflict. To appease largely urban environmentalists, the Obama team has squandered the potential for thousands of blue-collar jobs in the Heartland and the Gulf of Mexico.

In this way, Obama differs from Bill Clinton, who after all recognized the need for basic industries as governor of poor and rural Arkansas. But the academic and urbanista-dominated Obama administration has little appreciation for those who do the nation’s economic dirty work.

NIMBY America’s quasi-religious devotion to the cause of global warming is the current main reason for their hostility to the basic economy. But it is all a part of a concerted, decades-long jihad to limit the dreaded “human footprint,” particularly of those living outside the carefully protected littoral urban areas.

Oddly, in their self-righteous narcissism, the urbanistas seem to forget that driving production from more regulated areas like California or New York to far less controlled areas like Texas or China, may in the end actually increase net greenhouse gas emissions. The hip, cool urbanistas won’t stop consuming iPads, but simply prefer that the pollution making them is generated far from home, and preferably outside the country.

The perspective in the Heartland areas and Texas, of course, is quite different. They regard basic industries as central to their current prosperity. Oil and gas, along with agriculture and manufacturing, have made these areas the fastest growing in terms of jobs and income over the past decade.

Of course, the apologists for the NIMBY regions can claim that they, too, create economic value. And to be sure, Silicon Valley — now in a midst of one of its periodic boom periods — Wall Street and Hollywood constitute some of the country’s prime economic assets. Similarly, highly regulated cities such as New York, San Francisco, Seattle, Boston and Chicago offer a quality of life, at least for the well-heeled, that draws talent and capital from the rest of the world.

But the NIMBY model suffers severe limitations. For one thing, these high cost areas generally lag in creating middle-skilled jobs; New York and San Francisco, for example, have suffered the largest percentage declines in manufacturing employment of the nation’s 51 largest metropolitan areas. Indeed with the exception of Seattle, the NIMBY regions have all underperformed the national average in job creation for well over a decade.

These areas are becoming increasingly toxic to the middle class, especially families who are now fleeing to places like Texas, Tennessee, North Carolina and even Oklahoma. NIMBY land use regulations — designed to limit single-family houses — usually end up creating housing costs that range up to six times annual income; in more basic regions, the ratio is around three or lower.

Ironically, America’s most ardently “progressive” areas turn out to be the most socially regressive, with the largest gaps between rich and poor. Even the current tech bubble has not been of much help to heavily Latino working-class areas like San Jose, where unemployment ranges around 10%, nor across the Bay in devastated Oakland, where the jobless rate surpasses 15%.

To succeed, America needs both of its economies to accommodate the aspirations not only of its current population but the roughly 100 million more Americans who will be here by 2050. If the regions that want to maintain NIMBY values want to do so, that should be their prerogative. But stomping on the potential of other, less fashionable areas seems neither morally nor socially justifiable.

 

[RightField]

I like these articles that try to give a greater context to politics and the economy.

 

[4est_4est_Gump]

He's being forced to shore up his base at a time when they should be firmly behind him which makes him late to run to the center, which means that in the Fall, he will reluctantly allow the pipeline to go on after he has received all the green lobby contributions he thinks he can get at which time, he will begin asking for even more union funding for jobs while executing some other symbolic eco-move like re-ratcheting up CAFE standards or going after more coal plants by prodding publicly the EPA to strengthening CO2 emissions standards.

Of course, this all assumes that he can expertly keep Iran quiet and under control perhaps by offering them some technology for inspections swaps...

 

[RightField]

I just filled my car up with gas on the way home tonight and it was almost $4 a gallon. Thanks for your backwards and unworkable energy policies President Obama and may this be one of many reasons that you are defeated in November.

 

[RobDownSouth]

I just filled my car up with gas on the way home tonight and it was almost $4 a gallon. Thanks for your backwards and unworkable energy policies President Obama and may this be one of many reasons that you are defeated in November.

You poor thing. How about a nice cup of tea?

 

[KingOrfeo]

I just filled my car up with gas on the way home tonight and it was almost $4 a gallon. Thanks for your backwards and unworkable energy policies President Obama and may this be one of many reasons that you are defeated in November.

You don't really believe you'd be paying a penny less if McCain were POTUS, do you?

 

[RightField]

You don't really believe you'd be paying a penny less if McCain were POTUS, do you?

Yes, of course I would. We'd have an aggressive "all of the above" plan working and gas prices would be down all over the world.

But I understand how it is that democrats can't comprehend the laws of supply and demand. To most democrats the only important calculus is 'how much can I get away with taking?"

 

[Ishmael]

Yes, of course I would. We'd have an aggressive "all of the above" plan working and gas prices would be down all over the world.

But I understand how it is that democrats can't comprehend the laws of supply and demand. To most democrats the only important calculus is 'how much can I get away with taking?"

Actually that's not it at all. They do understand these things, even if they hate them.

It's all about the restriction of travel by the individual and the notion that there is such a thing as energy production with no unintended consequences.

Ishmael

 

[RightField]

February 13, 2012
Our Budget Quagmire
By Robert Samuelson

WASHINGTON -- Social Security's disability program is a political quagmire -- and a metaphor for why federal spending and budget deficits are so difficult to control. The numbers are too big; the details, too complicated; and the choices, when faced, too wrenching. President Obama's new budget, estimated at $3.5 trillion or more, will raise all these problems. Experience suggests that little will be done to rein in long-term spending and deficits.

Social Security's disability program opens a window on this larger paralysis. Created in 1956, more than two decades after Congress authorized Social Security, the program was initially seen as a natural complement to coverage for retirees. Through sickness or accident, some workers had to retire early. They, too, deserved protection. For many years, the costs were modest. But in recent decades, they have exploded.

Consider. In 2010, Social Security's disability program cost $124 billion plus another $59 billion for Medicare (after two years, disability recipients automatically qualify for Medicare). This exceeded $1,500 for every U.S. household. For the past two decades, disability spending has increased at a 5.6 percent annual rate, compared with 2.2 percent for the rest of Social Security. As a result, disability represents nearly one in five dollars of Social Security spending, up from one in 10 in 1988.

All these facts come from a fascinating paper by economist David Autor of the Massachusetts Institute of Technology. The disability program, Autor writes, is a "central component of the U.S. social safety net" but doesn't help "workers with less severe disabilities" to stay in the labor force (By law, recipients can't be employed because disability is defined as the inability to work.) This means Social Security collides with the 1990 Americans with Disabilities Act, which aimed to keep the disabled in jobs.

Guess which prevails. One program, Social Security, pays the disabled not to work; the other, the ADA, simply encourages their work. Money wins. In 1988, 4 percent of men and 2 percent of women aged 40 to 59 received disability benefits. By 2008, the men's rate was almost 6 percent and the women's, 5 percent.

Autor attributes disability's expansion mainly to liberalized, more subjective eligibility rules and to a deteriorating job market for less-educated workers. Through the 1970s, strokes, heart attacks and cancer were major causes. Now, mental problems (depression, personality disorder) and musculoskeletal ailments (back pain, joint stress) dominate (54 percent of awards in 2009, nearly double 1981's 28 percent). The paradox is plain. As physically grueling construction and factory jobs have shrunk, disability awards have gone up.

For many recipients, the disability program is a form of long-term unemployment insurance, argue Autor and his frequent collaborator Mark Duggan of the University of Pennsylvania. Benefit applications surge when joblessness rises. From 2001 to 2010, annual applications jumped 123 percent to 2.9 million. On average, recipients start receiving payments at age 49 and keep them until 66, when they switch to Social Security's retiree benefits.

Superficially, the case for overhaul seems overwhelming. Tougher eligibility standards would protect the genuinely disabled but limit benefits for others. Don't hold your breath. For starters, any crackdown could become a public-relations disaster. It might seem gratuitously cruel. Many recipients command sympathy. With low skills, their jobs prospects are poor. "People are driven into the program by desperation," says Autor. Nor are they rolling in money; the average payment is about $14,000 a year.

Advocates for the poor would protest. The disability program "isn't in crisis," says the Center on Budget and Policy Priorities, a well-known liberal think tank. Presidents Carter and Reagan tried to tighten eligibility. They failed. Indeed, the backlash against Reagan's effort led Congress to relax the rules in the ways that now expand awards. High unemployment worsens the timing.

Lawyers would also resist big changes. The Social Security Administration initially rejects about two-thirds of applications, but about half of these are appealed by lawyers and other professional advocates before administrative law judges, where the approval rate is between 60 percent and 75 percent. In a series of well-reported stories, The Wall Street Journal's Damian Paletta showed that the system is open to abuse. But it's also lucrative. Lawyers and other advocates are entitled to 25 percent of back benefits up to $6,000 per case. Their total payments approach $1.5 billion annually.

The larger budget quagmire now comes into focus. What the federal government does is so vast that it suffocates informed debate and political control. The built-in bias for the status quo reflects the reality that the various parts of government are understood, defended and changed mainly by those who benefit from their existence. However strong the case for revision (and it is powerful here), it is tempered by political inertia. What's sacrificed is the broader public good. The quagmire is of our own making.

 

[4est_4est_Gump]

Did you see where the economist who proved that Health Care Insurance premiums would be going down under Obamacare now admits that his static model did not account for Human Action and premiums are actually going to go up?

After this and the failed predictions of the static model used to sell stimulus, now merc is back with a static analysis of the new Obama budget proving it is going to decrease the deficit through the simple mechanism of higher taxation.

 

[4est_4est_Gump]

Actually that's not it at all. They do understand these things, even if they hate them.

It's all about the restriction of travel by the individual and the notion that there is such a thing as energy production with no unintended consequences.

Ishmael

Q: You favor an increase in the capital gains tax, saying, “I certainly would not go above what existed under Bill Clinton, which was 28%.” It’s now 15%. That’s almost a doubling if you went to 28%. Bill Clinton dropped the capital gains tax to 20%, then George Bush has taken it down to 15%. And in each instance, when the rate dropped, revenues from the tax increased. And in the 1980s, when the tax was increased to 28%, the revenues went down.
A: What I’ve said is that I would look at raising the capital gains tax for purposes of fairness. The top 50 hedge fund managers made $29 billion last year--$29 billion for 50 individuals. Those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair.
Q: But history shows that when you drop the capital gains tax, the revenues go up.
A: Well, that might happen or it might not. It depends on what’s happening on Wall Street and how business is going.
Source: 2008 Philadelphia primary debate, on eve of PA primary Apr 16, 2008

 

[unregistered]

 

[4est_4est_Gump]

Obama submitted his budget knowing it wouldn't even survive his own party, but he with his state sponsored media, can successfully blame the obstructionists in the evil Republican Party.

Did you see them lying to blame it on Republicans knowing that Harry Reid is not about to let it come up for a vote...




REPUBLICAN OBSTRUCTION! they will continue to scream...


Meanwhile, with all their new plans obstructed, the economy is "suddenly" beginning to improve and they want credit for it!

*snicker*

 

[JAMESBJOHNSON]

Folks better wakeup and smell the coffee.

When the Captain and officers realized we'd collided with an iceberg they lowered the lifeboats for the 1st class passengers, and shook-down the rest to buy more lifeboats for the elites.

Sooner or later theyre gonna row away and leave you behind.

 

[RightField]

The Economist
Over-regulated America
The home of laissez-faire is being suffocated by excessive and badly written regulation
Feb 18th 2012

AMERICANS love to laugh at ridiculous regulations. A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down children’s lemonade stands because the enterprising young moppets did not have trading licences. The list goes hilariously on.

But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.

Consider the Dodd-Frank law of 2010. Its aim was noble: to prevent another financial crisis. Its strategy was sensible, too: improve transparency, stop banks from taking excessive risks, prevent abusive financial practices and end “too big to fail” by authorising regulators to seize any big, tottering financial firm and wind it down. This newspaper supported these goals at the time, and we still do. But Dodd-Frank is far too complex, and becoming more so. At 848 pages, it is 23 times longer than Glass-Steagall, the reform that followed the Wall Street crash of 1929. Worse, every other page demands that regulators fill in further detail. Some of these clarifications are hundreds of pages long. Just one bit, the “Volcker rule”, which aims to curb risky proprietary trading by banks, includes 383 questions that break down into 1,420 subquestions.

Hardly anyone has actually read Dodd-Frank, besides the Chinese government and our correspondent in New York (see article). Those who have struggle to make sense of it, not least because so much detail has yet to be filled in: of the 400 rules it mandates, only 93 have been finalised. So financial firms in America must prepare to comply with a law that is partly unintelligible and partly unknowable.

Flaming water-skis

Dodd-Frank is part of a wider trend. Governments of both parties keep adding stacks of rules, few of which are ever rescinded. Republicans write rules to thwart terrorists, which make flying in America an ordeal and prompt legions of brainy migrants to move to Canada instead. Democrats write rules to expand the welfare state. Barack Obama’s health-care reform of 2010 had many virtues, especially its attempt to make health insurance universal. But it does little to reduce the system’s staggering and increasing complexity. Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.

Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.

The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.

Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America’s share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.

A plea for simplicity

Democrats pay lip service to the need to slim the rulebook—Mr Obama’s regulations tsar is supposed to ensure that new rules are cost-effective. But the administration has a bias towards overstating benefits and underestimating costs (see article). Republicans bluster that they will repeal Obamacare and Dodd-Frank and abolish whole government agencies, but give only a sketchy idea of what should replace them.

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

Would this hand too much power to unelected bureaucrats? Not if they are made more accountable. Unreasonable judgments should be subject to swift appeal. Regulators who make bad decisions should be easily sackable. None of this will resolve the inevitable difficulties of regulating a complex modern society. But it would mitigate a real danger: that regulation may crush the life out of America’s economy.

 

[RightField]

http://pjmedia.com/victordavishanson/the-gaseous-policies-of-barack-obama/?singlepage=true

The Gaseous Policies of Barack Obama
March 5, 2012 - 12:05 pm - by Victor Davis Hanson

“They” Did It (Again)!

There are no “oil men” in the White House. So the Obamites cannot, as in the past, blame Halliburton, BP, or Exxon for rigging gas prices out of the Oval Office. Which leads to the question: why then are prices now climbing when the Bush-oil company connection is no longer the narrative? The new answer? “Wall Street” (e.g., the fat-cat bankers, corporate jet owners, those who don’t know when not to profit, etc.) raised prices.

But if true, who let them get away with that? The Chinese, who are scrounging every barrel they can on the world market? The Indians, who follow suit? Maybe it’s the Obama administration Treasury that has borrowed $5 trillion in three years, not only eroding the buying power of the world-traded dollar but also sending a message to oil producers that even more debt is coming and their petrodollars will only be worth less and less?

Or perhaps it is growing world tension, as in Iran, that caused the panic? But then who snubbed the Green revolution in Iran in the spring of 2009, sought “outreach” and “reset” with the theocracy, and leveled five serial demands to stop Iranian enrichment (or else!) to the point that Iran no doubt understood 2009-2012 was a once-in-a-lifetime exempt window of opportunity to get the bomb and to control the Gulf?

To paraphrase William Tecumseh Sherman, Obama might as well rail at the wind. The administration’s current panic mode arises because we are nearing $5 a gallon. (I just filled up two miles away in West Selma, with a supposed 21% unemployment rate and a per capita income of about $14,000, and the price today was $4.27.) It is only early March. Obama may blame Wall Street, but he is savvy enough to do the following calculus: by August, people will want to drive more than they do in March; the Chinese will suddenly not wish to buy less oil this summer; he has no federal leases that he approved in January 2009 that will be coming on line after three-and-a-half years; Volts will not be going into hyper-production mode; and prices will only go up just as the campaign and the weather heat up. There is about an hour’s worth of Obama administration past quotes on gas prices that should make some interesting campaign ads.

High Gas Prices Are Good...no Bad ...or (high gas prices used to be good, but now are bad).

So what exactly is the administration’s reaction to skyrocketing gas prices? That should be an absurd question — except that we know administration officials are either on record as indifferent to the high cost of gasoline, or in fact hoping for higher prices.

Consider also the cancellation of the Keystone pipeline; the restrictions of new federal oil leases in the West, Alaska, offshore, and in the Gulf; Obama’s prior promises that energy prices would skyrocket because of his efforts to enact cap and trade; his boast to help Brazil out by importing its new offshore oil finds; his worries only over the abrupt rate of gas increases in 2011 rather than his desire for gradual, steadier escalation; Energy Secretary Chu’s various statements that high prices were not such a concern and indeed that he wished to see gas reach European levels (e.g., $8-10 a gallon); Interior Secretary Salazar’s insistence that even $10 gas would not open up new federal oil lands; and on and on.

I think that such words and deeds translate into some technocratic “never waste a crisis” dream in which we adapt to mass transit, begin to pile into Smart cars and subsidized government Volts, arrange our power use around the cycles of the Sun and wind, and in general consume far less as dictated by those in the technocratic overseer class, the waiting-Escalades-on-the-tarmac bunch who by needs must consume far, far more to save us from ourselves. The financiers of Solyndra and other failed subsidized firms are somehow exempt from the sorts of invective leveled at those who produce oil, as if we like those who lose our money and end up producing nothing but despise those who make a profit, pay taxes, and get us to work in the morning.

“Skyrocketing” for Thee, “Orchid-Growing” Temperatures for Me

I say technocratic because only those who work for government or live in larger cities or do not depend on driving vans, pick-up trucks, tractors, or semis could think it was wise for an oil- and natural gas-rich nation not to exploit fully its own natural resources. (Can any of you readers recall a civilization that in the past voluntarily chose not to exploit a valuable natural resource when it could be done safely, without damage, and to great profit?)

Whatever the level that the price of gas reaches, Barack Obama and Steven Chu and the technocracy won’t feel it all that much. Do you remember Obama’s first day in office when he abruptly ordered the temperature in the White House dialed up? (Had that “oil man” Bush been too energy-conscious?) David Axelrod himself complained that one could grow orchids at Obama’s new presidentially mandated heat: “skyrocketing” prices for us, but orchid growing for the president?

Think of some of the ramifications of this faculty lounge policy (I use that term empirically rather than as invective, given I taught among faculty for 21 years). Americans must borrow even more billions to import ever-higher priced oil that enriches many of our enemies, all of which will be pumped abroad under far more lax environmental conditions than had we developed our own resources here at home. (What happened to “Planet Earth”?)

Increased gas costs will also simply transfer lots of dollars that might have been spent in America to foreign governments, and will curb consumer consumption of other goods in an economic downturn. Is the driving force then some philosophical desire to restrict crass American materialism in order to return to a preferable pre-carbon dioxide Golden Age past? And if so, are the president’s sudden complaints about high gas prices and considerations to draw again from the strategic petroleum reserve entirely cynical, in the sense that once reelected, he and Secretary Chu will accelerate their restrictionist policies in hopes of keeping gas prices even higher? (We are already halfway on the road to “European levels.”) Or of making subsidized Solyndra- and Volt-like projects at last viable?

Why would the president consider tapping the strategic oil reserve, but not start a breakneck effort at developing new sources? Is previously pumped oil less polluting; does it increase supply and lower prices in a way that freshly pumped oil does not? Does his mockery of “drill, drill, drill” suggest that “not drill, not drill, and not drill” is a wiser alternative? Does Obama realize that even an extra 3 to 4 million barrels a day produced here would earn the U.S. billions in extra revenue and help to stabilize world prices by taking a commensurate amount of American demand off the world market?

The Strange Case of Dr. Chu

Give credit to Steven Chu. He’s not backing down and most recently reiterated to Congress that high prices are not much of a concern of this administration. (But Mr. Chu: if they go up any more, you will soon be out of a job, yes?) In contrast, and faced with reelection, the president now brags that we are using less fuel and pumping more of it than when he took office. Again, examine that surreal logic: because unemployment is high and GDP growth low, there is less demand for gas, and that is suddenly a good thing? (Note how — for the first time? — Obama does not blame Bush for lowering gas demand as he had serially for causing the economic doldrums: “Bush wrecked the economy but I was smart enough to make it far worse to lower gas demand.”)

Then the president boasted further that domestic production is at an all-time high. Consider that weird reasoning as well: although he curtailed production on federal lands where there are now record levels of known oil and gas reserves, private industry has developed horizontal drilling and fracking — despite, rather than because of, the president — on mostly private land in the Dakotas and elsewhere. Is the reasoning, then, something like: “Congratulations to the oil industry for ignoring me”?

In sum, from January 2009 to January 2011 — in the pre-Climategate days before Al Gore was a “sex poodle” and when the Himalayan glaciers were to be swamps and polar bears extinct — new gas and oil production was considered “bad,” given that Obama was pushing wind, solar, and “alternative” energies. In those giddy cap-and-trade days, he could afford to pontificate because he was not up for reelection and world demand was sluggish, dropping oil prices at the wellhead. When the world economy began rebounding, demand picked up, prices spiked, and now Obama is in campaign mode: suddenly high gas prices are bad and he claims not that he wants his House-approved cap-and-trade bill pushed through his Democratically controlled Senate, but rather that all along he has encouraged private enterprise to drill while successfully persuading us to cut back our consumption (as if we did so because of the impressive oratory of Barack Obama rather than because he had managed to ensure millions of Americans now had no jobs to drive to work to).

The Omnipotent Mr. Obama

Why is it that Obama takes credit for the rebound of the stock market after the historic drops in September 2008, but sees the price of gas as extraneous in a way speculation on Wall Street is not? To say that gas prices have doubled under his watch is considered by sophisticates simplistic and reductionist, given all the factors beyond his control that contribute to such increases; to say that Wall Street has improved under his watch is to appreciate the brilliantly subtle and clever manner in which an omnipotent Obama has restored financial confidence and restored some of our lost 401(k) plans.

Obama keeps claiming that the oil companies are gouging us. Some of them may well be doing that; after all, they can profit well enough at the old $40-$50 a barrel levels on about 45% of our supply produced domestically, and “need” not receive $110 for their Texas or Dakota oil at the world price. But such thinking assumes that we all should sell our product at less than we might to help fellow Americans. The farmer who produces almonds need not sell his crop at $1 a pound off the tree because he does not “need” such profits, even though he realizes that world demand has forced the price up (from the old $.75 a pound) that he could receive by exporting his almonds. In other words, everything produced in the United States that has the potential to be exported has a “world” price in this globally interconnected world, and the fact that oil does too does not make its producers inherently evil. We might as well try to convince this new generation of gold miners to sell their product to fellow Americans at $500 an ounce to help lower the deficit rather than to “gouge” us at demanding a “world” price of $1500 an ounce that is well beyond what they “need” to profit from mining.

So here we are: as gas keeps spiraling the secretary of energy simply cannot any longer remark on the resulting deleterious effects since he is on record that they are not deleterious. And the president has urged us to consider, in lieu of Neanderthal drilling, our sizable algae reserves (does algae grow in the U.S. more abundantly than elsewhere?) in a manner that he once urged us to inflate our tires and “tune up” our electronic ignition cars.