Economics & Business

Beware of cheap gasoline prices

Remember this past summer when gasoline and diesel prices were paralyzing the country? Liberal acquaintances and relatives of mine were screaming that, as usual, it was entirely the fault of Bush/Cheney. After all, they both are oil barons, on the receiving end of bucket loads of money at our expense, right? These same folks were completely unmoved a couple weeks before the election when a very select few media sources released the Obama statements that anybody could go ahead and build a coal energy plant if they chose, but he'd bankrupt them with taxes and regulation. A few people talked about the devastation such an energy policy would create---trickle down job losses in trucking, railroad, etc. (similar to what we hear now about the auto industry). There was no outrage or debate in the halls of Congress. Unfortunately, the top leadership of the coal and electric industries did not race to microphones to plead with the American people to stop the coming doom. If my memory serves me correctly, I did not hear any labor union executives speaking out about pending loss of jobs and benefits. Instead, we witnessed another crucial element that in a normal cycle would have turned the election.

Fuel prices are back to a reasonable, and for most, a quite comfortable place. But as many of our fellow citizens are explaining this away as the market reaction to the ousting of the Bush Administration, I fear we are being lulled into a false sense of euphoria in terms of what we pay at the pump.

Post-election, have you noticed the TV commercials on energy? All of them are in compliance, of course, with Sen. Obama's 'energy policy'. There's a crusty old fellow supposedly from Tuscon, Arizona, touting wind and solar, and using folksy rhetoric such as, "God's green acre". Clearly, his message is directed toward the pick-up truck, hick types that according to liberals, aren't smart enough to just quietly follow all phases of the progressive movement in lockstep. This commerical was produced not just to keep momentum going about alternative energy, but it clearly wants to debunk Sarah Palin and the "Drill, Baby, Drill" crowd. They attempt to propagandize us into the belief that real, card-carrying rednecks are onboard for wind and solar. The gentleman in the commercial does everything but tell us, "Fossil fuels are going to heck in a hand basket, don't ya know?"

Another commercial I've seen frequently is the one about clean coal. Viewers are taken on a 'tour' of a clean coal production plant, which is simply barren land with nothing happening on it except the growth of sage brush. Again, this is a slam toward any of us moron's who would like to see the production of clean coal increased. The 'progressive' viewers probably are loving these examples of Hollywood production brillance. Since these commercials are very expensive to put on the air, and since they reflect perfectly the policies of the incoming administration, dare we ask who is behind the funding? There are websites given quickly at the end and you can visit them and read a little bit about the organization, but the bottom line remains---who is really behind the funding?

Current gas prices are a luxury. Congress and the new president seek to gain complete control of Detroit and the automaking industry. They will renew off-shore drilling bans, probably come January (look for that as part of the "First 100 Days" phrase Pelosi loves to use). There will be no exploration, coal mining will be decreased, not increased, the new president will likely carry through on another campaign relevation of having our electricity 'skyrocket', and more. The New, New Deal says nothing about building nuclear plants to get us moving quicker toward cleaner and increased electricity, yet we are all supposed to go buy an electric car as soon as they are mass produced.

Energy independence as defined by the 'moronic' group of which I am a proud member, would mean aggressively going after our massives amounts of coal and oil to sustain our energy needs, and at the same time, integrating alternatives as they become affordable and reliable. I fear the plan is to greatly restrict any fossil fuel usage while we wait for alternatives to come on line. The result would be a vast decrease in commerce and industry. Our way of life would change dramatically and a once great nation would be not just hobbled, but incapacitated. What would our government do without the huge tax receipts from the evil oil companies? If the oil industry is burdened with more and more tax and regulation, they will go the way of the American auto makers.

There are many among us that are full of hope, but I'm more fearful than anything. I foresee $4.00 gallon gasoline again, possibly higher, sooner than later. Don't be fooled into thinking that the federal government is not concerned about the decrease in gas taxes that are a result of this drop in the price of oil. Low gas prices with subsequent freedom to travel, take a job further away from home, etc., are not options the Congressional leadership and incoming administration want we morons to enjoy.

If fossil fuel powered cars are going to soon be a part of the past, and the average family can't afford a pricey electric car, the result will be we either don't go anywhere or we take public transportation. That works if you live in a city where that is available and if government-run transportation happens to go where you need it to go. As the theme song in another commercial goes, "What kind of world do you want.........?"

Why bail out DNC & RNC donors?

Some of the biggest donors to both the Democratic and Republican national conventions are now among the companies getting or asking for federal bailouts, according to a report last week from the Campaign Finance Institute. The only thing that shocked me about the story was that there has been no outrage at all, from anyone. If this happened on a local level here in Colorado, someone would write an amendment to stop it from happening in the future. If this happened at your city’s level of government, someone would be speaking out at city council meetings and getting recall efforts started.

But on the national level, if people even saw the story, they rolled their eyes and just moved on. Why? Why aren’t we more outraged?

The fact that companies that are so perilously close to bankruptcy that they must ask the federal government for a loan, gave thousands of dollars to both political parties only four months ago, is an abomination. But the fact that we have collectively had little to no reaction is the bigger problem.

After a long campaign that was marked by hope, change and mavericks, you’d think that we’d be more upset. Is it that we think that it’s okay? Or is it that we think we can’t do anything about it?

I’m honestly wondering what is behind our collective non-reaction.

I don’t blame a conspiracy by the government, or the media or big corporations. Why would anyone bother to invent a conspiracy when the plain truth doesn’t seem to bother anyone?

Seriously, more Americans have an opinion about what kind of dog the Obama’s should get, or on college football adopting a playoff system than they do about where billions of bailout dollars are going. Do we care that companies who are asking for billions of our tax dollars had enough money to contribute to both national conventions four months ago?

I’m not trying to go out on a wacky limb here. I’m not about to leave the comfort of my laptop and start raving against the government on some street corner. I just honestly want to know if somebody out there thinks that this blatant abuse of influence is wrong.

So let me ask you, blogger to reader, are you angry about this? Are you looking for your torch and pitchfork and getting ready to riot, or do you think the Obamas should go ahead and adopt a Labradoodle?

Don't repeat the 1930s

"Productive industry owned and run by federal bureaucrats is an impossible fantasy. It will worsen the economy, just as it did in the ‘30s," warns John Andrews about the proposed automaker bailout in the December round of Head On TV debates. Susan Barnes-Gelt says the Detroit rescue is necessary for an "economy stuck on empty." John on the right, Susan on the left, also go at it this month over Obama's transition and Colorado's economic stimulus options. On the lighter side, they offer winner & sinner awards for 2008 along with a wacky forecast for 2009. Head On has been a daily feature on Colorado Public Television since 1997. Here are all five scripts for December: 1. AUTOMAKERS SEEK BAILOUT

Susan: Congressional bailout of Detroit must consider that Ford and GM are public companies while Chrysler and GMAC, GM's finance arm, are owned by Cerberus - one of the world's richest and most secretive private investors. Taxpayers have bailed out enough Wall Streeters, Cerberus should match the feds.

John: The US auto industry was driven to the wall by big-brother government with its burdensome policies on taxes, regulation, labor, and environment. Washington DC now virtually taking over Detroit, complete with a Soviet-style car czar, will only make it worse. The answer is ordinary bankruptcy with givebacks by the greedy UAW.

Susan: Nonsense, with Congress in its pocket Detroit ignored CAFÉ standards, the competition and the market. The UAW is not the problem. Until the nation solves the health care and portable pension issues, our economy is stuck on empty.

John: Productive industry owned and run by federal bureaucrats is an impossible fantasy. It will worsen the economy, just as it did in the ‘30s. Bipartisan arrogance by Hoover and FDR turned a normal recession into the Great Depression. Bush and Obama must not repeat that mistake. No bailout for Detroit.

2. OBAMA SO FAR

John: After Obama won with his message of hope and change, we of the opposition hoped that he would change. As inauguration day approaches, it seems he has. His cabinet looks like a mixture of Clinton’s third term and McCain’s first term. His defense secretary worked for President Bush and Bush’s father.

Susan: Obama is smart, deliberate and believes in the value of responsive government. It's going to take the focus, experience and wisdom of his team to address the global economic meltdown and huge challenges abroad. January 20th can't come soon enough.

John: The 44th President gives evidence of having the right stuff so far, but this is the preseason. When he takes the oath, it’s game on. Then we’ll see if he has backbone behind the charisma. Recession is a reality check. Pakistan is a timebomb. Blagojevich is a nightmare.

Susan: Obama will take office in the midst of a massive mess. He will only be able to accomplish what the times and temperament of the public allows. At best, he must restore confidence in government and governing. Low expectations are the key to a happy life.

3. RECESSION HITS COLORADO

Susan: Even the most conservative economists have become Keynesian at the prospect of a massive recession. Colorado's construction is dead with homebuilding and development at a standstill. The answer is a massive public works program - FasTracks, roads, bridges and civic infrastructure.

John: Two years of anti-business policies and bigger government have earned our governor the nickname of Recession Ritter. Colorado employers need a lighter dose of taxes and regulation to survive this economic slowdown. Stimulating business is best done with the market ideas of Milton Friedman, not the dead hand of Lord Keynes.

Susan: Greenspan's Friedman unfettered market policy got us into this mess. And Colorado already has one of the lowest tax rates in the nation. Colorado's leadership - an oxymoron - local, state, public and private - must step up, take risks and be bold. . . when pigs fly.

John: Colorado leaders are from your party, not mine, but they deserve our respect regardless. Speaker Carroll and Senate President Groff named a special committee on economic recovery. Good. It should reduce taxes and regulation. Gov. Ritter wants to help small business. Good again. He should cool it with labor unions.

4. WINNERS & SINNERS OF 2008

John: Before 2008 is forgotten, here’s our annual salute to Colorado winners and sinners of the old year. Denver hosted a successful DNC and sparkled for its 150th birthday. Coffman and Polis went to Congress after tough primaries. Ritter’s tax increase flopped. Tough times for Rockies baseball and the Rocky Mountain News.

Susan: The biggest winner, now that we are at the end of 2008, is the American public; witnessing the end of the Bush government. Eight years of being lied to while corporate goliaths and hedge fund managers got rich, have taken a huge toll.

John: Enough with the Daily Kos talking points. Give me some hometown humor. How about Mark Udall making “Boulder liberal” into a badge of honor with his 10-point victory. How about Speaker-designate Bernie Buescher becoming election roadkill. How about Golden changing its name to Tincup after the Coors brewery goes away.

Susan: That's a good one and Commerce City sounds like a brand all America would love to adopt! Urbanism is a huge winner. With Obama's election - a true urbanist who thought about being an architect. C I T Y is no longer a 4-letter word!

5. FEARLESS PREDICTIONS FOR 2009

John: It’s time again for Susan and John’s fearless new year predictions. 2009 is gonna be crazy. Harry Reid launches a deodorant brand. Jon Stewart and Joe Biden trade jobs. Bill Ritter gives up the governor gig and heads back to Africa as a missionary. Colorado Public Television acquires the Rocky.

Susan: Republicans drown Grover Norquist in a bathtub. Sarah Palin replaces Shawn Hannity and Bill O'Reilly on Fox News, as the station struggles for viewers. Bill Clinton's handicap falls to the single digits as he's banished to the links for the next four years.

John: The Secretary of State’s husband will still have an ethical handicap in triple digits. So Hillary dumps Bill and marries Henry Kissinger. The Onion acquires the New York Times. Mattel acquires GM. The Mafia acquires Chicago. The Obamas get a pretty little pitbull and name it Sarah.

Susan: Hickenlooper goes to Washington to head the Department of Special Events - the perfect job for a guy who is better at putting on a show than governing a city. With DC becoming the nation's new financial hub, Pennsylvania Avenue changes its name to Wall Street and the bankers morph to street sweepers.

Crafty like a fox

After a bit more than a month away from the partisan battles, I'm back in my blogger chair. I've had a chance to ruminate on the 2008 election results, and to my great surprise, the sun continues to rise in the East and set in the West (though I'm sure global warming alarmists will soon say that this, too, is in mortal danger). The real impact, of course, of the decisive Democrat victory won't be seen for years to come. I have to hand it to the President-elect -- he's crafty like a fox. His early appointments were designed to give him cover from attacks from the right, and reflect the sober reality he now faces in dealing with both the financial downturn and the ever-present terrorism and security threat. His appointments of Geithner and Summers were reassuring to the financial markets which are now expecting a high-level of government intervention. For those of us who still believe in free markets, its not good news, of course.

The financial bailout undertaken by the Bush Administration and Paulson/Geithner before the election has ushered in a whole new era of government intrusion into the private sector. And Barack Obama, with his predilection for "spreading the wealth around" is just the guy to take maximum advantage of it. The government will own banks, auto makers and insurance companies before it is all through -- and tax payers will be on the hook for it all in the end.

Of course, Obama's early appointments don't give a full picture of what is yet come -- for his next appointments will surely be grist for the far left of the party, still smarting over Obama's decision to keep Bush Defense Secretary Robert Gates. Interior, Energy, EPA -- all of these will be given to a left-wing ideologue who will seek to roll back environmental regulations in pursuit of greenhouse gas restrictions. All that "Drill here, Drill now"? You can forget about all that; now that gas is back to $1.50 a gallon, you can bet we'll be returning to the days of alternative energy investments and ever stricter emission standards -- all just as the auto makers are seeking a multi-billion bailout. Makes no sense -- but, then again, the global warming religion is based on faith, not facts.

Take a look at this piece in the Wall Street Journal -- a great example of the above:

Mr. Obama...(is) a student of the late radical thinker Saul Alinsky, who argued that you do or say what's necessary in a democracy to gain power, while keeping your true aims to yourself. Mr. Obama's novel contribution has been to turn this exploitation on his supporters on the left (who admittedly are so wedded to their hero that, so far, they don't seem to mind).

His next big challenge is an upcoming conference updating the Kyoto targets. Mr. Obama has not backed off his overwrought climate rhetoric, but listen carefully to Al Gore. Now that Democrats are on the verge of power, he's backing off cap-and-trade and carbon-tax proposals (i.e. visible energy price hikes for consumers) in favor of a new approach -- massive government subsidies for 'green technology'.

That's right -- open up the spigot. As long as we're spending a few $Trillion on the banks, bad mortgages and all, why not throw a few tens-of-billions at alternative energy? Start the presses! It's only paper, after all!!

In the end, of course, there will be a limit to all this largesse -- and it will come when taxes rise to support the massive debt we are now taking on for our children to deal with. Remember when "balanced budget" was the cry in Washington? Those days are long, long gone. In its place we have socialism in all its European glory.

And of course, don't forget health care -- the next great socialist experiment that is coming your way, like it or not. As the WSJ again shows in a brilliant editorial today, Tom Daschle is going to reform your health care -- like it or not:

Tom Daschle, the former Senate Majority Leader who Barack Obama has tapped to run Health and Human Services. "I think that ideological differences and disputes over policy weren't really to blame," he writes of 1994 in his book "Critical," published earlier this year. Despite "a general agreement on basic reform principles," the Clintons botched the political timing by focusing on the budget, trade and other priorities before HillaryCare.

President-elect Obama will not make the same mistake. Congressional Democrats are already deep into the legislative weeds, while Mr. Daschle is organizing the interest groups and a grassroots lobbying effort. Mr. Obama may be gesturing at a more centrist direction in economics and national security, but health care is where he seems bent on pleasing the political left.

According to Mr. Daschle, because of the Clintons' hesitation, "reform opponents succeeded in confusing and even frightening Americans about what change might mean," and this time the Democrats mean to define the debate. Consider the December 2 letter to us from Senator Max Baucus, who is upset that a recent editorial on his health-care plan did not use his favorite terms of art (his style being surrealism). "It will require affordability, but premiums will not be set," he writes. So the government will merely determine "affordability" -- which might as well be the same thing.

You see the pattern here: the issue in health care reform is style, not substance. Forget any discussion of the merits, the 1993 initiative failed because it wasn't sold properly, not because there are any inherent flaws in the concept. And lest you think that there will be proper study and debate before such a bill reaches the President's desk for signature, think again -- for the Democrats, so sure are they in the righteous of their cause, aren't wasting any time:

Most disturbingly, Democrats are talking up "budget reconciliation" to pass a health overhaul. This process was created in 1974 and allows legislation dealing with government finances to be whisked through Congress on a simple majority after 20 hours of debate. In other words, it cuts out the minority by precluding a filibuster. Mr. Daschle writes that reform "is too important to be stalled by Senate protocol," and Mr. Baucus has said he's open to the option.

Any taxpayer commitment this large ought to require a social consensus reflected in large majorities, but Democrats are determined to plow ahead anyway. They know that a health-care entitlement for the middle class will never be removed once it is in place; and that government will then dominate American health-care choices for decades to come. That's all the more reason for the recumbent GOP to get its act together.

Like Saul Alinsky and the other radicals in Obama's background, the ends always justifies the means. Ram it through at all costs -- the goal of social justice can't be hung up on the niceties of dissent and debate.

Yes, elections have repercussions. And this one more than most.

As I've said many times, folks: Hang on to your wallets!

Whatever happened to political economy?

In a previous column I questioned the idea that there is something called "the economy" and suggested instead that we refer to our multiple transactions in the global marketplace with the term of the United States Constitution, viz., commerce. This is not just a matter of semantics. For if we choose our words with care, we accurately name the things to which the words refer. Before the term "economy" was applied to our domestic and foreign commerce, it referred to a virtue–of individuals, businesses and nations. The first dictionary definition of economy, after all, is "Careful, thrifty management of resources, such as money, materials, or labor."

Just as households and businesses must practice economy in order to make the most prudent use of their resources, so must governments. But with its powers of taxing, spending and borrowing, government has access to considerably more resources than any household or business. That means the temptations and opportunities for abuse are much greater.

As the purpose of our national government is to make laws for the common defense and general welfare, it is not, by definition, designed, like the household, to meet the daily recurrent needs of anyone; or, like a business, to make a profit. It exists to make households and businesses safe and secure.

For most of our history, American government has practiced political economy, out of conviction and necessity. That is, it is limited in its scope and its powers and not entitled to huge sums to conduct its functions, however greater those were than anyone else’s. And as long as the federal government in particular performed its constitutional functions, heavy taxation was both difficult to justify and hard to obtain against jealous state governments.

To appreciate the soundness of this limited view of economy, it is helpful also to be mindful of what commerce is and why it is so indispensable to modern republics. In ancient times, commerce referred to sea going trade, as commerce includes the root "mer," meaning sea. Hence, Athens, a naval power, supported commerce that its rival, Sparta, a land-based power, took little interest in.

Commerce contributed greatly to the decline of medieval feudalism, a system that combined perpetual armaments and subjugation by the lords of the peasants. Those aristocrats who aspired to national crowns found the nascent commercial classes a vital alternative to depending upon their rivals for financing their kingdoms, especially their wars.

The middle class, so called because its members were neither aristocrats nor peasants, made money in trade with cities and states other than their own. In return for protection or favored treatment, they would lend money to kings.

There were essentially two approaches that kings of the early modern nation states took toward the generation of national wealth. One supported acquisition of precious metals and hoarding them for national purposes. Spain, the first great nation at this time, was an exponent of that view. Another view, favored in Britain, was that it was better to encourage merchants to build their fortunes with limited regulation, as a growing commerce funded government with minimal taxation.

Adam Smith’s Wealth of Nations provided the most powerful argument for the second view of national wealth. The British government was no less tempted to commandeer the resources of the country than the Spanish, but Smith made a compelling case for laissez-faire (let them do as they please) as far more productive than national missions to exploit natural resources the world over to enrich the government’s coffers. Smith’s famous "invisible hand" was not blind to the avarice of businessmen (quite the contrary) but rather saw them as more efficient producers than any government could ever be.

As we stand on the brink of massive efforts to "rescue our economy" from its current credit crisis, it is helpful to remember these historical lessons on how to build up national wealth and, by implication, what diminishes it. The federal government tried to spend its way of the Great Depression and failed, just as its massive programs 30 years later failed to end poverty. Only individuals and businesses practicing economy, supported by a government practicing the same virtue, can accomplish that.

To the extent that our government embarks on a massive program of public works, business bailouts, unemployment compensation, forced unionism and uneconomical energy schemes, our current crisis will become much worse and we will imagine only that we didn’t do enough rather than far too much to "save" our commerce.