Obama’s EPA riding over the bodies of energy producing companies
Why is the US economy a wreck? Why are we paying sky-high prices at the gasoline pump? We have an administration in Washington that is philosophically bent on treating the productive free market economy the same way a conquering Roman general or invading barbarian horde would treat a foreign territory. The democrat party left views the private sector economy as a victim it is entitled to conquer, rule over, and loot at will.
You couldn’t have a clearer demonstration of the total incomprehension on the part of the left of the role of freedom and the rule of law in making possible economic growth, innovation, and prosperity. When this country elected Barack Obama, it really in essence turned over control of the government to someone with the same economic perspective as Attila the Hun.
Ezra Klein offers the left’s intellectually bankrupt and futile response. Young Ezra has nothing to offer but emotionally manipulative appeals to sentimentality. The Obama budget must be supported, regardless of consequences or affordability because it spends lots of money on the poor. “The poor” are a species of Brahmanic sacred cattle whose interests trump reality.
It doesn’t matter if you bankrupt the country and strangle economic growth affecting everyone. If you fail to immolate the American economy on the altar of bleeding heart social consciousness, you are just mean!
Ezra is a member of the economic school that wants to raise taxes (and stifle economic activity) now. After all, as unidentified “experts” cited by the Associated Press announced today, no study accepted by the left proves that drilling (and thereby increasing petroleum supply) reduces gas prices.
If you are simply an irrational emotionalist, economics is whatever left-wing studies say it is, and the proper operation of any economy really consists of transfers of wealth from the more affluent to the less affluent members of society.
Andy Laperriere explains that the federal government’s cheap money/low interest policies have very real costs, including the long term reduction of economic growth.
During the past three years, the Federal Reserve has tripled the size of its balance sheet—in effect printing $2 trillion—something it had never done in its nearly 100-year history. The Fed has lowered short-term interest rates to zero and signaled that it will keep them at that level for years. Inflation-adjusted short-term rates, or real rates, have been in the minus 2% range during the past couple of years for the first time since the 1970s.
The unfortunate fact is, as Milton Friedman famously observed, there is no free lunch. After the Fed’s loose monetary policy helped spur the boom-bust in housing, it’s remarkable how little attention has been devoted to exploring the costs of Fed policy.
A few critics of quantitative easing (QE) and the zero interest rate (ZIRP) have correctly pointed out that these policies weaken the dollar and thereby reduce the purchasing power of American paychecks. They increase the risk of future inflation, obscure the true cost of the unsustainable fiscal policy the federal government is running, and transfer wealth from savers to debtors.
But QE and ZIRP also reduce long-term economic growth by punishing savers, reducing saving and investment over the long run. They encourage the misallocation of resources that at a minimum is preventing the natural rebalancing of our economy and could sow the seeds of another painful boom-bust.
One intended effect of a loose monetary policy is a weaker dollar, which can help gross domestic product by boosting exports. But a weaker dollar also raises import prices (such as oil prices) for American consumers. For the average American family, this adverse impact has likely outweighed any positive impact from QE and ZIRP.
Conservatives (really more accurately referred to as “liberals”) argue that the free market produces superior allocations of resources because of its natural access to superior information on supply and demand provided by the voluntary input of enormously large numbers of individual human beings. The free market consequently inevitably operates on the basis of better information than any possible small group of political leaders or experts can ever hope to possess. Beyond mere utility, the free market additionally has morality on its side. Human beings are morally entitled to exchange what is their own, whether goods, services, or currency, as they desire and think best. The alternative to freedom is always coercive force, and freedom is intrinsically morally better than coercion.
Progressives reject the free market, noting that it fails to make the idle prosperous, the incompetent and the unlucky successful, and the improvident and intoxicated equal in security and material success to the responsible and provident.
Since the free market never actually seems able to deliver heaven on earth, progressives proposed that government should intervene to establish a safety net to assure that no one, no matter how unlucky or ill-behaved, should be left without the necessities of human existence.
Progressives demand that we should all surrender some significant portion of our economic liberty and deliver control over the free market to government specifically because they believe that the rule of credentialed experts will deliver superior results.
The Progressive experiment, which has gone on for many decades now, has survived this long because of the capacity of capitalist enterprise to deliver prosperity and economic growth despite being shackled by ever-increasing levels of regulation and despite the diversion of substantial percentages of economic output to entitlements.
Our expert rulers, in reality, merely exchanged an ever-increasing slice of the entire economy for more political support. Their calculations were fraudulent and completely risible, burying information unfavorable to their ends, achieving balanced budgets by phony bookkeeping, and invariably relying on wildly optimistic projections to cause their plans’ mathematics to add up.
In good times, progressive experts have always spent more, added new programs, and constructed new bureaucratic empires, piling the promises for the future up to the stars. When the budget didn’t really add up, they simply placed their trust in the ability of the capitalist system to deliver enough growth, soon enough, to save them, and simply kicked the can of fiscal responsibility down the road to be dealt with later.
Now, of course, in both Europe and America, the music has finally stopped, the game is over. There is no more road to kick the can down. America and Europe have hit the point where the costs of government are dramatically impairing the free market’s ability to deliver prosperity and growth. The capitalist goose has been shaken and squeezed and strangled, but there is no increase in egg production occurring.
It seems perfectly evident to me that, if what the progressives believe, that the rule of scientifically trained experts can improve upon the results of the free market, those experts would have, in the course of all their training and elite education, encountered Chapter 41 of the Book of Genesis in which Joseph successfully interprets Pharaoh’s dream to mean that seven fat years will be followed in turn by seven lean years, and counsels Pharaoh to set aside a portion of his government’s revenues to cover future shortfalls during the seven lean year recession.
The current international economic crisis demonstrates vividly that contemporary progressive economic planning is not only inferior to free market results, it is decidedly inferior to Bronze Age Middle Eastern economic administration.
Essentially what has happened is that progressive establishment elites, those who claim the right to rule over all the rest of us on the basis of their superior wisdom, training, and credentials, have flown the Entitlement State airplane right into the ground. They wrecked the economies of a large number of nations by creating a crisis through market interference and mismanagement. They have issued too many promises and threaten to bankrupt their nation’s economies far into the future.
The current recession proves, once and for all, that the wise men of progressivism were never very wise at all, and that their claim of a right to overrule liberty and the free market on the basis of superior wisdom and morality is not well-founded.
When you steer the cart off the road, you don’t get to take the wheel again and continue driving. It is time for a change of driver.
The feature humor item you’ll be seeing everywhere this holiday season is about a drastic shortage of butter in Norway occurring just as the Christmas season is at hand.
The journalists are telling us that the scarcity is the result of recent high Norwegian butter consumption resulting from a fashionable low-carb, high-fat diet on top of reduced production caused by a shortage of hay due to an unusually rainy summer growing season.
Profiteers are reported trying to charge as much as 350 euros ($465) for a 500-gram (1.1 lb. or 1 lb and 1.6 oz) packet of butter.
Ho, ho! Isn’t it funny?
None of the features on this news item I have found, however, notes that no butter shortage exists elsewhere in Europe or in the United States. But the AFP story offers a clue:
Last Friday, customs officers stopped a Russian at the Norwegian-Swedish border and seized 90 kilos (198 pounds) of butter stashed in his car.
The butter shortage obviously is not result, in a modern world, of a local dairy feed shortage, or of local supplies being exhausted by unusual demand. With rising demand and consumers willing to pay higher prices, the supply would be being met by enterprising Russians trying to make a kroner, if government were not standing in the way.
It is obvious that some kind of Norwegian limits on butter importation, doubtless in place to protect Norwegian dairy farmers, prevents legal access to supplies from abroad.
Norway’s holiday problem isn’t really about diet fads or rainy summers. It’s about government doing what government likes to do: delivering favors to special interests at the expense of society as a whole.
lynnux notes that government regulation establishes the rules by which banks operate and even creates their opportunities for profits, but these vital economic realities come into being in the first place through the agency of politicians, people like Barney Frank, whose expertise (such as it is), and interests and concerns have no connection to economic realities or markets.
Politicians seem such busy-beavers today, “doing things” “for” us. Why such whirling dervishes, generating laws in bulk? In its broadest outlines, law is mostly static. Politicians seek to appear to the public to be men of action “doing something.” This leads them to make too many economic and personal choices that they are not supposed to be making “for” us at all, picking winners and losers. It is now to the point where, famously, they no longer even read the laws they promulgate upon the body politic. Their process is finger in the wind (test the zeitgeist for what buzz evokes positives), then claim to be acting in name of the democratic will of the people—who, like banks to regulators, can later be blamed, should anything go wrong. As a republic, not a direct democracy, our representatives are supposed to be doing the right thing, in their best judgment. We rely on their decency, wisdom, and intelligence and vision for the long term. They have no way of knowing anything about their constituency anyway, because to pollsters, people only express self-interest, not the public interest. The public interest can only be assessed at a remove, which is the representative’s job. Pollsters get whatever they fish for. Responders also like to echo conventional wisdom. Implementing conventional wisdom is not politicians’ job. ...
Politicians wrapped in soundbites simply may not be qualified to make all the rules they seek to impose on us in their show of “caring” for us. This, I think, is what Richard Posner is getting at when he speaks of The Crisis of Capitalist Democracy. We need systems engineers today who really do understand the system. Politicians are mostly not this, but marketing specialists. They dissolve always into futile calls for infinitely ethical global governmental forces (themselves) to abolish investment uncertainty in a complicated utopian merger with perfect empirical risk analysis, forgetting that the past is no divining rod of the future (nor of truth. ...
The law is being asked to make business judgments law simply should not be making at all. Law is static. Markets are not. The market will adjust to any fixed rule, changing the “new normal.” Positive feedback loops (“positive” does not imply good) can ensue, at many unexpected levels. The media’s celebrity focus on political figure summiteering, however, follows an old trope, of suggesting to the public that our pseudo-gods and deities, through law, can command markets. These heroes then arrogantly begin to believe their press releases and to act accordingly.
Lawyers often go to law school precisely because they don’t like math or statistics. The type can quite easily ignore economic reality as they proceed to plug old forms and numbers into new contexts.
“The core problem underneath all of this, when you whittle it down, is that we simply are not getting enough growth in the developed world economies to pay our way out of all the debts that those economies have built up by making promises that are undeliverable to public sector workers.”
November 15, 2011 – CBO Director Doug Elmendorf admitted to Senator Sessions that in the long run the stimulus will shrink the economy. He testified at a Senate Budget Committee hearing that the stimulus will indeed “be a drag on GDP” over the next ten years.
Megan McArdle, Business and Economics editor at the Atlantic, was attending her tenth B-school reunion at Chicago and ran into econometrics specialist Steven Kaplan who had updated the Thomas Piketty and Emmanuel Saez data on top incomes through 2009.
The numbers show that income inequality fell sharply as the economy declined.
Isn’t that wonderful? Occupy demonstrators can clearly now pack up their tents and drums and go home.
Income inequality is clearly easy to cure. Simply adopt left-wing policies, ruin the economy, and sit back and watch all the boats sink, with the upper boats descending to levels much closer to their neighbors than before.
Simon Raven, writing back in 1970 in Places Where They Sing, the sixth volume of his roman fleuve, depicts the Provost of Lancaster College repeating to himself the claims of the same philosophy of fairness which Barack Obama and other Americans on the left insist on preferring even to greater productivity and the benefit of all.
“’In conclusion,’ wrote Robert Constable, ‘it is important to face up to Professor Parkinson’s charge that a high rate of tax on earned income draws off creative and inventive energy, too much of which, he claims, is now unproductively employed in devising new methods of tax avoidance. There is some evidence to support this assertion; but the assertion itself demonstrates and strengthens precisely those attitudes of mind which modern social philosophy is concerned to discredit and destroy. For personal ability or talent must no longer be regarded as a means to personal enrichment but as a commodity, held in trust by some fortunate individual, whereby he may serve and enrich mankind. Indifferent to monetary returns, such an individual should find his satisfaction in the exercise of his skill (grateful that it releases him from the drudgery by which most men must earn their livelihood) and in the knowledge that he is providing pleasure or amenity for his fellow human beings. Such grace, I fear, is still far to seek; and it will certainly not be found in any quantity as long as influential writers like Professor Parkinson continue to regard society, not as an area of tillage to be held and harvested in common, but as a barren and bloody arena in which men mangle one another in pursuit of acclaim and gold.’
That, thought Constable as he lifted his head, is putting it a bit strong. Although there are real gladiators, the iron men of industry and commerce, for the most part the circus is occupied by perfectly decent fellows who are hoping, in return for a conscientious display of talent, to achieve a quiet independence and retire to a Sabine farm. But then again, thought Con¬stable, if society is to be truly co-operative there is no place even for such temperate self-interest as this. It’s not the economics of the thing that matter so much as the moral attitude . . . the idea that one will make a part of human society for only so long as it takes to raise enough money to opt out of that society and buy a pretty house on the hill way up above the noise and the suffering and the stink. If society were justly ordered, thought Constable for the millionth time, if wealth were fairly spread, then no ability would win enough money to escape the suffering and the stink, and all ability would therefore be used to mitigate them. This, then, must be the argument for heavy taxes on earned money – that independence, even when earned, is a crime against humanity.”
Iowahawk explains how to feed the hungry American family in these hard times on $10 billion a day.
Seems like these days I hear a lot of whiney whiners whining about “out of control government spending” and “insane deficits” and such, trying to make hay out of a bunch of pointy-head boring finance hooey. Sure, $3.7 trillion of spending sounds like a big number. “Oh, boo-hoo, how are we going to get $3.7 trillion dollars? We’re broke, boo-hoo-hoo,” whine the whiners. What these skinflint crybabies fail to realize is that $3.7 trillion is for an entire year – which translates into only a measly $10 billion per day!
Mister, I call that a bargain. Especially since it pays for all of us – you and me, the whole American family. Like all families, we Americas have to pay for things – health, food, safety, uncle Dave America with his drinking problem. And when little Billy America wants that new quad runner they promised, do Mom and Dad America deny him? No, they get a second job at Circle K, because they know little Billy might have one of his episodes and burn down the house.
So let’s all sit down together as an American family with a calendar and make a yearly budget.
Jeffrey Tucker points out that the Austrian economists Hayek and von Mises explained long ago in the 1930s why the Keynesian policies of credit expansion being used today to try to bring about recovery would not be effective in restoring prosperity then or now.
Did you ever have the feeling that we’ve been through this before?
Think of it. Those in charge have only recently sworn — yet again! — that if we keep interest rates at zero, keep battling the symptoms of recession and unemployment with spending and jobs programs, clobber the speculators with regulations, and otherwise keep trying to revive moribund industries, all will be well. Just don’t cut government spending or let interest rates rise!
So where have we heard it all before? It was the 1930s, when the battle between F.A. Hayek and J.M. Keynes raged in the English-speaking world, not only in the academic journals but in the newspapers in London and the United States.
Hayek gave a series of lectures based on his previous works in German that tried to explain that the ruling elite and their theoretical apparatus had it all wrong.
In a thousand different ways he said the same thing: “To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.”
Further, “because we are suffering from a misdirection of production, we want to create further misdirection — a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end.”...
Ludwig von Mises wrote in 1931:
Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth and market conditions. It causes production to pursue paths which it would not follow unless the economy were to acquire an increase in material goods. As a result, the upswing lacks a solid base. It is not real prosperity. It is illusory prosperity. It did not develop from an increase in economic wealth. Rather, it arose because the credit expansion created the illusion of such an increase. Sooner or later it must become apparent that this economic situation is built on sand.
John Hinderaker shrewdly diagnoses the source of recent liberal paralysis of will in Washington.
Many liberals believe that government policies have little impact on the economy. A number have expressed that view to me privately. They think that the private sector will produce wealth regardless of what happens in Washington, and the only question is how to split it up. I think that is what President Obama and his advisers believed when he took office. The country was in economic turmoil from which it inevitably would recover, as it always does. When it did, Obama would get the credit.
In the meantime, the administration’s mantra was “never let a crisis go to waste.” Obama saw economic decline as an opportunity to pave the way for socialized medicine, to enact a near-trillion-dollar payoff to public sector unions in the guise of “stimulus,” and to extend the government’s control over various sectors of industry.
I think Obama and his advisers were genuinely surprised, not that their policies didn’t bring about economic recovery–they couldn’t have expected that–but that recovery didn’t happen of its own accord. That is why they are so nonplussed today.
I think John is perfectly correct.
Barack Obama and the democrats in general thought the Panic of 2008 was just a bump in the economic highway, contrived by smiling liberal Fates intending to deliver them into power. A panicked public would accept the leadership of the left during a momentary crisis and find themselves soon after living in a European-style welfare state. The New Deal’s march in the direction of socialism would be completed. President Obama would join the pantheon of progressive builders of grand collective entitlements, going down in history beside Franklin Roosevelt and Lyndon Johnson. The economy would fix itself; it always does. And President Obama would receive the credit for both the recovery and for Obamacare.
But, then, the economy did not heal itself.
There comes a point in Ayn Rand’s Atlas Shrugged, after the announcement of Directive 10-289, when the efforts of capitalist heroes Dagny Taggart and Hank Rearden to keep the railway system operating and steel mills in production begin to fail.
Somebody like James Taggart, one of the leftist supporters of the regime, begs Dagny or Hank to keep the failing system afloat. The hero assures the collectivist that the burden of regulations and redistribution has made it impossible. But we want it, insists the second-hander looting collectivist. It’s your responsibility to make it work for us.
Barack Obama is no more able to understand than James Taggart the incompatibility of limitless liberal demands and a viable economy.