There’s an election in Australia on Saturday, September 7, and while the economy is of the greatest concern, it is a carbon tax that has driven up costs and put businesses into closure that is the issue that will determine the outcome. Meanwhile, in the U.S., imposing a carbon tax remains a top priority of the Obama administration.
A carbon tax is really a tax on the use of energy. Diehard environmentalists oppose any form of energy use. The code words are “greenhouse gas emissions”, meaning carbon dioxide (CO2) that the Greens constantly tell us will cause the Earth’s temperature to rise, but the Earth is not cooperating, having been in a natural cooling cycle going on 17 years now. Nor are the apocalyptic predictions about CO2 anything more than lies given the fact that it is a minimal element of the Earth’s atmosphere. That said, without it, all life on Earth would die because all vegetation depends on it.
In “Taxing Air: Facts and Fallacies About Climate Change”, Bob Carter and colleagues dismember green claims and, addressing Australia’s carbon tax, note that “price increases will cascade through the economy, and for most of them no compensation will be proposed. At the bottom of the pile, to whom the accrued costs will be passed, lies the squashed citizen and consumer.” Those citizens will be voting on Saturday.
As an article in The Guardian, a British daily, noted, a conservative coalition led by Tony Abbott is likely to win, ending six years of Labor (socialist) rule that included a battle within the Labor party for its leadership, the result of its having passed a carbon tax after the then-Prime Minister, Julia Gillard, had promised not to impose it. Kevin Rudd challenged and replaced her. Now he and the Labor party are expected to be defeated.
“Having built his standing as opposition leader on the contention that Labor’s carbon tax would destroy jobs and hurt households,” the Guardian article noted, “Abbott has promised his first legislative act as prime minister will be to repeal it.”
What has occurred in Australia is a case history example of what happens when greens get their way. They always manage to destroy the economy. A recent study of Australia’s carbon tax by the Institute for Energy Research yielded the following findings:
# In the year after Australia’s carbon tax was introduced, household electricity prices rose 15%, including the biggest quarterly increase on record.
# Currently 19% of the typical household’s electricity bill is due to Australia’s carbon tax and other “green” programs such as a renewable energy mandate.
# The job market had previously been stable, but after Australia’s carbon tax, the number of unemployed workers has risen by more than 10%.
# Because Australia’s exports are relatively emissions intensive, the practical result of the Australian carbon tax serves as a tax on exports and import-competing industries.
# Australia’s carbon tax was accompanied by income tax increases for 2.2 million taxpayers.
# Due to fiscal gaps that exist between carbon tax revenues and increased government spending that accompanied the scheme, Australia’s budget bottom line will worsen as higher deficits and greater public debt increase.
# Carbon dioxide emissions have actually increased, and will not fall below current levels until 2043, according to the Australian government.
Viv Forbes, chairman of the Carbon Sense Party in Australia, an opponent of the carbon tax and other green proposals, says “The growing failure of green energy in Europe should warn Australia to abandon bi-partisan policies dictating targets, mandates and subsidies for ‘green’ energy.”
This mirrors the same problems here in America where billions in loans to so-called green energy companies can be added to the list of Obama administration scandals as one after another went out of business. Solar and wind power is proving to be as great a hoax as “global warming” and a very costly one at that. How long has it being going on? Jimmy Carter had solar panels placed on the roof of the White House. Ronald Reagan had them removed. Barack Obama has had them installed.
Fifteen million registered voters in Australia will go to the polls and render their judgment on September 7. It is a vote that should be reported upon in the United States, but it more likely to be ignored or buried
I live in the best environmental conditions in the history of mankind. Even in Chicago, my air and water is far cleaner than the air and water used by cavemen thousands of years ago. There are more natural resources today than there were before the industrial revolution. I am less likely to die or be harmed by nature than virtually every person born before me. The environment is the cleanest, healthiest, safest, and the most conducive to human life it has ever been.
To most people, this idea is impossible to imagine. What about the factories and their smoke stacks sending unpronounceable chemicals into the air around us? What about the depletion of finite natural resources? What about factory farming, pesticides, and slash and burn agriculture? What about the hundred or more years of nearly unregulated pollution which has torn minerals out of the ground, cut down trees, dumped PCBs into rivers, pumped carbon into the atmosphere, blown the tops off of mountains, stripped mined rolling hills, and generally pillaged planet earth?
This feeling of pessimism in the face of unprecedented environmental success is largely a result of a failure to properly conceptualize what the environment is. The two ecological definitions of “environment” from the Merriam-Webster Dictionary are:
- the circumstances, objects, or conditions by which one is surrounded
- the complex of physical, chemical, and biotic factors (as climate, soil, and living things) that act upon an organism or an ecological community and ultimately determine its form and survival
Clearly the circumstances, objects, and conditions of the vast majority of people on earth are sublime in the sense that we are wealthier, healthier, and safer than ever. I live in an apartment with heating and air conditioning, and with a refrigerator which keeps food imported from around the world fresh. My livelihood persists regardless of weather conditions (except maybe in extreme circumstances) and provides me with a standard of living superior to that of 19th century European kings. The second definition is just an extension of the first, and factors in the global network of social and economic interactions which provide me with my standard of living.
Yet these definitions do not represent the standard conception of environment. The conception we are taught in school, and further assaulted with in common parlance, is that the environment is a giant, amorphous blob of “stuff” which includes forests, the air, rivers, oceans, and other parts of the planet without any cohesive unifying element between them. For some reason, we must protect this environment from the “harm” of human interaction. An untouched pile of coal in the ground is a part of a healthy environment; getting that coal out of the ground and putting it to human use is bad for the environment.
The key component left out in this conception is the personalized nature of the environment. There is no single environment except in an extremely broad, meaningless sense that we all live on the same planet. In a more functional sense, my environment is determined by the things and areas which I directly interact with, not by distant places and things which I will never directly perceive.
The average river in America in 10,000 BC had fewer industrial pollutants in it than the average river in America today. The same can be said about most air and soil. Yet my environment is cleaner and healthier than those of cavemen. I use soap, ventilation, filtration systems, germ theory, and all of the facets of modern life to clean my environment for personal use.
On the other hand, cavemen used to light fires in their caves whenever they were cold and breathe in smoke for hours on end. They urinated and defecated in the same water sources they bathed in and drank from. They ate animals filled with dangerous bacteria and parasites. Who had the cleaner environment?
But those are external alterations, the cavemen still had the cleaner natural environment. So what? What good was it to cavemen that the air two hundred yards above their head was clean, or that the water upriver was free of man-made pollutants (but not the excrement of animals)? Who cares what the “untouched” environment is like? We always interact with our environment to shape it to our needs. Our ability to use reason to shape nature to our will is what separates humans from animals.
When you look at it this way, we can see that the environment used to be terrible. For most of human history, the environment would kill us when it was too warm, too cold, too rainy, not rainy enough, or when it produced too many insects, or did anything that our primitive technology couldn’t respond to. This caused men to desperately “destroy” the environment by cutting down trees, mining coal, and damning rivers so that the “untouched” environment wouldn’t kill us when weather patterns randomly shifted. Yet it is economic advancement and technological growth which is blamed for the lion’s share of “environmental decline” today. In reality, it is the exact opposite case.
In the introductory paragraph, I originally wrote, “the environment is the cleanest it has ever been in the Western world” rather than the whole world, but I soon realized my error. It is true there are places where impoverished individuals labor under skies darkened by soot and water poisoned by toxins, but even the vast majority of them have better environments than they did fifty years ago. The water is a little bit dirtier, but it is probably better filtered, and their food is more plentiful, their clothes of a higher quality, and their houses better built. “Sweat shop” laborers in India and China would rather work in a Nike factory next to a polluted river, than on a subsistence farm in the untouched countryside. Based on the migration movements within these countries, clearly they prefer the environment of one over the other.
What about climate change or other large scale environmental shifts caused by human interactions? I do not know to what degree human beings cause global environmental changes, but to the degree they theoretically do, the best solution is to further augment the environment to our needs. When humans first migrated north out of warm climates, their response to coldness was not to move back south, but to kill animals and wear their fur. When humans faced high infant mortality rates, their response was to improve agriculture to get a better food supply, not to stop having as many children. When the use of horses threatened the growth of cities, man started using the car, instead of moving to the country side.
Let there be no mistake, the left’s view of the environment is mystical and anti-human. It puts inanimate objects and mindless beasts on a higher moral level than conscious humans. It says that man must sacrifice himself so mountains can look pretty and water can be clear. Most importantly, it holds the standard of environmental health to be the degree to which nature is not used by men. By extension, the healthier the environment is, the more impoverished mankind is.
This false conception must be tossed aside. The environment is the surroundings of each individual, and the standard of its health is the value it provides to the individual. Do not think of human beings as a pox upon the earth, but rather think of the earth as a tool for human beings.
Credit to Alex Epstein for enabling me to understand many of these arguments.
The budget sequestration has taken effect and in the next few weeks it will push President Obama and Congress into another haggle over government spending. The President will likely continue to support and push his plan that he made reference to in his 2013 state-of-the-union speech: to raid the Medicare prescription drug benefit program. The President’s plan would require pharmaceutical manufactures to offer rebates on drugs for people that are “dual eligible” for Medicaid and Medicare and receive drug benefits through Medicare’s Part D drug program.
The Medicare Part D rebate proposal will not only raise costs for seniors but will deny them access to drugs they need. Currently, the more than 37 million seniors enrolled in Part D are able to choose from an array of plans that best meet their budget and medical needs. Private insurance plans compete with one another offering varying drug coverage, deductibles, and premiums, and the feds subsidize the premiums. Market competition between the plans vying for seniors’ attention will keep premium cost low translating into less taxpayer money being used for subsidies.
The President’s proposal would require pharmaceutical companies to rebate some of the money they make on drug sales to “dual eligibles.” The former Congressional Budget Office Director Douglas Holtz-Eakin has stated the “rebates” will force Part D premiums up by as much as forty-percent and drug companies will try to recover the cost of those forced rebates from somewhere. That somewhere will be seniors’ pockets.
In response to the President’s plan a coalition of conservative and free-market organizations have written a letter to Congress urging them to oppose Medicare Part D Rebates. The letter argues that,
“This is not a ‘rebate’ in any true sense of the word. Rather, this is an attempt to force drug makers to sell to insurance companies at a loss, as the government does with the poorly-performing Medicaid program. Government forcing companies to turn money over to the Treasury is not a rebate, it’s a tax.”
This rebate is essentially a tax hike that will only go to fund more reckless spending by the Obama administration.
The U. S. Constitution rightly puts the military under civilian control by giving Congress the power to declare war and by making the president the commander in chief. But what happens when Congress is not in session and the Commander-in-Chief is AWOL? Then you get Syria.
With Congress not returning from its summer recess until September 9, 2013, and the White House proclaiming through its Secretary of State, former Vietnam Vet Against the War John Kerry, that the U. S. has “irrefutable evidence” that Secretary Kerry’s former dinner partner, Bashar Assad, has used chemical weapons against his own people, our Peace Prize–winning President finds himself in a bit of a pickle, to say the least.
“This war, like all wars, must end,” pronounced President Obama back in May, declaring a unilateral end to the U.S. war on terrorism directed against our own country. “That’s what history advises. That’s what our democracy demands.” Yet the bad guys didn’t get the message, for despite the celebrated execution of Osama bin Laden by the formerly secret – and now largely depleted – Seal Team Six, al Qaeda is more active than ever and the U. S. is on the run, having to close embassies in the face of anticipated attacks because it cannot or will not defend them.
Some wars, though, evidently must be started, for that is what history also advises and the president himself demands – or does he? While running for re-election just over a year ago, President Obama announced on August 20, 2012, that “We have been very clear to the Assad regime … that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized.” Yet on Wednesday, September 04, 2013, the president claimed in Stockholm that “I didn’t set a red line; the world set a red line,” putting the credibility of the “international community” and of Congress – not of the White House – on the line.
The administration’s wishes notwithstanding, there is no “international community” regarding Syria. No international organization has endorsed an attack; China and Vladimir Putin’s “reset” Russia wield an insurmountable and inevitable veto against any U. N. action; and the Parliament of America’s historically closest ally, Great Britain, has rejected its own Prime Minister’s request to get involved. Congressional ratification of a treaty “condemning” the use of chemical weapons is equally meaningless; either deploring the use of weapons of mass destruction does not automatically require the U. S. to go to war to avenge their use or the President has forgotten Secretary Kerry’s characterization of the Iraq war as “”the wrong war in the wrong place at the wrong time.”
No U.S. military response at this time can possibly send a “clear message” for the president has none to send: His administration has no overarching foreign policy strategy and its only tactics are political. Somebody’s “red line” has been crossed – but not his – and it’s up to somebody else to do something about it, for the President cannot and will not act decisively.
In a 2011 Washington Post column, former George W. Bush speechwriter Michael Gerson observed that the Obama administration “lacks a consistent foreign policy philosophy [but] has nevertheless established a predictable foreign policy pattern. … [A]fter an internal debate that spills out into the media, the president decides he must do something. But hoping to keep expectations low, his actions are limited in scope. By this point, a strategic opportunity is missed and the protesters in country X feel betrayed.” Witness Tehran, Cairo, Benghazi, and now Damascus.
Former General Barry McCaffrey of Operation Desert Storm fame put it more succinctly. In a September 2, 2013, interview with Fox News, Gen. McCaffrey observed that the kind of half-hearted military attack for which the president is trying to drum up support won’t likely achieve its stated purpose and might even leave Assad more emboldened. The President, he said, “was so far out on a limb it was pathetic.”
The full-court press is on. Alarmist scientists, politicians, pressure groups, newspapers, ministers, rabbis and bureaucrats want Americans to “stop stalling” on climate change. They demand that we embrace “revenue-neutral” carbon taxes and carbon dioxide regulations, before it’s “too late” to prevent “catastrophic” global warming, “monster” storms and rising seas that will “inundate our coastal cities.”
Anyone dissenting from this “call to action” is a climate change “denier” – a pejorative devised to vilify and silence anyone who rejects this agenda, by linking our views to Holocaust denial. What nonsense.
All of us “deniers” know climate change is real and has been throughout Earth’s many cycles of warming and cooling, storms and droughts, ice ages and little ice ages. Striations (scratches) on a chunk of Niagara Escarpment limestone that I dug out a mile from my boyhood home memorialize stones dragged by the last glacier that buried Wisconsin under a mile of ice. Countless climate changes have buffeted our Earth.
What we deny are assertions that human carbon dioxide emissions have replaced the myriad of complex, interrelated planetary, solar and cosmic forces that caused previous climate reverberations, and that what we are experiencing now is unprecedented and likely to be catastrophic.
Not one of the alarmist claims is supported by actual observations or scientific evidence. Even worse, the claims are getting more ridiculous with every passing day: “children aren’t going to know what snow is,” crime is rising, oceans won’t smell the same, and storms are getting worse – because of global warming.
Contrary to the hype and hysteria, our planet stopped warming 16 years ago, even as atmospheric carbon dioxide levels continued to climb. That prompted climate catastrophists to start talking about “climate change” and blame every “extreme weather” event on CO2 emissions.
As I have pointed out before, far from being a “dangerous pollutant” (as President Obama and EPA keep saying), carbon dioxide makes all life on Earth possible. It makes food crops and other plants grow faster and better, loads them with more nutrients, helps them survive droughts, and makes our planet greener.
This trace gas has almost nothing to do with planetary warming or climate change. But it’s worth noting that the United States has slashed its CO2 emissions more than almost any other country – sending them back to where they were 30 years ago, thanks to the environmentalists’ latest target: fracking! And the daily human contribution of CO2 to our atmosphere is equivalent to a penny out of $1 million!
CO2 levels have “soared” to 400 ppm (0.04% of Earth’s atmosphere) not because of the USA or other developed countries – but because China, India and dozens of other countries are working desperately to lift billions of people out of abject poverty. To do that, they need fossil fuels, which provide 80% of the energy that makes modern civilization and living standards possible – and these countries are not going to slash their hydrocarbon use. To suggest otherwise reflects callous contempt for the needs of families that want to take their rightful places among Earth’s healthy and prosperous people.
No one would suggest that the absence of extreme weather events over a particular time period is due to humans. However, recent history certainly contradicts incessant claims that our weather is getting worse. In fact, no category 3 or higher hurricane has struck the United States in eight years, the longest such stretch since the Civil War. With only a couple of exceptions earlier this summer, the US is enjoying its longest respite from major tornadoes in decades. We are also witnessing the highest August Arctic sea ice extent since 2006, amid the coldest summer on record at the North Pole; record August lows for Alert and Eureka, in Nunavut, BC; and record highs for the extent of August sea ice in Antarctica.
Equally fascinating, most of the record high temperatures that the alarmists are trumpeting beat the previous records, mostly set in the 1930s, by mere hundredths of a degree. Yet, somehow that’s news.
As to oceans inundating coastal communities, Topex Poseidon satellites show virtually no rise in sea levels between 1993 and 2001, and the EU’s Envisat satellites show no rise from 2003 through 2011. The steady 2-3 mm per year rise in sea level, it turns out, is because scientists “adjust” the raw data (always upward, never down, for some reason). But even 200-300 mm (8-12 inches) per century, or by the year 2100, is a far cry from the 3-20 feet that President Obama and former VP Al Gore have warned us about. Even Mr. Obama was off a few years when he said June 2008 was “the moment when the rise of the oceans began to slow.” But it’s one more climate cataclysm that we can erase from our worry list – especially compared to the 400 feet that the world’s oceans have risen since the end of the last ice age.
(Mr. Gore is also famous for misinforming his 2009 “Tonight Show” audience that the Earth’s interior is “really hot, several million degrees” – the core is actually 9,000 degrees F – and forrefusing to debate anyone on climate change or even take audience questions that he has not preapproved. Perhaps in his defense, Nobel Laureate Gore managed only a C+ and a D in the only science courses he ever took.)
If it’s “weird weather” you seek, just peruse Richard Keene’s fascinating weather guides,Skywatch East and Skywatch West, for numerous examples of wild and wacky weather in the USA. For more examples, check out the Tri-State Twister and Children’s Blizzard, or consult the Nongovernmental International Panel on Climate Change 2011 interim report, Climate Change Reconsidered. You will be amazed at how different the facts are from the fallacies, fibs and fear mongering you find in the “mainstream media.”
One final point. No tax that penalizes people and businesses for using fossil fuels is “revenue neutral.” Any such tax or regulation kills profits and jobs, turns full-time jobs into part-timers, and adversely affects people’s health and well-being. Millions of families cannot heat and cool their homes properly, pay their rent, mortgage or other bills, take vacations, or save for retirement. The increasing stress results in sleep deprivation, poor nutrition, more commuting, higher incidences of depression and alcohol, drug, spousal and child abuse, lower life expectancies and higher suicide rates. Climate taxes and regulations also force us to spend billions subsidizing environment unfriendly biofuel, wind and solar energy.
That’s an intolerably high price to pay, for “protection” from illusory and exaggerated climate dangers.
Climate alarmists are trying to sucker, snooker and stampede us into taking “immediate action” on job and economy-strangling taxes and restrictions, before more people catch on to what’s really happening. This protection racket is one more example of passing a law, so that we can find out what’s in it. We simply cannot afford to let science continue being coopted to serve anti-hydrocarbon political agendas.
Demands that we “stop stalling” on “catastrophic manmade climate change” have nothing to do with preventing warming and cooling, storms and droughts that have been “real” since time immemorial. They have everything to do with regulating and restricting the use of hydrocarbons that provide 80% of the energy that makes modern civilization and living standards possible. They have everything to do with giving politicians, bureaucrats and pressure groups more money and more control over our lives and economy – but with no accountability for the lies, mistakes, job losses, ill health and deaths that are inevitable as US living standards deteriorate, and Third World lives remain destitute and desperate.
Computer models and scary predictions are not evidence. Basing energy and economic decisions on climate models is akin to betting your life’s savings on a computer model that focuses on middle linebackers and ignores quarterbacks and offensive lines, in predicting the Buffalo Bills will win the 2014 and 2015 Super Bowls – and when the prediction falls flat insisting that the Bills really did win, and reality must be “adjusted” to make it conform with the predictions.
Climate “deniers” and rationalists should support Senator Ron Johnson (R-WI) and other politicians and scientists who are under constant attack by climate alarmists, for daring to dissent from approved orthodoxy. Their vigilance and determination are all that stand between energy and economic sanity – and America heading down the same destructive path that Europe has trod for the past two decades.
In 1982 the U.S. Congress established a national policy to solve the problem of nuclear waste disposal. As far back as 1957, the National Academy of Sciences had recommended that the best way to address the problem was to dispose of it in deep underground rock. In 1987, Yucca Mountain in Nevada was designated as the site. It was immediately opposed by both environmentalists and others. Congress approved the site in 2002.
An Associated Press article on August 13 reported on a recent decision by the U.S. Court of Appeals for the District of Columbia ruling that the Nuclear Regulatory Commission had to complete the licensing progress and approve or reject the Energy Department’s application for the site.
“The court’s decision was hailed by supporters of the Yucca site, which has been the focus of a dispute that stretches back more than three decades,” reported the AP. “The government has spent an estimated $15 billion on the site but never completed it. No waste is stored there.”
The failure to open the Yucca Mountain repository is an obscenity. Instead of storing nuclear waste in the most studied piece of U.S. geography in the history of the nation, it is stored at more than seventy (70) sites around the nation. The Yucca Mountain site was supposed to begin accepting spent fuel by January 31, 1998, fifteen years ago.
The Appeals Court delivered a serious rebuke to the Nuclear Regulatory Commission which has essentially been treated as a political instrument of the Obama administration. The Court said the NRC was “simply flouting the law” when it allowed the Obama administration to continue plans to close site. This is especially egregious insofar as federal law designates the site as the nation’s nuclear waste repository.
“The President may not decline to follow a statutory mandate or prohibition simply because of policy objections,” said Judge Brett M. Kavanaugh who wrote the majority (2 to 1) opinion. “It is no overstatement to say that our constitutional system of separation of powers would be significantly altered if we were to allow executive and independent agencies to disregard federal law in the manner asserted in this case by the Nuclear Regulatory Commission.”
It is not just the President and the NRC that will not uphold the law that Congress passed. It is has been the Senate Majority Leader, Harry Reid, Democrat from Nevada. Kim Strassel noted in an August 15 commentary that “Mr. Reid has for years single-handedly thwarted Congress’s will to create a deep storage facility…Such has been one senator’s ability to render the 1982 Nuclear Waste Policy Act, 30 years of work, and $15 billion of federal funds moot.”
The arrogance of Sen. Reid, with the support of the President, is that of imperial kings and other monarchs for whom their personal agenda outweighs the welfare of the rest of the nation. The project was abandoned in the President’s first term; in 2011 the NRC, a supposedly independent agency, allowed the shutdown to stand.
The present claim is that there is no money to move forward with the completion of Yucca Mountain and it is true that opponents in Congress, led by Sen. Reid, have cut nearly all funding in the last three years, but the court said that the NRC has about $11 million remaining for the purpose of funding a review of its safety. Congressional staffers who have seen a redacted draft of the review to date say that is safe.
Nuclear waste, the by-product of electric power generation at commercial nuclear plants and of high-level radioactive waste from reprocessed spent fuel, must be stored somewhere. Congress addressed that in 1982, more than three decades go. We are still waiting for a rational, practical solution because of politics, not science, nor common sense.
Energy is a super-resource. It is beneficial to several targeted economic problems and may even help some political conditions. The qualities of energy make it a special category of elements found in nature: a super-resource.
Berries, broccoli, and beans are all considered superfoods which are defined as a special category of foods found in nature; a food that is considered to be beneficial to your health and that may even help some medical conditions. They pack a lot of punch.
Oil, natural gas and coal, are all super-resources. They are found in nature. They pack a lot of punch. They are beneficial to the economy in that they create jobs, increase revenues, and help balance the trade deficit.
Here are three examples of how these super-resources benefit the economy.
The Keystone pipeline would create thousands of jobs—primarily union jobs in construction (one of the hardest hit industries in the economic recession) and increased service employment in supporting communities. These jobs and the various land-use payments will provide additional revenues to the federal coffers. As some of the oil brought into the US will be refined and exported, it will help balance the trade deficit.
America’s abundance of natural gas—due to the combined techniques of horizontal drilling and hydraulic fracturing, and new technologies—means that there is more natural gas available than can be used within our borders. Many countries, such as Japan (with whom we run a $6 billion trade deficit), want our excess, but to ship it, the natural gas must be liquefied—which requires special liquefied natural gas (LNG) terminals. Reports indicate that LNG exports would “result in the creation of over 100,000 direct, indirect, and economy wide jobs and have an immediate economic impact resulting in $3.6 to $5.2 billion in potential annual revenues.”
The US contains one-fourth of the world’s coal reserves and the Powder River Basin (PRB) found in Wyoming and Montana accounts for about 40 percent of US coal reserves. The 13 active coal mines in the Wyoming portion of the PRB employ more than 6800 workers. US exports of coal to European and Asian markets are increasing. Exports could really take off if West coast ports were allowed to expand deep-water loading capacity—which would create new construction jobs.
Energy is clearly “beneficial to the economy.” Countries with super-resources have healthier economies, like superfoods help human health. But to effectively draw the “superfood” comparison, energy must “even help some” political “conditions”—and that “political condition” is immigration.
Mexico has been in the news lately—specifically for the energy reforms President Enrique Peña Nieto has proposed. Mexico has 115 billion barrels of oil equivalent—some of the world’s biggest remaining untapped oil reserves, yet production has declined by nearly 25 percent over the past decade. Mexico is now a natural gas and gasoline importer. The Financial Times reports: “experts predict it will become a net oil importer within a decade unless something is done.”
Pemex, the national oil company, with $60 billion in debt, is plagued by mismanagement and political meddling. “Because,” as reported in the Financial Times, “profits are siphoned towards government spending, not enough money has been ploughed back into exploration.” Or, as energy minister Pedro Joaquin Coldwell observed: “investment spending at Pemex is often, well, suboptimal.”
The Economist explains that Mexico is running out of easy-to-access oil and, on its own, is unable “to take advantage of the shale and deepwater deposits that have proved so bounteous across the border in the United States. So it needs partners.” David Gee, US energy practice leader of the Boston Consulting Group, according to CNBC, said: “Accessing those reserves requires intensive capital and specialized skills.”
President Peña Nieto understands the country’s need for modernization and that bringing Mexico’s wealth to the surface will take “the right business model and the right technology.”
Peña Nieto’s proposed energy reforms would end Pemex’s monopoly by allowing it to partner with foreign companies through profit-sharing contracts that would provide exploration and development opportunities. He hopes to “attract the foreign capital and expertise Mexico needs.”
Emilio Lozoya, the Pemex chief executive tasked with selling Mexico’s energy reform to foreign investors, hopes to increase oil investment by $10 billion a year. With the familiar geology and operating conditions found in Mexico—versus the politically unstable regions of Africa or the Middle East or the difficulty of operating in the Arctic—and the lure of access to previously unreachable natural resources, attracting foreign oil and oil-field service companies with the needed financial muscle and technical skills should be easy.
However, potential investors are skeptical. In 1938, under then-President Lazaro Cardenas, Mexico nationalized its oil industry—expropriating fields from US and British companies. In response to the proposed reforms, Chevron spokesman Kent Robertson said: “As with all the investment opportunities we consider around the world, factors such as economic returns, stability of the investment climate and sanctity of contract are central to any decisions we make.” While the terms being offered are not what the industry prefers—profit-sharing rather, than production-sharing—they should, if passed as planned, provide legal certainty.
“Even though the terms are not ideal,” Ayman Asfari, chief executive of the oil service company Petrofac, which is active in Mexico, believes they should not prove to be a deterrent. “Mexico’s reserve potential, particularly for deepwater and shale gas, is so great that it will definitely be attractive to the majors.”
Mexico holds the other half of two of America’s biggest discoveries. Chevron’s Lower Tertiary extends into Mexican waters and Texas’s Eagle Ford shale doesn’t stop at the Rio Grande. In just one year, 2012, the US issued more than 9100 permits, to 170 companies, to drill wells. Mexico has only drilled three shale gas wells and has not tapped the deep waters on its side of the Gulf of Mexico. John Padilla, managing director of the energy-consulting firm IPD Latin America, said “It’s probably the largest virgin untapped play that’s out there.”
Clearly, the super-resource will be beneficial to Mexico’s economy. The Economist calls Peña Nieto’s intentions “nakedly economic.” Peña Nieto believes: “This profound reform can lift the standard of living for all Mexicans.” But, how will it help the US political condition known as immigration?
If Peña Nieto can get his reforms through, despite the need to change the constitution and the opposition from those who believe any move toward privatizing petroleum “betrays the country,” he will create, according Pemex chief executive Lozoya, 500,000 jobs by 2018 and 2.5 million by 2025. Mexico will be booming. As has happened in North Dakota, people will be moving to Mexico for the jobs. Instead of Mexicans sneaking across the US border for low-paying jobs in America, they’ll be lining up for the good-paying jobs in Mexico’s oil fields.
Peña Nieto’s reforms are expected to pass, but experts predict it will be several years before they will boost oil-and-gas production. With immigration stalled in Congress, Peña Nieto’s energy reforms could have millions of jobs available in its oil fields before America passes immigration reform.
In a review of Mexico’s proposed energy reforms, Carl Meacham, director of the Americas Program at the Center for Strategic and International Studies, concludes: “If the Mexican Congress passes the constitutional amendments, Mexico could help itself and North America achieve their full potential, positioning the region as a global driving force of a revolutionary and revolutionizing energy industry.” Only a super-resource could do all that.
[First Published by Townhall]
I’ve just finished reading Rich Lowry’s new book, Lincoln Unbound, and as someone who has read a lot of books on Lincoln, I happily commend it to you.
The book’s rather long subtitle is “How an Ambitious Young Railsplitter Saved the American Dream – and How We Can Do It Again.” As the dust jacket puts it:
Lincoln lived the American Dream and succeeded in opening a way to it for others. He saw in the nation’s founding documents the unchanging foundation of an endlessly dynamic society. He embraced the market and the amazing transportation and communications revolutions beginning to take hold.
At the end of his enjoyable book, Mr. Lowry takes what he understands to be Lincoln’s philosophical dispositions and policy perspectives and suggests how they might be applied to address today’s problems. This is an interesting, thought-provoking exercise, but you’ll have to get the book to see whether or not you agree.For today, I just want to comment on how Lincoln’s thoughts concerning what he called “free labor” relate closely – indeed, are integral – to a proper understanding of our free enterprise system and property rights and to what the Declaration of Independence refers to as the “unalienable Rights” to life, liberty, and the pursuit of happiness. While Lincoln could not have anticipated Labor Day as it has evolved today, I want to suggest that his own understanding of “labor” ought to have a special resonance as we think about the meaning of this Labor Day.
As Lincoln’s thinking evolved, and especially by the time of the Lincoln – Douglas debates, Lincoln increasingly based his argument against the abomination of slavery on his understanding of the meaning of the natural rights secured, in his view, by the Declaration of Independence. But long before rising to national prominence for his stand against human bondage, Lincoln had espoused, over and over again, his belief that an individual should reap the reward of his own labor.
As Mr. Lowry points out, in 1847 Lincoln wrote that “each individual is naturally entitled to do as he pleases with himself and the fruit of his labor.” Or, as he put it in a more colloquial Lincolnism: “I always thought the man that made the corn should eat the corn.”Lincoln’s views concerning free labor – and the Declaration’s affirmation of the natural right to life, liberty, and the pursuit of happiness – were grounded in the Founders’ understanding and acceptance of John Locke’s work, with which they were intimately familiar and often relied upon. In his famous Second Treatise of Government, Locke put it this way: [E]very man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.
Note the explicit way that Locke linked an individual’s own labor to his property interest.Following Locke, James Madison, the principal drafter of our Constitution, declared that individuals possess property rights “in their actual possessions, in the labor that acquires their daily subsistence, and in the hallowed remnant of time which ought to relieve their Fatigues and soothe their cares.”
In his opposition to slavery, but also in a more universal sense, Lincoln repeatedly articulated the Lockean view that all individuals, of whatever race or creed, possess a natural right to enjoy the fruits of their own labor, to make those fruits their own property.
Moreover, Lincoln understood that the intertwining of free labor and property rights was essential to securing and maintaining the liberty espoused by the Declaration of Independence and guaranteed by the Constitution – and that free labor, individual initiative, and property rights are essential elements of the American free enterprise system.
Finally, in extolling the virtue of labor and property, Lincoln frequently admonished those who would set one man or class against another. As he put it in 1864 in his reply to the New York Workingmen’s Democratic Republican Association:
Property is the fruit of labor…property is desirable…is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself….
As early as 1847 Lincoln had expressed the same thought this way:[I]t has so happened in all ages of the world, that some have laboured, and others have without labour, enjoyed a large proportion of the fruits. This is wrong and should not continue. To [secure] each labourer the whole product of his labour, or as nearly as possible, is a most worthy object of any good government.
To my mind, it is always timely to consider Lincoln. And as Labor Day approaches, it is especially timely – and useful – to consider Lincoln’s views on free labor, and to contemplate the inextricably intertwined nature of labor, property rights, individual freedom, and the American free enterprise system which Lincoln championed.
Whether you are working this Labor Day, or merely contemplating Lincoln’s thoughts on labor, my best wishes for an enjoyable Labor Day weekend.[First published at the Free State Foundation blog.]
Americans are a fair people, and therefore support the principle of equal pay for equal work. But study after study has proven that our society falls short of the goal of pay equality in one glaring and inexcusable way: shorter people make less money than taller people.
Recent studies have shown that short people, women, blacks, Hispanics, immigrants, mothers, singles, gays/lesbians, the young, lefties, overweight people, handicapped people, people without blonde hair, bald men, women who don’t wear makeup, weak people, nice people, (maybe) people with unusual names, ugly people, and excessively beautiful people face wage discrimination in the workplace. We as a society shouldn’t be arbitrarily punishing workers for these innocuous attributes.
However, many of these factors, like attractiveness, are subjective. Others are concealable, like sexual orientation or hair color. Some are changeable, like physical fitness or weight. But one’s height is an objective, unchangeable physical characteristic and, therefore, the easiest of these wage injustices to address with common-sense, fair legislation.
Wealth should be earned. If an individual works hard, he deserves to be compensated accordingly.
Why should the short man make less money than the tall man? Unless the job in question is professional basketball playing, or some other job in which height is a tangible benefit, short people should be compensated just as well as their tall counter-parts. Yet tall privilege currently results in heightist employers paying short people 9% lower wages than their tall co-workers.
The solution to this problem is simple: we need the government to create a Bureau of Labor Fairness (BLF) to prevent wage discrimination. The private sector is simply incapable of dealing with this social issue, but the state can stand tall and stop oppressed short Americans from falling through the cracks.
Free-market ideologues will argue that America doesn’t need another government agency filled with bureaucrats to regulate the private sector, but this proposal will actually shrink the size of government and simplify regulations. The Americans with Disabilities Act, the Civil Rights Act, the Sex Discrimination Act, and all other existing anti-discrimination policies would fall to one agency which would have the power to stop all private prejudice – starting with height discrimination. Other forms of salary discrimination, such as prejudice against less attractive employees, could be addressed when objective, standardized assessments of beauty are developed by the BLF.
Too tall an order? Here is how the BLF can fix the problem of height discrimination: each business must submit an annual report to the BLF which states the height of each of their employees followed by a written evaluation of their work-place competence and their current salary. The BLF can then examine these reports and measure the degree of bias in each company by comparing the employee wage and competency evaluation against the national average wage.
If a worker’s wage differs from the national average, the BLF can determine the extent of height bias. If the bias is negative (paying the shorter employee less than he deserves), then the company must pay a bias tax and compensate the employee for lost wages and damages. If the bias is positive, the company is rewarded with tax breaks equal to some amount less than the bias premium.
With this framework established, unfair discrimination will be disincentivized, and historic wrongs might even be slowly righted. The program is not intrusive and only requires one report per year to be filed by American companies. Best of all, shorter workers who have faced oppression will no longer fear discrimination in the work place. They will know that companies will treat them a measure of respect and dignity. We need to be willing to stand tall and demand that the government end labor discrimination today.
In a sign her troubles have undergone a significant expansion, the Washington Free Beacon reported last week that former EPA Administrator Lisa Jackson has hired a lawyer as new details of her use of private email accounts to conduct official government business were revealed.
The agency and its previous head have still breathed easy despite months of inquiries and Freedom of Information Act requests fromChris Horner of the Competitive Enterprise Institute and American Tradition Institute. Jackson and enviro-crats have been shielded by colleagues’ efforts to block access to records, delay their delivery, or conceal damning information with redactions. Nevertheless the indefatigable Horner has continued to pepper the agency with new requests from new angles almost every time he discovers a new hint of malfeasance revealed from previous requests.
What seems to have alarmed Jackson – who is now Apple’s top environmental officer – is the revelation that she communicated with an official with Siemens from her alternative “Richard Windsor” account, which was revealed previously thanks to earlier Horner FOIAs. But even that cloaked “EPA.org” account didn’t provide enough secrecy for Jackson to hide missives she might not want prying eyes to see, so she made a request of Alison Taylor, a vice president for the multinational company.
“Can you use my home email rather than this one when you need to contact me directly?” Jackson asked. “Tx, Lisa.”
Conducting official government business on private accounts is illegal, if used for the purpose of concealment. The crime is punishable with a fine or imprisonment of not more than three years, or both. Also, the offender “shall forfeit his office and be disqualified from holding any office under the United States.” According to Horner, the message Jackson sent Taylor showed a deliberate effort to hide from the public how government business was conducted.
“There’s no ambiguity here,” said Horner to the Free Beacon. “This reflects a clear intention to violate law and policy.”
The conservative news site reported that Jackson hired Washington-based attorney Barry Coburn, which he wouldn’t confirm to them, but did a day later to Politico.
“Lisa Jackson has been a dedicated public servant who served her country honorably for over two decades,” Coburn said in a statement. “She has engaged in no wrongdoing of any kind. She is committed to responding appropriately to any inquiry initiated by any forum. We have offered to assist her in doing so.”
Unfortunately for the taxpayers who paid her salary, “responding appropriately” did not mean “rapid and forthcoming” under Jackson’s EPA reign, which was supposed to operate under President Obama’s “unprecedented level of openness in government.” In addition to Horner and CEI, House and Senate members who exercise oversight of the executive branch (and specifically EPA) have sought records and demanded explanations about use of the alias email accounts.
In November Texas Rep. Ralph Hall, chairman of the House Committee on Science, Space and Technology, sent a request to EPA’s Inspector General to review whether the agency complied with the Freedom of Information Act and Federal Records Act. The response he received was not enlightening.
“Given the large volume of emails sent to the public account — more than 1.5 million in fiscal year 2012, for instance — the secondary email account is necessary for effective management and communication between the Administrator and colleagues,” Associate Administrator Arvin Ganesan said in his Dec. 12 letter. He explained that the practice is “commonly employed in both the public and the private sector.”
Even so, the EPA Inspector General initiated an audit of the handling of the agency’s electronic records.
Then in December Michigan Rep. Fred Upton, chairman of the House Energy and Commerce Committee, and Subcommittee on Oversight and Investigations Chairman Cliff Stearns (R-Fla.), wrote to Jackson “that you describe fully the nature and extent of this practice.” At the time the congressmen wanted to know whether EPA’s records custodians responded to FOIA requests for Jackson’s correspondence by searching her (and others’) alias accounts – as opposed to their email addresses for public correspondence that they didn’t conduct their business on – for relevant materials. The committee leaders asked Jackson for “a detailed description of EPA’s procedures that ensure that all your ‘internal’ email accounts…are included in any search for responsive information or materials when EPA receives Congressional committee requests for information or documents….”
EPA began producing records in January from Jackson’s “Richard Windsor” email account that had a lot of text obliterated with black marker – so much that Horner called it a “defective compilation (that) boasts an impressively anemic content-to-volume ratio.” Even the name “Windsor” was redacted from the messages.
“I don’t know any other agency that does this,” said Anne Weismann, chief counsel of the watchdog group Citizens for Responsibility and Ethics in Washington, to Politico. “Why would you pick a fictitious name of someone of different gender? To me it smacks of…trying to hide.”
Sen. David Vitter, R-La., the Ranking Minority Member on the Senate Environment and Public Works Committee, and his colleagues upped the pressure on EPA at that point as well.
“EPA’s supposed reliance on ‘precedent’ is especially misleading because they’re clearly using a separate and distinct practice than previous Administrations,” Vitter said. “And if ‘Richard Windsor’ is no more than a standard work email account, why not share the unredacted versions and prove it to the American public?”
The practice was not limited to Jackson, of course, as it was discovered in other Obama administration agencies and was also used within EPA by both Deputy Administrator Bob Perciasepe and Jackson’s permanent replacement, former assistant administrator Gina McCarthy, who was only allowed to be confirmed last month after Vitter won concessions from EPA on transparency measures. But the revelation that Jackson evaded even beyond the “Windsor” account disturbed the senator.
“For months this Administration has brushed off transparency concerns, especially when it comes to federal record-keeping laws. Former EPA Administrator Jackson, aka ‘Richard Windsor’, has been the biggest culprit,” Vitter said. “Even with EPA’s recent promises to review and revamp its email practices and policies, the mere fact that the agency’s Administrator was trying to circumvent ‘sunshine’ laws is a huge red flag for the effectiveness of the agency and the Administration.”
Vitter, on Fox News, pledged to “go after” all of Jackson’s communications while she was at EPA from all her accounts. “Generally what’s being hidden is a very cozy relationship between this EPA and far-left environmental groups,” he said.
Which coincides with Jackson’s hiring of Coburn as her legal counsel. In June NLPC wondered why Apple, Inc., and CEO Tim Cook, would want to bring her and her baggage into a company that has enjoyed success but whose stock price has been in decline lately. In an interview with the Fuqua School of Business, at his alma mater Duke University, Cook explained how part of his management philosophy is to “look for people that are not political, people that are not bureaucrats….”
Besides the email fiasco, Jackson has other ethically questionable activities that occurred on her watch: Regional EPA administrators whose practice was to “crucify” oil and gas companies; EPA’s war against coalcompanies and utilities; excessive, controversial regulations; and experiments on human beings that piped diesel exhaust into their lungs.
“Tim Cook should think twice,” said Amy Ridenour, president of the National Center for Public Policy Research, a conservative think tank that also owns stock in Apple. “President Obama’s cabinet officers may get away with all kinds of things (or they may not, in the end), but the Responsible Corporate Officer Doctrine makes CEOs potentially criminally liable for any misdeeds of subordinates, even if they don’t know about them.”
Wonder if the “non-political” Cook has asked Jackson why she needs a lawyer all of a sudden.
[First published at the National Legal and Policy Center.]
The Heartland Institute and the Nongovernmental International Panel on Climate Change (NIPCC) have been hard at work since 2011 on a new edition of Climate Change Reconsidered. The first volume of the new report, titled Climate Change Reconsidered II: Physical Science, will be released in digital form in September to coincide with the release of the United Nations’ Intergovernmental Panel on Climate Change (IPCC) 5th Assessment Report. A second volume on “Impacts, Adaptation, and Vulnerabilities” is slated for release in March or April 2014.
Heartland is planning to hold a press conference in Chicago on Sept. 17 at which it will announce the findings of the 1,200-plus-page report and release an executive summary. The organization will also host a “book launch luncheon” on Sept. 18 in the Heartland Institute library featuring three of the report’s lead authors. More details of the unveiling of Climate Change Reconsidered II: Physical Science, will be released in the coming weeks.
The research effort has been led by Craig Idso, Ph.D., chairman of the Center for the Study of Carbon Dioxide and Global Change; Robert Carter, Ph.D., Former Head of the School of Earth Sciences, James Cook University (Australia), and S. Fred Singer, Ph.D., president of the Science and Environmental Policy Project and professor emeritus of environmental science at the University of Virginia. An international team of lead authors, section authors, contributors, and reviewers is participating in the effort.
The first two volumes published in the Climate Change Reconsidered series, in 2009 and 2011, were widely recognized as the most comprehensive and authoritative critiques of the alarmist reports of the United Nations’ Intergovernmental Panel on Climate Change (IPCC). Reviews and the complete texts of both volumes are available here and here. In June, a division of the Chinese Academy of Sciences published a Chinese translation and condensed edition of the two volumes.
Steve Stanek discusses in this podcast with Tom Steward about the issue of taxpayers around the country seeing taxes raised for public golf courses. One in particular created in the mid-eighties in Red Wing, Minnesota. The golf course was originally believed to cost the taxpayers nothing and possibly even turning a profit along with being beneficial to not only community appeal, but putting them ahead of the curve at the time with the growing popularity of the game. Yet, today the local property tax payers have paid hundreds of thousands of dollars financing the course.
To their credit Steward cites that the city has been transparent with the options, fiscal realities, and documents regarding the state of the course provided on their website. The community wide discussion shows support of some current subsidies in particular community pools, however this does not include the funding of a golf course in the red. The problem not seen in the projected growth for today is that there would be “too many golf courses, not enough golfers”.
The San Francisco area’s recently adopted Plan Bay Area may set a new standard for urban planning excess. Plan Bay Area, which covers nearly all of the San Francisco, San Jose, Santa Rosa, Vallejo and Napa metropolitan areas, was recently adopted by the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG). This article summarizes the difficulties with Plan Bay Area, which are described more fully in my policy report prepared for the Pacific Research Institute (Evaluation of Plan Bay Area).
Plan Bay Area would produce only modest greenhouse gas emissions reductions, while imposing substantial economic costs and intruding in an unprecedented manner into the lives of residents. The Plan would require more than three quarters of new residences and one third of net additional employment to be located in confined “priority development areas.” These measures have been referred to as “pack and stack” by critics. The net effect would be to virtually ban development on the urban fringe, where the organic expansion of cities has occurred since the beginning of time.
Violating perhaps the most fundamental requirement of a rational plan, Plan Bay Area begins with a situation that no longer exists. Further, it is based on exaggeration, systematic disregard of official federal government projections and overly optimistic planning assumptions.
Exaggerated Population Projection: The Plan assumes that the Bay Area will grow 55 percent more rapidly between 2010 and 2040 than official California state Department of Finance population projections indicate. These state-produced estimates have tended themselves to be on the high side (Figure 1). The planners scurried about to resolve these differences, but there is no indication that the state will be revising its projections. Plan Bay Area’s population projection would require growth in the Bay Area to increase by more than one-half from the 2000-2010 annual rate. The exaggeration of population growth has its uses: it leads to a higher greenhouse gas emissions projection for 2040, providing a rationale for stronger policy interventions.
Ignoring Current Greenhouse Gas Emissions Projections: The Plan also ignores the new, more favorable DOE fuel economy projections (Figure 2). These projections were issued in December, well before the publication of the draft plan in April and the adoption of the final plan in July. Indeed, if the new DOE projections had been published the day before, Plan Bay Area should have been placed on hold and revised. In short, Plan Bay Area was out of date when adopted.
Overly Optimistic Planning Assumptions: The Plan assumes that travel by light vehicle (automobiles, sport utility vehicles and pickups) would be reduced by substantial increases in transit ridership. Plan Bay Area presumes that expanding transit service 27 percent over the next 30 years will lead to a near doubling of transit ridership. This is stupefying, since over the last 30 years, transit ridership remained virtually the same, while service was expanded nearly twice as much as would be planned from 2010 to 2040.
The plan also assumes that residents forced into the priority development areas will use transit and walking much more, materially reducing their use of light vehicles. This research behind this assumption is skewed toward transit oriented developments located on rail lines with good access to downtown. But nearly nine out of 10 employees in the Bay Area work outside the downtowns of San Francisco and Oakland downtowns, and that number is increasing (according to Plan Bay Area).
Given recent history, it seems wishful thinking to believe that small transit service expansions and downtown oriented transit development can do much to attract drivers from cars. The modest gains greenhouse gas emissions reductions projected in Plan Bay Area are likely exaggerations.
Plan Bay Area’s “pack and stack” densification is likely to produce even less than the modest substitution of transit and walking for driving (see The Transit-Density Disconnect). Traffic congestion, in this already highly congested area, is likely to be worsened, which could nullify part or all of the greenhouse gas emission reductions expected from reduced vehicle use.
Correcting Plan Bay Area Forecasts
Plan Bay Area would only modestly reduce light vehicle travel and greenhouse gas emissions. This is illustrated in Figure 3, which shows that the “pack and stack” strategies that would force most new residents and jobs into priority development areas, Plan Bay Area would reduce greenhouse gas emissions by 2 percent (“Plan Bay Area” line compared to the “Trend” or “doing nothing” line).
By contrast, correcting the Plan Bay Area 2040 population estimates to reflect the state population projections would reduce greenhouse gas emissions more than eight times as much (17 percent), without the “pack and stack” strategies. A further correction of the Plan Bay Area 2040 estimates to reflect the latest DOE fuel economy projections, would reduce greenhouse gas emissions 22 percent, 11 times as much as the “pack and stack” strategies.
Heavy Costs for Households and Businesses
The Plan’s “pack and stack” strategies seem likely to exacerbate the Bay Area’s already high cost of living. Currently, the San Francisco and San Jose metropolitan areas have the worst housing affordability among the nation’s 52 metropolitan areas with more than 1 million residents. San Jose’s median house price relative to its median household income was 7.9 last year, according to the Demographia International Housing Affordability Survey. San Francisco’s median multiple was 7.8. This severely unaffordable housing results from recent decades of urban containment or smart growth policies, which have severely restricted the land on which development can occur. This drives up prices (other things being equal), consistent with economic principle. This has been made worse by house and apartment impact fees imposed on developers that are far above the national average.
By comparison, in major metropolitan areas that have not implemented strong urban containment policies, the median multiple has typically been 3.0 or less since World War II, including the Bay Area before its adoption (Figure 4). The “pack and stack” strategies would largely limit new development to small parts of the Bay Area, an even more draconian prohibition than the long standing restrictions on urban fringe development. This further rationing of land could be expected to drive land prices even higher, making it even more difficult for households and businesses to live within their means.
The problem is already acute. The new US Census Bureau housing cost adjusted data shows California to have the highest poverty rate among the states and the District of Columbia (metropolitan area data is not available). An early 2000s Public Policy Institute of California report showed Bay Area poverty to be nearly double the official rate, adjusted for the cost of living. Ultra pricey San Francisco had among the ten highest poverty rates – over twenty percent – of any urban county in the country.
Unaffordable housing has also fueled an exodus to the San Joaquin Valley (Central Valley). Now more than 15 percent of the workers in the Stockton metropolitan area commute to the Bay Area, which led the Federal Office of Management and Budget adding Stockton to the San Jose-San Francisco combined metropolitan area (combined statistical area). In addition, the greater traffic congestion is likely to lengthen work trip travel times. This is likely to further increase emission while also burdening job creation and economic growth (see Traffic Congestion, Time and Money).
Ignoring the Economy and Poverty
Plan Bay Area effectively ignores these costs (despite rhetoric to the contrary), by failing to subject its strategies to a cost per ton metric. According to the United Nation’s Intergovernment Panel on Climate Change (IPCC), sufficient greenhouse gas emissions reductions can be achieved at a cost between a range of $20 to $50 per ton. The previous regional plan (through 2035) included such estimates. Only highway strategies achieved the IPCC range. Transit and land use strategies cost from four to more than 100 times the top of the IPCC range. Even those estimates did not include the prohibitively higher housing costs that result from urban containment policies. The cost metric is crucial, because spending more than necessary to reduce greenhouse gas emissions limits job creation and economic growth, which leads to reduced household affluence and greater poverty. This is the very opposite of the economic objectives of public policy. Virtually all political jurisdictions around the world seek greater prosperity for their residents and less poverty. A legitimate regional plan requires subjecting its strategies to economic metrics.
There is opposition to Plan Bay Area. A citizen movement worked for rejection and has now filed suit claiming that the Plan violates the California Environmental Quality Act. The suit also alleges that MTC and ABAG used a questionable interpretation of state law and regulation to justify the irrational Plan outcomes.
Opponents were also successful in obtaining a rare recorded vote at ABAG. The governing board (General Assembly) is composed of selected elected officials from cities and counties who are not elected to their ABAG positions. ABAG adopts virtually all of its actions by consensus, rather by recorded votes, as occurs in many of the nation’s regional planning boards.
Consensus decision making seem especially odd in California, where inability to obtain sufficient votes in the legislature for the state budget required a constitutional amendment. Neither do city councils and county commissions operate on a consensus basis on controversial issues.
There is no shortage of controversial issues, at ABAG or other regional planning agencies. A good first reform would be for recorded votes to be the rule, rather than the exception. Consensus decision making may be appropriate for clubs, but it is not for representative bodies in a democracy (Note).
Impeding the Quality of Life
Plan Bay Area was outdated when approved and reflects a world that no longer exists. Drafters have insisted on extravagantly expensive and intrusive policies that produce only minimal greenhouse gas reductions, and at great cost, using, among other things, unreasonably bloated population forecasts to bolster their approach. Unless changed, the Plan will likely be more successful in driving up housing prices, limiting options for families, and further congesting traffic than meeting its stated goal of reducing greenhouse gas emissions.
On August 27, Heartland Institute Research Fellow Benjamin Domenech was a guest on MSNBC’s “All In with Chris Hayes” to talk about conservatives in Congress pressuring Speaker Boehner to use the upcoming debt ceiling fight to defund Obamacare.
Ben said: I think the right flank is tired Chris of seeing these sorts of issues come up again and again and feeling an unwillingness of Boehner and McConnell to stand up to the President and fight on it. So, there’s a lot of bluster to sort of compensate for that, but I just have to point something out that’s a little different about this situation, the fallback from my perspective for John Boehner isn’t any more realistic than the sort of things that the tea party is really pushing him to do right now when it comes to defunding Obamacare versus delaying it. I think that’s one of the issues really we have to understand is not the typical the elites are being realistic, the tea party is being unrealistic divide. Because I don’t think that you have the votes for either of those things in the U.S. Senate, which makes it a moot point from my perspective. Whichever strategy, whichever leverage John Boehner is going to use in this situation, I think you’ve already seen the redline from Secretary Lew when it comes to the way these negotiations are going to play out. Frankly, if the President is willing to come to the negotiation table on these sorts of things is going to be an issue.
He further goes on to discuss the strength of the right, which is to have this argument because when the President, himself, has delayed portions of the Affordable Care Act it creates a handy little argument for the right to make. Which is essentially he’s exempting employers, he’s exempting friends, but he won’t exempt the American people, but to think that any of those things will actually become policy is foolish.
Watch the video below:
In the third of the six films of the Star Wars saga, the Sith Lord who has infiltrated to become the ruling Chancellor of the democratic republic confederation of peaceful worlds announces to the elected Assembly of representatives of those worlds that to deal with an exaggerated, fabricated crisis, “The Old Republic will be reorganized into the first Intergalactic Empire.” The distracted Assembly responds with polite applause. One of the few characters who understands what is happening remarks wryly, “So this is how the Republic ends. With applause.”
Proving that truth is stranger than fiction, this is happening right now in the United States of America. President Obama has already seized the power to rule by decree, and is doing so virtually every day now.
For those who do not immediately get what is meant by “rule by decree,” let me explain. The Constitution grants the power to legislate, to make laws, to the Congress, which is why it is called “the Legislative Branch.” It grants the power to carry out, or execute, the laws to the President, which is why the President and his Administration are called “the Executive Branch.” The Constitution accordingly specifies that the President’s duty is “to take care that the laws be faithfully executed.” It grants the power to interpret and adjudicate the law to the Judiciary, which is why that is called “the Judicial Branch.”
But President Obama does not accept the limitations of his role within this constitutional framework. He is now regularly exercising the power to legislate directly himself, either by announcing on his own supposed authority changes in existing laws that Congress has already passed, or by announcing that he will carry out entirely new laws that Congress never passed, or even refused to pass. These actions are brazen, lawless violations of the Constitution.
The President through his Executive Branch has the power to issue regulations interpreting the law as passed, for purposes of implementation. But all regulations must be authorized by an underlying law passed by Congress. Neither the President nor any agency underneath him in the entire Executive Branch can issue a regulation that contradicts or changes the law that is cited as authorizing it. In other words, if the law says 2014, the President has no authority to say screw it, I say 2015, by regulation or otherwise.
The same is true of Executive Orders. All Executive Orders must be based on authority granted to the President by some law passed by Congress, or by the Constitution itself.
The President does have the authority to refuse to enforce laws he believes are unconstitutional. But he cannot refuse to enforce laws because he disagrees with them, or to gain political advantage, such as delaying implementation of a law until after the next election, attempting to deceive the American people as to what has been enacted until the next election passes. The Office of Legal Counsel in the U.S. Justice Department exists to advise the President as to his legal powers. And this is what legal opinions issued by that office have said.
Similarly, in Clinton v. City of New York, the Supreme Court ruled, “There is no provision in the Constitution that authorizes the president to enact, to amend, or to repeal statutes…. The only constitutional power the president has to suspend or repeal statutes is to veto a bill or propose new legislation.”
The Lawless President President Obama has engaged in such lawless usurpation of authority most of all in regard to his pride and joy, Obamacare, which he finagled through Congress in 2010 on a strict party line vote, openly buying off recalcitrant Democrats who foresaw the coming train wreck with various political sweeteners at taxpayer expense. But now that it has passed, he refuses to implement it as passed, even though former House Speaker Nancy Pelosi famously said we would have to pass it to find out what is in it. But not when the public finding out what is in it might lead to political disadvantage for the Democrats, apparently.
The lawlessness started even before President Obama’s re-election. The law provided for $716 billion in cuts to Medicare in the first 10 years alone. But to evade political retribution for these cuts, the President delayed them until after the election, and dishonestly misrepresented them during the campaign. He and his campaign told voters the cuts involved only reductions in “overpayments” to doctors and hospitals providing health care to seniors, and in “subsidies” to insurance companies, which millions of seniors had chosen to provide their Medicare benefits under Medicare Part C, saying actual Medicare “benefits were not affected at all”— “not by one dime.”
The President did not want seniors to be able to see in their own lives that these gross mischaracterizations were not true. The Medicare Chief Actuary explained that within a few years, the cuts would reduce Medicare payments to doctors and hospitals to only about half what is paid under Medicaid for health care for the poor, which studies have documented results in poor health care for the poor. So the cuts disappeared until after the election, by illegal Presidential decree.
Similarly, the Obamacare law provided that insurance companies could not decline coverage for children with pre-existing conditions, but in an alleged mistake, the law as passed said that did not become effective until January, 2014. But to gain political advantage before the 2012 elections, HHS issued a rule declaring that this popular provision would become effective on September 23, 2010. Intimidated from challenging the illegal rule in court, health insurers began withdrawing the sale of child only policies, resulting in no one selling such policies in almost half the country.
The Obamacare law as passed also provides that the extensive Obamacare subsidies for purchasing health insurance on the exchanges apply in such Exchanges set up by the states, as the law contemplated. But 27 states exercised their right under the law to refuse to set up exchanges, leaving the federal government to do it in those states, primarily because the states were left with no discretion or authority regarding how to organize them. Only 17 states have actually established exchanges on their own. The law as written and passed only provides for the Obamacare exchange health insurance subsidies to apply in these 17 states. So on May 23, 2012, the IRS issued an illegal rule providing that the Obamacare exchange subsidies shall apply in all 50 states any way.
After the President’s re-election, he famously announced a delay for one year of one of the basic pillars of the law, the employer mandate requiring employers of 50 or more full time workers to buy health insurance for their workers, as the government specifies exactly what they must buy. The Obamacare law explicitly says the Obamacare law would become effective in 2014. The President has no legal authority to change that to 2015, as the Supreme Court has ruled. But the President brazenly flouted the law, the Constitution, and the Supreme Court by decreeing the mandate shall be delayed until 2015.
This rewriting of the law as we go is contributing to further Obamacare chaos. The exchange subsidies were only supposed to be available under the Obamacare law to those who do not receive the required employer-provided insurance. But since no such insurance will now be required next year, very few will actually have the elaborate and expensive employer insurance as required. Moreover, the CBO estimates on the cost of Obamacare are based on only a fraction of workers qualifying for the exchange subsidies.
The Obamacare law requires the exchanges to verify whether applicants for the exchange subsidies qualify because they do not have required employer coverage, and to verify applicant incomes with employers to determine how much applicants qualify for in subsidies. But with no employer mandate for next year, the Obama Administration recently issued another illegal rule authorizing exchanges to just take the applicant’s word on whether they have employer-provided health insurance, and how much they are paid.
The Obamacare law as passed provides that Obamacare shall apply to members of Congress and their staffs when it becomes effective next year. But that was causing extensive panic on Capitol Hill as our public servants began realizing what that would mean for them. So the Office of Personnel Management recently issued another illegal rule exempting Congressional members and their staffs from the Obamacare limitations on what the federal government could pay for their health insurance, which will still apply to others in the private sector.
The Obamacare law also provides for caps on out-of-pocket costs consumers themselves must pay under Obamacare policies, limiting such costs to $6,350 for individual policies and $12,700 for family policies. But because the Obama Administration is apparently unprepared to implement these caps, the Labor Department issued an illegal rule in February 2013, rewriting the Obamacare law once again to waive these caps until 2015.
The Obama Administration has similarly flouted the Obamacare law in regard to implementing the Small Business Health Options Program (SHOP), which was supposed to grant small businesses broader health insurance options, the Federal Basic Health Plan Option, which was supposed to offer a more affordable managed care insurance choice, and required electronic notification to consumers of eligibility for Medicaid and Exchange subsidies.
An Illegal Habit But President Obama’s illegal flouting of the law has not been limited to his own hapless Obamacare law. Last year, the President implemented the so-called DREAM Act by decree, after Congress had considered it, but refused to enact it, providing for new benefits for illegal immigrants brought to America as children. Before that, the President had ruled by decree that governors could apply for waivers from the welfare reform work requirements adopted in 1996 under President Clinton.
President Clinton was sent out during the Democratic National Convention to falsely claim that the ruling only allowed the governors to require more work. But under the 1996 welfare reforms, the governors did not need any more authority to require more work. The law already granted them complete authority to do so.
Earlier this month, Attorney General Eric Holder ordered all U.S. attorneys to stop prosecutions of all nonviolent, non-gang-related, drug crime defendants subject to mandatory minimum sentences. The law requires such mandatory minimum sentences. The Obama Administration is just refusing to follow and enforce the law.
Last week, the President asked the Federal Communications Commission to impose a $5 tax per cell phone to finance the extension of a program to expand Internet access. The American colonists protested in the Boston Tea Party against a 3 cent tax on tea, which they complained was not imposed in accordance with law. The colonists were smart enough to see that if the King could impose a 3 cent tax without legal authorization, there was no legal constraint at all on his abuses. That protest led to the Revolutionary War over the principle.
One of the articles of impeachment against Richard Nixon was that he used the IRS for special audits and investigations of his political opponents. Under Obama, we all know now that the IRS has done the same thing. President Obama has also refused to obey court orders, such as when the federal courts ruled that his so-called recess appointments of federal officials when the Senate was not in recess were unconstitutional, or the federal rulings that the President’s extended moratorium on Gulf oil drilling after the British Petroleum oil leak were illegal under the law,
Charles Krauthammer wrote earlier this month regarding President Obama’s lawlessness that “such gross usurpation disdains the Constitution. It mocks the separation of powers….If the law is not what is plainly written, but is whatever the president and his agents decide, what is left of the law? What’s the point of the whole legislative process — of crafting various provisions through give and take negotiation — if you cannot rely on the fixity of the final product, on the assurance that the provisions bargained for by both sides will be carried out.”
Krauthammer further explained the resulting breakdown of our government, saying, “Consider immigration reform. The essence of any deal would be legalization in return for strict border enforcement. If some such legislative compromise is struck, what confidence can anyone have in it — if the President can unilaterally alter what he signs?”
Krauthammer adds, “Yet, this President is not only untroubled by what he is doing, but open and rather proud. As he tells cheering crowds on his never-ending campaign style tours: I am going to do X — and I’m not going to wait for Congress. That’s caudillo talk. That’s banana republic stuff. In this country, the President is required to win the consent of Congress first. At stake is not some constitutional curlicue. At stake is whether the laws are the law.”
Democrats Against Democracy If the President can rewrite and make up the law, then the bonds of democracy are broken completely. We are no longer governed by laws adopted through the democratic process, but ruled instead by authoritarian, Third World-style decree.
These brazenly lawless abuses of office by the President more than justify his impeachment. But with the most partisan Democrat control of the Senate in our history, that impeachment would go nowhere in the Senate. Moreover, even to raise the word guarantees a 250% Democrat voter turnout next year, especially given how the public reacted when the Republicans attempted to impeach President Clinton for his much more mild violations of law.
But there is another check and balance on President Obama’s abuse of office. Hold the Democrat party politically accountable for the third world-style authoritarianism and suspension of democracy of the Obama Administration. They are the ones covering for the authoritarian caudillo, in Krauthammer’s words. They are the ones who selected Obama as their party standard bearer despite his radical left-wing extremist roots and background.
Those today who contribute to, support, and vote for the Democrat party are supporting this lawless suspension of our democracy. Is democracy even socially respectable in America today?
[First Published by The American Spectator]
The Senate Homeland Security and Government Affairs Committee has private alternative currencies in its crosshairs. The Chairman, Senator Tom Carper (D-DE) and Ranking Member, Senator Tom Coburn (R-OK), sent a joint letter to seven federal agencies last week asking for feedback and policy proposals for regulation of virtual currencies, like Bitcoin.
Bitcoin has surged in value and popularity recently as it has come to be embraced by more users across the planet. In a world of government fiat currencies, Bitcoin is an admirable innovation. But in a sense it extends the current currency framework, as opposed to revolutionizing it. It was created out of less than thin air when cybergeeks who saw it as a natural progression of the modern web specified the creation and distribution of the new cybercurrency in a paper posted on the Internet in 2008. The virtual currency was then launched into operation in 2009.
With an insight that eluded many 20th Century macroeconomists, the cybergeek innovators recognized the natural market connection between the value and the quantity of the currency. So Bitcoin is organized to inherently limit its quantity. All transactions in the currency are recorded by servers, designated as Bitcoin miners, on ledgers that are regularly updated and archived. Under a formula originally specified in the founding documents for Bitcoin, new Bitcoins are created with every ledger update. But the formula specifies that the number of new Bitcoins created with each such update is cut in half every 4 years, until it reaches zero in 2140, when the total number of Bitcoin units will reach their maximum quantity of 21 million. Each Bitcoin unit, however, is subdivided down to 8 decimal places, which creates 100 million smaller subunits called satoshis.
The value of each Bitcoin unit and satoshi subunit is established by market demand in daily transactions. So the specified Bitcoin supply can cover more in market value transactions depending on that market demand.
Bitcoins are bought and sold over the Internet every day. Those market transactions determine the current value of Bitcoins daily. Each company or individual in the market is free to determine whether and to what degree they will accept Bitcoins in return for the goods, services, and even property they sell. Germany formally recognizes Bitcoin as a legal form of private currency. But what is most significant about the development and rise of such currencies is that no government authorization or recognition is necessary for such currencies to operate in the market through the free exchanges and decisions of buyers and sellers. The validity and value of Bitcoin is up to each individual in the market.
No doubt Bitcoin aficionados can contest, expand or clarify every statement and judgment uttered about the cybercurrency. But the bottom line is that it is a private, alternative, competing, and complementary currency on the model espoused by Nobel Laureate Friedrich Hayek, designed basically on the monetarist model espoused by Nobel Laureate Milton Friedman. That monetarism is reflected in the steady, regular, predictable increase in its supply, and in the daily market revaluation of its value.
Bitcoin is not a fiat currency in that no government declares by fiat that it is legal tender for any particular use. But it is fiat in the sense that it is created in the cybersphere out of nothing more than imagination, with no inherent value, unlike gold or silver coins, or currencies backed by precious metals. In the book Rethinking Money, former EU monetary official Bernard Lietaer reports that 6,000 to 7,000 such private, alternative, competing and complementary currencies are currently in use around the world, the great majority not backed by anything of inherent value except the willingness of market participants to trade in them. The number of such currencies has shot up from an estimated 5,000 in 2005.
The public reason for the attention of government officials and regulators to this development is the potential for malevolent use of Bitcoin, and other such currencies, by criminals and even terrorists, to transfer funds for illegal activities and worse, and for money laundering. The Senate Homeland Security letter states regarding these currencies, “Their anonymous and decentralized nature has also attracted criminals who value few things more than being allowed to operate in the shadows.”
The Personal Liberty Digest (PLD), a top libertarian website, reported on August 14, “Liberty Reserve, another virtual currency system based in Costa Rica, was shut down in May when the Justice Department charged the company with money laundering and used the Patriot Act to lock it out of the American financial system.” The government complained that Liberty Reserve allowed customers to convert money into a virtual currency and transfer it from account to account with a 1% transaction fee, the PLD website explained. That sounds like a good deal to me, but “Justice and Treasury officials said that allowed criminals to hide the sources of their money,” PLD reported.
But criminals are not criminals until they are convicted of something, and hiding the source of your money is not against the law, except for what you are legally required to disclose on your tax return. The source of your money is not a public matter, but a feature of your personal privacy, absent a specific legal disclosure requirement. The Justice Department has no business even asking you about the source of your money until it has sufficient probable cause to bring you in for questioning, and/or to file for a warrant for your personal financial records.
Personal Liberty Digest quotes U.S. Attorney Preet Bharara as saying about the Liberty Reserve case, “The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.” But there is nothing on the public record I can see showing that there was anything illicit about Liberty Reserve. It is Bharara’s “global enforcement action” which is the first documented abuse I have seen of the Patriot Act, warranting Congressional investigation and correction. Without convicting any Liberty Reserve customer of breaking any law by converting money into a virtual currency and transferring it from account to account, Bharara’s “global enforcement action” against Liberty Reserve is an apparent violation of Due Process. Nor does the jurisdiction of the Patriot Act “encircle the earth,” which is imperialist rhetoric.
In March, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury cleared American users of Bitcoin, and similar currencies, of any legal obligations under U.S. law. But it held that American entities that sell such currencies to the public were Money Service Businesses (MSBs) subject to mandatory registration and disclosure requirements under U.S. law. Those duly adopted requirements are legally valid and enforceable. They apply within the U.S.
Which means that any foreign financial institution that operates wholly outside the U.S. can issue any sort of currency it desires, and its activities are not subject to U.S. regulation or enforcement. Moreover, it cannot even be punished by exclusion from the U.S. financial or payments system without due process of law. It must be shown at least to have participated in some activity that violated U.S. law, before it can be punished under U.S. law.
The Coming End of Fiat Currencies
The term “fiat currencies” is strange and mostly not understood in this modern “progressive” era, where everything is transformed by political “Progressives” into fiat rather than natural forms, which continue to exist as long as so-called “Progressives” have the power to impose them. So instead of Natural Law, we have fiat law, which is whatever those who currently have the political power say it is. And instead of Natural Rights, the world today mostly recognizes only fiat rights, which are only the rights those in power say we have. America was rooted in Natural Rights and Natural Law, which so-called Progressives have been rebelling against for more than 100 years, certain they had better ideas more suited to the modern world.
And so today we have fiat money instead of natural money. Fiat money is money with a government declared value, rather than a natural, inherent value. That is how the government takes some paper, slaps some ink on it, and supposedly it has the value the government and the ink says it has.
But that fiat money also lasts only as long as the ruling class has the power to impose it on us. That means the political power and the market power to do that. At some point, the market power, which is more real and natural, can overcome the political power. And that is the point we are reaching, when the innovation becomes more real and natural.
It is not Bitcoin, or Liberty Reserve, or any other private organization that is abusing and trashing the dollar. It is the United States Federal Reserve. Since the Fed was established in 1913, the dollar has lost 95% of its value. That is due to the depreciation of the currency resulting from the Fed’s monetary policies. The Fed has been a true to form “progressive” institution since its founding as one of the first reforms of the “Progressive” Movement.
Jim Cramer was quite wrong, and trite, when he appeared on a CBS TV show to say that Bitcoin is not a true currency, because there is no central bank to regulate it. Currencies do not need regulation by central banks to function as true currencies. Central banks need regulation by markets to keep their currencies functional. And Bloomberg News was equally wrong, and trite, when it so predictably published the dysfunctional progressive party line in a column on April 4 by Mathew Zeitlin, saying that durable currencies can only function as creatures of a state.
The dollar prevails as the world’s reserve currency because it has only been in competition with other fiat currencies that have been equally mismanaged or worse. The regulatory and prosecutorial hostility of the U.S. government towards private alternative currencies tells us that the U.S. government itself sees a vulnerability of the dollar to these currencies. The Fed has expanded that vulnerability now to the breaking point with its wild reckless policies of recent years.
When the Fed embarked on its Quantitative Easing policies years ago, Chairman Bernanke was so sure he could reverse them before they caused any real problems. But the real difficulty he should have foreseen, given past Fed experience, was that it would never seem like a good time to do so before it was too late. Now, years of near zero real interest rates and QE have not produced any real economic recovery. But these policies have stuffed the balance sheets of American banks, and the Fed itself, with government and corporate bonds that are going to plummet in value when the Fed slows QE bond buying, letting interest rates return towards normal, market levels, which will signal everyone else in the markets to stop buying too.
And how many other investments throughout the American economy have been based on those same near zero interest rates for continued viability? So when the Fed backs off QE, and its years long zero rates, that is going to rock the solvency of the entire U.S. banking system, the U.S. economy, and even the Fed itself. But if that forces the Fed to reverse course, and try to persist with QE and zero rates, that will ultimately cause ruinous inflation that will only worsen, until the Fed goes back to trying to withdraw from QE and zero rates.
The economy is already barely growing, if inflation is currently measured correctly. If the Fed further destabilizes the economy, the dollar will probably further decline, as who will want to buy dollars to invest in a declining economy only continuously threatened with even higher tax and regulatory burdens? But if the Fed redoubles on its current policies, the dollar will probably decline further under the threat of eventual inflation. Who will want to hold dollars under this increasingly narrowing conundrum? That is when the world may turn to something different.
It is not Bitcoin that will arise as the alternative global reserve currency, because as discussed above, it has no inherent value either, so it is subject to wide swings in market value too. The real threat to the dollar is a different, private, alternative currency that can arise, that is based in real commodities with inherent value.
Such a currency will not be rooted only in the imagination of cyberspace, but will look more like the currencies of old that gave rise to booming capitalism. A foreign financial institution free from meddling, destabilizing, self-interested, U.S. policy interference can issue a currency where each unit entitles the bearer to specified quantities of a diversified basket of precious commodities, like gold, silver, copper, oil, diamonds and similar commodities that inherently hold their value over the long run.
The market value of such a currency will inherently be stable, tied to real value in the real world. When the market value of the underlying commodities declines, the issuer of the currency can buy more, and expand the currency, which will stabilize its value, and accommodate a growing economy. When the market value of the commodities rises, the issuer can sell some commodities, and retire some currency, which will again stabilize its value. The rest of the world can and will see the value in such a new reserve currency, which would be designed more on the hard money, supply side model of Nobel Laureate Robert Mundell, and his former student Art Laffer.
Such a private, alternative currency was described and explained in detail in Lietaer’s book. This is the real threat to the global reign of the dollar. And the reaction of the U.S. government to Bitcoin shows that the U.S. government itself sees that dollar vulnerability.
[First Published by Forbes]
Obama has announced that he will defund the entire government rather than sign a bill that does not contain funding for ObamaCare. Senator Harry Reid has said he will not let the U.S. Senate pass a continuing resolution that does not contain funding for the program that he rammed through despite the opposition of the majority of Americans.
Now Obama, denying the need for congressional approval, is defunding part of his own program all by himself.
Delaying the employer mandate has the effect of losing the revenue from the penalties. But not to worry. In a July 31 article in the generally pro-Obama New England Journal of Medicine, Mark Pauly and Adam Leive state that the lost revenue amounts to a mere $10 billion, “a small fraction of the eventual cost of the exchange subsidies.” The Congressional Budget Office expects those to reach an annual $153 billion by 2023.
The Administration’s rationale for the postponement is to reduce a burden on employers. More importantly, say Pauly and Lieve, it gives them an opportunity to help employees “take maximum advantage of exchange subsidies.”
Less revenue in, more spending out: isn’t that the functional equivalent of defunding other programs in a zero-sum government budget?
Moreover, “crowding out of fully paid private insurance by more generously subsidized coverage”—already documented in Medicaid—poses an even greater threat to the government budget for financing the Affordable Care Act (ACA). The annual subsidy bill could nearly triple, Pauly and Lieve suggest.
Not verifying eligibility for subsidies is still another way for Obama to effectively increase the program’s drain on the Treasury. There is no guarantee that the money spent for such “liar loans” can ever be recouped.
The ACA is of course the great defunder of private insurance companies, hospitals, doctors, medical device manufacturers, and all the other entities subject to the premium price controls, fee cuts, and new taxes. Senator Reid finally admitted to the Las Vegas Sun that the plan is to purge the private sector from health care.
What a situation for the American system of government! We have two men, a President and a senator, each asserting the power to singlehandedly defund the entire government, shutting down everything that the people’s House has voted to fund—unless funds continue to flow to ObamaCare implementers and promoters, such as Planned Parenthood’s Navigators.
Spending on these implementers and promoters is leveraging the defunding of other items in the federal budget, as well as the private sector. All of ACA’s funds come from defunding businesses’ hiring and expansion plans, research and development, and the hopes and aspirations of current and future taxpayers.
Obama is a great pretender—pretending that all is well with the American economy. We will surely hear from those cronies who are getting funded by his redistributive largesse— and not so much from the invisible ones who are defunded, sucked dry, exhausted, or silenced.
Obama is the Great Defunder. Congress can either defund his pet program, or stand by as the PAC-Man-like program defunds and eats out America’s substance until it collapses. Maybe with a bang, maybe with a whimper.
I cringe every time I hear a politician or pundit talk about how a certain policy will create or destroy jobs. Yes, I get why it’s done; the unemployment rate in America is very high today and many people’s top priority is getting back to work. These people don’t care about savings rates, capital investment, or any other metric for economic health, as much as they care about employment prospects. Fine, but that doesn’t excuse those with power or expertise for using such imprecise and ultimately destructive terminology to describe government policy.
The purpose of economic activity is to make a profit. Individuals create products and services to be sold at a greater value than they were produced for. A healthy economy is one in which more products of higher quality are produced at greater profit rates. This is accomplished when individuals save money to be invested into productive activities.
The key is that the individual desire for personal gain is the driving force behind the producing, selling, and buying which makes up economic activity. Adam Smith noted the importance of self-interest all the way back in the 18th century with his famous passage about the butcher selling meat for the sake of personal gain. This selfish drive for wealth is the engine of economic growth; it is the progenitor of the creativity, savings, investment, and production which creates economic prosperity for all.
The crusade for job creation misleadingly draws attention away from the cause of economic growth and towards its secondary consequences, thereby inadvertently creating confusion between causes and effects. The butcher does not make and sell meat to provide jobs to his employees any more than the consumer buys computers to help out Microsoft. The fact that economic growth tends to create more jobs is a necessary side effect, but it should not be thought of as the goal of economic prosperity.
Furthermore, the concept of “job creation” is oddly homogenizing. The term, “job” can refer to a vast plethora of potential activities conducted for the sake of compensation. If the economy were to “gain” 10,000 jobs, that could mean anything from an increase in 10,000 software engineers, to 10,000 bus boys, to 10,000 prostitutes (not that they aren’t productive). Therefore, even as a broad proxy, learning the change in job numbers for the economy is pretty much worthless as an indicator of economic health.
My fear is that misleading language about job creation can lead to political pushes for policies which are bad for the economy but seemingly good for job creation. This has always been a Keynesian policy, but many voters aren’t explicitly aware of the voodoo economic claims behind state attempts to boost aggregate demand. However, if President Obama keeps touting “job reports” in his speeches, he will legitimize these aims and make job creation the implicit goal of all economic policy.
Such aims were behind many of the disastrous policies of the New Deal and more recently Obama’s stimulus programs. This is why we are endlessly subjected to calls for “infrastructure improvement” like wheel chair ramps in deserted slums of Detroit or green energy schemes like Solyndra. And we cannot forget the great benefits of natural disasters like hurricanes and tornadoes since they create jobs, never mind the lack of houses for those employed Americans to live in. To many unemployed Americans, the fact that these projects are not just useless, but costly to the economy, is irrelevant as long as they can provide some short term employment.
On the other side, we heard about how the federal budget sequestration earlier this year would “cost” the US millions of jobs. This is held up as the very worst thing that could ever possibly befall the economy. Yet when jobs are eliminated, it is virtually always due to rational calculations conducted by business owners to cut costs and strengthen profits. Such actions should be applauded, rather than condemned.
I propose that we completely do away with any language involving creating jobs as a goal or destroying jobs as an obstacle. Economic value should be thought of in terms of profits and productivity, not costs and employment.
The weekend edition of the Wall Street Journal (August 24-25, 2013) carried a front-page story titled “CEO Exit Sets Microsoft on New Path,” by Shira Ovide. The opening sentences report Microsoft “finds itself beset by competition on all fronts” and the company’s “Windows operating system will still power nearly all the 305 million personal computers expected to be sold globally this year, according to research firm Gartner Inc. But it will run just 15 percent of all computing devices, if PCs, smart-phones, tablet computers and other gadgets connected to the Internet are lumped together, given the rise of rivals such as Apple Inc. and Google Inc.”
The article was accompanied by a graphic illustrating the dramatical decline in Microsoft’s market value since 2000 (from $603 billion to $290 billion) while other competitors grew (Apple, for example, from $18 billion to $495 billion) and new competitors have emerged from nowhere (Google, worth $290 billion, and Facebook worth $99 billion).
This got me to thinking… didn’t we publish a book about Microsoft around 2000 that predicted something like this would happen? Indeed, we did. In 2001 we published Antitrust after Microsoft: The Obsolescence of Antitrust in the Digital Era by David Kopel. In 2002, my comments about a proposed Microsoft antitrust settlement were selected by the U.S. Department of Justice as one of just 47 “major” letters out of 30,000 submitted, and one of only 5 in favor of the settlement, to forward to the U.S. District Court for the District of Columbia, which eventually approved the settlement.
Heartland launched its Center on the Digital Economy in 1999 to study changes in public policy made necessary by the sweeping social and economic changes caused by the emergence of the digital economy. Antitrust after Microsoft was the first publication of the new center.
Kopel wrote, “the decade-old fear that Microsoft would monopolize the Internet seems far-fetched” (p. 7). “Computing is already moving far beyond the boundaries of the desktop POC, as Internet-only devices and devices that replace personal computers begin to take off. To worry in the year 2000 that Microsoft will own the future of computing because of its strong position in the desktop PC market is like worrying in 1938 that the Mutual Broadcasting System would own the future of electronic entertainment because of its strong position in radio” (pp. 32-33).
Many people did in fact worry about Microsoft’s “monopoly powers” back then. Microsoft was being sued for violating a variety of federal antitrust laws, many of them vague and of no value to consumers. The government sought to break up Microsoft into two companies, one selling Windows and one selling everything else, and forbidding the two companies from ever cooperating. The DOJ actually got a judge (Thomas Penfield Jackson) to issue a decision ordering that “remedy,” but it was reversed on appeal.
Reading through Kopel’s book today, I’m struck by how prescient he was in his forecasts of changing technology, emerging competition, and the deadening influence of antitrust law in this arena of rapid change. Kopel’s concluding sentences still ring true today, a dozen years on:
If the Microsoft case is the best the Antitrust Division has to offer America, then there is nothing of value in the Sherman Act. It is time to repeal that remnant of a less enlightened and much slower-paced era (p. 160).
Perhaps you read the USA Today editorial on August 19 that concludes with: “the most important gains could come from radical shifts that are as unanticipated as was North America’s emergence as an oil and gas powerhouse.” It points out “that free enterprise has a way of solving problems that is beyond the capabilities of government.” And continues: “The surge in domestic oil and gas production—spurred on by such new techniques as hydraulic fracturing (or ‘fracking’) did not come about as the result of government energy polices, but largely in spite of them.”
Other oil producing countries are taking note.
Mexico has huge oil-and-gas reserves— estimated at 115bn barrels of oil equivalent, comparable to Kuwait’s—but lacks the technology to develop non-conventionals, such as shale gas and deep-sea crude. President Pena Nieto is looking to make reforms that would allow foreign companies to partner with the state-owned oil company, Pemex, to bring the wealth to the surface.
The Saudi Prince Alwaleed recently warned: “the kingdom’s oil-dependent economy is increasingly vulnerable to rising U.S. energy production.” Alwaleed’s comments were penned before Mexico announced its intended energy reforms. The thought of Mexico’s resources flowing on to the global market has got to make the prince increasingly nervous.
The reality of North America becoming an “oil-and-gas powerhouse” threatens more than just OPEC nations. In response to the USA Today editorial, Frances Beinecke, president of the Natural Resources Defense Council (NRDC), wrote an “opposing view” proclaiming: “Increasing domestic oil and gas production is no panacea for our nation’s energy needs or economy.”
Energy and the Economy
Apparently, she is not aware that regions with oil-and-gas development have some of the lowest unemployment in the country—states with resource extraction such as Texas, Montana, Oklahoma, and Wyoming all have unemployment rates below the national average and North Dakota has the lowest in the country at 3.9%. My home state of New Mexico shares the rich Permian Basin with Texas. There, they tell me: “Anyone who can pass a drug test can get a job.”
Due to the increasing domestic resource development, President Obama’s stated 2010 goal of doubling exports by 2015 has already been met—though not through his initiatives, and in fact, in spite of them. Alan Tonelson, an economist at the US Business and Industry Council, says: “When the president talks about trade, when he talks about creating middle class jobs, when he talks about turning the US economy into an economy that lasts, he usually talks about manufacturing, those are the classic American living wage jobs. There’s no chance that he’s been thinking mainly about petroleum.”
Rayola Dougher, a senior economic adviser at the American Petroleum Institute, sums up the economic impact of oil and gas on the economy: “We have been a real engine of growth at a time when other industries have been languishing.”
Next, Beinecke states: “U.S. oil production may be up 44% since 2008, but so are prices. The costs of crude oil have risen 6% in that time.” While this claim appears to be accurate on the surface, it ignores the fact that the Federal Reserve has driven the value of the dollar down. In his Forbes article, “The rising price of the falling dollar,” contributor Charles Kadlec, explains: “The real price of the on-going debauchery of the dollar is measured by the loss of our prosperity and the debasement of our liberty.” Similarly, Paul Streitz, in American Thinker, draws the connection between our national debt and the price of oil: “excessive spending means monetizing our debt, which means printing money, which means foreign oil producers want more of it for the same barrel of oil.”
Of course, Beinecke resorts to the environmentalists’ standard claim: “The fracking that is driving our oil and gas surge has grown at breakneck speed.” She continues: “states have responded with weak rules and limited enforcement.” Environmental groups, like Beinecke’s NRDC, want federal government to add regulation on fracking—which will increase the cost and slow the growth of drilling.
Friday, August 23, was the deadline for public comment on the Bureau of Land Management’s (BLM) draft rule to regulate hydraulic fracturing on federal lands. Oklahoma Attorney General Pruitt and attorneys general from four other states sent a letter to the BLM, objecting to the agency’s intent to duplicate the state’s long-standing regulation of hydraulic fracturing. “States have been regulating hydraulic fracturing for more than 40 years with great success. This proposed rule is just another layer of unnecessary regulation that will cause significant delays and hinder natural gas production,” General Pruitt said. “The Supreme Court has made it clear that regulation of water and land use is a state and local power, and no law gives an agency such as the BLM the authority to pre-empt state regulations.”
Environmentalists’ hyperbole about the use of hydraulic fracturing would lead the general public to believe that the practice is new. In fact it has been successfully used to extract oil and gas for more than 60 years—and, over the decades, it has been refined and made giant technological leaps. Attempts to link fracking to water contamination have repeatedly been disproven.
Then her “opposing view” takes the climate change tack: “more oil and gas production will only exacerbate climate change … Last year alone, Americans suffered $140 billion in crop losses, wildfires, storm damage and other impacts of extreme weather made worse by climate change.” Once again, baseless charges.
The $140 billion in crop losses pertains to the 2012 drought, but the National Oceanic and Atmospheric Administration Drought Task Force, put together to examine whether or not “human-caused CO2-fueled global warming” was the cause, said, in a report, dated March 20, 2013: “natural variations in weather patterns caused this sudden ‘flash drought,’” and “The report rules out global ocean conditions as well as human-induced climate change, as major culprits.”
Additionally, as I addressed last month, Dr. Roger Pielke, Jr., from the University of Colorado, at the Senate Environmental and Public Works Committee hearing on climate, testified to the effect that Weather Related Disaster losses globally as a percentage of GDP had actually decreased by about 25% since 1990, while droughts have “for the most part, become shorter, less frequent, and cover a smaller portion of the U S over the last century.” Other figures of merit, hurricane frequency, intensity, damages, landfalls, and ‘accumulated tropical cyclone energy’ have shown no trends over long periods of record. Floods have not increased, flood losses have gone down significantly, while tornadoes have not increased in frequency, intensity, or normalized damage since 1950, and there is some evidence to suggest they have actually declined. Beinecke is either ignorant of the facts, or guilty of deliberately misstating information.
The wildfires Beinecke mentions are connected to the drought and add drama to her comments as we are currently fighting wildfires in 11 western states. However, the true blame falls squarely on the forest management plans as enacted by the US Forest Service, which has allowed the forests to be overgrown and unhealthy. Keeping the forest healthy through thinning costs about $600 per acre, but fighting a forest fire can cost nearly four times more.
One of her last assertions is: “Our new 54.5 mpg fuel standards will cut oil imports by one-third and save consumers $1.7 trillion at the pump.” The 54.5-mpg figure is a standard that Obama announced in 2009 and it applies to the fleet average a company must have. Because Americans continue to purchase more trucks and SUVs with much lower mpg, a company must produce cars like the Volt or the Leaf that are measured at 93 and 99 mpg equivalent. Overall the average might come out in the mandated range. BMW recently announced the introduction of its first electric car, the i3. They are moving into electric cars, not because of customer demand, but “to meet regulatory requirements.” The Wall Street Journal reports: “The car will earn emissions credits for BMW in markets such as California, reducing the likelihood that BMW will have to pay fines for failing to comply with carbon dioxide restrictions and giving BMW headroom under those rules to keep selling its more profitable internal combustion models.” While electric cars may slightly reduce gasoline use, they really still run on fossil fuels—namely coal.
I close my examination of Beinecke’s “view” with this: “True energy independence means reducing our reliance on oil and gas by investing in America’s abundant clean energy resources that can power our country and boost our economy without endangering our health and climate.” I believe that we all want to end US dependence on oil imports from countries that wish to destroy us. But nebulous “clean energy resources” will not do that. When environmentalists refer to “clean energy,” they are most often referring to wind and solar—which produce electricity, albeit ineffectively, inefficiently and uneconomically. Only a tiny fraction of electricity in the US is produced from oil. The oil we import goes toward the transportation fleet. Until there are quantum leaps in technology, there will never be a massive shift from petroleum-based vehicles to electric. So Beinecke’s dream of “clean energy resources” will not reduce our “reliance on oil and gas.”
The title of Beinecke’s USA Today post is: “More oil and gas ups our addiction.” In reality, the true addiction is the clean energy she touts. Alternative energies such as wind, solar and biofuels are addicted to government money and the junkies’ dealers are those with close ties to President Obama and other high ranking Democrats engaged in crony corruption.
Let’s give the Saudi prince something to really worry about. Let free enterprise solve problems that are beyond the capabilities of government. Let’s build the Keystone pipeline and work with Mexico to use techniques, perfected in America’s oil fields, to bring its wealth to the surface. North America can be an oil-and-gas powerhouse—but government energy polies have to change. Then prosperity and liberty can be restored.
[First Published by Townhall]