President Obama likes to pose as a martyred man, because when he entered office, the economy was in a recession. But the recession soon ended, following the pattern of the American economy for the entire previous two-thirds of a century, and more.
During that time before Obama, America suffered 11 recessions since the Great Depression. The average length of those previous recessions was 10 months, with the longest being 16 months, as I have reported in this column before. When Obama entered office, the recession was in its 13th month. So based on the previous, long-term pattern of the American economy, the recession would soon be over.
And it soon was. According to the National Bureau of Economic Research (NBER), a collection of top economists recognized as the authoritative body as to when recessions start and when they end, the recession ended in June 2009. So the rest of Obama’s entire first term was the recovery from the recession.
That should have been very promising for Obama, because the long-term historical pattern of the American economy was also the deeper the recession, the stronger the recovery. Economist John Lott, in his new book, At the Brink: Will Obama Push Us Over the Edge?, quotes Milton Friedman on this point as saying, “A large contraction in output tends to be followed on the average by a large business expansion; a mild contraction, by a mild expansion.”
That was true even during the Great Depression. From 1935 to 1937, the economy actually boomed, with real GDP growth peaking at an astounding 13.1% in 1936. Similarly, in 1946 to 1948, the economy also suffered a severe recession, as America powered down from the World War II economy. But the economy began a postwar boom in 1949, with real GDP growth reaching 8.7% in 1950.
The economy boomed over the 1950s and 1960s in further recovery from the Great Depression 1930s. And it boomed with the historic, 25-year Reagan boom from 1982 to 2007, in recovery from the disastrous 1970s, which suffered historic, double digit inflation, and four worsening recessions from 1969 to 1982.
But nothing like that happened during the Obama recovery from the Great Recession. Real GDP growth peaked at 2.4% in 2010, and has never again reached even that pitiful level for a recovery from a deep recession. All Obama had to do to be a hero was stay out of the way of the typical American recovery. But Obama couldn’t do it. He was too busy fundamentally transforming America, a goal that implies there was something fundamentally wrong with America before he came along.
But is Obama’s fundamental transformation making America better, or trashing it? Obama keeps trying to tell us what a great success he has been by comparing the recovery to the recession. But recoveries are always better than recessions, by definition, so that is no achievement.
The right measure and comparison for Obama’s record is to compare the recovery not to the recession, but to 11 previous recoveries since the Great Depression. In those recoveries, the economy recovered all jobs lost during the previous recession within 25 months after the prior jobs peak (or recession start). So the job effects of prior post-recessions have lasted an average of about two years. But under President Obama, at the end of his first term in January 2013, 61 months after the prior jobs peak, more than 5 years, we still had not recovered all of the recession’s job losses. In January 2013, there were an estimated 134.8 million American workers employed, still down more than 3.2 million jobs from the prior peak of 138 million in January, 2008.
That included the longest period since the Great Depression with unemployment above 8%, 43 months, from February 2009, when Obama’s so-called stimulus costing nearly $1 trillion was passed, until August 2012. It also included the longest period since the Great Depression with unemployment at 9.0% or above, 30 months, from April 2009, until September 2011. In fact, during the entire 65 years from January 1948 to January 2013, there were no previous months, before Obama’s reign of error, with unemployment over 8%, except for 26 months during the bitter 1981-1982 recession, which slew the historic inflation of the 1970s. That is how inconsistent with the prior history of the American economy President Obama’s extended unemployment has been. That is some fundamental transformation of America.
By this point in the Reagan recovery, 61 months after the recession started, jobs had grown 8.7% higher than where they were when the steep 1981-1982 recession started, representing an increase of about 10 million new jobs. By contrast, in January 2013, jobs in the Obama recovery from the 2008-2009 recession were still 2.3% below where they were when the recession started, at least 3 million less, or a shortfall of about 8 million jobs if you count population growth since the recession started.
Moreover, in the 11 post-Depression recessions before President Obama, the economy recovered the GDP lost during the recession within an average of 4.5 quarters after the recession’s start. It took Obama’s recovery 16 quarters, or 4 years, to reach that point. Today, 5 years, or 20 quarters, after the recession started, the economy (real GDP) has grown just 2.4% above where it was when the recession started. By sharp contrast, at this point in the Reagan recovery, the economy had boomed by 18.1%, almost one-fifth.
Worse Even Than Bush or Carter
Bush’s second term suffered the Great Recession for more than a full year, or more than 25% of Bush’s entire second term, while the recession covered only the first 5 months of Obama’s first term. Prior to Obama, Bush’s second term suffered the worst real GDP growth of any full Presidential term since the Depression, with an average of just 1.9%. But average annual real GDP growth during Obama’s entire first term was less than half as much at a pitiful 0.8%.
Indeed, not only was economic growth during Bush’s awful second term more than twice as high as during Obama’s entire first term. Even Jimmy Carter produced 4 times as much economic growth during his one term as Obama did during his entire first term. In fact, real GDP growth under Obama has been the worst of any President in the last 60 years, as observed by Jeffrey H. Anderson, a senior fellow at the Pacific Research Institute, in Investor’s Business Daily on January 13.
But it’s even worse than that. As Anderson further observes, Obama’s real GDP growth has actually been less than half as much as the worst of any President in the last 60 years. In other words, even if you doubled actual GDP growth under President Obama, it would still be the worst record of any President in the last 60 years!
By the fourth quarter of 2012, Obama’s economy basically stopped growing altogether. Even if the economy finally breaks out into some real growth this year, that is only because of the long overdue recovery that is still straining to break out inside this economy, as indicated by the data above for 1936, in the depths of the Depression, and the postwar boom that started in 1950. That and the startling Reagan recovery from the 1970s are the standard for Obamanomics. Don’t be fooled by some way overdue short-term growth spurt this year that just reflects the basic cycles of the economy. Unless the fundamentals of Obamanomics are changed, the result will be long-term stagnation compared to the historic, world-leading, booming economic growth of the American Dream, and probably another recession during Obama’s second term.
Where Obama Went Wrong
The real reason Obama’s recovery has been the worst since the Great Depression is that he went back to the Keynesian economics of the Great Depression, which didn’t work then and won’t work now, and has pursued exactly the opposite of every pro-growth policy illuminated by Reaganomics. Obama’s Keynesian economic policies have focused on increasing demand, particularly through increased government spending and deficits, and through easy monetary policy, as the key to restoring economic growth, rather than focusing on incentives to increase production, as in the new, modern, supply-side economics that Reagan adopted in 1981. Keynesian policies failed so thoroughly in the 1970s that it is puzzling as to why Obama returned to them, as if he were ignorant not only of what happened then, but of everything that happened after then, from 1980 on. That is why I have called Obama’s economic policies Rip Van Winkle economics, because Obama seems to have slept through the 25-year economic boom from 1982 to 2007, and to be totally unaware of everything that happened then, in his own country.
Keynesian economics first arose in the 1930s in response to the Depression. The doctrine holds that economic growth is stimulated by increased government spending, deficits and debt. That is supposed to increase aggregate demand, which is supposed to lead to increased production to satisfy that demand, restoring economic growth.
But if the government spends more, where does the money for that increased spending come from? Either from increased borrowing, or increased taxes, which both take an equal amount of resources and spending out of the private economy as they finance in increased government spending. So not only can there not be a net increase in aggregate demand from these policies. The result is a net drag on growth, as the private economy spends money more productively and efficiently than the government. That is why it never worked in the 1930s, as the recession of 1929 extended into the decade long Great Depression, and it hasn’t worked anywhere else since. This is also why Obama’s so-called “stimulus” from February 2009 failed thoroughly, just wasting nearly a trillion dollars, and adding that much more to the national debt.
But most fundamentally, economic growth is not driven by demand, which is insatiable, but by increased production or output (supply), which is driven by incentives for productive activity. In other words, just as an individual cannot spend himself rich, neither can a nation. Prosperity is determined by production, just as an individual increases his or her income by becoming more productive.
Demand can never be inadequate in a market economy. If the demand for any product or service is not strong enough, the price of the good or service will fall, until demand equals supply. The people can never spend more than they produce, increasing aggregate demand. And they will never spend less, leaving demand inadequate, for they will either consume or save every dime that they earn or produce. The consumption goes into consumer spending, and the savings goes into capital spending (which is actually what makes us richer and more prosperous over the long run).
Keynesian economics has survived so long in Western thinking not because it works, or even makes any sense, but because it justifies what liberal politicians already want to do – spend with reckless abandon, run bigger and bigger deficits so they don’t have to explicitly pay for the spending with higher taxes today, and run up the national debt, which will be someone else’s problem later.
Obama was sold to us as a progressive, forward-looking thinker. But he is actually taking America back to the thoroughly failed economics policies of the 1970s, and even the 1930s, and so ultimately to the same results. Obama should have known better, given the uniformly bad experience with Keynesian economics worldwide, and its fundamental, transparent illogic. Indeed, Obama had a responsibility to the American people to know better. This latest experience with Keynesian Obamanomics in producing the worst recovery since the Great Depression should be taken as the final failure of the transparently foolish Keynesian doctrine, which now needs to be put to bed, in American colleges and universities, and throughout the councils of government.
[First published at The American Spectator]
Contrary to the suggestion of Kathleen Porter-Magee and Sol Stern at National Review Online the other day, you do not have to sport a tinfoil tricorn to believe Common Core curriculum and testing requirements are not only low-quality, but yet another threat to the American tradition of individual liberty and limited government.
The duo, one of whom I’ve heard out, paste unsubstantiated dreams onto a project prefacing national control over education, from teacher training to hiring and firing to classroom worksheets, by outlining what schools in 46 states must teach and test in every grade in math and English. Porter-Magee should know this, since she serves on a federal panel to review the actual questions for national tests currently under development.
Why on earth do the feds need to review these tests if the entire project is, as the two insist, state-instigated and -controlled? Ah, right, because the federal government provided all thefunds for these national tests, and major grants to the nonprofits who wrote Common Core. They and progressive outfits such as the Bill and Melinda Gates Foundation bankrolled this entire effort, and big businesses with significant financial stakes in national education markets helped sponsor the project and efforts to promote it to lawmakers and fellow business leaders.
The pair deceptively wrote that the Obama administration “has stated that adoption of ‘college and career readiness standards’ doesn’t necessarily mean adoption of Common Core,” but failed to mention that no standards but Common Core fit the administration’s definition of such standards. If the president has his way, states will lose federal money for setting their own standards, as they already were refused access to “Race to the Top” stimulus dollars if they refused Common Core. In January’s State of the Union address, President Obama said these federal grants “convinced almost every state” to adopt Common Core. Despite these realities, Stern and Porter-Magee fatuously assert, states can definitely set their own education standards — just as states can set their own drinking ages.
They also claim, inconsistently, that Common Core is “not a curriculum” and that it will promulgate “an academic curriculum based on great works of Western civilization and the American republic.” The standards essentially define the table of contents for all U.S. K–12 math and English texts. This may not constitute a curriculum, but it certainly defines what kids will and will not learn, especially when paired with two sets of national tests. And why should a centrally controlled, taxpayer-funded, unaccountable-to-the-public set of committees have the power to define what nearly every U.S. school child will learn?
Porter-Magee and Stern project their wishes for better U.S. curriculum onto Common Core. Works they acclaim, such as Common Sense, the Gettysburg Address, and To Kill a Mockingbird appear not on the actual standards, but on accompanying lists of book suggestions — such as California’s — that also include piles of trash schools can teach instead. I compared Common Core’s early math and literacy requirements with grade-level recommendations from Porter-Magee and Stern’s revered E. D. Hirsch, and made essentially the same finding one of Common Core’s content-level experts explained to two state legislatures, which led her to refuse to sign off on the project for obvious lack of quality and research. Calling Common Core rigorous is like calling an average high-school soccer team “world-class.” Porter-Magee and Stern’s purportedly conservative arguments essentially constitute doublespeak on every point.
There is no evidence Common Core will improve education. It’s never been field-tested, and research suggests education standards have no effect on student learning: Many states with high standards have low achievement, and vice versa. So why this horrific waste of time? Is it for the national student databases of test scores, hobbies, family income, voting status, health records, and more?
And how are all of these arrangements conducive to individual rights and limited government?
[First published at National Review Online.]
Here’s what most people do not realize: major oil pipelines extending 2,151 miles from the Canadian Tar Sands already have been completed and are in operation from Hardisty, Alberta, east through Saskatchewan and Manitoba and south through eastern North and South Dakota, Nebraska, and Kansas and then on to refineries in southern Illinois and central Oklahoma, carrying 590,000 barrels of oil each day.
If they knew that, they would certainly wonder why there is an uproar about adding capacity for an additional 830,000 barrels a day through new pipelines from Hardisty through eastern Montana and southwestern North Dakota, where it would pick up U.S. oil from the now famous Bakken Fields and then move further east through South Dakota and Nebraska to Steele City, Nebraska, where the existing pipeline travels on to Cushing, Oklahoma, and then continue it about 500 more miles to the Gulf Coast of Texas, where so many refineries are located.
Canadian oil is cleaner than most of what we get from Venezuela and the Persian Gulf. And our rejection of the Canadian oil will not slow development of the tar sands, a supposed goal of the environmental activists. Canada will simply build a pipeline to Vancouver and sell the oil to Asian countries.
According to Marita Noon, executive director of Energy Makes America Great, The Heritage Foundation has concluded “the project will create some 179,000 jobs on American soil and continue good trade relations with a close ally.” What’s not to like? Plenty, for some people.
The late environmental activist Paul Ehrlich once said that having cheap energy is the equivalent of putting a machine gun in the hands of an idiot child. That, I am afraid, is exactly what our alphabet soup of environmental activist groups evidently believe, which is why they support wind and solar energy with all their might: because they know it will never be cheap. In fact, they know it will never even be economically feasible.
Now they are panicked over the oil industry’s game-changing ability to develop heretofore uneconomical shale gas and oil with the advent of horizontal drilling and hydro-fracking, the latter technology having been used for 60 years in conventional oil drilling without any environmental damage whatsoever.
For years now, our government has ordered up environmental impact studies on the Keystone XL Pipeline, and when each study concluded there were no serious problems, they ordered up a new study. There have been four in all, the latest from the State Department, of all agencies, which again concluded there would be no major environmental impact. Now the State Department is calling for public feedback even though there have been tens of thousands of public comments already.
The drumbeat has failed so far. In mid-March, 17 Democrats voted with 45 Republicans in the Senate for a budget amendment supporting the pipeline, up from 11 Democrats voting for a similar amendment last year. That is good news, as is a recent Fox News poll reported in the Wall Street Journal on March 27, in which 70 percent of registered voters expressed support for construction of the pipeline.
Meanwhile, the labor unions, longtime Democrat supporters, are four-square in favor of the pipeline for the jobs it will bring. So how can the pipeline lose? Easily.
Recently the environmental activists staged a demonstration in Washington urging President Obama to stand his ground. Few showed up and some were arrested, but they made their point. Environment expert Daryl Hannah, best known for her movie role as a mermaid, said the State Department report was “totally wrong, flat out totally wrong.” Can the president resist that siren’s call? I doubt it. His office is a wholly owned subsidiary of both Hollywood and the green movement, with the administration having already spent billions and billions of dollars on failed green projects.
But there still could be a happy ending for most of us: the railroad. After nearly going bankrupt in the 1970s, U.S. railroads are back stronger than ever. They have saved North Dakota from overflowing with a glut of oil, by filling miles and miles of tank cars on Obama supporter Warren Buffett’s Burlington Northern Line with 500,000 barrels of oil each day and carrying it to refineries on the west coast of the United States. (Hmm, could that be another reason Obama opposes the pipeline?) By year’s end their capacity will rise to 700,000 barrels a day.
The railroads are fully capable of building new track connecting the Dakotas with our Gulf Coast-unless Obama and his Hollywood friends decide this, too, would be an environmental hazard. Stay tuned.
[First published at Human Events.]
A new Pew poll shows the percentage who say that global warming is a “very serious” problem has slipped six points since October.
Our friend Matt Vespa at NewsBusters wondered why Eilperin’s post didn’t pull out the numbers to prove her point.
Maybe she omitted the hard numbers for the simple reason that Americans have NEVER viewed this as a high priority issue. Let’s go back to January when President Obama – and the media – were pushing hardest for gun control policies. Aa Washington Post/ABC Poll found that 18 percent of all adults viewed addressing global warming as a high priority. Concerning the partisan breakdown, only 26% of Democrats and 7% of Republicans thought that stopping the polar ice caps was of the highest national urgency.
You read that right, only slightly more than a quarter of Democrats thought global warming was our most urgent issue at a time when hardly anyone was talking about it. In other words, it doesn’t have a natural base of support when no one is paying any concerted attention to the issue. . . .
It doesn’t matter if people believe in manmade global warming, if the intensity isn’t there, there’s no interest for politicians to act. Also, these were the same people who predicted a rapidly cooling earth in the 1970s and massive food shortages. They were wrong, and it’s not the time to gambling hundreds of billions – if not trillions – of dollars on something that is a natural occurrence.
Yup. And that’s something Eilperin and others in the MSM would know about if they reported on the substance of Heartland’s eight international conferences on climate change rather than the “controversy” that they are held at all.
But about that Pew poll: Eilperin buried the lead. The most remarkable part of that poll is that it shows overwhelming support for the Keystone XL pipeline, which President Obama is still dragging his feet about approving.
As the Obama administration approaches a decision on the Keystone XL pipeline, a national survey finds broad public support for the project. Two-thirds of Americans (66%) favor building the pipeline, which would transport oil from Canada’s oil sands region through the Midwest to refineries in Texas. Just 23% oppose construction of the pipeline. As you can see from the breakdown below, the only group that opposes the Keystone XL pipeline construction are “liberals” and that opposition clocks in at just 42 percent. A majority of Democrats (54 percent) and even stronger majorities of independents (70 percent) and Republicans (82 percent) support the pipline.
If Obama rejects the pipeline, he will be alone with the hard left on this issue, and far away from the mainstream of America.
In other bad news for climate alarmists, James Hansen — who recently quit his job at NASA to dedicate his life to full-time Chicken Little advocacy — nonetheless had to admit in a new paper that his many years of predicting uncontrollable global warming has not come to pass.
Prominent global warming activist James Hansen admits in a new paper that world temperatures are not warming as fast as predicted by the United Nations Intergovernmental Panel on Climate Change (IPCC).
“Annual fossil fuel CO2 emissions have shot up in the past decade at about 3% [per] yr, double the rate of the prior three decades. The growth rate falls above the range of the IPCC (2001) ‘Marker’ scenarios,” Hansen reports.
Nevertheless, “the rate of global warming seems to be less this decade than it has been during the prior quarter century,” Hansen admits. The slower pace of warming contradicts IPCC computer models projecting accelerating global warming.
Ouch. Guess Hansen had better hit the lecture circuit telling the world that the sky is falling. If his hypothesis is to be ever proven right, making a giant carbon footprint might be the way to go.
Meanwhile . . .
- the new alarmist “hockey stick” graph by Shaun Marcott, Jeremy Shakun, Peter Clark and Alan Mix turned out to be groundless;
- a prominent columnist at Britain’s Daily Mail made the sobering observation that “It’s the cold, not global warming, that we should be worried about” (25 times more Brtis, mostly the elderly, die in winter because it’s getting harder to afford ever-rising energy prices to keep a home properly heated);
- The Weather Channel reports that 3 in 8 Americans believe that global warming is a “hoax”;
- The Australian newspaper notices a “Twenty-year hiatus in rising temperatures has climate scientists puzzled“;
- and the Arkansas legislature rejected a renewable power mandate — on the day Heartland’s James M. Taylor informed them of the high-costs-for-no-public-benefit nature of requiring the state to get 5 percent of its energy from “renewable” sources such as solar, wind, and biomass.
That’s a rough few weeks, but it’s early yet — and finally warming up here in Chicago. I imagine the green shoots of even more bad news for climate alarmists will start coming up soon. A good place to see those shoots is via a free subscription to The Heartland Institute’s Climate Change Weekly email newsletter.
Already Public Knowledge is calling for a nostalgist FCC Chair who would reclassify broadband as a telephone-regulated-service to claw back the FCC’s waning regulatory power in a competitive market. Others want support for net neutrality regulation to be a litmus test for the new FCC Chair.
Whoever the president nominates to be the new FCC Chair would be wise to not get boxed in on these issues until she/he learns whether or not the FCC actually enjoys the legal authority to do what these advocates want.
Importantly, the Supreme Court currently is considering whether or not to continue to grant legal deference to federal regulatory entities like the FCC when they are deciding matters that effectively self-arbitrate the boundaries of their own legal authority.
Equally important to determining the actual boundaries of the FCC’s authority going forward is a D.C. Court of Appeals decision, on Verizon’s challenge of the FCC’s 2010 Open Internet Order mandating net neutrality regulation of broadband Internet service. Both of these court decisions could largely delineate how much policymaking power the FCC enjoys in the Internet Age.
In the absence of any significant net neutrality problems in the broadband industry, and until the Supreme Court and D.C. Court of Appeals rule, the new FCC Chair would be wise to maintain a forward-looking FCC mindset.
What’s the biggest risk to the new FCC Chair’s tenure? It would be falling into the nostalgia trap that the FCC must restore its past glory and power by applying its original and now obsolete 1934 monopoly telephone regulatory authority to the modern unregulated Internet.
If the courts eventually rule that the FCC in fact does not have the expansive regulatory authority over the Internet that it used to enjoy over the legacy telephone monopoly of the past, the FCC need not take the law into its own hands by trying to reclassify broadband as a telephone-regulated service.
If the FCC determines it needs additional legal authority for the Internet Age, it can ask Congress for it formally and publicly justify why it is necessary.
If the D.C. Court of Appeals does indeed rule against the FCC (as many expect, including Public Knowledge), the nostalgists’ recommendation to thwart the potential will of the court by reclassifying broadband as a telephone-regulated service, presents great peril for the new FCC Chair.
First, it could put the new FCC Chair at serious odds with the Court, Congress, the rule of law, and the Constitution. If the D.C. Court of Appeals rules the FCC does not have authority to regulate unregulated broadband Internet services, it simply does not have the authority it wants until it either convinces the Supreme Court to rule that it has the authority or it persuades Congress to legislatively grant it new authority.
Given that any FCC Chair must swear an oath to uphold the U.S. Constitution, advising the FCC Chair to ignore and thwart the D.C. Court of Appeals would unnecessarily and irresponsibly put the FCC institutionally at risk. Potentially disobeying or trying to game a seminal Federal Appeals Court decision would be no trifling matter.
Second, it is a publicly untenable position. On one hand the FCC cannot argue that it is moving the nation forward by promoting competition, investment, innovation and progress, while on the other hand arguing that the best way to move forward is to go backward decades in time.
How would it be progress or pro-competition/innovation, to apply 1887 common-carrier railroad regulation to the modern Internet when we haven’t regulated railroads that way since 1976, Bus-lines or trucking that way since 1980, or airlines that way since 1984? As the public switched telephone network (PSTN) becomes obsolescent, telephone common carrier regulation becomes obsolescent along with it.
How is it pro-innovation or progress for the FCC to go back and apply monopoly telephone price regulation to unregulated competitive broadband providers?
How soon we forget that rigid telephone monopoly regulation led to little innovation in telephone service for ~50 years; and it delayed the commercialization of cell-phones for ~33 years, Internet packet-switching and PC modems for ~25 years, and broadband service for ~17 years.
Third, it would require the FCC to contort itself beyond credulity. To reclassify unregulated broadband information services as a regulated telephone service, would require the FCC to admit and argue that most everything it has done and decided over the last decade was dead wrong and must be done over.
In other words, the FCC would have to explain why over a decade of its facts, reasoned arguments, and legal precedents were all wrong, and why the FCC should be trusted now to adopt a diametrically opposite legal position when nothing material has changed in the marketplace to warrant it, and when the only thing that has really changed would be the legal boundaries of FCC’s authority.
It would be exceedingly difficult for the FCC to argue that such an obviously self-serving ruling would not be legally arbitrary or capricious.
Fourth, applying telephone interconnection price regulation to Internet routing would break the Internet. Telephone and Internet are opposite technologies. Telephone technology is circuit-switched, continuous, predictable, centralized and regulated, while Internet technology is packet-switched, discontinuous, unpredictable, decentralized and unregulated.
Ramming a square peg into a round hole would break both.
Lastly, reclassification of broadband as a telephone service would be a 180 degree reversal from the near unanimous bipartisan consensus of the last several months to not let the UN’s ITU regulate the Internet like a telephone service. How could the new FCC Chair be able to convince anyone that the only the FCC should be able to regulate the Internet, but not any other country or the ITU? Such a radical and self-serving flip-flop would make the FCC and the U.S. a laughing stock in communications circles.
In sum, FCC Chair could not face a starker strategic choice between a nostalgic FCC-centric mindset and a modern Internet-centric mindset.
The nostalgic strategic trajectory would be one fraught with exceptional legal, technological, political, investment, and business conflict, risk and uncertainty. The modern strategic trajectory is one of continued investment, innovation, collaboration, growth and progress.
May the new FCC Chair choose wisely.
[First Published at The Daily Caller]
Steve Stanek is featured in an excellent piece from Monday night on Chicago’s NBC affiliate WMAQ. It a story about the “essential air service” program, a legacy boondoggle from the airline deregulation of the 1970s.
As the piece by Stefan Holt notes, this 40-year-old “temporary” program makes sure the small airline Air Choice One flies 12 nine-seat flights a day from Decatur to Chicago and St. Louis. Cost to travelers for a ticket to O’Hare: $44. The federal government chips in $90 per flight. Cost to taxpayers: $2.4 million a year. Oftentimes, these flights are empty.
I watched Holt (who is destined for the Big Network one day) interview Steve in Heartland’s library. Holt asked the excellent “TV news” question: “How essential is ‘essential air service’?” Steve didn’t miss a beat: “It’s not essential at all.” I told Steve afterward that Channel 5 News would definitely use that quote, because it was just perfect for the use of a TV journalist.
Steve does a great job hammering home the free-market perspective in a (rare) piece that, as was clear from the interview, was going to be sympathetic to our point of view. Steve comes in at the 1:53 mark in a 3:15 story, and is featured off-and-on for about 40 seconds. Steve also brought up the ADM crony capitalism angle, which I don’t think Holt had thought of before. Holt ended up using more of that angle in the piece.
Steve did an outstanding job – put on a clinic, really, on how to handle a TV interview: Have your facts at hand, answer questions directly and in short sound bites, be passionate. Watch it below.
View more videos at: http://nbcchicago.com.
President Barack Obama is currently contemplating a replacement for Federal Communications Commission (FCC) Chairman Julius Genachowski – who has announced his intention to step down.
Arguably the largest swath is Network Neutrality. Net Neutrality remains a major problem for a free speech-free market Internet – and a source of great anxiety for its Leftist backers.
Genachowski’s FCC in December 2010 imposed it – bereft of any legislative authority to do so. The Chairman and everyone else knew there was no such authority – because the D.C. Circuit Court said so just eight months prior to his again jamming it down on us.
Après Genachowski le déluge – of lawsuits. Verizon, Metro PCS wireless and Virginia Attorney General Ken Cuccinelli all sued to undo the Net Neutrality power grab. The very same D.C. Circuit will in the fall begin hearing these arguments.
There does the Left’s tension begin. They don’t want to just maintain the Internet turf they’ve usurped – they want to expand upon it. These lawsuits could roll back much of their takings.
The naming of Genachowski’s replacement gives the Left an opportunity to demand the Obama Administration protect the over-reached status quo – and ratchet up the regulatory count.
On a conference call with the Progressive Change Campaign Committee, a liberal advocacy group,…Rep. Edward Markey (D-Mass.), who is running for the Senate, said…that any new chairman of the Federal Communications Commission must support net-neutrality regulations.
But wait – they want more.
Genachowski’s failure to re-establish the FCC’s authority over broadband was his most significant policy blunder — and the defining moment of his tenure. When a federal court ruling exposed the shortsighted folly of the Bush administration’s decision to change how the FCC regulates broadband, Genachowski should have moved immediately to “reclassify” broadband under the law. But he retreated under a predictable but fact-free industry backlash.
What does it mean to “reclassify” broadband?
(W)hat does President Obama have waiting in the wings for when his Net Neutrality power grab is thrown out?
Meaning – again, without any legal authority whatsoever – President Obama will move the Internet from Title I to Title II. Title II is how the FCC over-regulates landline telephone lines – you know, that bastion of innovation lo these last seventy-plus years. Title II opens up the Pandora’s Box of uber-regulation of the Internet. But wait – there’s more.
Under Title II, President Obama can also begin to tax the Internet – just as the Feds tax landlines, just as they already tax the living daylights out of your wireless Internet – checked your cell phone bill lately? It’s 17.4% – and climbing, an $8 billion total take in 2010 – and hurtling ever upward.
Of course the Left wants more regulation in all directions. They disguise that desire by demanding that the next FCC Chairman push harder for the “public interest.”
The “public interest” is in fact a legislative term which the FCC is charged with taking into consideration when enforcing said policy. A term so nebulous it can mean virtually anything.
For the Media Marxists, its abased meaning is – much more government injected into every form of media and communication, and the demonization and silencing of those who oppose the more government agenda….
The underlying theme throughout is the advancement of as much government as possible – all the while as much as possible disrupting the free market and destroying or silencing those opposed.
All under the fraudulent guise of advancing the “public interest.” By which they of course mean government interest.
After all, Media Marxists are… Marxists. And growing the government interest is what they do.
As bad as the FCC’s Old Boss was, the Left wants the New Boss to be much, much worse.
President Obama’s second-term Cabinet choices have been much further to the Left than their predecessors.
- Secretary of State: Hillary Clinton to John Kerry.
- Secretary of Defense: Leon Panetta to Chuck Hagel.
- Secretary of Labor: Hilda Solis to Thomas Perez.
So, sadly, Leftists will likely get their wish at the FCC.
[First published at RedState]
On Good Friday, a day fewer people would be paying attention to the headlines than on most other days, the Obama administration released news about its plans to raise the price of gasoline. Gasoline prices for the first quarter of 2013 are higher than the same time in 2012. Intentionally pushing prices up would seem stupid in the midst of a struggling economy—that is, if your goal is to help those most impacted by higher fuel and food prices, rather than boosting the bottom line for your billionaire donors.
The plans, announced Friday, call for stricter limits for sulfur in gasoline—from the current 30 parts per million to 10. (Sulfur is an important element that is found naturally in crude oil has many industrial uses.) The EPA estimates that the low-sulfur gasoline will raise the price of a gallon of gas by “less than a penny,” while industry sources say it will be closer to ten cents a gallon.
Energy analyst Robert Rapier, told me that the new regulations “will certainly make gasoline more expensive.” He said; “Note that diesel was historically less expensive than gasoline until the ultra-low sulfur diesel standard was passed. Since then, diesel has often been more expensive than gasoline. I am not saying whether or not those standards were needed, maybe they were. But the impact on cost is undeniable. I worked in a refinery when those standards were passed, and we spent a lot of capital making sure we could comply.”
Though air pollution is a worthy consideration, it is low on the public’s list of priorities, while gas prices are of utmost importance. If the public doesn’t see air pollution as a problem, and the President’s popularity has peaked, why would he put out policy that would hit the middle class the hardest? Because, despite his campaign rhetoric, he’s not “a warrior for the middle class.”
One year ago, Christine Lakatos launched her blog— “The Green Corruption Files”—through which she set out to prove that “green corruption is the largest, most expensive and deceptive case of crony capitalism in American history. Stay tuned as we expose one piece of this scandal at a time.” Last summer, Lakatos and I partnered to draw more attention to Obama’s Green-Energy Crony-Corruption Scandal. To date, I’ve written fifteen columns based on her research—this is the sixteenth.
A week ago, she posted her expose on George Soros and his profiting from his, apparent, insider information on green-energy investments. Within her post, Lakatos says: “be prepared for regulations and legislation that will, in some form or another, resemble cap-and-trade and demand additional funds to bank roll Obama’s efforts to save our planet.” Exactly one week later, the new EPA standards on gasoline were released. The standards will raise the cost of fuel—which has been the underlying goal of the Obama energy agenda: make what works more expensive so people will accept the high cost of “green energy” in the name of saving the planet. (Remember outgoing Energy Secretary Chu’s 2008 statement: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”)
But, as the Soros story shows, it’s not about the planet, it’s about the profit. Soros’ investment portfolio shows he invests where he can make money—both traditional and green energy (though, as you’ll see, through Obama’s green energy emphasis, he has more control over green energy investments). In a 1998, 60 Minutes interview, Soros said: “I am basically there to make money. I cannot and do not look at the social consequences of what I do.”
Soros’ relationship with Obama goes back almost as far as his manipulation of money and markets.
It is reported that back before, Obama became a Senator, or announced his presidential bid, and before the founding of the Soros-funded Center for American Progress (CAP), Morton Halperin, (the director of Soros’ Open Society Institute), John Podesta (the former Clinton White House chief of staff), Jeremy Rosner (a former speech writer for Bill Clinton), Robert Boorstin (a Democrat strategist and also a former speech writer for Clinton) and Carl Pope (a Democrat strategist and environmentalist) met in 2002 at Soros’ Long Island Southampton beach house to draft a plan to defeat President Bush in the presidential election of 2004. Without that meeting, Lt. Col. Robert “Buzz” Patterson, says: “Barack Obama would be … an unremarkable and unheard of state senator. Instead, Barack Obama is the President of the United States.”
Soros was an early donor to Obama’s senatorial race. “Soros and his family gave Barack Obama $60,000. This does not include money that Soros was able to funnel to so-called 527 groups (Moveon.org, for example) that have also been politically active; nor does it include money that Soros was able to raise from tapping a network of friends, business associates, and employees.”
Once Obama was running for president, Soros was there again with support to the tune of $5 million—which put him on the Forbes’ 2008 list of Obama’s Billionaire Buddies. But the king of contributions wasn’t done there, and in September 2012, Soros pledged $1.5 million in donations to a trio of super PACs backing Obama and congressional Democrats. Soros’ political contributions are widely known, as is his funding of left-leaning organizations such as CAP, The Tides Center and the Apollo Alliance—which all play a part in his ability to cash in on green.
Soros was instrumental at the least, integral at the most, in writing Obama’s 2009 Stimulus Bill that put nearly $100 billion into various green energy companies and projects. Additionally, there is a little-publicized connection between Soros, green energy advocacy, and the White House.
The Soros-funded Apollo Alliance brags about its role in writing the 2009 Stimulus Bill. In an interview, the best-selling author of Throw Them All Out, Peter Schweizer, states: “Billionaire George Soros gave advice and direction on how President Obama should allocate so-called ‘stimulus’ money in a series of regular private meetings and consultations with White House senior advisers even as Soros was making investments in areas affected by the stimulus program.”
Schweizer, then, reveals, “In the first quarter of 2009, Mr. Soros went on a stock-buying spree in companies that ultimately benefited from the federal stimulus.” He continues: “It is not necessarily the case that Soros had specific insider tips about any government grants,” nevertheless, Soros’ “investment decisions aligned remarkably closely with government grants and transfers.” The majority of those investments were in green energy ventures that gained from the stimulus and/or government regulation such as BioFuel Energy that benefitted when the EPA announced a regulation on ethanol.
Shortly after the 2009 Stimulus, more to secure his investments than because of any core belief, Soros launched several new groups to help propagate the manmade climate change narrative that is the foundation for green energy investments—without belief in manmade climate change, we don’t need renewables as there is no energy shortage.
Some of the little-publicized connections include Cathy Zoi, former CEO of Al Gore’s Alliance for Climate Protection, and who, while at the Department of Energy, oversaw the disbursement of more than $30 billion in green-energy stimulus funds. In early 2011, she resigned to work for a Soros fund: Silver Lake Kraftwerk. Another is Denis McDonough who has replaced Jack Lew as Obama’s Chief of Staff. McDonough was a Senior Fellow at Soros-funded CAP, which Bloomberg News called: “an intellectual wellspring for Democratic policy proposals.” Other CAP/Obama advisors central to the green-energy scheme include Carol Browner, Van Jones, and Steve Spinner.
So, what return has Soros gotten on his stimulus-inspired stock buying spree plus investments in companies like First Solar and Solar City? Lakatos’ thorough research discovered that Soros’ green tab exceeds $11 billion of stimulus money (dwarfing Citibank’s) –– and we, the taxpayers, footed the bill. Keep in mind, this tally doesn’t factor in any profit Soros has made off these investments—or will continue to make as a result of Obama’s climate change agenda being pushed by EPA regulation.
As save-the-planet regulations and legislation come out of the Obama administration, which raise costs for the middle class and hurt America’s struggling economy, remember the Soros story. It illustrates that Obama is not the “warrior for the middle class” he campaigned as, but he’s most concerned about creating wealth for his “green cronies”—of which Soros is just one. This new EPA low-sulfur gasoline proposal is just the latest in a series of green regulations. We don’t know for whom it creates wealth, but we know it isn’t the middle class.
[First Published at Townhall]
President Obama’s alternative energy “stimulus,” administered through his Department of Energy by previous Secretary Steven Chu, had already become a joke because of the failures and foibles of so many recipients of Recovery Act funds. But now – as though officially commemorating the absurdity of this historically bad U.S. government program – one of its bankrupt beneficiaries has changed its name from one of simplicity to one of mockery.
Reporting the development, headline writers across the nation rubbed their eyes, double-checked the wire information, and then – especially realizing how close they were to April Fool’s Day – had to add extra assurance to the breaking news.
For the Boston Herald, where A123 was headquartered near MIT, it was this:
The Milwaukee Business Journal reported it this way:
And a Wall Street Journal reporter Tom Gara built up the suspense with:
According to the reports, A123 – now under ownership by Chinese-owned Wanxiang America – was required to change its name as a part of a bankruptcy agreement. The company released a statement Friday explaining that the name A123 will still exist, “operating successfully under Wanxiang’s ownership,” as a limited liability corporation. B456 represents the parts of the company “still in the bankruptcy process.” I guess they don’t understand the entire enterprise was a failure.
And in an additional element of stooge-ery, as Kai Petainen of Forbes noticed, a B456 is a fire extinguisher – as in dousing the flames from your lithium ion battery. Autoblog observes that Amerex model “happens to be good for ‘energized electrical equipment.’”
The double meaning fits, as A123’s (former) top customer is Fisker Automotive, which appears to be near bankruptcy itself. The manufacturer of the $102,000 Karma suffered two recalls – one in December 2011 and another in mid-2012 – because of A123 battery defects that could cause fires. Fisker did suffer fires in Texas and California last year, and Hurricane Sandy’s flooding ignited several of them in New Jersey – and while none were attributed to their batteries (Texas remains unsolved), an A123 battery did cause an explosion at a General Motors alternative energy research facility in Warren, Mich. last April.
Funny, isn’t it? Not “ha-ha” funny, but ridiculous funny – unbelievably stupid funny. Funny in an “I can’t believe our tax money is paying for these comically bad businesses and technologies” way. And it applies to President Obama’s abject failure to invigorate the economy by creating “green jobs” in the alternative energy and electric transportation sectors, which have been around for over a century and the free market still hasn’t made economical or viable. The examples were plentiful:
- With a visit by the president, the administration had just boasted how many thousands of green jobs were created by Solyndra, and how environmentally friendly its technology was, thanks to the Energy Department’s $535 million loan guarantee. But months later, with plenty of forewarning to the White House, Solyndra went bankrupt, and left behind a big toxic mess when it shut down. What a rib-tickler!
- Fellow stimulus loan recipient Abound Solar, not to be outdone, also went bankrupt and had accumulated a hazardous waste site of its own as it liquidated. But it was later discovered that the company sold defective or underperforming products, and even caught fire. Evidence showed Abound officials knew it, before they received taxpayer dollars. Yet as the Colorado company crashed, the Department of Energy still praised the company’s work as “innovative” and cost competitive – a gut buster!
- Employees of battery maker LG Chem, recipient of $151 million from a DOE Recovery Act grant, were discovered on the clock playing games, reading magazines, watching movies or helping charities like Habitat for Humanity – that is, when they weren’t ‘off-duty’ on their cyclical furloughs. Why? They had no real work to do, and as of late October had “yet to ship out a single battery,” according to a local news report. Stop it – you’re killing me!!
And there are so many more jokes where those came from: The Tesla Model S that was panned by the New York Times after it had to be towed away; the Fisker Karma that broke down for Consumer Reports, which then called it the “worst luxury sedan;” A123 executives expecting their bonuses while going through the bankruptcy process; a Nissan Leaf trip that took six hours because of recharging needs, when it should have taken only three hours; Leaf batteries that can’t tolerate extremely hot climates; First Solar panels that couldn’t tolerate desert heat…etc….
Meanwhile the Obama administration repeatedly touted: how clean the energy was; how the future for the American economy was in “green jobs” and the alternative energy sector; how necessary it was to keep up with China in wind and solar (until it became a disaster for the Communists too); and what a great economic investment it was (tell that to the attendees at the “ECO:nomics—Creating Environmental Capital” conference hosted by the Wall Street Journal not too long ago, who are losing their shirts).
And to this day DOE refuses to update its Loan Program Office Web site with new information about any of its projects. Anyone who isn’t aware of the bankruptcies and other project failures that visits the LPO pages would still think Solyndra and Abound are still in business and still created their projected jobs, and that Fisker is still a smashing success, that a $5.9 billion loan guarantee to Ford Motor Company really did convert 33,000 employees to “green jobs,” etc.
There’s enough material to keep Jay Leno’s monologues stoked for a month. Unfortunately those are not tears of laughter streaming down taxpayers’ faces.
[First published at National Legal and Policy Center]
Paul Ryan’s House Republican budget, and Patty Murray’s Senate Democrat budget, deserve continued scrutiny and debate, because they do definitively display the core beliefs of the two parties on a wide range of issues. That includes crucially taxes, and the foundations of economic growth and prosperity.
But the fallacies in the Senate Democrat budget include not even remotely understanding the House Republican budget. For example, the Senate budget states that the House Republican budget shows that, “They believe that we should make massive cuts to education, health care, and other investments that benefit the middle class, seniors, and the most vulnerable families.”
But the House Republican budget makes absolutely no cuts to anything. It continues to grow government spending every year. After 10 years under Ryan’s budget, by 2023, the federal government would be spending $1.4 trillion more in that year than it would in 2014. Ryan’s Republican budget proposes to spend $41.5 trillion over the 10 year budget window. Obviously, any talk of massive cuts in this budget could not be more silly, inexcusable and irresponsible.
True, even this spending is not nearly enough for the Senate Democrats. They propose to spend $47.2 trillion over the 10 year budget window, and by 2023 would be spending another $733 billion more than the Ryan Republican budget that year. Ryan’s budget only cuts the growth in spending, but spending continues to grow, across the board, including a 70% increase in spending over the 10 years on Medicare, which the Senate Democrat budget says Ryan proposes to dismantle, a 67% increase in Social Security, and a 21% increase in Medicaid. Obviously, the Senate Democrat budget cannot even discuss the House Republican budget intelligently.
On taxes, the Senate Democrat budget says the House Republican budget shows that “they think the wealthiest Americans and biggest corporations shouldn’t be asked to pay their fair share. In fact, recent Republican proposals have actually cut taxes for the rich and asked middle class families to pick up the tab, a policy position that is far outside the mainstream of how the American people believe we should approach this.”
Shouldn’t be asked to pay their fair share? Who is asking? Internal Revenue Service (IRS) data, compiled from income tax returns, as reported by the Congressional Budget Office (CBO) shows that in 2009 the top 1% of income earners paid 39% of all federal income taxes. That was three times their share of national income at 13%. It was also more than double the 17.6% of federal individual income taxes paid by the top 1% when President Reagan entered office in 1981, and his historic tax rate cutting began.
Yet, the IRS data also shows that in 2009 the middle class, as represented by the middle 20% of income earners, paid just 2.7% of all federal income taxes as a group on net, while earning 15% of the national income. As a result, the top 1% paid almost 15 times as much in federal income taxes as the entire middle 20%, even though the middle 20% earned more income.
And this was before all the tax rate increases on “the rich” at the beginning of this year. With the expiration of the Bush tax cuts only for “the rich,” and the Obamacare tax increases going into effect, top federal income tax rates on the rich rose nearly 20%, the tax rate on capital gains rose nearly 60%, the tax rate on dividends rose nearly 60%, the Medicare payroll tax rate rose 62%, and the death tax was permanently restored.
Moreover, the bottom 40% of income earners as a group on net, instead of paying some taxes to support government programs, services and benefits, were paid cash by the IRS in 2009 equal to 10% of all federal income taxes that year.
The official IRS data also shows that in 2009 the top 20% of income earners, which included those earning more than $74,000, paid 94% of federal individual income taxes. That was 85% more than the share of national income they earned, almost double. The selfish bastards in that top 20% earned just over half of all the income in the country at 51%. Is it fair that they earn so much more than the bottom 20%, which earned almost nothing? Well, that’s what happens when the top 20% includes nearly 6 times as many full time workers as the bottom 20%.
The top 20% also includes the majority of Americans with advanced graduate and professional degrees. And the most work experience. If they would just party till they drop, like so many others, we wouldn’t have so much inequality. And America would look a lot more like Argentina, or maybe Cuba.
Obviously, “the rich,” a crass term that has no place in responsible politics, pay much more than their fair share. And the Senate Democrat budget can’t discuss tax policy intelligently either.
Recent Republican proposals have cut taxes on the rich and asked the middle class to pick up the tab? When was the last time any Republican proposed to increase taxes on the middle class? It was 30 years of Reagan Republican tax policy that cut taxes on the middle class reducing the share of the income tax burden paid by the middle 20% to just 2.7% of the total income taxes, while earning 15% of the income. And it was Reagan Republican tax policy that abolished income taxes on the bottom 40%, with the IRS paying them rather than taxing them.
It was, in fact, Ronald Reagan who first proposed in the 1970s what became the Earned Income Tax Credit (EITC) that has done so much to reduce income tax liabilities for lower income people, in his famous testimony before Russell Long’s Senate Finance Committee in 1972. As President, he cut federal income tax rates across the board for all taxpayers by 25%, including for the middle class, working people, and the poor. He also indexed the tax brackets for all taxpayers to prevent inflation from pushing working people into higher tax brackets. In the Tax Reform Act of 1986, he reduced the federal income tax rate for the middle class all the way down to 15%. That Act also doubled the personal exemption, shielding a higher proportion of income from taxation for the middle class and below than for “the rich.”
Newt Gingrich’s Contract with America adopted a child tax credit of $500 per child that also reduced the tax liabilities of lower income people by a higher percentage than for higher income people. President Bush doubled that credit to $1,000 per child, and made it refundable so that low income people who do not even pay $1,000 in federal income taxes could still get the full credit. Bush also adopted a new lower tax bracket for the lowest income workers of 10%, reducing their federal income tax rate by 33%. He cut the top rate for the highest income workers by just 11.6%, from 39.6% to 35%.
We just went through a national debate at the turn of the year about extending “the Bush tax cuts for the middle class.” Those tax cuts for the middle class were adopted by a Republican Congress in 2001, with virtually all Congressional Democrats at the time voting against them. For all those “low information” commenters out there, these are established facts over which reasonable people cannot differ.
Now Paul Ryan continues this long established Republican policy of cutting taxes for the middle class and working people, by proposing tax reform in the House Republican budget that would cut the income tax rate for families making less than $100,000 a year to 10%. And the Republican House majority passed that proposed Ryan budget, with all House Democrats voting against it again as well.
It is changes to federal income taxes that are being debated today, and so it is the relative shares of who pays what of those taxes that are relevant to that debate. But even if all federal taxes are considered, again according to official IRS data, in 2009 the top 1% paid over 22% of all federal taxes, while earning 13% of the income. That is down under Obama from the nearly 27% of all federal taxes paid by the top 1% achieved by Reaganomics in 2007.
Moreover, in 2009 the top 20% paid nearly 70% of all federal taxes, while earning 50% of the income. The middle 20%, the true middle class, paid 9% of federal taxes, compared to their 15% share of income. The top 1% alone paid well over twice the total federal taxes as the entire middle 20%, while earning less in income. The bottom 20% paid 0.3% of all federal taxes. And again, this is before all the tax increases on top income earners adopted at the start of this year.
Moreover, the Left is again grievously in error in thinking the maximum taxable income for the Social Security payroll tax of $113,700 is a loophole for the rich. Social Security benefits are calculated based on the worker’s income history. Only the income on which the worker paid taxes is counted towards benefits.
So the limit is not an unfair loophole. Workers don’t pay taxes on income above the limit, but they don’t get benefits for that income either. That is because Social Security is a contributory program that only replaces a floor of wage income in retirement. Once your retirement income is above that floor, there is no good reason to force taxpayers to pay more for higher benefits. That is especially because Social Security pays such poor, below market returns on tax payments into the program, actually negative real returns for higher income workers. So why force a worker to pay more for a negative real rate of return? It doesn’t even help to close the long run Social Security deficit, because more benefits would be owed in the future in return.
Finally, the Senate Democrat budget blares several times, “The highest priority of the Senate Budget is to create the conditions for job creation, economic growth, and prosperity built from the middle out, not the top down.” But the Senate has been under Democrat control going into its seventh year by now, and Obama has been President going into his fifth year by now. So where is that job creation, economic growth and prosperity, built from the middle out?
The central economic policy of the Senate Democrat budget is that increased government spending is what promotes economic growth and prosperity. But contra to even Keynesian economics, increased taxes are no problem for the Senate Democrats. That is why the Senate Democrat budget, which the Senate Democrat majority has now passed, includes yet another trillion dollar tax increase, the third major tax increase this year, in only the third month of the year.
But under precisely these policies, not only have we gotten no robust job creation, and no robust economic growth, but middle class incomes have been plummeting rather than rising. Since President Obama entered office in January, 2009, real median household income has declined by about $4,500, or 8%. That’s the equivalent of losing one month’s income every year.
Even if you start from when the recession ended in June, 2009, the decline since then has been greater than it was during the recession. Three years into the Obama recovery, median family income had declined more than 5% by June, 2012 as compared to June, 2009. That is twice the decline of 2.6% that occurred during the recession from December, 2007 until June, 2009. As the Wall Street Journal summarized in its August 25-26, 2012 weekend edition, “For household income, in other words, the Obama recovery has been worse than the Bush recession.”
The Senate Democrat economic growth model fails to take into account double entry bookkeeping. Increased government spending on anything can only be financed by drawing equivalent resources out of the private sector, by either increased borrowing or increased taxes. Since resources tend to be used more productively in the private sector, increased government spending tends to amount only to a net drag on the economy. Even more so counting the negative incentive effects of the increased taxes.
The Senate Democrat budget touts increased spending on “infrastructure, education, job training, and innovation.” But the economy’s stagnation is not due to inadequate infrastructure, and in any event we tried increased infrastructure spending in Obama’s failed, nearly $1 trillion, so-called “stimulus” when he first entered office. Education spending is also already at an all time high.
Moreover, the history of federal job training programs is that the federal government is always way behind the curve regarding what workers need to be trained for, producing newly trained workers with skills that are already obsolescent. The four dozen federal job training programs have not led to economic growth and prosperity. “Innovation” just refers to Obama’s failed crony capitalist favoritism and bailouts that have produced spectacular failures and drains on hard earned taxpayer funds.
So who is the better champion of the middle class? As the Bible says, “By their fruits you shall know them.”
[First published at Forbes]
Prominent global warming activist Michael Mann threw down the gauntlet against evangelical Christians this week, calling a distinguished climate scientist and well-known Christian an “evolution denier” while refusing to participate with him in a global warming debate. In the wake of Mann’s unprovoked attack, prominent ‘evangelical’ global warming activists, who target evangelical Christians by claiming to also be evangelicals, declined to stand up for the Christian scientist against Mann’s ugly and unprovoked assault.
Fox News Channel apparently invited Mann to appear on the air and debate climate scientist Roy Spencer on the topic of global warming. Roy Spencer, a principal research scientist at the University of Alabama in Huntsville, is one of the most knowledgeable climate scientists in the world. He has been a Senior Scientist for Climate Studies at NASA’s Marshall Space Flight Center, receiving NASA’s Exceptional Scientific Achievement Medal for his global temperature monitoring work with satellites. Spencer currently holds the position of U.S. Science Team leader for the Advanced Microwave Scanning Radiometer flying on NASA’s Aqua satellite. He is frequently invited to testify before Congress and in state legislatures regarding climate science.
Spencer’s scientific research leads him to be skeptical of the assertion that humans are causing a global warming crisis. He is also well-known among climate scientists for being an evangelical Christian.
Mann declined Fox News Channel’s invitation to debate Spencer. Not content to be a gracious invitee, Mann took to his Twitter account to pour out venom at Fox News Channel, Roy Spencer, and Spencer’s religious beliefs. “No, @FoxNews, I’m not interested in ‘debating’ #climatechange and #evolution denier Roy Spencer on your ‘news’ network,” wrote Mann.
Within the global warming debate, it is well understood that calling a global warming skeptic a “denier” is a deliberate attempt to demean and disrespect him or her on a personal level. Global warming skeptics were universally labeled “skeptics” until a handful of particularly aggressive warmists began drawing asserted links between global warming skeptics and “holocaust deniers.” Soon thereafter, the most aggressive warmists lumped the two groups together and began referring to global warming skeptics as “deniers.” Mann was quite aware of the insulting and disrespectful nature of the term when he called Spencer an “evolution denier.” Indeed, shortly after refusing to debate Spencer and calling him an “evolution denier,” Mann punctuated his use of deliberately disrespectful language by tweeting, “Getting on a debate stage signals that, while you might disagree, you respect the position of your opponent.”
The timing of Mann’s gratuitous attack on “evolution denier” Spencer is particularly inconvenient for global warming activists targeting evangelical Christians. Global warming activists have made a concerted effort of late to intensify their targeting of evangelicals.
For example, ‘Creation Care’ advocate Todd Levasseur published a full-length editorial this week in the Charleston Post and Courier arguing that people have a religious obligation to become global warming activists. He wrote, “Maybe it is time for an 11th Commandment: ‘Thou shalt not emit greenhouse gases.’”
Global warming activist and self-professed evangelical Katherine Hayhoe will be delivering a talk next week at the University of Kentucky making the case that Christians have a biblical directive to fight global warming. Making a special effort to appeal to evangelicals, Hayhoe recently wrote, “[D]oesn’t climate change mean that we have to believe in evolution and a four-billion-year-old Earth? Not at all.”
Expecting self-professed ‘evangelical’ warmists to stand up for Spencer after the Christian scientist was gratuitously attacked by their warmist colleagues, I reached out to more than a dozen self-professed evangelicals who signed the Evangelical Climate Initiative’s “Climate Change: An Evangelical Call to Action.” To my surprise, not a single one would stand up for Spencer against Mann’s attack.
The closest any of these signatories came to defending Spencer was Ft. Myers, Florida, pastor John Daugherty. Declining to directly address Mann or Spencer by name, Daugherty vaguely asserted it is “unfortunate” that there is “name calling on both sides.”
Richard Cizik, president of the New Evangelical Partnership for the Common Good, expressed disappointment not at the gratuitous nature of Mann’s attack on a fellow evangelical, but that the gratuitous attack might make it more difficult for Mann’s point of view to prevail over Spencer’s. “[I]t is counter-productive to dismiss or denigrate these religious believers, or for that matter the science denialists who believe in Intelligent Design. It plays right into the hands of climate denialists who want a culture war.”
It seems that Cizik, with his frequent use of the deliberately insulting term “denialists,” did not get Daugherty’s memo about name-calling.
Hayhoe, incidentally, recently appeared with Mann at the Commonwealth Club of California. When the moderator at the Club brought up the topic of Mann’s much-criticized conduct as a central figure in the Climategate scandal, Hayhoe eagerly came to fellow warmist Mann’s defense. She also talked about the importance of speaking up for what is right, even when it is unpopular. “We have a responsibility. … If we hold silent on it, who will speak?” asked Hayhoe. To date, Hayhoe has declined to stand up for fellow evangelical Spencer.
All of this leads one to wonder just how sincere self-professed ‘evangelical’ global warming activists are in their assertion of commonality with the evangelicals they target with their global warming activism. Levasseur spent more time ranting about the “petty, short-sighted politics and disinformation campaigns funded by the Koch Brothers and Big Oil” than he did talking about the attributes of God. Cizik counter-protests people at anti-abortion rallies by carrying a placard that says “Stop mercury poisoning of the unborn.” Hayhoe waxes poetic about the “communal” mindset in her native Canada while expressing regret that Americans start “thinking back to 1776” when they hear warmists advocate higher taxation and more government control. Rational people can have different points of view on each of these issues, but these identity-defining positions by ‘evangelical’ warmists do not appear to be in keeping with most American evangelicals.
Perhaps all of these ‘evangelical’ warmists truly are evangelicals. If they are, however, they are clearly a different strain of evangelical than the evangelicals they are targeting with their global warming activism. And they seem much more inclined to stand shoulder-to-shoulder with global warming activists throwing venom at people of faith than they are to stand with evangelicals caught up in the warmists’ wrath.
[First published at Forbes]
[UPDATE: On March 29, Reuters reported that Fisker hired a bankruptcy attorney.]
Fisker Automotive, which has received $193 million of a $529 million Department of Energy stimulus loan guarantee and apparently still wants the rest of it, stopped making its sole electric car – the $102,000-plus Karma – last July. But only now has it decided to furlough workers for a week.
“In parallel with the process of identifying a strategic partner, Fisker is, of course, continuing to manage its day-to- day operations and has recently instituted temporary furloughs for its U.S. workforce covering the final week of March,” the company said.
The announcement came this week from the company, which despite having raised more than $1.2 billion in private capital, hasn’t been able to keep the factory lines running. In its official statement, though, Fisker said that’s quite normal.
“This is a common practice, particularly in the automotive industry, to manage costs and operations based on current activity levels and commercial requirements,” the release said, according to Reuters.
True, the Big Three automakers have been well known to briefly sideline workers while they tweak plants to produce a different vehicle, or to adjust inventories, etc. But Fisker has only one model, and has not manufactured any since July. And apparently making CEO Tony Posawatz nervous is the fact that Fisker is required to make a loan payment of unknown quantity – soon.
It appears the $1.2 billion is largely gone, as Posawatz has been desperately seeking “partners” – namely in China – to help Fisker build its next model, the Atlantic, which is supposed to be half the price of the Karma. But at $55,000, it will still be for rich people. There aren’t enough of those in the Orient to keep that vision alive, which is why two companies there ultimately withdrew their interest in a joint venture with Fisker.
So as a result, some 200 employees in the U.S. are idled. This is a drop from 775 employees in February 2012, when Fisker lopped off 71 workers when its plans to build the Atlantic in Delaware were shelved. Forty more were let go late last year, and apparently another 100 were dropped since December. But again, multiple media sources have said no Karmas have been produced for eight months, and as of October only 2,000 had been sold.
There are so many disturbing ways to quantify this. For the moment let’s just address the $193 million that has actually been issued from taxpayers, and not the $529 million that was going to be (and theoretically still could be) issued. The stimulus funding was only to be for U.S. jobs – design work and for manufacturing the Atlantic in Delaware – but not for the assembly work at Valmet Automotive in Finland.
If you go by what has been recognized as the peak number of jobs since DOE approved the Fisker loan, then $193 million divided by 775 jobs equals a $249,032 subsidy per job. But of course those jobs didn’t last, and the important ones are the permanent ones. None appear to fit that category in Fisker’s current predicament, but if you could assume the 200 jobs that are left will continue, then the math works out to $965,000 per job. And if you want to count by vehicles sold, the $193 million subsidized each unit at $96,500. Karma owners Al Gore, Leonardo DiCaprio and Justin Bieber ought to be writing thank-you notes to taxpayers for the nice discount.
With all the money that’s been poured into Fisker so far, especially by its seed investors at Kleiner, Perkins, Caufield and Byers, would they let it fail? Beyond the financial investment, there is the social benefit of helping our fellow man live in a healthier environment by assuring that Fisker vehicles remain on the road – namely to fight global warming, so the advocates have said. And if you listen to environmentalists and Gore, who is also a KPCB partner, you can’t put a price tag on that. Undoubtedly that justification was part of the lobbying effort when KPCB spent $400,000, and Fisker spent $280,000, in 2009 and 2010 to help along the stimulus bill, the American Clean Energy and Security Act, the Clean Energy Jobs and American Power Act, and other similar legislation.
Even the DOE Loan Program Office still touts the public benefits of taxpayer “investment” in Fisker, noting that the project would produce 2,000 permanent jobs, 17.4 million gallons of gasoline displaced, 154,000 tons of carbon dioxide avoided, and 30,000 annual cars off the road.
So clearly KPCB’s partners, Palo Alto Investors, Gore, DiCaprio, the government of Qatar, and other existing investors need to step up to keep their vision for Fisker alive. And clearly they have the resources to make it happen:
- According to an estimate by Forbes, following the sale of Current TV to Al Jazeera, Gore’s net worth is $300 million – exceeding Mitt Romney’s!
- DiCaprio’s net worth is estimated at $200 million, and raked in $38 million from May 2011 to May 2012, according to Forbes.
- Palo Alto Investors “makes long-term investments for high-net-worth and institutional investors” and claims “approximately $900 million in assets under management.”
- KPCB’s value is not measurable, but top partner John Doerr has a net worth of $2.7 billion. There are many more partners of significant wealth like him. The managing partner identified as overseer of Fisker, Ray Lane, was president and chief operating officer of Oracle Corp., one of the world’s largest software companies. During his eight-year tenure he oversaw its growth from a $1 billion company to a $10 billion company. He probably has a few bucks left.
Unfortunately “green investing” is no longer viewed as the moneymaker that it was six years ago, as the Competitive Enterprise Institute’s Myron Ebell explained earlier this week at GlobalWarming.org. He cited a summary of a conference hosted by the Wall Street Journal that was supposed to be a celebration of great opportunities in “creating environmental capital,” but instead was a downer. For example John Dears, chief investment officer of the California Public Employees’ Retirement System, reported their fund dedicated to clean energy technology has experienced a negative 9.7 percent annualized return since 2007.
“Our experience is that this has been a noble way to lose money,” Dears said, echoing a sentiment expressed by others.
But as renewable energy advocates and investors have said so often, whether in search of Recovery Act money or the preservation of special tax credits and breaks for their industries, no price is too high for the fight against global warming and the pursuit of clean energy.
Well, Fisker is fizzling, and the words of Gore, DiCaprio, and Kleiner Perkins still hang in the air. They have the resources, so it’s time for them to step up and save jobs, gallons of gasoline, cars on the road, and carbon dioxide emissions. While it’s not for their personal bank accounts, it’s for so much more – their fellow man and the planet. Where are they?
[First published at National Legal and Policy Center]
Backers of the federal Marketplace Fairness Act estimate it would generate another $23 billion of annual revenue for states. Of course, another way to look at the law is to say it would take $23 billion away from consumers. That’s $23 billion less money consumers would be able to spend shopping.
The act, known as the Internet tax bill, would require online retailers to collect sales tax from each customer, based on where the customer is located. If Customer A lives where the state sales tax is 6 percent, the retailer would have to collect 6 percent tax on the sale. If Customer B lives where the sales tax is 8 percent, the retailer would have to collect 8 percent on the sale.
Proponents call it “marketplace fairness” because traditional retailers – the “brick-and-mortar” stores – must collect sales tax on every sale they make.
Currently, online retailers must collect sales tax only from customers in states where the retailer has a physical presence. The brick-and-mortar store people say this gives online retailers an unfair advantage, because online retailers’ customers come from all over the country, including states where the online retailers have no physical presence. Therefore, many of their sales are untaxed.
Defenders of the bill argue it imposes no new taxes because states already require persons who buy things out of state to pay tax on them. They say shoppers already owe the estimated $23 billion the act would take.
OK, let’s ignore the impact $23 billion fewer dollars to spend would have on all retailers, and accept the premise. The money is owed, and online retailers would merely be enforcing existing state laws.
This still isn’t marketplace fairness, because brick-and-mortar stores don’t collect out-of-state tax. The stores collect whatever the tax is where they are located. They couldn’t care less where their shoppers live.
All across this country, cities draw people from near and far. Many small towns also have major tourist industries.
So let’s have true marketplace fairness. We’ll require every retailer – online as well as brick-and-mortar – to determine where each shopper lives, collect the appropriate sales tax amount, and then send the money to the appropriate tax jurisdiction.
Just a few days ago, in a Daily Caller column, 60 Plus Association Chairman Jim Martin wrote in defense of the Marketplace Fairness Act: “Millions of Internet merchants collect taxes every day with professional accounting tools that are as reliable and technologically sound as the shopping cart software they use to sell their wares. Taxes at the time of sale can be calculated and collected with the ease and reliability of all other steps in the transaction based on the state and locality of the buyer.”
Surely the brick-and-mortar stores could install similar tools. Surely it would be no problem for cashiers to ask every customer’s address, verify it, and enter that information into the computer system, which would determine the correct sales tax. Surely the brick-and-mortar stores would have no problem using their computers to track this information and send the proper payments to the appropriate taxing jurisdiction for each customer. Surely they would have no problem submitting themselves to audits from tax jurisdictions across the country.
Fairness demands this. Surely brick-and-mortars retailers would have no problem with true marketplace fairness.
In those three pithy phrases, Ronald Reagan summarized the essence of government as envisioned by tax-and-spend liberals who these days prefer to call themselves “progressives” interested in “revenue enhancement” and “investment.”
It doesn’t have to be that way, of course. By following the principles of limited government and separation of powers laid out by the Founders in the U. S. Constitution, U.S. citizens and their representatives could empower individual liberty; create opportunity; reward innovation, ambition, and hard work; and preserve freedom. In short, we could keep the republic that Benjamin Franklin and company bequeathed us and government of the people, by the people, and for the people would not perish from this earth.
But the ratchet of tyranny and oppression that work constantly in the other direction is on display again in Washington, as senior Illinois Senator and No. 2-ranking Democrat in the U. S. Senate, Dick Durbin, last month pushed for a national online sales tax designed to lift another $200 million from the pockets of Illinois residents alone.
Along with Gov. Jerry Brown’s State of California, the State of Illinois is in a race for the bottom as the most financially bankrupt state in the Union, with unfunded pension liabilities approaching $100 billion. The City of Chicago already has among the highest sales, gasoline, parking, restaurant, and hotel taxes in the country, and both the city and the state of Illinois have nearly exhausted such quick-fix money-raising schemes as gambling boats and selling off long-term streams of revenue like parking meters, toll way bridge fares, and – coming soon – Chicago Transit Authority public transportation fares.
As elsewhere, the problem in Illinois is largely one of legacy costs, resulting primarily from feckless mayors and governors constantly giving in to state and municipal employee unions rather than risk labor unrest. Rather than rein in costs or reform pensions, however, the State just keeps looking for more ways to pull money out of people’s pockets, with or without federal assistance. And that’s where an Internet sales tax may come in.
“No man’s life, liberty or property are safe while the legislature is in session,” wrote Judge Gideon J. Tucker in 1866, and federal lawmakers who lust after more power and control over their fellow citizens continue to prove him right. Like those who want to raise federal income taxes again insisting that they only want “the wealthy” to pay their “fair share,” Sen. Durbin and others who supported the general idea of a national online sales tax in a 75-23 Senate test vote last month insist that the new tax is solely about leveling the playing field between online merchants and their brick and mortar counterparts.
It’s “just a question of fundamental fairness,” insists Senator Durbin, who actually claims “We’re not talking about imposing a new tax. Not at all.” Not, that is, unless you consider a nearly 10% government-imposed financial penalty that did not previously exist a ”tax.” And even United States Supreme Court Chief Justice Roberts was smart enough to see in his Obamacare opinion that the “individual responsibility” penalty that the “Affordable Care Act” imposes on those who choose to go uninsured is a “tax.”
“More and more,” the Chicago Tribune on Monday, April 1, 2013, quoted National Conference of State Legislatures “point person” Max Behlke as complaining, “people are going into stores, looking at products and then buying them with their iPhone, buying it on their BlackBerry, because it’s cheaper.”
But that’s exactly what consumers should be doing. Despite the increasing encroachment of the socialist welfare state, many Americans still work hard for their money and try to spend it wisely. That means buying goods and services at the lowest available price, whether shopping the sales at Macy’s, buying gasoline out of state, buying used clothing at thrift stores, or purchasing comparable goods on the Internet because they’re available at lower prices. Doing so is an integral part of the market system that is most consistent with individual liberty, freedom of choice, and – ultimately – efficient allocation of the world’s resources.
Local retailers complain that they must charge sales taxes while online retailers do not, but that’s not actually true. Online retailers with a physical presence in a state are already obliged to charge tax on sales to customers with shipping addresses within that state, as online auction sellers and out-of-state art galleries have been aware for years. It’s true that a potential buyer may walk into a local shop, find something she likes, and then buy it online at a lower price, but a local retailer can make tax-free sales to out-of-state customers by making online sales as well. And customers will often pay more to get something in person today rather than to wait for it to arrive later, especially after taking shipping costs into account.
The economic problem isn’t the sales price, which the merchant can always lower to compete with online retailers; the problem is the sales tax that drives a wedge between the price the buyer pays and the price the seller receives, which in Illinois can be at least as high as 9.25%.
But much like the older couple in which one or both partners doesn’t have a hearing problem so much as a listening problem, Illinois and similar states don’t really have revenue problems, they have spending problems. With all admiration for Grover Norquist’s efforts to keep taxes in check, his approach may ultimately be wrong: We don’t need to cut taxes as much as we need to stop spending.
Sadly, an Internet sales tax won’t help either.[See a related post by Heartland's Steve Stanek: "Internet Sales Tax Unfair."]
The March 22, The Atlanta Journal-Constitution featured a detailed, well-written article by reporter Ariel Hart titled “Rare bat stalls Ga. roadwork.” The article mentions in May 2012, a single Indiana bat was seen in a tree in North Georgia. This bat is an Endangered Species since 1967.
Consequently, federal regulations must be followed on land use regarding road projects in Northern Georgia. Projects must not “harm, kill, or harass” the bats. Currently $459 million in Georgia road projects are delayed up to one and one-half years. The cost of studies is between $80,000 and $120,000 per project and the total for the 104 projects in the next three years may be $8 million.
Indiana bats are named because a large proportion of them hibernate from early fall to early spring in Indiana caves. Thus habitat studies are only conducted in late spring and summer and obviously large numbers of Indiana bats are from Indiana.
The irony of Georgia’s pain from habitat studies is the Fowler Ridge wind farm in north-west Indiana with 355 gigantic wind turbines covering 50,000 acres built 2008-2010. An additional 150 wind turbines are planned for the site in the near future. Adjacent to this wind farm is the 2009 Meadow Lake Wind Farm with 121 wind turbines. This Benton County, Indiana location is one of the largest concentration of wind turbines in the world.
It is long known wind turbines are devastating to bat populations. A U. S. Geological Survey report, “Bat Fatalities at Wind Turbines: Investigating the Causes and Consequences” mentions thousands of bats are killed annually at wind turbine sites around the world. More detailed descriptions of environmental problems of wind turbines is found a recent blog post by me: ”Violent Environmental Problems With Wind Turbine Operation“.
Besides being minced by turbine blade rotations, bats are subject to deaths by other means as explained by the August 26, 2008 Scientific American article “On a Wing and Low Air: The Surprising Way Wind Turbines Kill Bats.” Bats are killed by pressure pulses causing burst blood vessels in their lungs. As nocturnal creatures, bats are particularly vulnerable to wind turbines because wind turbine operations are frequently late at night when demand for electricity is at its lowest.
Now questions arise about the U. S. Government having dual standards about safety of humans and bats. Road projects in Georgia are for purposes of improving traffic flow and safety and reducing air pollution by increasing automobile operation efficiency. There is no question lives are saved by improved traffic flow on four-lane roads versus two-lane roads with potential for head-on collisions. Using EPA standards for reduced air pollution due to more efficient automobile operations, the potential for lives saved may be in the hundreds. The delay of possibly one and one-half years for bat habitat studies will cost Georgians lives. These delays are to prevent the “harm, kill, or harass” of a few and maybe no bats.
In Indiana, the origin of Indiana bats, thousands of bats perish annually due to wind farms in Benton County where no standards to protect bat habitats are enforced. Additional wind farms are strewn all over the Midwest due to its favorable wind speeds. Consequently, millions of bats die yearly due to wind farm operations. Apparently the U. S. Government’s enthusiasm for promoting renewable energy resources allows ignoring the fate of animals listed by the Endangered Species Act.
In Georgia federal regulations super cede common sense and Georgia citizens are subject to “harm, kill, or harass” over interests of a few Indiana bats. Bats are more important than Georgia citizens. This may be the penalty for being a red state.
Premiering this week on Masterpiece Classic on PBS, Mr. Selfridge is an interesting and enjoyable ten-part drama series. It tells the story of Harry Gordon Selfridge, an American businessman who brings a new kind of shopping experience to Great Britain and shakes up that staid nation’s economy.
Selfridge, played excellently by Jeremy Piven (Entourage), arrives in London in the first decade of the twentieth century and opens the nation’s first modern-style department store, called Selfridge’s. He has already had great success in transforming Chicago’s Marshall Field’s store into the world’s first department store, and is now taking that idea to England.
This establishment is even more ambitious, unlike anything else found in England at the time. Whereas other shops keep their goods hidden, and their staffs function as authoritarian figures deciding for the customer what the person should buy, Selfridge’s is consumer-oriented and a palace of entertainment. Gorgeous architecture and amenities greet the customers, and show-biz elements are common, such that the establishment is a spectacular entertainment medium in addition to being a shopping place.
Instead of hiding the wares in storage areas and closed cases, bringing them out only when the staff has decided what a customer should have, Selfridge’s puts all the wares on open display and invites the individual to browse and appreciate the astonishing array of goods available. (It also creates the new problem of shoplifting, which is alluded to in the first episode.) Selfridge is believed to have coined the phrase “The customer is always right,” and his staff are trained to take a servant’s mentality, seeking out what the customer wants, instead of deciding what the person should want.
Selfridge is something of a mass of contradictions, but his character is fully believable and true to life as played by Piven. The entrepreneur is a real promoter, openly in search of success and riches, but he is also something of an idealist, wanting to bring a better life to the masses. He is a family man who seems bound to succumb to temptations to break his marriage vows. He is a driven, self-made man who also really cares about the people who work for him. He is a huckster who truly cares for his customers. He is, in short a true businessman.
Selfridge’s big idea truly changed the world, but in part because it fit so well into a world that was already changing. With women enjoying new independence and more free time in the new century, and with prosperity rising thanks to the workings of the Industrial Revolution and market capitalism, the kind of democratic approach to merchant sales is both socially welcome and economically efficient. On the other hand, the efficiency of Selfridge’s, made possible by economies of scale, will ultimately make it and other stores like it much more efficient than their predecessors, which will end up driving the latter out of business.
This is a good thing overall for society, a classic example of the Austrian economist Joseph Schumepter‘s observation of “creative destruction” at the heart of market capitalism (a notion derived from Marx but embraced by free-market thinkers), but it is also, of course, a personal catastrophe for those businesses that are creatively destroyed by Selfridge’s and its imitators.
In addition, the social forces that make Selfridge’s such a brilliant idea also lead to a consumer mentality that affects everything—not just business but also entertainment and even politics—as the century wears on. This intense individualism apparently fostered by both the market and the culture would soon come to be a worry for both Left (under the Frankfurt School’s pervasive influence) and the traditionalist Right, with its opposition to rapid social change.
Yet although these two very different critiques of the social effects of market have some valid points to make, they tend to overlook the fact that on balance the changes were highly salutary indeed.
Traditionalists ought to acknowledge that the social and technological changes that unleashed the greater individualism also helped rid the world of much ignorance and prejudice (which statist forces on both the left and right have continually tried to replace with prejudices and superstitions of their own). Leftists, for their part, ought to do much better at acknowledging the astounding material and social benefits that market capitalism has brought to people such that what is considered poverty in the United States today was once great wealth here and is still an unattainable standard of living for most of the world.
By creating a smoother and more reliable bridge between producer and consumer, Selfridge and his imitators enabled producers to bring their wares to a vastly expanded market, thus expanding greatly the economies of scale throughout the economy. The expanding market led to many more and better jobs, which led in turn to further market expansion and so on, in a virtuous circle of economic growth. The only thing that could stand in the way of all of this truly wonderful progress was government, and it has done so with horribly impressive effectiveness in the decades since Marshall Field’s, Selfridge’s, and other institutions of consumer empowerment freed people from widespread want and ignorance.
The pilot episode of Mr. Selfridge does not dig into all of these implications, but this story of entrepreneurship and innovation set near the time of Downton Abbey does suggest such thoughts and themes quite clearly in the intelligent screenplay by the always skillful Andrew Davies. Instead of pushing particular conclusions on the viewer, Davies lets the events speak for themselves, and they are quite eloquent for those who are attuned to the implications. Piven’s performance conveys Selfridge’s virtues and vices with equal skill, and the result is a character whom we can like and respect without forgetting his all-too-human weaknesses.
The pilot episode of Mr. Selfridge clearly indicates an awareness of and respect for both the greatness and shortcomings of market capitalism. What is more impressive is that the show represents neither unbridled cheerleading nor unfair criticism of the market. In all, episode one of Mr. Selfridge is a balanced, sympathetic, and wise portrait of a capitalist. As such, it is a welcome example of thoughtfulness in our increasingly politicized and ignorant times.
[First posted at The American Culture.]
Since I am one-eighth Cherokee and my spouse is the daughter of immigrants from Italy, our marriage was interracial and presumably illegal in Virginia. We often entertained renting a hotel room in Virginia as a sexy way to protest the Virginia law. We never did. It was cheaper to go home to the District of Columbia and make love there. In our case, economics trumped making a political statement.
In 1967 the Supreme court ruled in the case of Loving & Loving versus the State of Virginia, that the 1924 ban on interracial marriage was unconstitutional. I do not remember that the ban interfered with medical, inheritance or other important decisions in Virginia. The main effect was the promotion of a slightly naughty amusement on the part of couples like us.
The lesson for the same-sex marriage cases now before the Supreme Court seems to me to be the current cases are not very important in terms of changing behavior. Nevertheless, public opinion is still sharply divided.
This suggests that a decision from the United States Supreme Court may be premature. There is a dictum from the legal literature that is on point in my opinion: Hard decisions make bad law.
The publicity surrounding President Obama’s failed strategy to stimulate the economy, by putting clueless manager Steven Chu in charge of the Department of Energy’s lending activities, has become so bad that few “green energy economy” entrepreneurs want to accept taxpayer money any more.
That’s according to a report published earlier this month by the Government Accountability Office, which reviewed DOE’s loan programs for a briefing to both the House and Senate’s Appropriations subcommittees on Energy. Amusingly though, the Web site of DOE’s Loan Programs Office still calls itself “The Financing Force Behind America’s Clean Energy Economy.” The minor blip that undermines that premise is that DOE is having trouble getting someone to borrow $55 billion.
GAO’s director for Natural Resources and Environment, Frank Rusco, undertook an audit/investigation that evaluated three types of DOE loans: the 1703, 1705, and Advanced Technology Vehicles Manufacturing programs. The 1705 program backed alternative energy projects such as Solyndra and Abound Solar, and had a sunset date of Sept. 30, 2011. The 1703 program supports “innovative clean energy technologies that are typically unable to obtain conventional private financing due to high technology risks,” and is still active. The ATVM program’s funds are also still available, and backs manufacturers producing vehicles (or “qualifying” components) that meet the governments fuel economy standards – for the most part, electric vehicles.
According to Rusco’s findings, DOE issued approximately $15 billion of the $18 billion that was authorized for the now-expired 1705 program. Under 1703, DOE had $34 billion in loans it could guarantee. For the ATVM program, Congress approved $25 billion that DOE could back.
For 1703, DOE has not made any loan guarantees, although four nuclear projects have received conditional commitments for $10.33 billion. Nine other applications are said to be in the due diligence stage. Technologies that are to be considered under the program include biomass, hydrogen, solar, wind/hydropower, “advanced fossil energy coal,” and carbon sequestration practices/technologies.
But it’s the ATVM program that is really getting the cold shoulder from electric vehicle entrepreneurs and overall automakers. Of the $25 billion that was made available, DOE only issued $8.4 billion in guarantees to five companies – the remainder has been mostly left unused. Rusco reported that DOE has seven applications totaling nearly $1.5 billion that it considers inactive for various reasons, has no others under consideration, and its last ATVM loan was closed in March 2011. DOE officials told Rusco they are not likely to use all of the remaining ATVM loan program resources.
Why? To find out, Rusco and his staff interviewed nine applicants at various stages for the loan guarantee program. But because no applicants were actively in pursuit of ATVM loans, they interviewed representatives of companies and manufacturers “based on their eligibility to apply, ensuring that we included current, former, and prospective applicants.”
Those interviewed cited predictable reasons for their regret, hesitance or refusal to accept government funding, including bureaucratic red tape, reporting requirements, uncertainty about credit subsidy costs, lengthy review times, and the expenditure of time and resources for an uncertain outcome. But now – with the benefit of hindsight of so many that went before them into the tortured realm of government dependency – apparently many have been deterred by bad publicity surrounding previous loans.
“Some applicants noted that the Solyndra default and other problems have created a negative public image and political environment for the program,” Rusco reported to the committees, “which has made its future less certain and DOE more cautious about closing on loan guarantees.”
With the ATVM interviewees, Rusco noted a similar problem, explaining, “as the program is currently implemented by DOE, the costs of participating outweigh the benefits to their companies.” Respondents to his inquiries also say Solyndra-type problems tainted the ATVM program’s image.
“They believed the negative publicity makes DOE more risk-averse,” Rusco reported, “or makes companies wary of being associated with government support.”
Undoubtedly “Solyndra” is to the DOE stimulus scam what “Watergate” is to political scandals – you don’t even need to add “gate” – but the ATVM program publicity alone has been disastrous enough to ward off anyone in their right minds who may have considered them as lenders. NLPC has reported nearly ad nauseum on the four top recipients of loans under ATVM:
- Nissan received $1.45 billion to refurbish a plant in Smyrna, Tenn., to produce the all-electric Leaf model and its batteries. Despite all indicators and especially paltry sales, CEO Carlos Ghosn insisted for years that 1.5 million EVs would be sold by 2016, and that EVs would account for 10 percent of new car sales by 2020. But the Leaf never overcame its expensive cost (like all EVs, as well as the Chevy Volt) and inefficiencies, such as limited range and long charging times. Loss of battery life in vehicles based in extremely hot climates in the U.S. didn’t help either. The bad image finally took its toll to the point where Nissan cancelled its grand opening celebration of the Tennessee plant, after so much earlier build-up and fanfare. Finally last month Nissan admitted “we were a little bit arrogant” about prospects for the Leaf.
- Ford Motor Company received a $5.9 billion DOE loan guarantee to renovate its factories to produce vehicles (presumably) that are more fuel efficient, as the Loan Program Office boasted that 33,000 employees would suddenly be converted to “green manufacturing jobs.” While Ford hasn’t suffered as much bad publicity as others, there isn’t much to show for taxpayers’ “investment” in the company’s green efforts either. The biggest public rollout of any electric vehicle was the Focus Electric, whose sales are barely measurable, which an executive said the company wasn’t even trying very hard to sell. “The marketing of the Focus Electric is to people who buy electric vehicles, not to you and me,” said Jim Farley, Ford head of global marketing, to USA Today in April 2012. “We’re focused on the people who buy them.”
- Tesla, which received $465 million under ATVM, has been hit hard more recently in the media. Billionaire CEO Elon Musk runs the company, which spent $480,000 from 2007 to 2011 to lobby various arms of government in support of pro-green stimulus programs, and Musk also donated handsomely to political candidates and committees of both parties, but mostly to Democrats. But like another loan recipient, Fisker (more in a moment), Tesla produces an electric car (the Model S) that sells for $101,000 – thus taxpayers are backing rich entrepreneur’s business that caters to wealthy customers. And the crowning blow is that last month Musk got into a dispute with a New York Times reporter over a horrible review of the Model S, in which the car ended up being towed away. Musk has been trying to recover ever since.
- Finally there is Fisker Automotive, founder Henrik Fisker, and the $102,000 Fisker Karma. It’s hard to imagine how a vehicle company with so much attention on it could have had a worse debut. In brief (because NLPC has reported on it so much) the car has had recalls because of design flaws and a failed battery supplier (A123 Systems, which went bankrupt), saw its $529 million DOE loan guarantee cut off after $193 million, and had Consumer Reports call it the worst luxury sedan on the market. After three CEO changes in less than a year, management started shopping for a “partner” (some say a buyer) in China. That strategy reached a crisis point recently when, in a dispute with the controlling executives, Henrik Fisker quit the company, reportedly over a disagreement whether to continue to seek the remainder of the allocated DOE/ATVM money. It’s quite clear he couldn’t stomach it any more.
“What happened after Solyndra obviously has shifted unfortunately the discussions — rather than talking about … that everybody wants America to be the leader in new technology, it shifted to being more political focused,” Fisker told The Detroit News after he resigned. “That’s a situation everyone’s going to have to deal with.”
Everyone will have to deal with it, that is, except those who won’t accept loans from the Obama administration.
[First Posted at National Legal and Policy Center]
Cato’s Jonathan Adler, writing in Reason, gives a more eloquent version of the argument I’ve advanced in the past about the perils of tossing federalism aside on the marriage issue.
“The arguments for holding Proposition 8 unconstitutional do not seek to vindicate a “right to marry” so much as they seek to alter the definition of what constitutes a marriage in the first place. Marriage has been understood to constitute the union of one man and one woman through most of human history… Many of us find this to be an unpersuasive justification for denying state recognition of same-sex couples, but this is not a sufficient basis to render such policies unconstitutional. Federalism requires that state governments are allowed to adopt unsound policies. Indeed, it is only by allowing a diversity of policy choices to be made that we can discover the mix of policies that best protect individual liberty and facilitate the pursuit of happiness.”
Adler notes the historical precedence of state authority over the definitions of family law, and then moves on to the tactical problem:
“Advocates of same-sex marriage, myself included, believe it is proper to expand the traditional definition of marriage to include same-sex couples. Insofar as the state is in the business of licensing and recognizing marriages, it is prudent, wise, and just to recognize that two people of the same sex are just as capable of creating an enduring, committed relationship and providing for the care and nurturing of children as many heterosexual couples. But this does not mean a state’s refusal to take this step violates the Constitution. Not every policy that is unwise or even unjust is unconstitutional.”
This reminds me of Thomas’s position on Lawrence, which used to be on my wall in the Senate offices. The decision to stop the ongoing conversation of democracy and assert a nationwide standard is always tempting for those who view the courts as an avenue to getting the result they want ahead of the trendlines of culture, but I am in favor of trusting the people in these matters to decide these issues for themselves.
The larger danger is the inevitable clash between religious liberty and a newly required and nationally legitimized approach to same sex marriage. The Illinois proposal currently being considered by their state legislature is a perfect example: one which would require religious associations to essentially give up their daily activity of evangelism, retreat from public life, and sacrifice their property rights if they are viewed as holdouts on the wrong side of the cultural trend. It is a perfect encapsulation of the thorny religious liberty issues which will inevitably be litigated over the coming decade – namely, how much the state can demand of churches, synagogues, and mosques to bend to the new law likely imposed by the Supreme Court. Let me draw your attention to page 5.
“Nothing in this Act shall be construed to require a religious organization as defined in paragraph (1) of this subsection (a-10) to make available a parish hall or other religious facility on the premises of a church, mosque, synagogue, temple, or other house of worship for solemnization or celebration of a marriage that is in violation of the religious organization’s religious beliefs, provided that: (A) the religious facility is primarily used by members of the parish or congregation for worship and other religious purposes; (B) for solemnization and celebration of marriages, the religious organization generally restricts use of the religious facility to its members and opens the facility only occasionally to non-members on an unpaid basis; and (C) the religious organization does not make the religious facility available to the general public for rental or use for which a rental fee or other compensation is required or for which public funding or other public benefit is received.”
There are a host of problems in this “provided that” section, nearly all of which are bent against the ability of religious institutions to evangelize – they must close their doors to outsiders entirely in order to abide by this rule. Regarding (A): how do we assess a facility’s role as “primarily” to serve members of the parish or congregation? Similar to the challenge in the contraception mandate situation, where there’s been concern federal representatives would have to survey students at Catholic schools to see how many were actually Catholic, this would essentially eliminate whole swathes of church activity. As for (B): the vast number of protestant institutions, where membership is often more nebulous, rent their facilities to non-members for use in weddings, a not insignificant source of income (and a not insignificant cost for the facility). The combination of (A) and (C) would simply eliminate the bulk of functional church activity. Non-churchgoers may think of a religious institution as a Sabbath-focused entity – in reality, the five days a week classes, day schools, counseling, fellowship hall scout meetings, soup kitchens and the like are the primary focus of most active denominations, featuring the prevalence of non-members and the active participation of many other non-profit groups, which will now have to choose between receiving public benefit (does this include tax treatment?) and their use of church facilities.
But remember, we’re not forcing the churches to do anything. They just need to understand that functionally, from the perspective of the state, they will eventually have to choose: either they are public facilities which can be used by all, or they can lose their tax status. Churches and other religious groups will have to resolve their willingness to engage legal protections and prepare to lose their tax status (as we’ve already seen in New Jersey) in anticipation of the inevitable lawsuits, and may wish to incorporate their schools and attendant organizations in a different manner so as to create legal firewalls. It is a libertarian pipe dream that such clashes with churches and religious institutions are in any way avoidable.
In a proper federalist system, states would work according to the laboratories of democracy model: they would see how this approach plays out in Maryland and Maine over the coming years, and alter their laws accordingly to protect religious organizations, businesses, mosques and churches, and prevent community clashes as best possible. State laws differ dramatically, and for a reason. I expect the Court to prevent such an approach: instead of allowing the people to decide a contentious issue of rights, love, and childrearing, they will almost certainly rip this away from the people.
They should trust the people more. If marriage is to be redefined, it ought to be by the American people, not unelected judges. We’ve seen the clashes already in California on this point, but by taking the issue national, the Court will sow social discord in significant ways with yet another enormous expansion of the Equal Protection standard, one which will inevitably set it up for future difficulties as plaintiffs take this new path to a logical conclusion. The reaction will not be as longterm as Roe, but it will be more divisive than the elites in media and politics expect, as any issue is where a decision is forced rather than allowing the citizenry to come around to the idea, where they view such matters as the working of legitimate democracy.
Ultimately, this debate is likely to do more damage to the public square than it ever should have in a system which understood the importance of balance, patience, and faith in the federalist approach which served this nation so well in the past. Trust in government is already at its nadir, and Supreme Court approval is near record low. Perhaps this is because the people understand they no longer direct the course of legitimate government which is supposed to serve their interests, and that on issues of life, death, and love, the will of a far-off power is now regularly imposed on them.
As Ronald Reagan noted, the Founders recognized the importance of “sovereign states, not mere administrative districts for the federal government”, and “regarded the central government’s responsibility as that of providing national security, protecting our democratic freedoms, and limiting the government’s intrusion in our lives — in sum, the protection of life, liberty and the pursuit of happiness. They never envisioned vast agencies in Washington telling our farmers what to plant, our teachers what to teach, our industries what to build… They believed in keeping government as close as possible to the people.” That principle is an inherently conservative one, a wise one, and should not be dismissed so quickly simple to achieve another political end.
[First Published at Ricochet]
No doubt a disturbing amount of these voters were unaware that Obama’s inauguration on January 21st was a ceremonial re-enactment of the constitutionally required one the day before, and certainly they accepted unquestioningly the line in his ceremonial speech in which he said, “We will respond to the threat of climate change… Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms.”
But that particular sentence only stays afloat when no one looks any deeper into it. The most damaging thing that can happen to a politicized thesis such as ”climate change” is for more people to actually question it and discover for themselves that it looks like indefensible misinformation. For President Obama and others promoting the idea of man-caused global warming, any kind of plausible opposition to this issue imperils it, so they avoid exploration of critical viewpoints and instead label them as “deniers”. Case closed.
That is the hallmark of far-left agendas. The global warming issue showcases how spectacularly this tactic fails.
Steve Goreham’s The Mad, Mad, Mad World of Climatism: Mankind and Climate Change Mania — which will have a second print run in April — dives headlong into addressing those who promote the idea of man-caused global warming.
Mad, Mad, Mad World is very effective in revealing the three glaring errors in Obama’s climate change inaugural speech statement. Goreham uncovers the false premise of the “denier” label in his chapter about the funding disparity between wealthy green organizations and the significantly less-funded conservative think-tanks. He points out how the “overwhelming judgment of science” myth falls apart in his “Big Whoppers about Climate Change” chapter, and notions about the supposed ‘devastating impacts’ of global warming crumble apart in his “Wild Weather and Snow Follies” chapter.
The Mad, Mad, Mad World of Climatism addresses all that and more in a very readable way, while placing fun fact tidbits in the page margins which further undermine the global warming crisis narrative from multiple angles. Goreham’s book has over thirty pages of chapter endnotes, most of them featuring web site links leading readers on an ever-widening path of discovery about the issue. A particularly inconvenient truth for those pushing the crisis narrative: neither the companion book for Al Gore’s film nor his 2010 Our Choice book has a single footnote or endnote. Our Choice has vague source references for a few of its charts. The Mad, Mad, Mad World of Climatism has endnotes on all of the short glosses in its margins.
Informed as I already am on the global warming issue, I still found new information in the book that I can use in debates with people on Al Gore’s side. One in particular I hadn’t known about: ex-EPA administrator Carol Browner had suggested “an electric company will be able to hold back some of the power so that maybe your air conditioner won’t operate at its peak”. I did know about the way inquiries into the ClimateGate scandal ended up looking like whitewashes, but Goreham boils that down in a way that any reader can easily understand and use against those who say ClimateGate was an inconsequential matter. Goreham deftly reinforces how the IPCC scientists involved in that matter are still in deep trouble and how the inquiries that supposedly exonerated them have readily-seen faults. I found this refresher especially useful.
As I noted in my review of Goreham’s prior book, Climatism!, his label of “climatists” is quite appropriate, more so than the term “warmist.” My own earliest notice of the so-called global warming crisis movement was the result of being puzzled about what happened to big concerns over global cooling. Goreham brings up that very topic on page 2, an episode emblematic of the need to solve whatever we are perceived to be doing to the planet.
I strongly urge people to buy and read this book, and to keep it on hand for quick reference when those who unquestioningly follow President Obama’s call for action on global warming ratchet up the clamor for action. Allowing such rhetoric to go by without a hitting back is to let the handlers of low-information voters win the day. What these handlers can’t tolerate is their minions losing the debate to high-information voters. Such losses breed more high-information voters, an anathema to the so-called global warming fraternity.
Borrowing an Indy-500 witticism about race drivers: There are those “who have hit the wall and those who will hit the wall.” I apply it to the global warming issue by suggesting there are those who are skeptical of man-caused global warming, and those who will become skeptics after reading skeptic material. The Mad, Mad, Mad World of Climatism is exactly the kind of book capable of accomplishing that transformation.
[First published at the American Thinker.]