Rick Perry at CPAC 2012

At CPAC this week, Rick Perry visited the Blogger Lounge and while there spoke briefly about the Keystone Pipeline.

http://www.youtube.com/watch?v=UOJmJklM_po

While President Obama is planning on raising taxes and spending another trillion dollars more than the government takes in for yet another feeble attempt at a government led job recovery, private industry jobs are ready to go, but he has killed it and China stands to benefit. Sure he will tell us that he is only delaying the decision until after the election to give time to study the issue in greater detail.

Similarly, he is bragging now about opening more acreage to oil drilling after he put a moratorium on drilling in the Gulf of Mexico, waiting until the oil rigs sailed into the sunset in search of more favorable countries, so now he can blame the oil companies for not drilling.

But getting back to the Keystone Pipeline, the argument of the environmentalists is that this pipeline will jeopardize a large drinking water aquifer in the mid-west. But this map proves otherwise.

Ogallala Aquifer Map

If you click on the link to enlarge the map you will see that the Ogallala Aquifer is already criss-crossed with many pipelines today and that the proposed Keystone Pipeline passes over the upper corner of the aquifer but otherwise goes around it.

This is purely Obama desperately trying to hold some kind of coalition together. But as in the recent battle with the Catholic Church over ObamaCare and contraception, he has supporters on both sides of the issue, a no-win situation. In this case it is the environmentalists on one side and union construction workers on the other. He continues to build upon his record and that record is a disaster for America.

That’s my opinion; I’d like to know yours. Please comment below.

They are still using the same tired rhetoric, about inheriting the worst economic calamity since the Great Depression. The truth is that the worst economic calamity since the Great Depression is the Obama administration. Barack Obama stands with Herbert Hoover as the only presidents with negative job growth during their administrations. As if stuck in the 1930s, Obama dusted off FDR’s playbook, since he had no personal executive experience to draw on, and that playbook didn’t work then and it’s not working now.

So along comes an opportunity for a major “shovel ready” project, backed by unions, that can create thousands of jobs, move us closer to energy independence, help us depend less on getting oil from Middle East despots, and what does Obama do? He kills it. What he wanted to do, was defer a decision on this until after the election, eleven months away. He wanted to do what he does best, vote “present”.

Congress, particularly the Republicans who seem to be the only adults working on Capital Hill, included a provision in the payroll tax holiday extension, to make a decision within sixty days. People are hurting, gas prices are creeping up, unemployment benefits have been extended to extraordinary lengths, and this incompetent president says that sixty days was not enough time to review the proposal so he had to, sadly, reject it. Perhaps if he hadn’t played all those rounds of golf, perhaps if he had studied it a little closer instead of spending all that time in Hawaii, perhaps if he put this job creating proposal on the top of the EPA’s to-do list instead of their focusing on the job killing regulations to limit power plant emissions, he would have gotten his job done. But no, sorry, I don’t have my homework, teacher, I dunno, I forgot, my dog…. Enough!

Let China make an oil deal with Canada. We can always buy the oil back from them at a premium. Why not, they probably don’t have enough of our dollars as it is now. Why not give them more? This president is making decisions that will cobble together a coalition of supporters to get him reelected. This is about appeasing the environmental movement so that they won’t abandon him.

At an event in Ottumwa, Iowa, on Dec. 31, Rick Santorum mocked the idea that the pipeline posed the threat of environmental damage, noting that there were already many other pipelines in the area it would go through. “This is just, again, pandering to radical environmentalists who don’t want energy production, who don’t want us to burn more carbon,” Mr. Santorum said.

The State Department, which has authority over this since it goes between us and Canada, “said there was not enough time to draw a new route for the pipeline and assess the environmental harm.” Bullfeathers. It’s a 1700 mile pipeline. The area in question is a fraction of that length. Agree to the pipeline, get started hiring people and building it in areas not in dispute, and work to resolve the section in question. But unless it is killed, Obama risks losing the green vote and what is more important, America or Obama’s reelection?

I’d like to ask my Congressman, Tim Bishop, to weigh in. What do you have to say about this, Tim? Or are you too busy manufacturing your own campaign issue around outsourced phone center jobs. If jobs are really important to you, you would stand up and challenge Obama for killing an opportunity for good, high paying, union jobs in America. On the other hand you can stay silent, not challenge President Obama’s error and risk his ire and possibly lose campaign funds and support. So what do you stand for, Tim? Putting America first or putting your interests right up there with President Obama’s and above America’s.

That’s my opinion; I’d like to know yours. Please comment below.

Tim Bishop likes manufacturing. The manufacturing of campaign issues, that is. In his effort to manufacture a campaign issue around overseas outsourcing, he got a lifeline from the White House yesterday when President Obama held an “insourcing” forum yesterday to encourage companies to “bring jobs back to America.” An editorial in the Wall Street Journal titled, “Insourcing for Dummies” describes the effort.

Having spent his entire adult working life at either Southampton College, which went out of business and was acquired by the State University of New York, and the House of Representatives, Mr. Bishop should be forgiven if his grasp of economics is lacking. So let’s try to help get him up to speed.

Coming from academia, I am sure Mr. Bishop will give due deference to a study on outsourcing from an Ivy League University. Matthew J. Slaughter, an economist at Dartmouth’s Amos Tuck School of Business, conducted a study where he found that for every job outsourced overseas, two jobs were created in the U.S. How could that possibly be? It works something like this.

Let’s say a company has an opportunity to outsource its call center overseas and takes advantage of doing so. It utilizes a well-educated work force in India, and let’s say it cuts its cost allocated to that call center in half. It now has additional capital to invest in growing the business. To do so, it hires more sales people, who in turn need sales engineers to explain their widgets to their perspective customers, and when the customers buy more widgets, more people are needed to process the orders and build the widgets. This boost of growth results in a boost in jobs.

Slaughter studied Bureau of Economic Analysis data, reported annually between 1991 and 2001 for 2,500 multinational companies. This was a time when India and China were ramping up their operations to take on outsourcing roles. What Slaughter found was that while employment in their foreign affiliates grew by 2.8 million jobs, U.S. based employment in the parent firms grew by 5.5 million jobs. Taking it a step further, when that job growth is compared to total job growth, those multinational created more jobs faster than the economy as a whole.

Tim Bishop’s Plan

So what is Tim Bishop’s big idea? He wants companies to shut foreign outsourcing or have two call centers that callers can choose between. That means there is no savings from the call centers, which translates into fewer profits to use to grow the business and hire fewer people. Also lower profits, means less tax revenues because what are companies taxed on? Correct! Profits!

So in the midst of a dastardly economy with high unemployment, and staggering deficits, Tim Bishop wants to curtail corporate growth, reverse conditions for job growth, and reduce tax revenues. What a trifecta! This is all so that Tim Bishop can have something, anything, to build a reelection campaign around. There no major call centers in his district, so this is a bald-faced effort to cling to office. If he was serious about the economy, he would be advocating for slashing the corporate tax rate or even backing the Fair Tax, so that money held overseas could flow back to the U.S. and perhaps other countries would build factories here and create even more jobs. But that would require a grasp of economics, instead of an iron grasp on his House seat.

That’s my opinion; I’d like to know yours. Please comment below.

Congressman Tim Bishop held an online town hall meeting to hear questions from constituents and give his answers. Perhaps he thought this a safer forum than a live town hall meeting. Last year’s meeting in Setauket did not go well and was soon viral on You Tube.

I will comment on three of the topics from that meeting: the payroll tax cut, regulations, and manufacturing jobs.

Payroll Tax Cut

Congressman Bishop came out heavily pitching the extension of the payroll tax cut, from the normal level of 6.2% to the current level of 4.2% and even to go lower to 3.1%, for at least another year. He made the startling claim, quoting some experts that if the payroll tax cut wasn’t retained it would cost 400,000 jobs. It must be from the loss of all that spending power generated from a 2% cut in the payroll tax. I am sure pizza parlors will be devastated, as the weekly savings to a typical family will be about the cost of a pizza pie. The other statistic was that if the payroll tax was cut further to 3.1%, 750,000 new jobs would be created. Interesting. Raise the tax by 2% and 400,000 jobs would be lost, cut it by an additional 1.1% and nearly twice as many jobs would be created. Like prior predictions of how government intervention would affect jobs, we are supposed to believe that employers will start hiring if the cost of hiring a new employee  is reduced by 3.1% for just one year, before going back up. Only those people who never worked in private industry, like Bishop, Schumer, Obama, would believe that.

Bishop insisted that these cuts would have no impact to the Social Security Trust Fund. Considering that there is nothing in the Social Security Trust Fund other than a bunch of IOUs from Uncle Sam’s other pocket, he may be correct on that front, but he said that the cut would be paid for cutting spending elsewhere. Not surprisingly, he didn’t say where exactly “elsewhere” was.

Throughout the call, Bishop’s press secretary was conducting a dopey poll. To paraphrase, “If you are in favor of the payroll tax cut that will put $1,500 in your pocket, press 1, if not, press 2.” Who wouldn’t press 1? What would the results be if he asked, “If you are in favor of borrowing $600 from China that your children and grandchildren will have to pay back, so that we can give you $1,500 today, press 1, if you think more borrowing and debt is a bad idea, press 2,” I think the poll would turn out quite differently.

Regulations

A caller who owned a small construction company asked about all the regulations and paperwork that businesses had to deal with. Bishop said that President Obama had things well under control forming a commission to “zero base” all regulations and hundreds and hundreds of regulations have been taken off the books. In the Wall Street Journal today there is an editorial titled, “Regulation for Dummies,” that paints a very different picture.

To answer the most basic question—has regulation increased?—we’ll focus on what the government defines as “economically significant” regulations. Those are rules that impose more than $100 million in annual costs on the economy, though there are hundreds if not thousands of new rules every year that fall well short of that.

According to an analysis of the Federal Register by George Mason University’s Mercatus Center, the Cabinet departments and agencies finalized 84 such regulations annually on average in President Obama’s first two years. The annual average under President Bush was 62 and under President Clinton 56

As the graph clearly shows the number of “economically significant” regulations under Obama has skyrocketed. This is what is causing the uncertainty that is hindering employment. How can this be curtailed? A bill just passed in the House of Representatives called the “Regulation from the Executive In Need of Scrutiny Act (REINS)”. This would require any of these economically significant regulations to be sent to Congress for approval before becoming being enacted. What the process is today is that Congress can vote against regulations, but that can be vetoed by the President. If the regulations are coming from the president, wouldn’t you expect him to veto it? This turns it around so that the Congress has to approve the regulations, if they don’t, there is nothing for the president to veto. The Democrats say this is a Congressional encroachment of the Executive.

“The REINS Act would undermine our ability to protect children from harmful toys, prevent asthma and lung ailments resulting from pollution, and ensure that our small businesses can compete fairly in the marketplace,” House Minority Whip Steny Hoyer added. “At the same time, it would force Congress to play a larger role in the regulatory process, leading to even more gridlock in Washington.”

Surely he forgot to mention killing bunnies in there somewhere. But let’s look at the process: Congress passes a law; departments in the Executive branch write regulations to carry out the law Congress passed. So why is it an outrage that Congress reviews economically significant regulations to see if the Executive is actually implementing what they passed? Tim Bishop voted against the REINS Act. This is another case of Democrats focusing on piddling regulations while saying “hands off” the really impactful ones.

Manufacturing Jobs

Another caller asked the Congressman about manufacturing jobs. He patted himself on the back for helping to bail out the auto industry. He said if he and others hadn’t done that that hundreds of thousands of jobs would be lost. I addressed the implausibility of this in an earlier post. In that post I argued that if GM and Chrysler went bankrupt and even if they didn’t come out of it leaner and meaner, people still needed transportation. They would buy Fords, Toyotas, Nissans, Hondas, etc., that are currently built here in the U.S. Those car companies would need to increase their purchases from suppliers and those who formerly supplied GM and Chrysler would be well situated to supply the remaining car companies. The argument that we don’t manufacture here anymore is a myth. On a dollar volume basis, we still manufacture more than any country on earth. A few miles from where I am writing this, in Georgetown, Kentucky, is the largest Toyota factory outside of Japan. Due to a free trade agreement with South Korea that the Democrats blocked for years, that Toyota plant will begin exporting about 6,000 Camrys a year from Kentucky to South Korea.

One of the reasons we don’t build more here is our lousy tax code. Fix it. A reason there is not more manufacturing in Mr. Bishop’s district on Long Island is high electric rates. Factories run on power and power on Long Island is expensive. One of the reasons for that is that government approved the building of a $5 billion nuclear power plant on Long Island, and then when it was ready to throw the switch, they changed direction and said it couldn’t open. So Long Island rate payers had to find and buy electric from other sources and pay for the mothballed plant that produced nothing. Once again, the government helping us out.

But Tim Bishop has a solution. He wrote a bill to ban offshore call centers from federal contracts or loan guarantees for five-year. Nothing like micromanaging a corner of the economy while the rest of it burns. Why not look to the root cause? Tax structure, too much regulations, ObamaCare, out of control government spending. If Congress would fix those problems maybe companies wouldn’t look offshore to set up call centers.

The Budget

Tim Bishop also touched on the deficit and debt. He said we need to cut spending, but he never said what he would cut; he said we needed to control entitlement spending, but he didn’t say how he would do that; and he said we needed to add revenue, but he knew exactly how to do that, tax the rich. Here’s how I see it. The government got us into this mess by spending too much money, they should get us out of it by spending less money. Asking for any more tax revenue is just shirking their responsibility for which they are paid handsomely, and passing the problem on to us. Who couldn’t solve the problem with enough money?

That’s my opinion; I’d like to know yours. Please comment below.

Boeing 787 Dreamliner photo by craezer

Yesterday, the House passed a bill that would prevent the National Labor Relations Board (NLRB) from telling Boeing, America’s largest exporter, that it couldn’t build a factory in South Carolina, a Right-To-Work state. Boeing built a $750 million factory (with their own money, not yours) and hired 1,500 workers, before the NLRB stepped in and called this union retaliation. But no jobs are being eliminated back in Washington state, in fact, Boeing has added  2,000 jobs.

So why is the federal government telling a private company where it can or cannot locate a factory? It is purely a union play, by a bunch of bureaucrats. Boeing faced a tough strike in 2008 for 58 days. Boeing’s new plane the 787 Dreamliner is way behind schedule, partly due to the strike. Boeing tried to negotiate a ten-year moratorium on strikes by the union. The union refused. So Boeing decided to add capacity in South Carolina. It didn’t shut down operations in Washington state, it didn’t relocate the plants in Washington to South Carolina, and yet the NLRB says it is a retaliatory move because of the 2008 strike. I guess in the bizarro world of the NLRB adding 2,000 jobs in Washington is retaliation.

What is President Obama doing about this? After all it is adding jobs in an economy that desperately needs them and doing so with private money. Obama says the NLRB is an independent board so his hands are tied. Now if you will excuse him, he has to get back to demanding more taxpayer money to create green jobs at a cost of around $600,000 each. Meanwhile, Obama’s jobs adviser, Jeffrey Immelt of GE is shipping jobs off to China to help the Chinese compete with Boeing. What the hell is going on here?

We have Congressman like Tim Bishop fighting to keep an unneeded post office open at taxpayer’s expense, and fighting to stop Boeing from creating jobs with private money in South Carolina. He is joined in this effort by his Congressional neighbor, Steve Israel, from the adjoining district who also happens to head up the Democratic Congressional Campaign Committee, responsible for giving control of the House of Representatives back to Nancy Pelosi. This is purely a union play. But I’ve got some bad news for the Congressmen. According to a recent Rasmussen poll 48% of Americans no longer see a need for labor unions, while 30% disagree.

The unions threw everything they had at Scott Walker in Wisconsin and lost; they came out in force against Bob Turner in NY-9 and lost; we have Jimmy Hoffa calling the Tea Party folks “sons of bitches” who should be taken out. Taken out? Maybe it’s just me, but that sounds like a violent threat, not that the unions are ever violent, but I am probably overreacting. We all know that violence always comes from the Tea Party.

It’s time to clean house people. Jobs are created by private industry, not government. Our president doesn’t understand that. Not only does he not understand that but his appointees at the NLRB are actively working to kill private sector jobs. President Obama for an equivalent time in office, has the second worst job creation record, only surpassed by Herbert Hoover. He and Hoover are the only two presidents since 1890 with negative job growth over their first two and a half years in office. If there are any moving companies that do business between Washington, D.C. and Chicago, you might want to add 1600 Pennsylvania Avenue to your mailing list.

That’s my opinion; I’d like to know yours. Please comment below.

Photo by Dave Makes

Two news items yesterday, when put together, start to tell an interesting story. Warren Buffett invested $5 billion in Bank of America in a private sweetheart deal that will guarantee him a 6% return (that’s $300 million per year) and he is hosting a fund raiser for Barack Obama in New York where the tickets start at $10,000. What’s going on?

Barack Obama is the worst jobs president since Herbert Hoover (see previous post on this); the economy is flat lining; and yet Buffet thinks Obama is doing a great job. Think of some of Obama’s other supporters among the captains of industry: Jeffrey Immelt of GE and Howard Schultz of Starbucks.

Crony Capitalism

What is crony capitalism? Crony capitalism is where we have a capitalist economy but instead of truly free markets, some business leaders get cozy with government to tilt the playing field in their favor. Those on the left like to paint conservatives as the champions of big business and the wealthy, but if you look at the campaign contributions of many big business CEOs you will be surprised at who they support. Let’s look at two examples, Warren Buffett and Jeffrey Immelt.

Warren Buffet

In the financial meltdown triggered by the housing bubble bursting, the government stepped in to prevent large financial institutions from failing. This creates what is known as a moral hazard. A moral hazard is where the risks associated with a particular transaction are covered by someone else such as the government or insurance, so the investor is willing to take overly large gambles. Why? Generally, the bigger the risk, the bigger the payoff if you are right and if the downside is protected by government or other parties you have less to lose. Big upside, small downside, let’s play!

Warren Buffett invested in Goldman Sachs in the midst of the financial crisis in 2008, as a result of his $5 billion investment he reaped “$10 billion in interest, fees, and dividends,” according to Mark DeCambre at the New York Post. If you know that the government won’t let the bank fail, what is your downside risk? The upside turned out pretty sweet. Warren Buffett was an adviser to candidate Barack Obama and you can be sure the topic of how to handle the fiscal crisis was discussed. Buffett is now investing in Bank of America where his company, Berkshire Hathaway stands to make another killing. Would the government stand by and let Bank of America go under? What do you think?

Warren Buffett has also been making the rounds calling for more taxes on the rich. This writer and others have suggested that if Warren Buffett thinks the government deserves more of his money, go ahead and write the check, but he balks at that suggestion. Why? Depending on when you measure it, Warren Buffett is one of the three richest people in America. No matter how high to raise the tax rates, he will be able to afford it. Other entrepreneurs and small businesses may not be able to afford the higher taxes and thus find their companies financially squeezed. Buffett’s company Berkshire Hathaway has made a lot of money buying up good companies. Could his high tax advocacy be a way for the government to create some new investment opportunities for him?

Buffett has also invested in a Chinese company to build electric cars. Why didn’t he invest in GM to help sell the Chevy Volt? In the midst of this lousy economy President Obama announces new CAFE standards that would require car companies to build cars that would get over 52 miles per gallon by 2025. That will probably drive GM and Chrysler out of business with their heavily unionized companies already at a severe cost disadvantage of around $2,000 per car. What a great opportunity this would create for a company with an electric car! Slap a GM or Chrysler nameplate on it and voila, problem solved.

Jeffrey Immelt

For all the talk about higher taxes, General Electric paid no taxes in 2010. During the fiscal crisis GE got large sums of money from the government.

During the wild Congressional spending spree of the last couple of years, GE miraculously became the largest beneficiary of the government’s Troubled Asset Recovery Program (TARP) bank bailout. Although GE did not initially qualify for TARP, the company’s $18 million annual investment in battalions of Washington DC lobbyists convinced Administration regulators to push that “reset” button and extend TARP guarantees and subsidies to GE. Public records demonstrate GE Capital, the company’s massive financing arm, pocketed $120 Billion in loans from the Federal Deposit Insurance Corporation at interest rates of less than 1% and snatched 25% of the entire $340 billion in subsidies from “Temporary Liquidity Guarantee Program” (TLGP) rescue fund. — Chriss W. Street

Immelt has also been appointed as the head of President Obama’s job council. At the same time Immelt is entering into an agreement with China to build airplanes to compete against Boeing. Meanwhile do you recall Boeing and the government being in the news lately? Well the National Labor Relations Board has told Boeing that it cannot open another factory that will hire 5,000 employes in South Carolina. In the midst of 9% unemployment, Obama said that the NLRB was an independent agency and his hands were tied. How convenient?

What’s that Smell?

While the engines of job creation, small businesses, are stuck wondering what will hit them next, the crony capitalists are cozying up to President Obama and getting fat while stymieing their competition. I don’t know if this is illegal or not, but how much different from insider trading, at least from appearances, is this? The heads of major corporations give advice to President Obama, go out and make spectacular deals, and the economy continues to languish while they get rich. They get rich not because they have a better idea, or are more nimble, but because taxpayers are absorbing much of the risks while they make the dough. Perhaps Congressman Issa can use his Government Oversight committee to ask a few key questions.

That’s my opinion; I’d like to know yours. Please comment below.

Photo by Ted Abbott

Can we now drop any pretense that Joe Biden is anything but a CINO (Catholic in Name Only)? On his latest state visit to China, Biden gave a speech that should be characterized as other than “just Joe being Joe.”

We already know that Joe Biden is cheaper than dirt when it comes to his own money and sharing it with the least of his brothers. His financial disclosure records are proof enough of that. Recently Vice President Biden attended Sunday mass at a church in Southampton on Long Island. A friend of mine reported that when the collection plate was passed around, Biden kept his hands a safe distance away from his pockets, but he is quick to preach that the government is entitled to as much of your money as it needs.

Biden is also pro-abortion, something that goes against basic Catholic teaching. But if that were not enough to hide behind the fig leaf of “I’m personally opposed to abortion but I shouldn’t impose my views, yada, yada, yada,” he gives a speech in China saying he understands their one child per family policy. This is a policy where the government of China will force families to abort any pregnancies if that family already has a child. As American he should strongly protest such an intrusion on human rights. As a Catholic he should condemn it in the strongest possible terms.

So the next time the main stream media wants to hang a shred of decency on some immoral practice because Joe Biden or Nancy Pelosi supports it, just leave out the part that they claim to be Catholics.

That is my opinion; I’d like to know yours. Please comment below.

Actual Unemployment vs. Stimulus Sales Pitch

It was a very close race, one of the last decided in the country. Out of 180,000 plus votes the final margin of victory was just under 600 votes. In that election Tim Bishop successfully managed to hide from his record and instead he took advantage of a late Republican primary that was hotly contested and pounced with a campaign of personal attacks on his opponent that was just enough to carry the eight weeks until Election Day. His opponent, Randy Altschuler, wants a rematch and it appears the race will be decidedly different.

Bishop’s campaign theme, oddly enough, was that Altschuler was an entrepreneur who created jobs both here and abroad. Only he conveniently left out the part about jobs created here.  In the middle of an economy with high unemployment and a woefully inexperienced administration in charge, it seemed an odd point of attack, but what else did Bishop have? Could he brag about his vote for ObamaCare? He needed a police escort to get him out of a town hall meeting where he tried to explain that vote. Could he brag about the stimulus? We were told that without the stimulus unemployment would rise to 9% while implementing it would cap unemployment at 8% (see chart above). Bishop dutifully voted with Nancy Pelosi for the stimulus and unemployment soared. Most people would conclude that the administration was wrong and the stimulus actually made things worse.

In his Congressional district, the share of the $787 billion that was borrowed for the stimulus from places like China that will have to be repaid by his constituents is roughly $3 billion, however the amount of stimulus dollars that came to the district is between $600 – $700 million. In effect, Congressman Bishop voted for a stimulus program that failed and saddled his constitutents with an additional $2.3 billion in debt to pay for stimulus dollars given to other Congressional Districts.

Mr. Bishop’s ignorance of basic economics explains a great deal of his misguided policies. In defending his bailout of the automobile companies, he says that if he hadn’t done that, we might have had one million more people unemployed. This is economic hogwash, as I point out here and in my book, Liberty’s Lifeline. The left clings to what is called static analysis. What does that mean? It means that no matter what happens people won’t change their behavior.

Picture yourself standing under an umbrella in a rain storm. If someone takes away your umbrella what will you do? You will probably seek some other form of shelter as soon as you can. That is dynamic analysis. You lose your umbrella, you immediately look for a substitute. The left believes that you will continue to stand there in the rain and get soaked. That is static analysis. Under static analysis, the government works. Under dynamic analysis the free market works. Static analysis says that if you raise tax rates, you will collect more money and if you lower tax rates you will lose money. Free markets have proved that lower taxes increase people’s incentive to produce and therefore increase total revenues. Static analysis says that if there are one million people employed by GM, Chrysler and their suppliers, if GM and Chrysler go completely out of business, one million people will be unemployed. Free markets say that people still need transportation. If GM and Chrysler go out of business, poeple will buy from Ford, Toyota, Honda, et. al, and those companies will need to increase production to meet the demand from former GM and Chrysler car buyers. Therefore they will need more employees which they can find from the pool of people just laid off from GM and Chrysler. Will it be all of the former employees? Probably not. Will it be the disaster that Tim Bishop says he prevented? No. But Tim Bishop who spent his entire adult working life in academia or government doesn’t understand this. And since he doesn’t understand economics he has and will continue to vote for bad ideas like the stimulus.

Tim Bishop says he is fighting high gasoline prices with his “Big Oil Welfare Repeal Act.” On his website introducing the bill he says that he is fighting $4 a gallon gasoline prices with this kind of bill. A few lines later on the same web page, he says the bill will have no effect on gasoline prices. So why is he wasting Congressional time with such a measure when we are facing national bankruptcy? Simple. It fits into a nice thirty-second sound bite that he can feed to the public when he runs for re-election, letting them believe he is doing something serious when he is not.

To give you a sample, here is the latest from Tim Bishop’s spokesman, Jon Schneiderman.

Randy Altschuler would rather launch baseless attacks than give a simple yes or no answer whether he supports the Republican budget to end Medicare as we know it. Maybe Randy can go to Brookhaven National Lab and talk to the 1,000 workers who have a job today because Tim Bishop fought the Republican budget, and tell them where he stands on the issues.”

So there you have the crux of Bishop’s weak reelection strategy. Questioning Bishop’s record is a baseless attack. With a budget deficit of $1.5 trillion that Tim Bishop helped create by voting with Nancy Pelosi 97% of the time and Bishop is fighting to keep spending high? The Democrats have no plan of their own (Obama’s budget was defeated in the Senate 97-0) on how to cut spending and that is a defensible position? Medicare is broke. Tim Bishop voted to cut $500 billion in Medicare funding with ObamaCare and now reforming the system before it goes bankrupt is a bad idea? As far as Brookhaven Narional Labs, we all feel for people who lose their jobs, and there are plenty of those stories to tell. But the folks at Brookhave National Labs are government employees, and the govenment in in dire financial shape. So Tim Bishop fights to keep spending high to save 1,000 government jobs, hands the bill to the rest of his 710,000 constituents who must deal with this administration’s disasterous economic policies and he thinks this is leadership?

It’s time that Bishop and Schneiderman start talking about and defending Tim Bishop’s record and what he thinks we should to to get the economy moving again. He squeaked into office in 2010 and things have gotten worse since. In stead of spending time crafting sound bites that can patch over his poor record in Congress it is time to get our country back on the path to success and get Washington out of micromanaging out lives.

That’s my opinion; I’d like to know yours. Please comment below.

With gas prices on the rise, Bill O’Reilly, is once again targeting his favorite whipping boy, The Speculators. Like a 1940′s whodunit, we are told of those evil greedy speculators and how we need more government intervention to reign them in. The question that is never asked nor answered is, where do the speculators go when gas prices fall? If their evil intent is to drive up prices so they can make obscene profits, why would they ever stop?

It was only about three years ago when gas prices were similarly on the rise. The O’Reilly Factor was all over the speculators and how they were greedy, selfish, and had to be stopped. But from June 2008 to December 2008 the price of a gallon of regular gasoline dropped from $3.99 to $1.66 and no mention was made about the speculators. Why? Did they disappear? No.

The speculators were still there, but this time they were driving prices down. Huh? Speculators don’t care if the price goes up or the price goes down. All they care about is that the price moves in the direction they predict it will. If speculators predict prices will rise because of supply and demand, which could be affected by growth in China or political upheaval in the Middle East, they will help push prices up. If they predict prices will fall because of a severe economic contraction, they will help push prices down. They are performing a legitimate market function by providing liquidity, they are not out to get “the folks,” as Bill likes to say. Economist Walter Williams explains it here using other commodities to take some of the emotion out of the discussion where oil is concerned:

Here’s a non-rocket science question: If you expect a reduced harvest of wheat, corn, rice or any other commodity some time in the future, what would be the wise thing to do about your consumption today? I bet that the average person would answer: Consume less now so that more will be available in the future.

But how in the world can people be encouraged to consume less now? Enter the futures market, which consists of a worldwide group of millions upon millions of traders, often called speculators. Speculators, betting on a future shortage, buy up wheat, corn and rice today in the hopes of making money selling it for a higher price when the bad harvest hits. As speculators buy more and more wheat, corn and rice, they drive up today’s prices. As today’s price gets higher, people consume less, but more importantly, people do the intelligent thing without bureaucratic edicts. The vital role of the futures trader, or speculator, is to allocate goods over different time periods. And, it’s not just wheat, corn and rice that must be allocated over time but all commodities including oil.

Okay, that may explain the speculators but some have also said there is ample supply of oil, so why are prices rising?  If it is not the speculators, who is at fault? To that I say turn your eyes toward Washington. Oil is an international commodity that is priced in U.S. dollars, because U.S. dollars are the world’s reserve currency. But what has our government been doing to the dollar? With the reckless spending and unprecedented borrowing and indebtedness, we are printing money like crazy which is driving down the value of the dollar. As the value of the dollar falls, you need more of them to buy the same amount of oil.

Gold vs Gasoline prices

As you can see from this chart, the trend in gasoline prices closely matches the trend in gold prices. At one time our dollar used to be backed by gold, so you can look at gold as value based money rather than fiat money. Fiat money is where a government issues paper and says it has a worth that the government determines. There isn’t any real commodity or thing of value behind it, it has value because the government says so. Let’s look at it a different way. Let’s say you could buy your gasoline by using gold instead of paper dollars. In 1990 it would have taking 0.003 ounces of gold to buy a gallon of gasoline. In April 2011 it would take 0.0025 ounces of gold to buy the same gallon of gasoline. So while we are starting to worry about gasoline costing nearly $4 a gallon nationwide, it is really relatively cheap on an historical basis, so watch out.

Price of a gallon of Regular gasoling in ounces of gold

Historically you can see a slight upward trend in the price of gasoline when using gold as the standard of value. It has been climbing, but not ridiculously so.

So lay off beating up on the speculators and start turning your firepower on Washington. If we don’t get our fiscal house in order and soon, we will be in very deep trouble indeed. This has to be fixed and it has to be fixed now; not in ten years, not in twenty years, NOW.

That’s my opinion; I’d like to know yours. Please comment below.

(This is the second of a series of articles focusing on topics presented at the Cato Policy Perspectives 2011 conference held at New York’s Waldorf Astoria hotel on Friday, April 8, 2011)

Kicking off the conference, Ed Crane, president of the Cato Institute, talked about American exceptionalism and how President Obama doesn’t believe in that. To illustrate, he gave the example where while in Europe the president was asked if he believed in American exceptionalism, and he hedged by saying he supposed so, just at the Germans believe in German exceptionalism, the British believe in British exceptionalism, and the Greeks believe in Greek exceptionalism. President Obama doesn’t think that America is exceptional and to the extent that he might, he is doing everything in his power to root it out.

The other key point that Mr. Crane made concerned people talking about national goals and aspirations. Nations shouldn’t have goals. People should have goals and nations should protect their right to pursue them. Who wants Washington to set some goals and then have individuals reorder their lives to fit into the grand plan? To me that is the essence of the battle between libertarianism and statism. This is also a nice segue into the Cato presentation on education provided by Charles Murray.

Education

One of the key contributors to American exceptionalism is a well educated work force, and we may be losing that edge. However, Mr. Murray found reasons for optimism. Another point of view I wish to consider was in an article in the Wall Street Journal today by Vint Cerf, one of the real forces behind the Internet.

At a time when we see the tragedy of K-12 education played out in the documentary Waiting for Superman and the pitched battle over public sector unions and teacher tenure in Wisconsin, Mr. Murray’s talk titled. “The Coming Good News About Market Forces and Education,” might seem a bit out of place. He didn’t delve too deeply into K-12 education, other than to say there are a lot more options today than there were in the past, among them: home schooling, charter schools, and vouchers. Mr. Murray’s focus was on post secondary education.

First the bad news:

• The BA degree is no longer a classic liberal education. There are precious few institutions (Murray could name four) that actually provide one.
• He called it a saccharin education with almost anything qualifying as a course. Some of my favorites are: The Stupidity Course at Occidental College (one of Obama’s Alma maters); The science of Harry Potter at Frostburg State University; The Simpsons and Philosophy at UC Berkeley; and Tree Climbing at Cornell University
• It used to be you spent four years getting a BA to mature and grow. In the old days you had a more distant relationship with your professor, more like a supervisor at work. He didn’t care how many other courses you had, he gave you an assignment and he expected you to finish it on time, if you didn’t you failed. Which brought to mind a professor I had at Manhattan College who taught math. His famous saying was, “Engineer build bridge, bridge fall down, no partial credit.” Today that’s not the case. If you miss an exam, you take the makeup test. If you don’t like your grade, you whine to the professor.
• There is now a residence staff at most colleges to do the things parents used to do, so that now four years living at school is just a way of prolonging adolescence.
• He called it a con game
  • You need a degree to get an interview
  • A degree will get you a wage premium over those who don’t have one
  • There is no relationship between a degree and what you actually learned
  • An employer sees a degree and knows two things: one, you have some level of intelligence; two, you have some level of perseverance.
  • A Yale graduate is important not because of what they learned at Yale, but the fact that they got into Yale when they were eighteen speaks to some amount of raw material to work with.

Now the good news.

• Universities were built to support a large library, bring together great minds for scholarship, and enable a large number of students to listen to lectures. Things have changed
• We no longer need a physical library — with the Internet and resources such as Google books you can access a tremendous amount of research material from home.
• Scholarship is now done through collaboration across the world, not across a campus.
• Distance learning works. Why listen to some adjunct give a lecture when you can sit in one room while a Nobel laureate a thousand miles away conducts the lecture?

With the expense of college seeming to be without end the status quo cannot continue. Employers know they are not being served. But there is an enthusiastic group of suppliers ready to provide solutions.

The real course work to learn a skill in college could probably be completed in one and a half to two year, Murray estimates. If a set of certifications could be developed, and Murray cites the CPA exam as an example, that would demonstrate to employers that the applicant before him has actually acquired a set of skills, what more would they need? If similar certifications for marketing, teaching, social work, etc. could be developed a new form of post secondary education might be born. Then the goal of a good education could be about learning how to find what you love and how to pursue it.

Innovation

Vint Cerf has a slightly different take;

Despite our well-developed college and post-college system, America simply is not producing enough of our own innovators, and the cause is twofold—a deteriorating K-12 education system and a national culture that does not emphasize the importance of education and the value of engineering and science.

Perhaps there is a solution in the melding of the two. Our K-12 system produces 1 million dropouts a year and 70% of eighth graders cannot read proficiently. It is broken. We need to put students ahead of job security for teachers and allow talented teachers to receive the economic rewards worthy of their talent. Unions are for just the opposite, protect the inadequate teacher and don’t reward the good teacher as they make the “rest of us” look bad.

But we do need more engineers and scientists. How do we encourage that? First we need to get education out of the hands of Washington. Washington will make sure the solution is bland and ineffective. One of the biggest backers of the creation of the Department of Education was the National Education Association the big education union, so that should tell you something. Let the fifty states come up with competing ideas on how to accomplish this.

Perhaps state schools could offer loans to engineering and science students that would cover whatever financial aid didn’t, in other words a free education. The trade off would be that they had to work in that field in that state. If they did 1/10 of the loan would be forgiven in the first year, 1/9 of the remaining principle and interest would be forgiven in the second year, 1/8 in the third year, such that after ten years, the loan would be fully forgiven. Employers would be attracted to locate near the schools to pick up the talent that graduated. The additional revenue generated from high tech businesses in the state, the income tax revenue from highly paid engineers and scientists coupled with the lower cost of dropouts who end up in prison should make this a cost effective program. All of the capabilities that Charles Murray talked about could be used to form a K-12 to post secondary bond to interest younger students to go into the engineering and science disciplines.

Charles Murray thought this would happen over the next ten to fifteen years. It should a priority to set up sooner. If we fail to act, the replacement for the iPhone won’t just be made in China, it will come from a Chinese company.

That’s my opinion; I’d like to know yours. Please comment below.