Liberty

I just started reading a book that was recommended to me on the need for a Green Revolution.  I won’t disclose the name of the book until I have finished it and will provide a review, but there are some interesting points to be made.

The author approaches the subject from a liberal perspective.  Now, I know that many conservative pundits will read Green and see red.  They believe that the effort to go green is to subjugate us all to living back in the stone age.  I approach the subject with a different view.  I personally believe we will stop using oil long before we run out of it.  I also believe that people who carelessly pollute the environment should be stopped and punished.  This is particularly true when I am stopped at a traffic light behind a car bearing an Obama bumper sticker and they roll down the window and toss their cigarette butt on the street.  Serious hunters and fishermen tend to be conservationists as well since carelessness on that front is only going to come back and prevent them from doing what they love.  So if we start with the premise that we all want a planet we can inhabit and enjoy for a long time, both liberals and conservatives, we’ll probably come up with some pretty good solutions.

I also believe that if we can produce energy cleanly, why not?  The more we do that and learn how to do it more efficiently then the sooner we can fulfill my previous prophesy of not needing oil it long before we run out of it.  My main beef with the book so far is its belief that the solution lies in government “leadership” which I consider an oxymoron of the highest order.

I believe that many of the problems that we are now addressing are the direct result of government programs.  And as government continues to grow and take away our liberties and impose more “solutions” on us that don’t work, the deeper our problems will become.  Let me cite some examples:

• The Financial Crisis — the current financial crisis was triggered by the collapse of the housing bubble.  At the core of that collapse was Fannie Mae and Freddie Mac.  The former was created during the Great Depression, but like many government programs that might be a good idea when they start out, they are never shut down when their intended goals are achieved.  The bureaucrats, in a scramble to keep their jobs, go find another mission which eventually leads to trouble.  In the Johnson administration Fannie Mae was “privatized”, however, government backing was always assumed.  Johnson didn’t want Fannie’s debt on the federal balance sheet when he rolled out another massive government “solution” the Great Society.  Along comes the Carter Administration and the Community Reinvestment Act which compelled lenders to make riskier mortgage loans.  In the Clinton Administration, Attorney General Janet Reno got a lot more aggressive in threatening banks that didn’t step up lending of more and riskier mortgage loans.  President Bush may have called for more oversight of Fannie and Freddie, but at the same time he wanted to increase the level of home ownership.   All of this increase in demand drove home prices to unsustainable levels and once those who should have never gotten a loan in the first place couldn’t pay them back, the whole house of cards collapsed.
• Social Security — Now here’s a ponzi scheme that would make Bernard Madoff look like a piker.  It was a government program that started out with good intentions, that no one has had the political courage to fix so the government keeps kicking the can down the road for the next generation to deal with.
• Education — In the Carter Administration there was concern that we were falling behind in education.  The government’s solution?  Split off education from the Department of Health, Education and Welfare, into a stand alone Department of Education.  Since it’s inception in 1980 Congress has appropriated $1.06 trillion to the Department of Education. So how did that work out?  Now we graduate high school seniors that many colleges have to teach them high school skills so that they can succeed in college.  What about the free market?  If you mention school vouchers the liberals will scream.  School vouchers will ruin the public school system.  But almost everywhere it is tried, it is successful.  Where is Barack Obama going to send his children to school?  Not to public school.  At least Jimmy Carter sent his daughter to public school, so let’s give him points for not being so much of a hypocrite.
• Energy — After the 1973 Arab Oil Embargo, when nuclear engineer Jimmy Carter took office, the Department of Energy was created adding another huge bureaucracy to the already massive government.  Some of the arguments you hear today is that Brazil is energy independent and one reason for that is that they make ethanol out of sugar cane.  If the Brazilians can do it, why can’t we?  During the Carter Administration they used the argument that during World War II the Germans made petroleum out of coal.  If they could do it, why can’t we?  That brought about the Synfuels project.  Congress appropriated $100 billion for this boondoggle and every project under this program failed.  A proven energy technology is nuclear.  However in this country, since 1979, environmentalists and liberals killed the industry.  On Long Island a $5 billion nuclear power plant was built and all but ready to throw the switch and provide clean nuclear power to replace or cap the oil fired power that had until that point supplied Long Island’s needs.  The plant was ready, but protests that evacuation was impossible, shuttered the plant.  The cost of the plant was dumped on the taxpayers and now the hue and cry is that we are producing too much CO2.  The book mentioned the ignominy of President Bush going to Saudi Arabia to ask for a price break when oil prices were skyrocketing.  I think the true ignominy was that we were begging foreign governments to give us a break when our own government said we couldn’t expand oil exploration here.  Cuba and China could drill off of our coast but we couldn’t.  If the issue is a lack of oil refining capacity, put yourself in the position of an oil company CEO. You know that you can build a new refinery at a profit, but when you look across the bargaining table you see your government putting all kinds of obstacles in the way and at the same time pumping subsidies into ethanol providers who are your competition.  Are you going to place that bet on a refinery, or make do with what you have?  And while we’re at it, how efficient is it to stop the refinery to re-formulate a dozen or more different gasolines for different parts of the country?  That’s our government’s energy policy.  But, we’re supposed to believe that government can really tackle and solve our energy problems going forward.
• Food — While government subsidizes the ethanol producers to make a product that no one would buy if not for the heavy hand of government, they are at the same time paying farmers not to produce so that prices will remain high.  So corn is diverted from feeding cattle, producing corn syrup as a sweetener substitute for sugar (which is subsidized at twice the world price), and being used as a food by itself, driving up the price of all foods that have corn anywhere in the chain, our government is also telling farmers not to produce and pays them for it.  So call me skeptical if I don’t think that in the absence of government interference, we couldn’t feed the world.
• Automobile Bailout — We are now faced with bailing out the Big Three Auto Companies.  Why?  Well there are many reasons and I think chief among them is the government mandated CAFE standards.  When the first Arab Oil Embargo hit in 1973 people who wanted better mileage cars could buy from the Japanese and they did.  For years, you could get a high mileage car if you wanted to by buying a Volkswagen Beetle.  So why did Congress feel it was necessary to get involved?  The market provided the full gamut of choice that people had the liberty to make.  But government felt they had to intervene.  Was the motive to provide high mileage cars to help the environment or was it to appease the United Auto Workers (UAW) by limiting Japanese cars?  If you look at the history further the motive may become a little clearer.  When that didn’t work, because people still wanted to buy Japanese, the UAW figured it must be because wages are so low in Japan they couldn’t compete, so let’s make them build the cars here in the U.S.  The idea behind that was that the UAW would organize those plants and make them just as expensive as the Big Three.  With CAFE, and UAW organizing the foreign owned plants, the problem would be solved.  It turned out that the workers at the foreign owned plants didn’t want to be organized by the UAW.  So GM, Ford, and Chrysler were saddled with the costs that the union and management agreed to, and the CAFE standards were forcing them to build cars they couldn’t sell at a profit.  The Big Three could still sell cars at a profit, such as trucks, Cadillacs, Lincolns, but having to average the mileage of those vehicles with higher mileage cars, they might have to sell seven subcompacts for every Cadillac to meet the CAFE requirement.  Since Americans can buy a Toyota, Honda, Nissan or many other brands if they want a well priced, high quality, high mileage car, the Big Three have to price theirs at a loss to compete, because if they don’t sell the small ones they’re not allowed to sell the big ones.  What would happen if the market were left alone?  The foreign makers would supply the high mileage end of the market, the Big Three could make money selling trucks, SUVs, and high priced cars.  They could plow those profits back into the next generation of vehicles and as the price of gasoline climbs they would either continue to shrink to become smaller companies or they would develop a competitive product.  The problem is our government, through the CAFE standard has bled them of any profits.  They have nothing to plow back in to R&D to make a new generation of fuel efficient cars, all they can do is demand a bailout or cost the economy 3 million jobs.
• The New New Deal – This is the one that scares me most of all.  To address the current economic calamity we here that the Obama administration, nostalgic for the days of FDR, is going to create a new New Deal, only bigger and bolder.  The problem is that many people believe that FDR and the New Deal actually got us out of the Great Depression.  Folks, the Great Depression was ended by World War II, not FDR.  It dragged on for twelve years, and many of the steps intended to “fix it” made it worse and prolonged it.  From the Smoot-Hawley tariffs that killed international trade, to contracting the money supply instead of expanding it, to raising taxes instead of cutting them, to having government entities like the TVA competing with private utility companies, I shudder to think of the fixes this new administration is going to attempt.

Government just grows and grows, takes more and more of our liberties away, and screws up the economy with program after program.  It’s time we went program by program and measure its performance against its original goals and shut down any program that isn’t working, cut taxes that were needed to fund these beasts, and return the money to the people.

As far as going Green, I believe it is something that is important and that we should do for our long term benefit.  However, I believe it should be market based, not driven by some bureaucrat in Washington, that decides that this technology is better than that one.  They are not smart enough.  No one is.  If we need the government to help to fund basic research because there is no commercial application on the horizon for a private company to fund such research, fine.  If some financing help is needed to reach a tipping point for some early adopters similar to SBA backed loans, I think that would be okay as well.  But the focus should be on letting the market decide.

The idea that today the world is too crowded also makes me wonder.  If you took the population density of Manhattan island, then 3 times the current world population would fit in the state of Texas.  That leaves a lot of space remaining.

Are there problems to overcome?  Yes. Do we have the ability to overcome them?  Yes.  Is it better we start working on them sooner rather than later? Yes.  But, is it a good idea to expect our government to lead us there?  No.  Not by a long shot.  Let’s dispense with the scare tactics.  Let’s get the government out of our way rather than looking to government to come up with a solution.