By Thomas E. Brewton
As prolongation of the 1930s Depression and stagflation in the 1970s demonstrated, Senator Obama’s announced policies are a prescription for economic disaster.
Keynesian economic doctrine, not under that name, but in substance, is back in the news in a truly menacing way. Senator Obama proposes to repeat the policies of Franklin Roosevelt’s New Deal that turned an ordinary two-year recession into an eight-year disaster, with unemployment rates continuously in the high teens.
The key elements of Senator Obama’s proposed economic policies, as in the New Deal and the stagflation of the 1970s, are much higher taxes, along with a pervasive increase of business regulations and price controls in healthcare and energy (which sharply depress business activity and employment rates), full-frontal embrace of labor unions (which will push up wages and benefits to levels deterring profitable expansion of industrial production), and massive new government deficit spending (which will accelerate the already dangerously high rate of inflation and devaluation of the dollar). Carried out as he proposes, Senator Obama’s polices will lead us again into the swamp of stagflation.
The basic thrust of Keynesianism is the belief that control of the economy must be collectivized at the Federal level, because private business is incapable of providing full employment, and because the proper goal of economic policy must be thwarting greedy businessmen to attain so-called social justice: equal distribution of income and wealth, without regard to merit, capability, or hard work.
Not surprisingly the New York Times editorial board and the Times’s propagandist Paul Krugman are prominent Keynesian enthusiasts.
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Posted by Walt in Economics, Presidential Race categories at 10:58 PM EDT
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By Thomas E. Brewton
Why does much of New Orleans still look as if the 2005 devastation of Hurricane Katrina had occurred just a few weeks ago?
Huge areas of New Orleans still are wastelands. New Orleans's liberal-progressive-socialist Senator Mary Landrieu has grabbed far more than her share of Congressional pork. Hundreds of millions of Federal dollars spent for rehabilitation have produced far too little beneficial result. People were without electric power for months; the police department contained more thieves than honest law enforcers; drug-dealing and prostitution remain major enterprises; and the city still retains its crown as the nation's murder capital.
One of the city's few "legitimate" businesses is casino gambling.
City and state administrations have yet to coordinate rebuilding plans, as politicians fight over who gets what share of the spoils.
The best that the city's Mayor Nagin can do is to demand that the Democratic-socialist Party presidential candidates pledge to send even more pork to New Orleans.
What accounts for this dismal record?
The answer is simple. New Orleans abandoned God and personal moral responsibility, turning instead to worshipping the atheistic, secular political state. That secular god has failed miserably, notoriously so in the aftermath of Katrina.
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Posted by Walt in Economics, Liberalism, Politics, Social Issues categories at 11:49 PM EDT
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By Thomas E. Brewton
Today's clamor for more regulation of financial institutions to prevent another subprime mortgage meltdown is an exercise in self- deception.
Congress, led by Representative Barney Frank, is planning to overhaul regulation of the financial community, and Treasury Secretary Paulson has already proposed a broad program for that purpose.
No doubt, much of what is proposed is needed. But it should be obvious from repeated experience over the decades that regulations alone will not prevent periodic economic booms and busts.
Only by dealing with the root cause will we moderate economic cycles. And that root cause is the ineluctable human tendency to over-expand bank credit when the money supply is artificially enlarged.
Today's proposed subprime mortgage regulations may prevent tomorrow's repetition of that phenomenon, but they will have no restraining impact upon whatever the next speculative bubble may be. Sarbanes- Oxley regulation was instituted after the dot.com bubble-burst and the corporate collapse of Enron, but it had no restraining effect upon the speculative housing bubble, of which subprime lending is merely a symptom, not a cause. Before that, we had the speculative explosion of commercial real estate over-building that ended with the collapse of the savings and loan institutions in the 1980s.
Beginning with our nation's first financial panic in 1819, similar boom-and-bust patterns appear every five to ten years, except in extraordinary circumstances such as wartime.
In one respect, Karl Marx's economic analysis was on the mark.
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Posted by Walt in Communism, Economics categories at 10:16 PM EDT
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From 1789 to 1815 Congressmen received $6.00 daily, but only on the days they showed up. From 1815 to 1855 Congressmen received a modest salary, compared to the massive salaries of the Congressmen today. In 1855 their salaries increased to $3,000 annually. Then in 1865 they gave themselves a 66% increase to $5,000 annually. 6 years later they boosted their salaries another 50% to $7,500 per year. The American People became so outraged by the greed that congressmen were showing, that congress was forced to take a 33% paycut, which lasted 34 years until 1907, at which time they gave themselves another 50% increase back to $7,500 annually. They took two other paycuts, both of which were during the Great Depression, for a total of 15%. These are the only 3 times in American History that any Congressmen have ever taken salary cuts.
In 1935, Congress voted themselves a 19% increase, then they didn't receive another pay raise until 12 years later, when they gave themselves a 25% increase in 1947. In 1955 Congress gave themselves a whopping 80% increase. In the years 1987, and 1991 Congress received 2 raises per year. 3% + 20% in 1987, and 4% and 25% in 1991. Within the last 10 years Congress has raised their salaries 8 times for a total of 26%. While the lowest paid American Workers have only received 1 raise within the last 10 years.
In the last 25 years Congress has seen 18 salary increases totaling 277%. While the lowest paid American Workers have only seen 5 wage increases in 25 years totaling a mere 166%. In the last 25 years the cost of living has increased 251%. The Minimum Wage has not been increased since 1997. While Congressmen's pay has increased 8 out of the last 10 years. To see what Minimum Wage would be, if Congress had given American Workers the same amount of increases they took, click here.
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Posted by Walt in Economics, Politics categories at 11:40 PM EDT
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By Alan Caruba
Having written about the energy industry and issues now for a long time, I hope I can be forgiven for being enraged by the comments by Sen. Charles Schumer (D-NY) in response to President Bush’s press conference Tuesday morning. There is simply no way to describe them other than false.
The Democrat Party has long made “Big Oil” their favorite punching bag, confident that the public has no idea what influences the price and supply of oil. Saying anything favorable to Big Oil is immediately deemed evidence that one is in their pay and whatever facts are offered are therefore invalid.
There are, however, some simple truths about Big Oil that cannot and should not be ignored. To do so leaves everyone at the mercy of energy policies that have created the situation in which the United States finds itself today.
Fact #1. The combined ownership of oil reserves by the independent, investor-owned oil companies such as ExxonMobil, Conoco-Phillips, BP, Chevron and others is barely 4% of the total known oil reserves in the world. By itself, ExxonMobil’s share is 1.08%.
Fact #2. Oil is a global commodity sold on mercantile exchanges for whatever price it can command. Speculation in oil prices is the primary reason they have been driven to utterly insane costs per barrel. It has nothing to do with actual supply and demand.
Fact #3. No nation on Earth is or can be “energy independent.” The geopolitics of oil is complex, but as nations such as China and India have seen their economies grow, their need for oil grows with it and thus they compete with long established industrialized nations for existing oil supplies. This competition has an impact on prices.
Fact #4. The OPEC nations, those in the Middle East and including Venezuela, control 77% of the world’s known oil reserves. Like Russia and Mexico, where the oil industry is controlled by the state, it is generally poorly managed. Several Big Oil companies that were induced to undertake exploration and development in Russia and Venezuela actually had their assets nationalized or stolen at prices well below their investment and value.
Fact #5. Energy is the master resource. All nations with any hope of growing their economies require it, mostly in the form of electricity, but also for oil’s role in transportation. The failure to have a national long-range energy policy that is based in reality can severely impact energy prices.
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Posted by Walt in Economics, Energy, Environment Issues categories at 9:45 PM EDT
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By Alan Caruba
Okay, let’s say that President Obama or Hillary is in office and Congress has passed a bill that requires everyone to have health insurance. Gas is up over $4.00 a gallon, food prices are sky high, and, if you’ve recently graduated from college, you are paying off loans at $1,000 per month.
If you’re a homeowner, you have a mortgage, property taxes, and a stack of other bills. You’ve got to decide between paying the mandated premium or being able to drive to work, buy food, holding onto your home, or keeping the bill collector from your door.
All of a sudden, mandatory health insurance doesn’t seem like such a great idea. In fact, your big worry is that Social Security will be able to send you a monthly check and that Medicare and Medicaid won’t go flat broke before you die. Trustees for these massive entitlement programs just announced Social Security will be depleted by 2041, while Medicare goes bust eight years from now in 2019.
According to a March 18 Policy Analysis published by the Cato Institute, health care consumers are annually spending “more than $1.8 trillion dollars for overall health costs, more than what Americans spend on housing, food, national defense, or automobiles.”
Moreover, “because of the way health care costs are distributed, they have become an increasing burden on consumers and businesses alike. On average, health insurance now costs $4,479 for an individual and $12,106 for a family per year. Health insurance premiums rose by little more than 6 percent in 2007, faster on average than wages.”
The news gets worse. “Moreover, government health care programs, particularly Medicare and Medicaid, are piling up enormous burdens of debt for future generations. Medicare’s unfunded liabilities now top $50 trillion.”
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Posted by Walt in Economics, Health categories at 10:41 PM EDT
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By Alan Caruba
Recently I emailed a gentleman who is highly regarded, nationally and internationally, as one of the top strategic, military and economic long-range thinkers of our times. He is the author of several bestselling books about the way globalization is impacting the lives of the Earth’s population.
In addition to having read his books and magazine articles, I occasionally visit his blog to read what he is thinking about currently. I noticed that he was casually referencing “global warming” in a post, so I emailed to let him know that there is no scientific proof or basis for the endless global warming claims. I cited all the usual data that disputes it and I provided the URLs of several websites that could provide him with even more.
His response was quite revealing. “It doesn’t matter one way or the other. All the same fixes are required for sheer pollution reasons on a global scale given population increase and consumption increase. You’re arguing the past.” He would later post that, so far as the data debunking global warming, he was “beyond caring.”
As I interpret this, no matter how utterly false the justifications are for the global warming hoax given by Al Gore, the United Nations Intergovernmental Panel on Climate Change, and others, leading to efforts to replace, slow or deter the use of energy sources such as coal, natural gas and oil, this particular influential intellectual was beyond caring because the world’s population was responsible for pollution and consuming too much of everything.
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Posted by Walt in Economics, Environment Issues, Global Warming categories at 8:44 PM EDT
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By Alan Caruba
In early March, President Bush, addressing an International Renewable Energy Conference, was widely quoted saying that the United States has to “get off oil.” Earlier he had said that America was “addicted” to oil. These are such huge lies one wonders why he is telling them, unless perhaps he has quietly been investing in ethanol production.
For the record, “renewable” energy refers to solar and wind energy for electricity, and biofuels for transportation. None of these options can ever be expected to provide the electric energy America uses, nor will biofuels ever replace oil for transportation.
In one of the most brilliant analysis of America’s dependency on oil, “Gusher of Lies”, by Robert Bryce, the author spells out the realities of a world in which, not just the United States, but all nations are going to be importing oil for as long as crude can be pumped from places around the world that include the Middle East, Russia, Africa, South America, and the deep ocean waters.
The problem is not a lack of known reserves of oil. The problem is the way the lack of knowledge by the consuming public is being exploited.
Yes, the price of a barrel of oil has reached and surpassed $107, but that price is subject to a myriad of factors that have nothing to do with scarcity. As OPEC president, Chakib Khelil, told reporters recently, “There is sufficient supply. There’s plenty of oil there.” He’s telling the truth. One factor is the falling value of the U.S. dollar. Oil that is priced in Euros has not risen nearly as much.
“Energy independence,” says Bryce, “is hogwash. From nearly any standpoint—economic, military, political, or environmental—energy independence makes no sense. Worse yet, the inane obsession with the idea of energy independence is preventing the U.S. from having an honest and effective discussion about the energy challenges it now faces.”
Nowhere is this more obvious in the campaigns of the Democrat and Republican candidates. John McCain, the GOP nominee, is committed to the global warming hoax that is based on the lie that the use of all forms of energy is contributing “greenhouse gas” emissions at such a rate the Earth is warming dramatically. It isn’t. There isn’t a scintilla of scientific data to demonstrate this. It has warmed about one degree Fahrenheit—naturally—since the end of the mini-ice age in 1850.
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Posted by Walt in Economics, Environment Issues, Global Warming categories at 11:26 PM EDT
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By Alan Caruba
The ugly little secret of Election 2008 is that it does not matter which candidate becomes your next President because all of them, Democrat and Republican, have energy policies that will keep America moving down the road to an inevitable lack of electrical energy and the oil, i.e., gasoline and diesel, needed to keep cars and trucks on the road. Throw in the need to heat homes and other structures in the winter and cool them in the summer, and you have a bad choice no matter who your choice may be.
In a recent Washington Times editorial, the energy proposals of the candidates were compared. All subscribe to the hoax of global warming and, with it, the notion that carbon dioxide (CO2), a greenhouse gas, has to be reduced or sequestered. Given that CO2 constitutes 0.038% of the Earth’s atmosphere, this might seem strange to anyone with any sense, but we are talking about politicians here.
John McCain is the biggest believer in global warming among those still running. He has co-sponsored a bill with Sen. Joe Lieberman that would impose an economy-killer in the form of a “cap-and-trade” arrangement on American business and industry that would have them wasting money on emissions “credits” they could use, trade or sell. This plan has been a total failure in Europe and, of course, ignores all the emissions being produced in places like China, India, Russia, the continents of Africa, South America, etc. It is idiotic.
Hillary Clinton hates “Big Oil”, possibly because they may not be among her biggest contributors. She is calling for increased fuel-efficiency standards, but I keep telling people there is just so much energy that can be squeezed out of a gallon of gasoline. It's called the Law of Thermodynamics. Much of the current energy is wasted in the form of heat and the rest keeps your pistons providing power to the wheels. This isn’t rocket science, but there are limits to efficiency, even if there are no limits on stupidity.
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Posted by Walt in Economics, Presidential Race categories at 10:51 PM EST
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By Thomas E. Brewton
The New York Times is distressed that private philanthropists can give money to any charity they choose.
Only a socialistic Federal government is capable, says the Times, of making wise decisions about dispensing money to achieve social justice.
The flip side of American private largess is the stinginess of the public sector. Philanthropic contributions in the United States — about $300 billion in 2006 — probably exceed those of any other country. By contrast, America’s tax take is nearly the lowest in the industrial world. Federal, state and local tax collections amount to just more than 25.5 percent of the nation’s economic output. The Finnish government collects 48.8 percent. As a result, the United States spends less on social programs than virtually every other rich industrial country, according to the Organization for Economic Cooperation and Development. The Finnish government probably has money to build children’s health clinics.
Critics of government spending argue that America’s private sector does a better job making socially necessary investments. But it doesn’t. Public spending is allocated democratically among competing demands. Rich benefactors can spend on anything they want, and they tend to spend on projects close to their hearts.
The real point, of course, is not that private philanthropists misplace their donations. The point is to move the United States farther toward what Hilaire Belloc called The Servile State and Friedrich Hayek called The Road to Serfdom.
True socialism of the kind lovingly promoted by the New York Times requires that all economic resources of the nation be collectively controlled by government ownership or by regulation.
Social justice being defined as equality of income, the Federal government must roughly double income taxes to bring the United States up to par with other socialist nations.
The Democratic Party's presidential candidates, all liberal- progressive-socialists, have not explicitly acknowledged that goal, but Senator Hillary Clinton's recent pronouncements make clear the direction in which she intends to head if elected.
Thomas E. Brewton is a staff writer for the New Media Alliance, Inc.
The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets.
His weblog is THE VIEW FROM 1776
http://www.thomasbrewton.com/
Email comments to viewfrom1776@thomasbrewton.com
Posted by Walt in Economics categories at 9:53 PM EST
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