Free Markets, Free People

Daily Archives: March 9, 2009


SCOTUS turns down New York gun lawsuit

The Supreme Court smacked down New York City and Mike Bloomberg:

New York City on Monday failed before the U.S. Supreme Court to revive a lawsuit it filed against the gun industry.

New York sued several gun manufacturers in 2000, arguing the companies violated a state public nuisance law with their marketing and distribution of the firearms products they sell. Among the companies sued were Beretta USA Corp., Smith & Wesson Holding Corp. (SWHC), Colt’s Manufacturing Co. LLC, Sturm, Ruger & Co. (RGR) and Glock GmbH.

A federal law enacted in 2005 sought to shield gun makers from lawsuits like the one New York filed, prompting a federal judge to throw the case out. The 2nd U.S. Circuit Court of Appeals in New York in April 2008 upheld that ruling by a 2-1 vote.

New York, in a court brief, said the 2005 law violates state rights under the U.S. Constitution. “This congressional effort to control how states make law raises important questions about the Tenth Amendment’s protections of state sovereignty,” New York said.

The gun manufacturers, in a joint legal brief, said the federal appeals court correctly applied the 2005 statute and argued the law does not violate the Constitution. “This case does not qualify for Supreme Court review,” the gun makers said.

Does anyone else get New York’s argument in this case? Talk about non-sense.

H/T: Of Arms and the Law


Intellectually Incurious

Yesterday on the podcast, we talked about Pres. Obama’s attitude towards certain aspects of his presidential responsibilities.  Apropos of that discussion, he is receiving some criticism for his indifference to the markets.

Some Wall Street economists think President Obama could have voiced some sympathy about the plight of frightened shareholders when he compared the stock market’s plunge to an election tracking poll that “bobs up and down, day to day.”

They worry that the president is underestimating the important role the stock market plays in the economy’s performance, and that the markets’ precipitous slide is actually a vote of no confidence in the administration’s handling of the economy. There’s also a suspicion that Mr. Obama and his advisers think only wealthy people own stocks.

“There is some of that feeling that rich people are the ones who have stocks. He does have somewhat of that feeling. But you’ve got to remember that most people who own stocks aren’t rich,” said David Wyss, chief economist at Standard & Poor’s, the influential Wall Street financial research and forecasting firm…

…Mr. Wyss and some of his colleagues on Wall Street – where investors have lost trillions of dollars in savings and the market is not so much bobbing as dropping straight down – think Mr. Obama could have shown more concern for the markets, which represent the economy and signal its future direction.

During Mr. Bush’s tenure, there was constant criticism that he was “intellectually incurious”, e.g., he showed a lack of interest in the portions of his job he wasn’t required to be engaged in on a regular basis.  I wouldn’t dispute those criticisms, of course, but it seems to be a trait that Pres. Obama shares with his predecessor.

Pres. Obama appears to be fascinated by aspects of politics such as “green jobs” and health care that aren’t actually part of the president’s core portfolio, while being uninterested in the foreign and military policies that are essential parts of the president’s purview.At the moment, we’re in the midst of an economic crisis–and I use the word intentionally–that stems from a credit bubble collapse.  The stock market is a predictor of future earnings and profitability for private sector firms.  As such, it tells you things about the expectations investors (which at this point includes more than half of the population) have about the future income that their investments will produce.  What the collapse in the stock market tells us is that investors are voting with their money that future earnings will be substantially lower, meaning that firms all across the country will be less profitable.

What happens on a day-to-day basis, of course, may be subject to a variety of market whims and fancies, but long-term trends do indicate the direction of the economy.  The market is a leading indicator.  So when there are several straight weeks of decline in stock prices, the market is telling us something.

This seems not to be a reality that the president comprehends.

Instead, the president’s main focus seems to be on health care, green jobs, more policemen and prosecutors, and the like.  All of which may be wonderful things, and none of which will happen if the economy implodes. To the extent the current crisis forces him to concentrate on economic policy, he appears to resent it.

Similarly, the president has made missteps in foreign policy this week.  The Obama Administration apparently attempted to sell our Eastern European allies down the river by offering to shut them out of missile defense if the Russians cooperate on nuclear non-proliferation in Iran–until they got caught out on it.  That was a  major misstep.It was quickly followed by two minor missteps.

First was Sec. Clinton presenting the Russian foreign minister with a button which was supposed to say, in Russian, “Reset”, to symbolize the new engagement with the world the Obama Administration was supposed to bring about.  What the button actually said was “overcharge” in Russian.  On top of this, it’s generally a bad idea, symbolically, to present the Russians with a button to push of any sort, considering that the major foreign policy goal of the last half of the 20th century was to prevent the Russians from pushing “the button”.

Second was the treatment of Gordon Brown, the prime minister of the UK, during his visit.  Rather than pulling out all the stops to showcase the visit of the head of government of what, by nearly any measure, is the United States’ most important ally, Mr. Obama treated it as if the Deputy Agriculture Minister of Azerbaijan had showed up on the White House’s doorstep.  In what may be a first in my lifetime, the various press organs in Britain, from the commies at The Spectator Observer, to the staid tories of The Times of London all agreed that Pres. Obama’s treatment of Mr. Brown amounted to an egregious snub of the United Kingdom.

In addition to the above, one has to note the retention of Sec. gates at the DoD, along with the retention of the great majority of the Bush Administration’s positions on executive privilege and the prosecution of the Global War on Terror.

What all of these things add up to is a picture of a president who is essentially uninterested in military policy, or foreign policy, or, really, economic policy, and who in effect simply ignores them to the extent he is able, and delegates their operation to his subordinates.  What he cares about is government, and its ability to intervene in the marketplace, and to provide goods and services.  It is in those areas where his interest and attention actually lie, and the remainder of the executive branch can, as far as he’s concerned, operate on auto-pilot.

Take all of the above together, and it appears to present an emerging picture of a man who is truly intellectually incurious, and who wishes to ignore, to the extent possible, those aspects of the president’s job that he doesn’t find personally appealing.

Sadly, he appears to be fascinated by aspects of politics such as “green jobs” and health care that aren’t actually part of the president’s core portfolio, while being uninterested in the foreign and military policies that are essential parts of the president’s purview.


Cap-And-Trade – The Impact And The Politics

It is time to get real about what the promised cap-and-trade tax means to the average American.

Politicians love cap and trade because they can claim to be taxing “polluters,” not workers. Hardly. Once the government creates a scarce new commodity — in this case the right to emit carbon — and then mandates that businesses buy it, the costs would inevitably be passed on to all consumers in the form of higher prices. Stating the obvious, Peter Orszag — now Mr. Obama’s budget director — told Congress last year that “Those price increases are essential to the success of a cap-and-trade program.”

Essentially Congress will be creating a new commodity literally out of thin air. It will only create a certain amount of that commodity and so create instant scarcity. As we all know, scarcity drives up prices. The next year, the plan is to remove a portion of the created commodity from the market creating even more scarcity and driving prices for the commodity even higher.

Imagine steel as the commodity. Imagine steel prices going through the roof. Do you suppose they might effect the price of, say, automobiles? Metal buildings? The price of building a bridge or sky scraper?

So who, in the final analysis, is going to end up paying for this increase in steel prices? Why the final consumer, of course. Naturally, with steel, in some cases you can choose to consume (buy a new car, rent an office or approve the bridge) or not consume. However, with the CO2 tax on all industry, to include manufacturing, service, transportation and energy, you have little choice in the matter of consumption. You will be picking up the tab for this.

That brings us full circle to the promised tax cut for 95% of America and my promise that what government gives with one hand it takes with another, making the tax cut illusory at best:

Hit hardest would be the “95% of working families” Mr. Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat “unless you use energy.” Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.

After all the caterwalling the left does about “progressive taxation” they are about to implement the most regressive tax I can imagine. And as I’ve pointed out, the tax is pervasive, touching just about all aspects of life. Food prices will rise. Energy prices will go through the roof.

The Congressional Budget Office — Mr. Orszag’s former roost — estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That’s about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

Of course there is talk of subsidizing those at the lower end of the economic ladder so the impact of rising prices is lessened. Naturally that also negates the impact of the cap-and-trade system. In the end, your tax dollars subsidze the system while increased prices are passed along by so-called polluters. As the price of permits rise over the years, permit holders pay the increasing cost, pass it along and you again subsidize it. The rich can afford it, the poor will be subsidized, so who will get squeezed? Why that middle class that Obama and Biden are so concerned with.

Economically, estimates are that we’re going to have a miserable year in ’09 and possibly ’10. But we may begin to see a recovery really start to take hold in ’11, just in time for the 2012 presidential election. The smart politicians in Washington plan to delay cap-and-trade implementation until 2012. The reason should be obvious. If cap-and-trade has the expected impact on the economy, we could very well see the recovery stall and head back into recession. But politically the timing would be perfect. The mirage of recovery would be just enough to keep the current administration in power for another 4 years, before the economy wrecker of cap-and-trade begins to do its work.

~McQ


Ending the “I Want Obama To Fail” Kerfuffle

Patterico does it by producing a 2006 poll:

poll-should-bush-succeed

The difference, of course, is instead of 51% of Democrats telling a polling company they wanted Bush to fail, an influential conservative came right out and said it about Obama.

The point for the left? You can quite pretending you’re witnessing something never seen before and climb on down from the throne of self-righteousness to your usual seat on the stool of hypocrisy (dissent no longer being the “highest form of patriotism).

~McQ

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