Free Markets, Free People

Economics

Why won’t this administration look at this revenue source?

Because of their false agenda, that’s why.   They’re still convinced that, despite 17 years of no warming (as recently admitted by the head of the IPCC), oil is bad and “green” is good and that they’re doing something to save the world.  Disregard the fact that green is still unviable.  Disregard the fact that everywhere it has or is being pushed, energy costs are skyrocketing.  Nevermind the fact that we are sitting on a sea of fossile fuel products that we only need to access.  Screw the fact that science can find no discernable warming.  Their minds are made up.

That said, there’s also the fiscal side of the house.  The debt.  The deficit.  And the demand by Democrats to raise more revenue.

Unfortunately, because of their agenda, they’re likely to completely screw up a golden opportunity to bring in much more revenue and drive energy prices down, because their agenda is against fossile fuel.  And we all know the party agenda comes before what is best for the country.

Enter the administration with a renewed plan to tax oil companies instead of opening access to the vast natural riches we enjoy.  The result?  Well this chart will help you comprehend the vast differences in the two policy choices (full size here):

So the either/or is “tax ‘em or open access”.  The difference:

According to a 2011 study by Wood Mackenzie, increased oil and natural gas activity underpro-access policies would generate an additional $800 billion in cumulative revenue for government by 2030. The chart puts into perspective the size of these accumulating revenues – enough to fund entire federal departments at various points along the timeline. By contrast, Wood Mackenize also found that hiking taxes on oil and natural gas companies would, by 2030, result in $223 billion in cumulative lost revenue to government.

It only proves the old saw -“If you want more of it, reward it and if you want less, tax it”.  Think about it – money to help run government and pay down the debt (not to mention the thousands, if not millions of jobs created) being passed up in the name of false science and agenda politics.

Meanwhile, we’ll be left in the cold and the dark, thanks to agenda driven policies with no foundation in reality.

~McQ

Damned “Southernomics”

In light of Michal Lind’s fantasy about the South, another indicator of how wrong he is:

State Farm, the nationally-known insurance chain headquartered in Bloomington, Illinois, has apparently had its fill of “The Land of Lincoln’s” confiscatory taxes.  The 800 million dollar company is reported to have purchased “substantial workspace” in the Dallas, Texas area. The giant insurance firm’s workers are being kept in the dark reportedly to avoid “alarming them”; but is it their workers or the State of Illinois they would like to keep in the dark about this move? If this doesn’t signal State Farm’s coming dash out of Illinois’s clutches, what could it mean?

A knowledgeable Dallas real estate insider has called this impending move “a major business relocation” of record-breaking proportions. The numbers involved are approximately 2.5 million square feet of workspace and thousands of workers. No company in Dallas’ history has made a move this large.

Texas isn’t the only state State Farm is running to. There has also been a report that it has leased office space in Atlanta. The combined amount of both new locations roughly equals the 3.5 million square feet it has in Bloomington.

Why?

These moves should come as no surprise to anyone.  In spite of (or maybe because of) raising its corporate and personal income tax rate by 67% in 2010, Illinois has seen its credit rating fall and its deficit raise.  A review of the tax structure in Georgia shows the personal and corporate income tax is 4% as compared to Illinois’ 6.25%.

Texas has no personal or corporate income tax.

But, you know, the South has just replaced physical slavery with economic slavery – and all those Texans and Georgians who will benefit from employment with State Farm after the move know that only too well, don’t they? /sarc

I’m sure the taxes are just part of the reason.  Most likely the complete business atmosphere in the South is more likely the draw.  A welcome mat instead of a outstretched hand have to be appealing.  The same thing is happening in a number of northern states – the difference being the fiscal mess of today coupled with the difference in Blue state remedies vs. Red state remedies has started to turn a trickle exiting Blue states into a flood.

~McQ

Texas terrifies the left

If ever there was a load of crap on toast, it can be found today in Michael Lind’s atrocious piece in Salon.

He calls it “Southern Poverty Pimps”.  I see a more apt name to be “Southern Cliches R Us”.

It is probably one of the more absurd attempts to make the economic success in Texas look bad that I’ve seen in quite some time.  You would almost feel it was something Paul Krugman would hack out.  One of my bets, concerning all the negative stereotypes Lind uses, is he’s rarely if ever been in the South.

For instance:

Needless to say, private sector unions that pool worker bargaining power are anathema to today’s suave metropolitan successors to the slave-owning plantocracy.  The whole point of the Southern model of economic development is to create a non-union region from Virginia to Texas, to which companies can be induced to move from states with unionized workforces.  Besides, unions engage in collective bargaining, in violation of the Southern ideal of employer-worker relations, in which the master gives orders and the fearful worker obeys without question.

Of course the fact that in the great North unions are losing members like water through a sieve would never see the light of day in a Lind expose, one assumes.  That would run contradictory to his whole premise that the South has just shifted from racial slavery to economic slavery.  No mention of the thousands upon thousands fleeing the horrible economic conditions of Blue states, no mention of Detroit, no mention of the rust belt.  No mention of the urban blight found in Blue states or their failing economies.

You see, if the “Southern model”, aka the Red State Model” is allowed to exist, if it isn’t demonized and condemned, if all stops aren’t pulled out to include the usual racial and ethnic accusations the left loves to fling around, well, it might make people think that the Red States are on to something.

Of course, we already know they are, don’t we?

And so does Texas.  You see, Texas’ success terrifies them.

Thus Lind’s pitiful attempt to use the divisive language of which the left is so fond.  It couldn’t be that people actually are fine with their wages and tired of unions who take their money and really don’t produce much of anything but fat-cat union officials could it?

Heavens no.

It’s all about “economic slavery”.

~McQ

Krugman: was he lying then or is he lying now?

My bet would be on “then”, because in a moment of exquisite candidness, Paul Krugman – the man who has said “What? Me worry?” about the deficit and the debt, who claimed ObamaCare would do what Obama promised, – has apparently been drugged and finally told the truth:

Eventually we do have a problem. That the population is getting older, health care costs are rising…there is this question of how we’re going to pay for the programs. The year 2025, the year 2030, something is going to have to give…. …. We’re going to need more revenue…Surely it will require some sort of middle class taxes as well.. We won’t be able to pay for the kind of government the society will want without some increase in taxes… on the middle class, maybe a value added tax…And we’re also going to have to make decisions about health care, doc pay for health care that has no demonstrated medical benefits . So the snarky version…which I shouldn’t even say because it will get me in trouble is death panels and sales taxes is how we do this.

Gee … everything everyone who has paid attention has been saying all along.  Middle class taxes (you have to shake your head at his “oh well” approach to a middle class tax.  A sales tax.  Perhaps the most regressive tax going).  Death panels. Etc.

But it’s safe now … selling his credibility and being a hack has landed Obama another 4 years.

Apparently he’s on a “resurrect Paul Krugman’s professional reputation” tour.

Not that it’s working.

~McQ

Why are we in the mess we’re in? [update]

You don’t have to be a rocket scientist, brain surgeon, or even particularly smart to figure out that this trend means entitlements, as structured, will fail:

Last week, the Commerce Department announced that the gross domestic product shrank by 0.1 percent in the fourth quarter of 2012. And the Census Bureau reported that the U.S. birthrate in 2011 was 63.2 per 1,000 women ages 15 to 44, the lowest ever recorded.

Slow economic growth and low population growth threaten to undermine entitlement programs like Social Security and Medicare. Despite contrary rhetoric, they are programs in which working-age people pay for pensions and medical care for the elderly.

When Medicare was established in 1965 and when Social Security was vastly expanded in 1972, America was accustomed to the high birthrates of the post-World War II baby boom. It was widely assumed that the baby boom generation would soon produce a baby boom of its own.

Oops. The birthrate fell from the peak of 122.7 in 1957 to 68.8 in 1973 and hovered around that level until 2007. The baby boom, it turns out, was an exception to a general rule that people tend to have fewer babies as their societies become more affluent and urbanized.

So, when will our so-called “leaders” finally  figure this out? My guess, in fact it really isn’t a guess, is they know but haven’t intestinal fortitude, politically speaking, to do what is necessary.  That is cut them, privatize them or any of a host of other options they won’t even consider.

What they will consider, of course, is raising taxes and borrowing.

The fact of the matter is that both Social Security and Medicare are based in flawed models. The original models saw the base of the those paying into the system remaining constant, despite the “general rule that people tend to have fewer babies as their societies become more affluent and urbanized.”

The numbers don’t lie. Fewer and fewer workers are available to pay into these systems and continue to pay out at the rate at which they’re paying out now. This is no mystery. This is plain old everyday economics.  It’s as plain as the nose on your face. Yet our so-called “leaders” seem unwilling and unable to face the facts.  The facts are not going to change. We’re not going to suddenly have a baby boom again.

These are the sorts of problems elected leaders are supposed to face head-on. That’s why they’re elected, supposedly. Yet we continue to let our elected officials get away with malfeasance. So while it is easy to point at them and say they’ve failed, in fact we’ve failed. We have failed to gin up the courage to do what is necessary to fix these problems. To force our “leaders” to do the right thing. We continue to claim in poll after poll that entitlements must be fixed. Yet we continue to put in office, time after time, the same people who haven’t yet mustered the courage to do that (nor fund themselves held accountable for not doing it).

Whose fault is that?

UPDATE: Here’s a perfect and timely example of part of the point:

John Kasich, the fiercely conservative governor of Ohio, announced Monday that he’s going to expand Medicaid dramatically using federal money — a 180-degree turn from what conservative groups swore their allies in governors’ mansions would do when the Supreme Court gave them an out last year.

This makes John Kasich a big, fat liar.

Republicans should be the ones circulating recall petitions. He should be drummed out of office, out of politics and never again hold any office higher than dog catcher. But they won’t, because despite this, he’s “one of ours”.

~McQ

Another country from which to “learn”

The question, as posed earlier concerning Britain and France, is will we?

Electricity prices are rising in Germany – and citizen with a low-income are suffering particularly. They are at risk of fuel poverty. 10 to 15 percent of Germans are now struggling to pay their energy bills. 600,000 households have the electricity turned off every year.

Remember, Germany ran scared after the Fukushima disaster and dumped nuclear power (because, you know, German has so many earthquakes and tsunamis).  They then went “green”.  Result?  See above?

Other result?

The CEOs of manufacturing industries are warning that production in Germany is at risk because of low energy prices in the United States. The energy prices there are now only a third of those in Germany. “Many industrial companies are planning to build new factories in the U.S. and not in Europe because of low energy prices there,” said Gisbert Rühl, chief of steel trader Kloeckner. “We are now reacting to this development and plan new business units in the United States.” To move production to the U.S. is especially attractive for companies in energy-intensive industries such as steel and aluminium or chemistry.

That would seem to be good news for us, no?

Well, it should be … except for the Democrats plan to raise taxes on the oil companies.  And Obama’s new wave of regulations.  Oh, and the Obama desire to see fuel prices “skyrocket”, ably aided by his Secretaries of Energy and the Interior.  And the EPA.

Etc.

~McQ

Tax on the rich? Boy it didn’t take long to spend that, did it?

Remember, this “tax fairness” was something which was going to solve our fiscal problems, if you listened to the left’s claim that is.  However, reality is fairly brutal and usually doesn’t much pay attention to rhetoric based in lies and stupidity.  Case in point:

Congress is poised to clear the final $50 billion chunk of emergency aid for Superstorm Sandy relief Monday — and in one vote, it will have used up all the new tax money President Obama won by raising rates on the wealthy in the “fiscal cliff” deal.

The “cliff” … well they’re busily engaged in trying to see if they can kick the can nearer the edge and, by the way, make the “cliff” a little higher while they do that by raising the debt limit … again.

Meanwhile, let’s talk about immigration, gun bans and whatever else our “leaders” can think of to distract us from this pending disaster.

‘Kay?

~McQ

Will we learn from Britain and France?

One of the more frustrating things I observe is our apparent unwillingness, as a country, to learn from the mistakes of other countries.  For instance, we’ve watched the effects of the welfare state in Europe and its fiscal impact, yet we continue down the same road toward the same cliff they’re now getting ready to go over.

More specifically, we’ve watched other countries raise taxes higher and higher and subsequently watched them lose their native talent.  France is in the process of doing that now.  And Britain?  Well, they’ve been suffering from it for a while:

Nick de Bois, secretary of the 1922 Committee of backbench MPs, said that Britain needs a “culture change” to stem the flow of talented emigrants by encouraging success.

“Our most economically active are leaving to apply their talents elsewhere,” the MP said, warning that talented Britons are being lured away to “growth economies” elsewhere in the world.

Office for National Statistics figures obtained by Mr de Bois show that in the ten years to 2011, a total of 3,599,000 people permanently left the UK.

Contrary to the perception of the typical emigrants being older people retiring to a life in the sun, the figures show that 1,963,000 of those who left were aged between 25 and 44.

By contrast, only 125,000 people of retirement age emigrated.

Note what is “luring” them away?  “Growth economies“.  And what does one usually find is anything labeled a “growth economy”?  Economic opportunity.  A chance to better your own situation without being punished and vilified for doing so.  You’d think that might be something our “leaders” would understand and appreciate.

But it’s about culture, isn’t it?  About the culture our leadership fosters.  And that culture in this country is “class warfare”:

“Government must help lead a culture change in this country that competes with the new economies, one where competitiveness and success are valued and personal achievement and personal wealth are respected, not pilloried,” he said.

That’s not at all where this particular government is headed, is it?
And the result?  Human Nature 101.  See Britain.

~McQ

So lift those heavy eyelids

What if people could easily function with much less sleep?

Jon M at Sociological Speculation asked that question after observing that “new drugs such as Modafinil appear to vastly reduce the need for sleep without significant side effects (at least so far).” At extremes, as Jon M noted in a follow-up post, modafinil allows a reduction to 2.5 hours a night, but “the more common experiences seem to be people who reduce their sleep by a few hours habitually and people who use the drugs to stay up for extended periods once in a while without suffering the drastic cognitive declines insomnia normally entails.”  In fact, alertness is not the only reported cognitive benefit of the drug.

The US brand of modafinil, Provigil, did over $1.1 billion in US sales last year, but for the moment let’s dispense with the question of whether modafinil is everything it’s cracked up to be.  We’re speculating about the consequences of cheaply reducing or even eliminating the need for sleep for the masses.

If I can add to what’s already been said by several fine bloggers – Garett Jones at EconLog on the likely effect on wages, then Matt Yglesias at Slate sounding somewhat dour about the prospect, and Megan McArdle at the Daily Beast having fun with the speculation – the bottom line is that widely reducing the need for sleep would be a revolutionary good, as artificial light was.

For a sense of scale, there are about 252 million Americans age 15+, and on average they’re each awake about 5,585 hours a year.  Giving them each two extra hours a night for a year would be equivalent to adding the activity of 33 million people, without having to shelter, clothe, and feed 33 million more people.

Whatever objections critics have, sleeping less will be popular to the extent that people think the costs are low.  For all the billions of dollars spent trying to add years to their older lives, obviously people would spend more to add life to their younger years.  Who ever said, “If only I’d had less time!”?

Consider that the average employed parent usually sleeps 7.6 hours each workday.  He spends 8.8 of his remaining hours on work and related activities, 1.2 hours caring for others, and 2.5 hours on leisure and sports.

If he spends more time working productively (i.e. serving others), that’s good for both him and society.  The time and effort invested in birthing, educating, and sorting people for jobs is tremendous, so getting more out of people who are already born, educated, and sorted is just multiplying the return on sunk costs.

That’s a godsend for any society undergoing a demographic transition after the typical fall in birthrates, because aside from hoping for faster productivity growth, the specific ways to address having fewer workers per retiree – higher taxes, lower benefits, more immigration, or somehow spurring more people to invest in babies for decades – are unpleasant or difficult or both.

And if he uses extra hours to pursue happiness in other ways, that’s generally fine too.  A lot of people may simply get more out of their cable subscription. Others will finally have time for building and maintaining their families, reading, exercising, or learning a skill.

Yes, once a substantial number of people are enhancing their performance, others will likely have to follow suit if they want to compete.  But then, that’s also true of artificial light and many other technologies.  If people naturally slept only four hours a night and felt rested and alert, who would support a law forcing everyone to sleep twice as long, cutting a fifth of their waking hours so that everyone would slow down to the speed that some people prefer to live their lives?

I don’t think most people have such a strong presumption in favor of sleep.  We like feeling rested, or dreaming, but not sleeping as such; a substantial minority of Americans sleep less than advised despite the known costs, and so reveal their preference for waking life over oblivion.

Just in cased you missed it, our problem STILL isn’t revenue

I continue to be stunned by the apparent willingness of all involved on the left to whistle past the graveyard when it comes to understanding what our fiscal governmental problem is and how to fix it.  Here … let’s try a picture:

Oh, look … it’s spending.  Specifically, spending on entitlements and interest on the money we’ve borrowed to do so.  And what are we talking about cutting?  The military, of course.  Because, you know, it is in the blue slice of the pie.  Make sense?

Pac Man’s revenge.  By 2050, he will have swallowed all of the blue.

But, hey, it’s “absurd” to argue about raising the debt limit. By the way, does anyone remember when Sen. Obama declared that raising the debt limit signaled a failure in leadership?

Ahem …

~McQ