Questions and Observations

Free Markets, Free People

The hidden premise–what’s missing in this parody meant to shame us?

It’s there for all to see if they will.  While the parody is clever as it can be, one huge and salient fact is missing and thus makes it all a giant FAIL!

Obi-Wan Kenobi, the mastermind of some of the most devastating attacks on the Galactic Empire and the most hunted man in the galaxy, was killed in a firefight with Imperial forces near Alderaan, Darth Vader announced on Sunday.

Hint: At what were Obi-Wan’s “most devastating attacks” aimed?  And OBL’s?

More false moral equivalency.

Aside: I thought Dick Cheney was Darth Vader?  My how times change, no?

~McQ

Twitter: @McQandO

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Rooting against the home team: Democrats and administration attack job creators

The other day I was on a conference call with representatives of ExxonMobil as they tried to explain why the upcoming attempt to remove certain tax breaks was a bad idea.  I was struck by a statement one of the representatives made:

The thing that tends to get lost is we’re the home team here. And you have two – if the government is looking, U.S. government is looking to raise revenue and they’re looking at our industry, they really have – it’s coming down to two choices, it appears. They’re looking at, right now, singularly focused on increasing tax, our taxes, as a way to increase revenue coming into the government. But study after study show that if you increase access, increase business opportunity for our industry, give us access to more resources to go explore and develop, give equal treatment to downstream investments, that by increasing access, you will increase revenue.

And by – and you will increase revenue by magnitudes more than by focusing just on raising taxes. And by giving us – the industry more opportunity to explore, develop, refine, what have you, that increases jobs. And jobs increases overall social welfare. [emphasis mine]

ExxonMobil employs about 84,000 people directly world wide (the oil industry in the US, both directly and indirectly is responsible for over 9 million jobs).  In the US, that part of the total is 35,000.  Now imagine if, instead of doing everything in their power to stand in ExxonMobil’s way, the government actually did what the ExxonMobil representative lays out?  The result would be as he concludes – more jobs, more revenue for government, and more opportunities in the works for both in the near future.  Right here. 

Instead of that, however, we see government doing everything in its power to hurt the “home team”.  I asked, given the situation here and the fact that ExxonMobil derives much of its income from outside the US (~75%), whether the sort of shenanigans now being attempted by Congress and the administration would have an effect on corporate planning:

Well, we approach our investments on a global basis, and obviously it’s – the money that we’re investing is our – it’s money – it’s not our money; it’s our shareholders’ money. And we’re looking to make investments that are safe; they are going to make consistent returns over a long period of time, given the nature of our business; and obviously, government policy and the consistency of government policy is an important criteria for us as we look at projects that are competing for our investment dollars around the world.

So to the extent that United States policy makes an investment, for example, in a U.S.refinery less attractive than an investment in a similar operation outside the United States, is that something we will consider? The answer’s yes, of course we’ll consider it.

You can’t ask for a clearer answer.  What is it the Democrats in Congress are doing?  Well they’re playing politics with American jobs.  In essence they’re trying to repeal tax breaks , but only for the oil industry.  Specifically (thanks Neo):

Intangible Drilling Costs – Companies which engage purely in energy exploration and discovery can recover their costs related to exploration at tax time at a rate of 100%. This lessens the burden on energy providers for the number of “dry holes” which may be found in the process. Integrated companies (i.e. “big oil”) can recover these exploration costs at 70%.

Domestic Manufacturer’s Deduction (Section 199) – A deduction (not a credit) equal to 9% of income earned from manufacturing, producing, growing or extracting in the United States, is available to every single taxpayer who qualifies in the U.S. The oil and gas industry, and only the oil and gas industry, is limited to a 6% deduction.

Percentage Depletion – The percentage depletion deduction is a cost recovery method that allows taxpayers to recover their lease investment in a mineral interest through a percentage of gross income from a well. This depletion method is not available to companies that produce oil as well as refine and market it (i.e. “Big Oil”.) This is available to all extractive industries (gold, iron, clay, etc) in the US and is in no way unique to the oil and gas industry.

Note that none of these are “subsidies”, nor (other than intangible drilling costs) are they unique only to the oil industry (although the oil industry is the only industry that is limited in the Section 199 deductions).  We hear Democrats whine constantly about the loss of manufacturing jobs, yet here they are pushing for tax changes that will likely kill good high paying manufacturing jobs in a critical industry.  Not only that, but as API’s chief economist, John Felmy points out they will also hurt our economy in other areas and possibly lessen our energy security by driving future jobs off shore:

[T]he more we invest here, the more we produce, the more we have improved energy security and, really importantly, it reduces he trade deficit. And for every reduction in the trade deficit means that’s dollars that aren’t lowing abroad and can be spent here, and adds further to the U.S. economy that we desperately need.

Those are extremely important points, points that are being virtually ignored by the Democrats and the administration in this headlong rush to “punish” big oil for “excess profits” and more importantly, as a means of taking the political heat off themselves and their absurd and self-defeating economic policies.  Somehow, one assumes, they believe that if they tax the oil industry more, then gas will cost less – go figure.

Read the transcript of the call I’ve linked above.  Check the numbers out.  It is eye-opening.

And the oil business isn’t the only target of such nonsense.  Jim McNerney, CEO of Boeing, covers the NLRB/Boeing debacle in today’s WSJ – something I pointed out a week or so ago.  The National Labor Relations Board  (NLRB) has gone to war against another home team – Boeing.  Here’s a company doing precisely what you’d expect the administration would applaud if they at all believed their rhetoric about “jobs, jobs, jobs”:

Deep into the recent recession, Boeing decided to invest more than $1 billion in a new factory in South Carolina. Surging global demand for our innovative, new 787 Dreamliner exceeded what we could build on one production line and we needed to open another.

This was good news for Boeing and for the economy. The new jetliner assembly plant would be the first one built in the U.S. in 40 years. It would create new American jobs at a time when most employers are hunkered down. It would expand the domestic footprint of the nation’s leading exporter and make it more competitive against emerging plane makers from China, Russia and elsewhere. And it would bring hope to a state burdened by double-digit unemployment—with the construction phase alone estimated to create more than 9,000 total jobs.

Eighteen months later, a North Charleston swamp has been transformed into a state-of-the-art, green-energy powered, 1.2 million square-foot airplane assembly plant. One thousand new workers are hired and being trained to start building planes in July.

It is an American industrial success story by every measure. With 9% unemployment nationwide, we need more of them—and soon.

Pretty hard not to agree with that, right?  And, the administration and Democrats have told the America people repeatedly that their focus is on jobs.  But in the example above about the oil industry and this example about Boeing, the rhetoric does not come close to supporting reality  In reality, they’re at war with the job creators:

Yet the National Labor Relations Board (NLRB) believes it was a mistake and that our actions were unlawful. It claims we improperly transferred existing work, and that our decision reflected "animus" and constituted "retaliation" against union-represented employees in Washington state. Its remedy: Reverse course, Boeing, and build the assembly line where we tell you to build it.

And, as with ExxonMobil, the government’s actions have consequences that it either doesn’t understand or doesn’t care about.  McNerney lays them out for you in the cold light of economic reality and, as you’ll note, it’s not much different than ExxonMobil’s answer:

The world the NLRB wants to create with its complaint would effectively prevent all companies from placing new plants in right-to-work states if they have existing plants in unionized states. But as an unintended consequence, forward-thinking CEOs also would be reluctant to place new plants in unionized states—lest they be forever restricted from placing future plants elsewhere across the country.

U.S. tax and regulatory policies already make it more attractive for many companies to build new manufacturing capacity overseas. That’s something the administration has said it wants to change and is taking steps to address. It appears that message hasn’t made it to the front offices of the NLRB.

We are in some dire economic times right now, and we have an activist government that is saying one thing but doing another.  It is telling us how critical jobs are to our economy on the one hand while, in two very important examples, doing everything in their power to discourage large American companies from creating them.

This is nothing more than political payback and cronyism.  At risk are the lives and livelihoods of thousands of Americans, put at risk to satisfy a political agenda.   The oil industry is not a favored industry of the left, so the administration and Democrats are doing their level best to drive it off, just when untold amounts of new fossil energy has been discovered (shale).  Boeing, on the other hand, isn’t serving a favored constituency as the administration and Democrats would prefer.  So they have attacked that company as well.

Both are extraordinarily bad precedents and symptomatic of a toxic political atmosphere in which the administration and Democrats are engaged in trying to pick winners and losers.  They are also engaged in serving favored constituencies rather than doing all that is necessary to encourage and invite domestic American industries (the home team) to create jobs.  Their actions border on the criminal and are inexcusable – especially in these tough economic times when Americans are suffering from the economic downturn.

These are actions that by government that must be stopped and stopped now.  And Democrats need to be put on notice that their ploy to punish the oil industry is transparent partisan politics and wholly unacceptable to the American people.

~McQ

Twitter: @McQandO

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Lawfare v. Warfare: Bin Laden family uses a little “Alinsky” on US and Obama

One of the “Rules for Radicals” that Saul Alinsky touted was:

"Make the enemy live up to its own book of rules.”

In a piece published by the New York Times, the “bin Laden family” condemns the attack on their father and demands that there be a reckoning:

If OBL has been killed in that operation as President of United States has claimed then we are just in questioning as per media reports that why an unarmed man was not arrested and tried in a court of law so that truth is revealed to the people of the world. If he has been summarily executed then, we question the propriety of such assassination where not only international law has been blatantly violated but USA has set a very different example whereby right to have a fair trial, and presumption of innocence until proven guilty by a court of law has been sacrificed on which western society is built and is standing when a trial of OBL was possible for any wrongdoing as that of Iraqi President Sadam Hussein and Serbian President Slobodan Miloševic’. We maintain that arbitrary killing is not a solution to political problems and crime’s adjudication as Justice must be seen to be done.

They’re also threatening to take the case to the International Criminal Court which would be an interesting turn of events.

The hidden premise, of course, is OBL was a criminal, not an unlawful combatant. The UN is also pushing that premise through its odious "Human Rights Council":

The United Nations (UN) affiliated human rights attorneys say the United States should release more details on the death of Osama Bin Laden during a military raid in Pakistan.They say in the statement that

actions taken by States in combating terrorism, especially in high profile cases, set precedents for the way in which the right to life will be treated in future instances.”

The statement, issued jointly by law professors Christof Heyns of South Africa’s University of Pretoria and Martin Scheinin of European University Institute in Florence, Italy, says that the “use of deadly force may be permissible” in certain circumstances “as a measure of last resort.” But they say that "the norm should be that terrorists be dealt with as criminals, through legal processes of arrest, trial and judicially decided punishment.” These guidelines, the men say, are “international standards on the use of force. [emphasis mine]

The death of bin Laden is being described in some quarters as an “extrajudicial killing”.  In fact, bin Laden was always considered to be an “unlawful combatant” by us and as such had no such protections.  In warfare, the targeted killing of an enemy, in this case unlawful combatant, is quite legal.

So what you are seeing here are competing premises, one saying terrorism is simply a criminal act and therefore terrorists must be treated as common criminals would be treated as well as afforded various rights because of that.  The other says these are enemies who have declared war on the US, committed numerous acts of war and, in accordance with the Geneva Conventions, are “unlawful combatants” and enemies whose targeted killing is an accepted practice of warfare.

Lawfare vs. warfare.

I think we’ve been pretty clear since the beginning, with the AUMF (which the Obama administration ironically used as the legal basis for its raid into Pakistan), that we’re at war (and yes, I also accept the AUMF as a declaration of war).

Second guessing by all the world’s hand wringers should simply be ignored.  This isn’t a criminal matter.  It is a military matter and it was executed as such.  The lesson it teaches other terrorists who’ve declared war on “the Great Satan” is we are relentless and remorseless.  Those are two good messages to send.

As for the bin Laden family – sorry about dear old dad.  Go float a wreath.

~McQ

Twitter: @McQandO

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Education or indoctrination?

A former student of a course that sounded innocuous enough by its title turned out not to be as you’ll see when you read his lengthy expose.

In there are the usual blathering about “academic freedom” (the last resort, I think, of many a marginal teacher), etc.

Is it a question of academic freedom when instructors/teachers/professors clearly intend to do something other than impart knowledge which allows a student to make his or her own mind up? In the name of "academic freedom" are students and institutions to be held hostage to absurd distortions of its meaning?

Clearly, when you read through this, you’ll find yourself having difficulty categorizing what is presented as anything other than indoctrination – assuming you know what indoctrination means and can separate it from what academia is supposed to do to “educate”.

But apparently, the university takes the easy way out even with the evidence recorded and videoed.

It’s a long article, but worth the read.  And frankly I could spend a day talking about many of the aspects of this argument, but, since mine is rushed today, I’ll leave it to you to do the heavy lifting in the comment section.

~McQ

Twitter: @McQandO

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With Osama bump fading, Obama faced with reality of bad economy

Osama bin Laden is dead and President Obama has received a bump in the polls for the successful operation that took him out.  That’s both deserved and expected.  But what’s unknown is how long that bump will last or whether or not the bump is really that important.

I’d say it won’t last long and that while it isn’t unimportant, it isn’t enough to carry him through 2012 and the election.  The most important issue Obama will have to overcome for re-election is the economy.  And right now, the economy sucks.   As a result, so do his poll numbers on the issue:

Just a third of Americans believe the country is headed in the right direction; less than four in 10 approve of Obama’s handling of the U.S. economy; and nearly 70 percent think the economy will get worse or stay the same in the next year.

As we all know, the economy is a complex issue and opinions of how good it is often come down to how an individual is faring or how his friends and acquaintances are.  It comes down to basic pocket-book issues such as costs, wages, jobs.  If the unemployment rate still hovers around 9%, given the promise that they’d keep it under 8% with the stimulus, then the administration is going to have some hard questions to answer.

It’s still very early to make predictions about the presidential race, especially with the dearth of worthwhile candidates on the GOP side, but history has not been kind to incumbent presidents in office when there has been an economic downturn of any magnitude and length.  This particular one is one of the worst, and the “I inherited it” mantra has no traction anymore.

But as a baseline from which to compare where the numbers go in the future, the poll is useful:

Looking ahead to next year’s presidential election, 45 percent said they would probably vote for Obama (a two-point rise from April), versus 30 percent who would probably vote for the eventual Republican nominee (an eight-point decrease).

The GOP’s decrease is well-deserved given the emerging field.  It’s a signal guys – heed it.  As for Obama, the most he can muster, post Osama, is a 45% plurality, which would tell anyone he’s vulnerable.  But the GOP numbers say he’s only going to be vulnerable to a worthwhile candidate and so far voters aren’t seeing one.

The obvious issue for next year – well, are you better off today than you were four years ago?

Only 37 percent approve of the president’s handling of the economy, while 58 percent disapprove.

Also, just 31 percent believe the economy will improve in the next 12 months, compared with 43 percent who think it will stay the same and another 25 percent who say it will get worse.

These economic numbers, GOP pollster McInturff says, underscore the “tremendous anchor the economy is to the president’s job standing.”

It’s not an “anchor” its an albatross.  While good marks on foreign policy, even if temporary, help Obama, the economy is the key.   And the GOP has all the ammunition in the world to keep that albatross around Obama’s neck.   But bottom line, or so it appears, no viable candidate, no presidency and so far the voters don’t at all seem impressed with the same old names that are joining the battle on the Republican side.

~McQ

Twitter: @McQandO

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Here are a few questions for you …

Call it a little thought exercise.

If you are an industry that has gotten tax breaks related to the cost of your production since there’s been an IRS and those tax breaks are the same sort of tax breaks every other producer or manufacturer in the country gets (well, except in some cases they single your industry out for less of a break than the others) and now the Congress wants to selectively punish your industry (for whatever reason – oh, yeah, making too much money) and no other (we’re not talking across the board cuts – just “Big Oil”) by removing all such breaks, what would you do?

Linking two of the politically volatile issues of the moment, Senate Democrats say they will move forward this week with a plan that would eliminate tax breaks for big oil companies and divert the savings to offset the deficit.

Now, I’m on record for removing subsidies for all businesses, and it is argued by some that a tax break is a form of subsidy.  But only if you believe all money belongs to government.  Instead a tax break lets a company (or individual) keep more of the money it (he or she) has earned.  A subsidy, on the other hand, or at least as I define it, is a payment from government to a company (or individual) which has been taken in taxes from other companies (or individuals).  I.e. it isn’t earned.

So, back to the point – if you’re an oil company, like ExxonMobil, for instance, and you’re thinking about building a refinery, would an antagonistic government and their tax policy focused on only stripping your industry of tax breaks other industries get figure into your decision?

Well of course it would.  Why?  Because your job is to give the best possible return to your shareholders’ investment.  So you are obviously going to make a decision to build that refinery somewhere that will help fulfill that goal.  Most likely, all things being equal, tax rates, business climate and a non-hostile governmental atmosphere are going to factor heavily in that decision.

If you had the whole world from which to choose a location  – and for the most part ExxonMobil does – would you build it here given your primary goal and given the above nonsense from Congress?

I bring all this up now just to have you think about it a bit.  More – and more specifics about my point – later in the week.

~McQ

Twitter: @McQandO

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Pakistan has some explaining to do

It’s going to be interesting to see how Pakistan attempts to weasel its way out of the obvious “someone there was helping bin Laden”  meme.

Here’s their first shot at it:

A senior official in Pakistan’s civilian government told ABC News, "Elements of Pakistan intelligence — probably rogue or retired — were involved in aiding, abetting and sheltering the leader of al Qaeda," the strongest public statement yet from the Pakistani government after the raid on Osama bin Laden’s compound.

This is based on the government’s judgment that the number of years bin Laden spent in Abbottabad — and it now appears in a village outside the city of Haripur — would have been impossible without help, possibly from someone in the middle tier of ISI, Pakistan’s intelligence agency, who grew up fighting alongside the mujahidin against the Soviets, said the official.

Ummm.  Yeah, it has to go a little deeper than that, unless someone is going to claim that the ISI – not rogue or retired – was totally asleep at the switch.  Some others (other than just a “rogue element”) that are still on active duty and at pretty high levels had to be complicit.  Waiving it off as “rogue elements” just isn’t going to be good enough.

For bin Laden to stay, safely for up to 7 years within Pakistan and apparently able to moving from one village to another, a whole bunch of people had to turn blind eyes.  Especially with the ISI’s reputation of knowing all that goes on within its borders.

It’s the impression of some in the government that the United States is giving Pakistan some space in the wake of the raid, but only for a limited time — and that if Pakistan doesn’t act in a way that satisfies the United States, there will be consequences.

One of the consequences could be a cut off or sharp reduction in the billions of aid we give them each year for their military and for the fight against al Qaeda and the Taliban.  At the moment, given this bin Laden story, it doesn’t appear to have been well spent.

That said, Pakistan is very important to us in other ways than just fighting terrorists.   It is the main staging base for the bulk of our logistical support for the effort in Afghanistan. 

Tricky diplomacy ahead.  Pakistan has been embarrassed by the US raid (rightfully so).   Also, although it has never been said openly, they’re seen as so unreliable an ally that we chose not to tell them we were going to do what we did for fear bin Laden would escape.

The US is going to have to move carefully here, but bottom line, Pakistan – at a minimum – is going to have to cough up those who were responsible for making it possible for bin Laden to stay in Pakistan for all those years and punish them.

~McQ

Twitter: @McQandO

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Meanwhile, back to the mundane but very important stuff–the economy

I think Bob Gorrell’s cartoon fairly represents what we should be talking about now after a week of bin Ladanpalooza.

 

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As Dale said in the podcast last night, it seems much more likely we’re in the 2nd year of a “lost decade” than any real recovery.  You get the feeling, or at least I do, that our so-called economic experts at the tiller of the ship have absolutely no clue as to how to proceed.    Dale also mentions that if we were calculating unemployment and inflation like we used too in the ‘80s we’d most likely be looking at about 18% unemployment and 10% inflation and wearing our “Whip Inflation Now” buttons already.

In the meantime you can literally see the steam escaping the GOP push to trim the budget, cut spending and downsize government.   It’s like everyone in government (and many voters) are still in denial.

If we were to resurrect the Misery Index, I’d dare say we’d be in new territory speaking of misery.  And, as I stated on the podcast, I’m surprised there aren’t those out there asking Ronald Reagan’s favorite questions – “Are you better off today than you were 4 years ago?”

My intent isn’t to sound alarmist, but maybe it’s time to be more than just a little alarmed.  Commodities are rising, wages are flat, and while we did see over 200,000 jobs created this past cycle, 60,000 of them were at McDonalds – literally – and we saw over 400,000 initial claims for unemployment registered.  “Unexpected”, of course.

In fact, it seems that we’re getting sunshine pumped up our skirts with weekly pronouncements that it is “getting better” out there.  Well, I for one am not seeing that.

You?

~McQ

Twitter: @McQandO

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Observations: The QandO Podcast for 08 May 11

In this podcast, Bruce, Michael, and Dale discuss the death of Bin Laden, and the economy.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

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Irony, the left, the AUMF and bin Laden

I assume most of you political junkies remember the left and their reaction to the Authorization to use Military Force resolution that was passed by Congress not long after 9/11.

The left wasn’t at all happy with Congress authorizing the use of force and during the presidential debates you had various Democratic candidates called out on it by the Obama campaign and we went through a series of apologies for voting for that.  Obama was never clear as to whether or not he’d have voted for it had he been in the Senate at the time, but he certainly left the impression he probably wouldn’t have.

The irony comes in the form of the justification for the raid on and death of Osama bin Laden.  Apparently the AUMF is suddenly a pretty handy thing to have around:

To justify the use of force, the Obama administration relied on the Authorization to Use Military Force Act of Sept. 18, 2001, which allows the president to use "all necessary and appropriate force" against persons who authorized, planned or committed the 9/11 attacks, as well as international law derived from treaties and customary laws of war.

The Obama and Bush administrations have argued that the use of force is allowed under international law because of the continuing conflict with al Qaeda, and the need to protect the United States from additional attacks.

One year ago, in the midst of a debate about the legality of targeted killing of foreign nationals, Harold Koh, the legal adviser to the State Department, said in a speech that the administration’s targeting practices complied "with all applicable law, including the laws of war."

"As recent events have shown," Koh said at the time, al Qaeda has not abandoned its intent to attack the United States, and so "the United States has the authority under international law, and the responsibility to its citizens, to use force, including lethal force, to defend itself, including by targeting persons such as high-level al Qaeda leaders who are planning attacks."

I find it both amusing and interesting (not to mention ironic) that those so heavily engaged in pumping up the Obama profile over the bin Laden killing are mostly unaware of the fact that the hated AUMF was the basis for the strike and, in effect, they’re now defending what they once roundly condemned.

As someone recently quipped, in the area of the war(s), this is like Bush’s third term.

~McQ

Twitter: @McQandO

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