Friday, September 30, 2011

So what do you really hate here????


The Obama administration is prosecuting seven oil and gas companies for the deaths of 28 birds. But what about the wind industry?

The Wall Street Journal (29 Sept) points out in an editorial this morning:

The Obama Administration’s hostility to oil and gas exploration is well known, but last week it took an especially fowl turn. The U.S. Attorney for North Dakota hauled seven oil and natural gas companies into federal court for killing 28 migratory birds that were found dead near oil waste lagoons…

Continental Resources is accused of violating the 1918 Migratory Bird Treaty Act because “on or about May 6, 2011 in the District of North Dakota” the company “did take [kill] one Say’s Phoebe,” of the tyrant flycatcher bird family. Brigham Oil & Gas is accused of killing two Mallard ducks. The Class B misdemeanors carry fines of up to $15,000 for each dead bird and up to six months in prison…

Absurdity aside, this prosecution is all the more remarkable because the wind industry each year kills not 28 birds, or even a few hundred, but some 440,000, according to estimates by the American Bird Conservancy based on Fish and Wildlife Service data. Guess how many legal actions the Obama Administration has brought against wind turbine operators under the Migratory Bird Treaty Act? As far as we can tell, it’s zero.

And this isn’t the first time this has happened.


Wednesday, September 28, 2011

Why Dick Smith Should Stick to Electronics: Dickhead Economics

In a populist outburst bemoaning the Cole’s CE pay for the year – as if that particular salary could materially affect the course of the Australian economy - vastly successful entrepreneur Dick Smith provided further evidence of a commonly observed phenomena:

Often it seems, businessmen who have an intense and sometimes unique knowledge of the micro workings of a given market and how to profit from that, frequently have quaint ideas about the wider forces at work. 

Smith told Morning Report that “capitalism has to have growth” and this is not possible because the world is “finite”. Apparently, the Murdoch empire (the guys currently flattened through a misjudgement in the micro markets they know so well) is obsessed with growth and they control 70% of Australia’s newspapers. And? Anyway…..

All this is “of course” linked to the poverty of farmers and “all those people on the dole” (that’s the guys in the hoodies with the cheap MP3 players, batteries and electronic goodies helpfully provided by Mr Wonder who “knows” that this “extreme capitalism” is wrong). Apparently “all extremes are wrong”. A bit of minor ex cathedra from the electronics king.

These are strange meanderings of logic. They come from the now thankfully out of fashion fantasy that “capitalism” like “socialism” is some kind of human selected “way of life” to be lifted down from the shelf in some sort of philisophico-political supermarket specialising in such wares, placed in the trolley and trundled to the cashier.

Presumably “extreme capitalism” is the jumbo size while the people of the USSR all went for the XOS version of socialism.

Nice to know know Dick is sticking with the family size capitalist pack that comes with a modest CEO salary, suitably wealthy farmers (who apparently make the world’s best food – it’s just that globalisation “doesn’t work the way its supposed to”, and no unemployment.

Why am I paying taxes so RNZ can parade this utter drivel? And why does Simon Mercer – once the fearless champion of “Fair Go” let him away with it?


Monday, September 19, 2011

Obama–policy to date… the evaluation


When it comes to the economy, presidents, like quarterbacks, often get more credit or blame than they deserve. They inherit problems and policies that affect the economy well into their presidencies and beyond. Reagan inherited Carter's stagflation, George H.W. Bush twin financial crises (savings & loan and Third World debt), and their fixes certainly benefitted the Clinton economy.

President Obama inherited a deep recession and financial crisis resulting from problems that had been building for years. Those responsible include borrowers and lenders on Wall Street and Main Street, the Federal Reserve, regulatory agencies, ratings agencies, presidents and Congress.

Stanford economist Michael Boskin on the records that Obama has set as president and last night's jobs speech.

Mr. Obama's successor will inherit his deficits and debt (i.e., pressure for higher taxes), inflation and dollar decline. But fairly or not, historians document what occurred on your watch and how you dealt with your in-box. Nearly three years since his election and more than two years since the economic recovery began, Mr. Obama has enacted myriad policies at great expense to American taxpayers and amid political rancor. An interim evaluation is in order.

And there's plenty to evaluate: an $825 billion stimulus package; the Public-Private Investment Partnership to buy toxic assets from the banks; "cash for clunkers"; the home-buyers credit; record spending and budget deficits and exploding debt; the auto bailouts; five versions of foreclosure relief; numerous lifelines to Fannie Mae and Freddie Mac; financial regulation and health-care reform; energy subsidies, mandates and moratoria; and constant demands for higher tax rates on "the rich" and businesses.

Consider the direct results of the Obama programs. A few have performed better than expected—e.g., the auto bailouts, although a rapid private bankruptcy was preferable and GM and Chrysler are not yet denationalized successes. But the failed stimulus bill cost an astounding $280,000 per job—over five times median pay—by the administration's inflated estimates of jobs "created or saved," and much more using more realistic estimates.

Cash for clunkers cost $3 billion, just to shift car sales forward a few months. The Public-Private Investment Partnership, despite cheap federal loans, generated 3% of the $1 trillion claimed, and toxic assets still hobble some financial institutions. The Dodd-Frank financial reform law institutionalized "too big to fail" amid greater concentration of banking assets and mortgages in Fannie and Freddie. The foreclosure relief program permanently modified only a small percentage of the four million mortgages the president promised. And even Mr. Obama now admits that the shovels weren't ready in all those "shovel-ready" stimulus projects.

Perpetually overpromising and under delivering is not remotely good enough, not even for government work. No corporate CEO could survive such a clear history of failure. The economic records set on Mr. Obama's watch really are historic (see nearby table). These include the first downgrade of sovereign U.S. debt in American history, and, relative to GDP, the highest federal spending in U.S. history save the peak years of World War II, plus the highest federal debt since just after World War II.

The employment picture doesn't look any better. The fraction of the population working is the lowest since 1983. Long-term unemployment is by far the highest since the Great Depression. Job growth during the first two years of recovery after a severe recession is the slowest in postwar history.

Moreover, the home-ownership rate is the lowest since 1965 and foreclosures are at a post-Depression high. And perhaps most ominously, the share of Americans paying income taxes is the lowest in the modern era, while dependency on government is the highest in U.S. history.

That's quite a record, although not what Mr. Obama and his supporters had in mind when they pronounced this presidency historic.

President Obama constantly reminds us, with some justification, that he was dealt a difficult hand. But the evidence is overwhelming that he played it poorly. His big government spending, debt and regulation fix has clearly failed. Relative to previous recoveries from deep recessions, the results are disastrous. A considerable fraction of current joblessness, lower living standards, dependency on government and destroyed savings is the result. Worse, his debt explosion will be a drag on economic growth for years to come.

Mr. Obama was never going to enthusiastically embrace pro-market, pro-growth policies. But many of his business and Wall Street supporters (some now former supporters) believed he would govern more like President Clinton, post-1994. After a stunning midterm defeat, Mr. Clinton embarked on an "era of big government is over" collaboration with a Republican Congress to reform welfare, ratify the North American Free Trade Agreement and balance the budget. But Mr. Obama starts far further left than Mr. Clinton and hence has a much longer journey to the center.

The president still has time to rebound from his economic policy missteps by promoting permanent, predictable policies to strengthen forecasted anemic growth. But do Mr. Obama and his advisers realize their analysis of the economic crisis was flawed and their attempted solutions mostly misconceived? That vast spending, temporary tax rebates and social engineering did little of lasting value at immense cost? That the prospect of ever more regulation and taxation created widespread uncertainty and severely damaged incentives and confidence? That the repeated attempts to prevent markets (e.g., the housing market) from naturally bottoming and rebounding have created confusion and inhibited recovery?

Can Mr. Obama change course, given the evidence that the economy responded poorly to top-down direction from Washington rather than the bottom-up individual initiative that is the key to strong growth? Is he willing to rein in the entitlement state erected under radically different economic and demographic conditions? And will he reform the corporate and personal income taxes with much lower rates on a broader base? Or is he going to propose the same failed policies—more spending, social engineering, temporary tax cuts and permanent tax hikes?

On the answer to these questions, much of Mr. Obama's, and the nation's, future rests.

Mr. Boskin, a professor of economics at Stanford and a senior fellow at the Hoover Institution, chaired the Council of Economic Advisers under President George H.W. Bush.

Thursday, September 15, 2011

The Rise and Fall of the White Man’s Empire

For at least three years I have been claiming that it is largely “all over” for the rent seeking economies – that is the interest group and politics riddled closet collectivist economies which make up the “developed” world.

Here is a graph that makes the point better than I can:


This is one result of the N.Z. Prime Ministers “streak of socialism in us all”.

Such fun…..


Wednesday, September 7, 2011

Extraordinary statement–how does this work?

In describing the denial the appeal of Roger Moses the Herald reported this from the sentencing proceedings:

In sentencing the men Justice Heath said their offending did not involve any element of dishonesty, rather the performance of directors was inept.

While in my view there were various reasons for which the activities of the defendant which might very well warrant a jail term and the upholding of law and order is a praiseworthy objective, sending people to jail for ineptitude seems strange indeed.

On this basis half the population ought to be inside. The rule, down through the centuries has ever been that one is allowed to make mistakes, make errors of business judgment, even make a thorough going muddle of the relatively straightforward.

One is not permitted however to break the law or commit crimes.

To move outside or away from this time honoured principle and commence instead to make judgments about what is and “ineptitude” and jail people on the basis of that judgment requires supreme and dangerous arrogance.

It is to be hoped that the elements of the conviction which led to jail were not those of apparent ineptitude.


Tuesday, September 6, 2011

What happens when Governments “stimulate”

When the inevitable call comes for “more stimulus” and “more government spending” and “more public works” – as it will in the next week or so this extract from the New York Times (hardly an advocate of dumping Keynesian spending or a critic of government spending):

HAMADA, Japan — The Hamada Marine Bridge soars majestically over this small fishing harbor, so much larger than the squid boats anchored below that it seems out of place.

And it is not just the bridge. Two decades of generous public works spending have showered this city of 61,000 mostly graying residents with a highway, a two-lane bypass, a university, a prison, a children’s art museum, the Sun Village Hamada sports center, a bright red welcome center, a ski resort and an aquarium featuring three ring-blowing Beluga whales.

Nor is this remote port in western Japan unusual. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

These policies fail – one cannot manufacture economic growth by governments spending up taxpayer money or borrowing from future taxpayers.

HT Russ Roberts at Cafe Hayek.