Saturday, July 19, 2008

A response to ML

A friend on Facebook linked to horrible, horrible, horrible editorial that I'm loath to link to - Change Means Never Having To Face Facts - but I feel the need so that readers of Page 132 have a complete picture of what I'm dealing with.

My response to this editorial was "Wow...there are so many false assumptions and allegations here that I don't know where to start. I do know that I'm now dumber for reading this editorial."

However, ML declared he liked debating with me and picked a few places to start. I shall attack them one by one...(ML's comments are in purple and mine in black)

Regarding Obama, here is what I see as the Obama economic plan (unless he has changed it again):
- Do absolutely nothing to increase American energy production, except increase government involvement in the development of alternatives, which leads to situations like the current ethanol boom. Government subsidies for ethanol have driven up the price of corn and caused average citizens to pay more for milk, meat, etc. We need a comprehensive plan, but a large part of that has to be more domestic drilling. Rather than support that, Obama was up until the beginning of this year calling for a higher gas tax.

Snide remark aside, ML has repeated what are Republican talking points on this and it misses the bigger picture. Barack Obama sees the bigger picture. It is completely untrue that Barack Obama has done nothing to increase energy production. He is against oil energy, but has pushed the development of all sorts of renewable sources including wind, solar and biofuels. But more importantly, he is pushing conservation, which is probably the biggest area for Americans to "gain" new energy. An increase in CAFE standards for automobiles and improvement in housing design and construction could save millions of barrels of oil each day. If Boeing made planes that were 5% more efficient, it would decrease American oil usage by 672, 900, 000 barrels a year (~1.8 million barrels per day).

It is also untrue that ethanol has been the source of the massive increase in the price of food. The University of Nebraska concluded in May that ethanol has increased of food by 1-2%. It is actually gasoline/petroleum increases that farmers need to drive their tractors, fertilize their fields and transport their goods to market that is the single biggest reason for the increase in food prices. All the more reason to build more efficient vehicles, our food prices will come down.

Did you know that Americans are sending $2 billion a day overseas to pay for our oil addiction? That is a MASSIVE capital outflow. And it is enriching lots of regimes that are not supportive to American goals or interests. Our oil addiction DIRECTLY strengthens slimeballs like Hugo Chavez, Islom Karimov and King Abdullah bin Abdul Aziz Al Saud.

To my knowledge, Obama has never called for a higher gas tax. He has rejected the ridiculous idea that we have a gas tax holiday because the loss of revenue would harm our transportation infrastructure (which we'd have to pay for eventually anyway...deferring paving potholes today doesn't make them go away tomorrow).

- "Reopen" trade deals, which is another way of saying he is going to stop the progress of free trade. I think you and I would both agree free trade is great diplomacy and needs to be promoted further.

I do agree with ML. Free trade helps poor people and Democrats should embrace it, but my party isn't there yet. However, "reopen" doesn't translate into stopping further progress. I know of no one that thinks "reopen" means "to stop". When sports players "reopen" their negotiations with their teams, it usually means that they are going to rework the terms, but not that they will stop playing.

- More unnecessary, unconstitutional regulation of business that drives up costs and makes America less competitive. Even if global warming is a threat (which is still disputed by experts), over regulating businesses and crippling the American economy through Obama's proposed cap and trade system that may or may not help the environment is the wrong solution.

1st - there is no scientist with a peer-reviewed published paper and no body of scientists that doesn't endorse the idea that the Earth is warming up and that human activity is the problem. The Bush administration said as much back in 2002. About the cap and trade a true free market economist, why wouldn't it be appropriate to figure in the total cost of negative externalities? Just because businesses have been able to avoid paying this cost in the past doesn't mean they should be allowed to in the future. Will it cost money? For 20th century industries, absolutely! But one of the greatest things about Americans is their ability to respond to a pricing mechanism and innovate. Know what happened when horse draw carts got to be too expensive (cost of hay, stabling, clean up horse apples, etc) in the late 1800s? Americans created a new form of transport...the automobile. I, and Barack Obama, believes we can adapt and innovate again.

- More and more big government programs that take money and jobs out of the private sector and add more bureaucracy to our already bloated federal government.

There is a fundamental difference between "bloated" government and effective government. Bloated government is a government that is feeble and costs a lot of money. Size doesn't matter. Paying 3 guys that can't do the job is always unacceptable. It is bad value for money. However, effective government does the job asked of them. Again size doesn't matter. If it takes 30 guys, but they do the job that is good value for money and is perfectly acceptable.

- "Universal" health care that will never be fully funded and has failed in multiple other countries. Again, giving more power to the federal government and taking liberty away from individual citizens to make their own decisions.

I think you need to view Barack's actual plan. He isn't suggesting a nationalization of the health care sector like in Canada or the UK. Under his plan, you can keep your health plan if you like. But the truth is that state or federal government already pick up the cost of something like 50% of all dollars spent on health care. Please don't act as if government isn't already very involved in health care. (And I know that ML gets his health care from a 100% government funded and provided health care UPDATED - ML wrote me to explain that he is "not really sure where [I] received that information, but [ML] pays about $100 a month just for health insurance. AND our health care coverage is better than a lot of people's, but it is certainly not the best out there and is free to no one, including members of Congress." - I stand corrected)

- Curbing CEO pay to score political points, something that the executive branch has no business doing - interfering with private sector pay scales.

I'll agree on the CEO pay. But I do reject the idea that the federal government doesn't have a valuable role as oversight in the business community. Thanks to EPA oversight, I can drink water from my local river. Thanks to the SEC, the brokerage house that oversees my 401-k much report each quarter exactly where my money is and would be held accountable should they make fraudulent claims about it. The federal government has a role in oversight and society is stronger, business is stronger, we are stronger when they do it well.

- Bashing and slapping extra taxes on businesses like oil companies and pharmaceutical companies all for making a profit. Meanwhile, generally liberal companies like Google run up three times the profits of what the media deems "evil" businesses and pays no excess taxes for their profits.

Let us not confuse what these two industries do. The Oil and Gas companies fuel our economy, but at great cost (see negative externalities above). Democrats want to roll back tax breaks for oil and pharmaceutical companies because they are profitable. Why should they get special treatment when other industries and sectors don't?

The argument about the windfall tax is an interesting one. Compare these two situations. Google started with two guys that have worked from an idea to create a service that has become indispensable. Google has made more money as it has become more useful. On the flip side, Exxon claimed some land possibly as much as 100 years ago. It had oil. Today, they chose to pump the oil today (and not 100 years) and through absolutely nothing of their effort, but instead through outside factors, the value is worth 100 times more. Democrats value work over wealth. Google worked for their profits, Exxon simply had the wealth given to them.

Now from economic argument, the windfall tax is a bad one, but from a political argument, it is powerful.

- Raise taxes on capital gains and the top income tax brackets, which will stifle entrepreneurship and investment in the economy, and hence create fewer jobs. America needs to abolish the death tax, lower corporate taxes, and make current tax rates permanent to ensure continued economic growth. And I think we need to cut unneeded govt programs. My prediction of all of Obama's plans is that our national economy will turn out like the state of Michigan's. Last year the only industry that grew in MI was the state government. I await your response!

Wow....let me just attack this from a fiscal responsibility viewpoint. A fundamental flaw with modern conservatism is that it has swallowed the Laffer curve and forgotten what it looks like. There is a whole side of the curve that is when government lowers taxes, it begins to cut government revenue without actually improving the economy. This fallacy has meant that under every Republican administration since Reagan has run up huge deficits. And why does that matter?

Because deficits weaken the dollar (the more we owe, the risky we appear to lenders). And oil is priced in US dollars. When the US dollar weakens, the price of oil goes up (the dollar is worth less, so it takes more dollars to buy the same amount of oil). Want cheaper gas? Raise taxes and pay down the deficit.

And I'll keep you to your prophesy about Obama, but you have cherry picked one state. Michigan is a unique case because it is a single-industry state and that industry is going through a hard time right now. I notice that you didn't choose Massachusetts. It is known as Taxachusetts, but also has effective governments. And it had private industry growth much larger the national average.