Sometime today, we expect The Employee Free Choice Act, also known as "card check" to be introduced in both the House and the Senate. The good news is that it will be difficult to get it through the Senate. The bad news is that it is not impossible. (It will almost certainly pass the House.) Although even liberals' favorite investor, Warren Buffett, has come out against Card Check, the Democrats are too beholden to unions to be easily swayed against the bill which will eliminate the requirement of a secret ballot to unionize a company. [youtube]YFpU5KSI3TU[/youtube] (Note: The last second that's cut off is Buffett adding "I think card check is a mistake." Even the name of the measure, implying that it adds to employees' choices, is Orwellian. What it does is makes workers susceptible to public pressure from union organizers and thugs, and from union member co-workers by calling for public signing of union organizing cards. Most Americans who understand anything about the issue oppose EFCA. Indeed, a January poll by McLaughlin and Associates shows opposition by 74% of respondents including 74% of union households. Furthermore, quoting from the press release, "When given a more detailed description of the Employee Free Choice Act, nearly 9 out of 10 voters, 86%, feel the process should remain private and only 8% feel it should be public information. Again, even union workers feel strongly that the process should be kept private, as 88% said private and only 8% said public." Now, liberals will whine that McLaughlin is a Republican polling firm and therefore its results are biased. And maybe that's true. But with numbers so overwhelming, it's impossible to believe that even a liberal polling firm wouldn't find broad public opposition to EFCA if the question were asked in a non-leading manner. (For example, a poll done by the AFL-CIO which shows support for EFCA leaves out the fact that the "card check" will be done in public!) The arguments against EFCA are extremely strong, and the arguments for it extremely weak. Yet it has a real chance of passing because of the Democrats' dominance in Congress and the president's stated desire to pass it. Richard Epstein, one of America's foremost thinkers in the area of political economy has written a scathing criticism of EFCA: The Case Against the Employee Free Choice Act In his paper, Epstein argues against not only the elimination of the secret ballot but also against the imposition of binding arbitration between a company and a newly-formed union who can't agree on a contract. I encourage you to read the paper yourself to really understand the issue and the lies coming from unions. Epstein also describes how declining private sector union membership is not unique to the US and "not attributable to any defect, real or imagined, in the present election process." A study by Anne Layne-Farrar which was released just last week, called "An Empirical Assessment of the Employee Free Choice Act: The Economic Implications", offers the following abstract:
The Employee Free Choice Act (EFCA), which is pending before the US Congress, would provide for union representation when an employee majority has signed union authorization cards and would create a system of mandatory arbitration if a collective bargaining agreement is not reached approximately 130 days after a union is newly certified. I critically assess the arguments presented for passing EFCA and consider the likely unintended consequences it will generate, should it be passed. I find that while card checks could be expected to increase union membership as hoped by EFCA proponents, EFCA is unlikely to achieve its main goal of improving social welfare, which should take into account possible consequences not only for union members but for all individuals. In particular, my quantitative analysis indicates that passing EFCA would likely increase the US unemployment rate and decrease US job creation substantially. The precise effect on unemployment will depend on the degree to which EFCA increases union density, but for every 3 percentage points gained in union membership through card checks and mandatory arbitration, the following year's unemployment rate is predicted to increase by 1 percentage point and job creation is predicted to fall by around 1.5 million jobs. Thus, if EFCA passed today and resulted in an increase in unionization from the current rate of about 12% to 15%, then unionized workers would increase from 15.5 to 19.6 million while unemployment a year from now would rise by 1.5 million, to 10.4 million. If EFCA were to increase the percentage of private sector union membership by between 5 and 10 percentage points, as some have suggested, my analysis indicates that unemployment would increase by 2.3 to 5.4 million in the following year and the unemployment rate would increase by 1.5 to 3.5 percentage points in the following year."The entire paper can be read HERE. (Some of the same people were involved in researching and writing both papers, so it's not surprising they have similar conclusions.) Card Check is a dangerous and cynical power grab by Democrats for their union masters. It is the second most dangerous item on Barack Obama's agenda, after "cap and trade", but it stands a better chance of passage than "cap and trade" does. It, like most of Obama's "economic" policy, is actually a politically-motivated ploy which even the President can't possibly believe would be good for the economy. I strongly Americans from all walks of life to contact their Senators (and, to a lesser degree their Representatives) and urge them to oppose EFCA.
David Theroux of the Independent Institute has written an article (much as we're seeing from a myriad of sources) about the stock market's reaction to Barack Obama's economic policies. While it's as much a recap as a source of new information, the article is worth reading and passing around just for the reinforcement of the important points that: 1) stock markets are not compatible with socialism or fascism, both of which the US is suffering from today, 2) that our current economic turmoil was caused by excessive government, not by deregulation, and 3) that the policies that are destroying the country are fundamentally designed to achieve the liberals' political goals rather than being serious or sound economic policy. See "The Obama Bear Market: “Never waste a good crisis”", David Theroux, 3/6/09 http://www.independent.org/blog/?p=1496
[update: 9 hours after writing this note, Barack's grade is now 54% "F".] MSNBC is running an online poll asking "If you were grading Barack Obama on his performance as president, what would he get?". At the moment I'm writing this note, 42% of the over 19,000 responses give him an "F". Help me get it over 50% by going to the site and giving Obama the grade he deserves. NOTE: If you have two different browsers, i.e. Internet Explorer and Firefox, you should be able to vote once in each. Also, you can vote from the office and then again at home. (Hey, I did learn something about voting while living all those years in Chicago.) http://www.msnbc.msn.com/id/29493093/
On Friday night, I had the privilege to hear Bill Kristol speak as the dinner keynote speaker at the 2009 Leadership Program of the Rockies Annual Retreat. In brief, Mr. Kristol's argument (as I understood it...he might say I misunderstood him) was that while he did not want to play down the bad situation the nation and the political prospects for conservatives are in today, he is fairly optimistic that both, but particularly the latter will recover in a reasonable time frame, and that the Republican Party will adopt good ideas which percolate up from grassroots political activists and thinkers outside the usual conservative channels. A well-known conservative blogger (who will remain nameless) asked me what I thought of Mr. Kristol's remarks. And after a brief time considering the question (which, strangely, I hadn't spent time considering before the person asked), I have reached a several-part answer: First, I'm less optimistic than Mr. Kristol that the national situation will improve in any important way for at least 6 more months, but more likely 12-18 months. In other words, I think this will shatter all records for post-WWII recessions. Second, I'm somewhat less optimistic that even a slightly longer-than average economic downturn will help Republican prospects as much as one might expect unless the Republicans stay as united as fiscal conservatives as the House GOP did on the "stimulus" bill...and I don't expect that to happen, particularly not in the Senate. Third, I am highly skeptical that Republican leadership, which includes so many of the old guard, are capable of getting through their thick skulls that my prior point is correct. If they did get it, they would have massively arm-twisted their caucus members to remove their earmarks from the budget bill now being debated, so they could claim something like "over 90% of the earmarks in the proposed budget are from Democrats" instead of the current case which is roughly 60% from Democrats and 40% from Republicans. I doubt they will be open (especially on the Senate side, again) to ground-breaking new ideas which come from outside the beltway. Finally, thinking back on all this, I occurs to me -- and keep in mind that I'm a person whose son's middle name is Rand -- that I'm not certain I want things in the nation to suddenly start improving, i.e. to improve in a way that could let progressives argue that Obama's reprehensible generational theft in the form of Keynsian spending and stimulus bills actually caused a beneficial economic outcome. It would be like the Democrats who argue that Clinton's tax hike was a good thing, economically speaking, because the economy improved afterward, despite that being so obviously a falsehood, an impossibility, that only a "progressive" could believe it. ("Progressive" is Latin for "I never studied economics, but I'm pretty certain I'm smarter than you are".) Instead, there are other factors in the economy which can (and did) in concert overwhelm the income tax rate hike. (It bears mentioning that Clinton passed a large capital gains tax cut, which few liberals ever talk about when discussing the effect of Clinton's tax policy on the economy.) This is not easy to say or think...but at the end of the day, I go further than Rush Limbaugh as far as wanting Obama to fail. I don't want the nation to fail. Unlike Michelle Obama and, in my view, our President, I love my country. After all, wanting to remake something completely is hardly a sign of deep love and appreciation for it. But if having things be a little worse for a little longer, or even substantially worse for substantially longer, might be the difference between people believing in Keynsianism and people realizing that Obama's New New Deal and its predecessor were economic disasters based on an obviously flawed theoretical foundation, I think the price is worth our paying. For the sake of our children and grandchildren, I want "progressive" economic thinking to be so thoroughly disproved that future generations won't get hoodwinked by promises of "hope" and "change" like so many economically illiterate Americans did in November. I will suffer through one or two worse years if it means my descendants won't be put through a second Barack Obama (or, roughly, a third Jimmy Carter.) It's great to see discussions on the web of people "going Galt." If enough productive members of society decide that it's simply not worth the risk and effort to strive for the next dollar, it is not primarily they who will suffer economically. It is those who believe in redistribution, who believe that Obama would and should make "government" pay her rent (and we thought she was insane when she said that -- turns out she was psychic.) Those so interested in being recipients of government redistribution of wealth, the "looters" and the "moochers" as Ayn Rand calls them in Atlas Shrugged, just let them try to redistribute income from people who simply quit working because we're not willing to be looted and mooched from. Yes, we are living Atlas Shrugged, and we might as well not quit halfway through the story. I've done this once already...I moved out of the US for nearly 2 years after Bill Clinton raised tax rates, and moved back just in time for the capital gains tax cut. Let me be clear: I gave up two years of at least $200,000 (but probably a fair bit more) per year, just so I didn't have to pay taxes to Bill Clinton's government. My money is where my mouth is in a way that few people can claim. And Clinton was a piker and a conservative in comparison to Obama. So, in case I haven't been clear enough: As long as we're already going to have a fairly bad recession, I'm saying let it be worse and longer. Let more people be persistently unemployed, let the economy drag along the sludge-laden bottom of the progressive sewer, let businesses close down or move overseas, let tens or hundreds of thousands of capable people publicly declare how excessive taxation and regulation is causing them to work less, take less risk, and employ fewer Americans, and finally let people recognize that capitalists are not a "necessary evil" but rather that they are a necessary good. Most people don't learn truly important lessons unless they are taught in an expensive or painful way. A once-and-for-all repudiation of Keynsianism is a lesson that is too important not to be learned in such a way. Many people who have survived cancer say that the chemotherapy was so bad, they almost wish the cancer had just killed them. But any treatment that didn't make them nearly wish for death would not cure the disease, which would often recur with a greater chance of killing the patient the second time around. And so it is with the recurrent national cancers that are Keynsianism and the politicians who impose it. The New Deal sickened the nation. Obama's New New Deal could kill it, but the chemotherapy of a recession severe enough to cause voters to say "never again" might just save the patient -- even if the patient might wish to die during the treatment. Therefore, I proudly proclaim I want Obama to fail, even if it means temporary substantial hardship for the nation. The Keynsian cancer must be cured, once and for all. Let us all be John Galt.
As part of my ongoing participation in Comment:visions, a European web site sponsored by Shell oil and two European news organizations to bring together opinions about a range of energy-related issues, I have offered my comment in response to the question "What role should biofuels play in our future energy mix?" You can find my answer and read other opinions here: http://www.commentvisions.com/month/march/2009/visions_from#7 Or, if you realize that mine is the only opinion you need, here's the text of my comment: Biofuels should have only a modest role in our energy mix over the next several years while research is done on how to create them in a way which can compete with fossil fuels in a free market, without the need for government subsidies. Furthermore, biofuels made from food crops should be ended as an energy source. Here in America, people are slowly learning that corn ethanol is an inefficient energy source and is no better – and arguably worse – for the environment than gasoline. Furthermore, it results in massive transfers of wealth... from taxpayers around the nation to a relatively small number of farmers, mostly large agribusiness corporations, in the form of subsidies. There’s a reason that when George Bush mentioned expanding corn ethanol production in a State of the Union speech a few years ago, Iowa Senator Charles Grassley was shown on the TV, smiling like the cat that ate the canary. Much of the push for biofuels is a result of environmentalists, anti-capitalists, and politicians and scientists seeking grants and contributions, working to convince people that human activity is leading to destructive climate change. It has become nearly a religion, and one that demands a tithe from every person in every developed economy in the world. At some point, and perhaps it is the silver lining to this incredibly dark cloud surrounding these economic times, people will realize that the current rush into “alternative energy”, including biofuels, is counter-productive and irrational – unless your real motivations are to help you raise money from donors or governments, or to win a Nobel Prize with lies. Eventually, biofuels will make sense, especially if cellulosic ethanol production can be made more efficient. But it’s time for our leaders to admit that they can’t save the world by burning our food.
I was thinking about measures Congress could pass to help stimulate the economy and be “green” and “sustainable” at the same time, and I think I’ve come up with something. Congress should require every dairy in America to produce at least 50% of its products from cows milked by hand, instead of by machine. Sure, companies which make cow-milking machines might go bankrupt or at least have to lay off many employees, but those workers can get satisfying jobs, working in the fresh air, wearing interesting boots, and knowing they’re keeping the planet more natural, all while the beneficent federal government subsidizes each hand-milked gallon with a 25 cent transfer payment to the dairy. Sure, the cost to the dairy will be closer to $1 per gallon, but certainly Americans will be willing to pay more for such hand-crafted goodness. Doesn’t a fish taste better when you’ve caught it yourself, or your grandma’s apple pie seem more delicious because you know it was made with loving care? It can be the same with milk, butter, even ice cream (my personal favorite dairy product.) It’s true that the price per gallon of milk will go up 75 cents…and that the US produced about 182 billion pounds of milk, or about 21 billion gallons, in 2008. So consumers will either have to spend an extra $16 billion dollars directly (plus $5 billion through higher taxes), or cut back on their dairy intake. But won’t everyone be willing to support a return to good old-fashioned methods and the gentle touch of a human hand on cows’ udders across the nation? And who, if not our Congressmen, are wise enough to teach us that we’d just waste that $21 billion if we still had it in our own pockets? If I still had my share of that money, I might do something stupid with it, like use it toward the cost of a private education for my children or replace my car’s old tires or even just go out to dinner. How fortunate for us that we have a kind and caring government to make sure my money is used wisely. And luckily, we have a model for this already with the governments’ (federal and state) moves to require certain percentages of energy production to come from “alternative” sources! Only someone as creative as a senator from Iowa would have figured out that we can save the planet by burning our food supplies! Yes, every form of non-fossil fuel energy is much less efficient than oil and natural gas, but isn’t it worth it, how good you feel when you see the wind farm or the solar panel, knowing you’re saving the planet (because Al Gore said you are) even though your energy bills are going up so much that you have to set your thermostat on 68 in the winter and 76 in the summer? What’s a little financial discomfort when you’re doing something so Important? Actually, I sent my uber-Liberal senator a really great plan along these same lines! Have every person in America who heats his or her home with fossil fuel not buy ten gallons of that fuel, then take dollar bills equal to the price of the non-purchased fuel and burn them in a ceremonial stone fire pit created in their living rooms. It’s perfect! It’s an alternative energy source, generating almost no greenhouse gases in the 15 seconds it burns, and it shows the proper disrespect for something as gauche and passé as money and the capitalist system which America used to have but which our “elegant” president is so wisely destroying in pursuit of…well, I don’t really know, but I’m sure he has our best interests at heart. Are you all with me? Let’s get those machines off of cow teats and get some soft, caring human hands on there! What could be more important, and assuming that Congress agrees, how could our government be wrong?!? If raising prices for everyone in America so that we who really care say we should is good enough for a reprehensible product like oil (so what if we just happen to need it to heat our homes, cook our food, and drive our cars), it’s gotta be good enough for milk!
It must have really bothered the Discovery Channel news reporter to write an article saying that (1) the planet's lack of warming can't be explained by the usual (alarmist) models, and (2) the planet's current cooling trend could easily last for several more decades. (see http://dsc.discovery.com/news/2009/03/02/global-warming-pause.html) The more new studies come out, the clearer it is that anthropogenic (man-made) global warming (AGW) is a hoax. And for those who don't read the science, at least you can see that most recent anti-AGW, anti-fossil-fuel protests have been disrupted by snow! Anecdotes are not data, but they can make an impact on the public, especially when they're so visually appealing as a man wearing a ski jacket, hat, and gloves, standing in a near-blizzard, holding a sign urging us to just say "no more coal", with a facial expression that my Australian wife might call: An Algore cult-member "stunned mullet" Ummm, excuse me, Miss, but what's all that white stuff on the ground around you during your protest to prevent coal-caused global warming? The question is will we let President Obama destroy our economy with a cap and trade policy aimed at curbing AGW. We might as well have a "no jumping" policy to try to slow down continental drift. Actually, I think in a few years, they'll be begging us to drive more, burn tires, and give our cows extremely flatulence-causing diets as we go through some years of global cooling.
Thanks to Greg Staff for this guest article describing how Obama's energy policies, particularly cap and trade, will lead to further economic trouble for the nation. Not only is cap and trade bad for the country, but Obama’s intention to change exploration and production tax laws will severely cripple the oil and gas (O&G) industry. There is a misconception that the O&G sector is still puttering along quite nicely, despite the drop in oil during the past 8 months from a high of $147/bbl to around $40/bbl. Admittedly, $147/bbl was too high and was driven by over-zealous New York City-based speculation. In fact, many oil companies based their 2009 capital budget on oil in the $50/bbl range. Natural gas has seen a similar slide, and budgets for companies whose primary product is gas were set at equivalent levels ($5 - $6 per MCF). Those prices seemed conservative and in fact many analysts thought they were too low. With the price of a barrel of oil now fluctuating wildly in the $30 - $45 range (and with some predicting $25), the O&G industry has essentially shut down nearly all speculative project work. Big ticket projects are on hold, and most discretionary spending has come to a screeching halt. Houston is about to enter its most difficult time since the early 80s, when oil had a similar percentage drop. Homebuilding is already at 50% of last year and dropping like a stone. Houston’s unemployment rate is likely to jump 25%, from 5.8% to 7.25% or higher, during 2009. In the general populace, there is no sympathy out there for O&G (nor is there sympathy for Texas to be found in Colorado); the media and many politicians portray “oil people” as fat cats who take advantage of the “poor.” The O&G industry is an easy target – indeed, “get rid of tax breaks for major oil” has been a common rant of the democrats. However, there can be no doubt, what is bad for the energy industries is bad for America, whether you live in Texas, Colorado, or elsewhere. Democrats have decided that the condition of the O&G industry isn’t bad enough, so Obama, through the budgeting process, intends to make sweeping changes to the tax code as it relates to O&G, including eliminating the deductibility of intangible drilling costs – IDCs. To explain IDCs, I offer the following from the Heritage Foundation: “Intangible Drilling Costs are outlays for non-salvageable capital expenditures associated with a mining operation. Because these items have no salvage value, mining operations (including oil and gas drilling) long have been allowed to treat them as expenses. As such, they could be taken in the year in which they occurred rather than spread out over the productive life of the property. Mining for any of the 105 minerals eligible for the depletion allowance is entitled to the deduction for IDCs. Examples of IDCs from the oil industry include the cost of building a road to the site of an exploratory well, of casings for the well shaft, and of pipelines to gather oil from the site which would be abandoned after the well is depleted. IDCs are important to the oil industry because they are a principal means of attracting risk capital. Typically this has been done by investors forming a limited partnership with an oil driller. They could then use a portion of the IDC deduction to “shelter” other income. Given the extreme risks of investing in oil production, it is highly unlikely that adequate capital would be available without the existence of such tax incentives.” IDCs are targeted to be eliminated only for the O&G industry – not for other mining endeavors. Also, please take a minute to read the below-linked article from the Oil & Gas Journal, to gain a better understanding of how this change and other tax changes will increase our dependence on foreign oil and gasoline supplies. The article explains how the O&G industry is being singled out from the rest of industrial America for additional tax burdens. http://www.ogj.com/display_article/354687/7/ONART/none/GenIn/1/Divisions-form-over-oil,-gas-provisions-in-Obama-budget/ Full disclosure: I do not work for an oil or gas company. I work for a small engineering firm that designs and constructs pipelines and related facilities. Our company has not been awarded a new significant project in six months, and three large projects by major operators have been canceled. All my company has to sell are man-hours. Once our few remaining in-house projects are completed, layoffs are inevitable. Similar outcomes are already occurring for pipe suppliers, equipment manufacturers, and all the myriad businesses that offer services to the energy industries. The O&G industries face extreme challenges over the next several years, and additional taxes can only hurt. Obama’s requested energy tax burdens, coupled with cap and trade, will spell doom for much of the domestic industry – especially smaller firms that now do not have sources of capital to fund exploration. Worse still, because these taxes (and cap and trade) have been submitted as a part of Obama’s budgeting process, it appears the provisions are filibuster-proof. After House passage, only 50 votes in the Senate are needed to pass a budget. This is an “end-around” method to avoid proper vetting of the consequences of these tax increases. Domestic energy supplies equal security for America. Additional tax burdens on domestic energy sources can only diminish our security and our independence from global supply disruptions. The “change” we will see from this is even higher prices and even more imports in the future.
Jim Cramer made some news the other day when he called Obama's economic agenda "radical" and said "This is the most, greatest wealth destruction I’ve seen by a president." White House Press Secretary Robert Gibbs offered some weak jabs at Cramer, who has now responded in depth. It's well worth reading, despite what you might think of Cramer's stock picking ability. It's also worth noting that Cramer is quite far to the left in the policies he supports. He's no Republican. But he believes that this is exactly the wrong time to be pursuing a radical leftist agenda. see "Cramer: My Response To The White House"