Today's lament is, "The bankers have benefited from a bailout, so why shouldn't auto workers?" But they have, they have -- for decades...
Chrysler was bailed out directly with government loan guarantees; the Big Three all benefited from Reagan era "voluntary" quotas on Japanese imports to prop up domestic car prices. But these were temporary fixes. For more than 40 years, a 25% tariff has kept out foreign-built pickup trucks even as a studied loophole was created in fuel-economy regulations to let the Big Three develop a lucrative, protected niche in the "passenger truck" business.
This became the long-running unwritten deal. This was Washington's real auto policy.
For three decades, the Big Three were able to survive precisely because they skimped on quality and features in the money-losing sedans they were required under Congress's fuel economy rules to build in high-cost UAW factories. In return, Washington compensated them with the hothouse, politically protected opportunity to profit from pickups and SUVs.
Thursday, April 30
Mr. Obama talks the language of pragmatism, but his program has revealed a man of the left. He clearly views the financial crisis and the liberal majorities in Congress as a rare chance to advance the power of the state in American life. The only two comparable moments in the last century were 1965, which gave us the Great Society, and 1933, which bequeathed the New Deal. Mr. Obama's goals are at least as ambitious, resuming the march toward the European welfare state that was stopped by what Democrats like to call the Reagan detour.I can't believe so many people believe taxes on other people are going to pay for it all.
His main method here is to make the federal government the guarantor of middle-class security. He wants to make a college education a new entitlement, regardless of the cost. He wants state-financed health-care available to all, even if it means jamming a $1 trillion bill through the Senate with 51 votes. And he wants a cap-and-trade tax that would punish the main current sources of U.S. energy and hand Washington a vast new source of revenue.
Oh, and by the way, he also wants to fix the financial system, run the auto industry, and build a nationwide, high-speed rail network. And on the seventh day, he rested.
What's striking is that Mr. Obama betrays no sense that maybe all of this isn't achievable, much less affordable, all at once. In contrast to Bill Clinton, he has abandoned any deficit concern, building in red ink of at least 4% of GDP for the next decade. And that's assuming the revival of rapid economic growth, and before counting the real cost of health care...
Mr. Obama is more popular than his policies, and sooner or later the twain shall meet. For now, we are living in another era of unchecked liberal government. The reckoning will come when Americans discover how much it costs.
Monday, April 27
The political class has spent the last few months blaming bankers for everything that has gone wrong in the financial system, and no doubt many banks have earned public scorn. But Washington has been complicit every step of the way, from the Fed's easy money to the nurturing of Fannie Mae and Freddie Mac, and since last autumn with regulatory and Congressional panic that is making financial repair that much harder. The men who nearly ruined Bank of America have some explaining to do.
No one really knows either the costs of global warming or the costs of dealing with it.
Countless practical difficulties would arise in trying to wean the U.S. economy from today's fossil fuels. One estimate done by economists at the Massachusetts Institute of Technology found that meeting most transportation needs in 2050 with locally produced biofuels would require "500 million acres of U.S. land -- more than the total of current U.S. cropland." America would have to become a net food importer.
In truth, models have a dismal record of predicting major economic upheavals or their consequences. They didn't anticipate the present economic crisis. They didn't predict the run-up in oil prices to almost $150 a barrel last year. In the 1970s, they didn't foresee runaway inflation. "General equilibrium" models can help evaluate different policy proposals by comparing them against a common baseline. But these models can't tell us how the economy will look in 10 or 20 years because so much is assumed or ignored -- growth rates; financial and geopolitical crises; major bottlenecks; crippling inflation or unemployment.
The selling of the green economy involves much economic make-believe. Environmentalists not only maximize the dangers of global warming -- from rising sea levels to advancing tropical diseases -- they also minimize the costs of dealing with it. Actually, no one involved in this debate really knows what the consequences or costs might be. All are inferred from models of uncertain reliability. Great schemes of economic and social engineering are proposed on shaky foundations of knowledge. Candor and common sense are in scarce supply.
Sunday, April 26
Not as many as certain politicians & the media tell us.
- Should people with incomes near or above the national median get health insurance subsidized by taxpayers?
- How about non-citizens? Should we distinguish between documented and undocumented non-citizens? Between those who pay taxes and those who do not? Remember that we are not talking about who should get emergency medical care, but instead who should get taxpayer subsidies to finance the purchase of pre-paid health insurance. Does that change your answer?
- Many young adults and childless couples are in good to excellent health. Do they deserve subsidies, when they may be making what they believe to be a rational economic decision and using their financial resources for things other than buying health insurance? Should a 25-year old Yale graduate triathlete making $30K per year get his health insurance subsidized by taxpayers if he chooses not to buy it because his budget is tight?
Saturday, April 25
Through March, federal receipts were running 14% behind the previous year. Each month during the fiscal year has trailed the previous year, and degree of the difference has steadily increased...
My estimate of April’s final result is almost 40% lower than April 2008, and further ratchets down the trend of collections decay that goes back to last summer. The receipts shortfall is far more than one would expect from an economy that shrank only 1.74% in the final half of last year....
The credit card stocks didn’t tumble or anything so my question is with all this cheap talk who is Obama pandering to? Even if the terms of sub-prime mortgages are a big mystery, the terms of credit cards aren’t. Everybody knows cards have high interest rates and that they always have. Who has accumulated large balances on their cards by making purchase after purchase, not paying down the balance every month and yet thinks these large debt burdens are somehow the credit card company’s fault?
- Myth: Everyone understands what a green job is.
- Reality: No standard definition of a green job exists.
- Myth: Creating green jobs will boost productive employment.
- Reality: Green jobs estimates include huge numbers of clerical, bureaucratic, and administrative positions that do not produce goods and services for consumption.
- Myth: Green jobs forecasts are reliable.
- Reality: The green jobs studies made estimates using poor economic models based on dubious assumptions.
- Myth: Green jobs promote employment growth.
- Reality: By promoting more jobs instead of more productivity, the green jobs described in the literature encourage low-paying jobs in less desirable conditions. Economic growth cannot be ordered by Congress or by the United Nations. Government interference - such as restricting successful technologies in favor of speculative technologies favored by special interests - will generate stagnation.
- Myth: The world economy can be remade by reducing trade and relying on local production and reduced consumption without dramatically decreasing our standard of living.
- Reality: History shows that nations cannot produce everything their citizens need or desire. People and firms have talents that allow specialization that make goods and services ever more efficient and lower-cost, thereby enriching society.
- Myth: Government mandates are a substitute for free markets.
- Reality: Companies react more swiftly and efficiently to the demands of their customers and markets, than to cumbersome government mandates.
- Myth: Imposing technological progress by regulation is desirable.
- Reality: Some technologies preferred by the green jobs studies are not capable of efficiently reaching the scale necessary to meet today's demands and could be counterproductive to environmental quality.
Saturday, April 11
Ronald L. Trowbridge opines:
The fatal flaw in former Gov. Rod Blagojevich's alleged schemes of pay-to-play politics could come down to the quid being too close to the quo. Had the separation been wider, it would have been business as usual among politicians in Springfield or Washington. Sweetheart deals happen all the time in state capitols and in Congress, where politicians are more circumspect. Examples abound:
•Sen. Christopher Dodd (D-Conn.), chairman of the Senate Banking Committee, got two sweetheart, low-rate mortgages from Countrywide Financial Corp. for his home in Connecticut and condo in Washington.
•Organized labor spent millions of dollars and provided truckloads of campaign workers for presidential candidate Barack Obama, apparently in hopes—hint, hint—of return favors such as supporting the Employee Free Choice Act, popularly called the card-check bill, which would eliminate secret union ballots.
•Gov. Ed Rendell of Pennsylvania unilaterally awarded a lucrative no-bid contingency fee contract to the Houston law firm of Bailey, Perrin & Bailey, which had contributed more than $90,000 to the governor's 2006 re-election bid.
•Michelle Obama was employed by the University of Chicago Medical Center. Her husband, as a U. S. senator, requested a $1 million earmark for the center.
The gazillion dollars spent on earmarks for bridges back home are rife with quid separating quo just long enough to appear as constituent democracy in action.
When Dodd, organized labor, Rendell, Obama and Congress do it, it's called "democracy," or "lobbying" or "free speech." When Blagojevich does it, with the quid too close to the quo, it's called "a crime." He was indicted for "efforts to illegally obtain campaign contributions in exchange for official action"—not much different from "efforts to legally obtain campaign contributions in exchange for official action."
Earth & Sky should be embarrassed:
Dr. Carnesale said – even in a tough economy like we’re seeing in 2009 – limiting carbon emissions might lead to economic opportunities.The research shows otherwise. Or just consider the broken window fallacy.
Albert Carnesale: Well, for example, should we have a price on carbon that’s emitted in to the atmosphere, carbon dioxide? If the answer to that is yes, in one way or another, whether it’s a tax or a cap and trade program, that will open opportunities for alternative energy sources in ways that are not currently, economically viable. That’s new kinds of jobs, new kinds of research and development.
Thursday, April 9
From a libertarian perspective, your generosity is reflected in what you do with your own money, not in what you do with other people's money. If I give a lot of money to charity, then I am generous. If you give a smaller fraction of your money to charity, then you are less generous. But if you want to tax me in order to give my money to charity, that does not make you generous.
President Barack Obama favors offering a public plan for health insurance modeled on Medicare, declaring recently, "The thinking on the public option has been that it gives consumers more choices, and it helps give — keep the private sector honest, because there's some competition out there." Not surprisingly, the editors at the New York Times endorsed the idea in an editorial yesterday...The Times' opinion editors evidently don't bother to read the news sections of their own paper before pronouncing on public policy. Just a week before, the Times found that Medicare reimbursements were so low that increasing numbers of doctors are refusing to accept patients covered by the government insurance program.Not for some, apparently.
Sunday, April 5
Flora...reflected that religious maniacs derived considerable comfort from digging into their motives for their actions and discovering discreditable reasons which covered them with good, satisfying sinfulness in which they could wallow to their heart's content.
Flora's observation of the congregation:
It compared most favourably with audiences she had studied in London; and particularly with an audience seen once — but only once — at a Sunday afternoon meeting of the Cinema Society to which she had, somewhat unwillingly, accompanied a friend who was interested in the progress of the cinema as an art.
That audience had run to beards and magenta shirts and original ways of arranging its neckwear; and not content with the ravages produced in its over-excitable nervous system by the remorseless workings of its critical intelligence, it had sat through a film of Japanese life called 'Yes', made by a Norwegian film company in 1915 with Japanese actors, which lasted an hour and three-quarters and contained twelve close-ups of water-lilies lying perfectly still on a scummy pond and four suicides, all done extremely slowly.
All around her (Flora pensively recalled) people were muttering how lovely were its rhythmic patterns and what an exciting quality it had and how abstract was it formal decorative shaping.
Later, as Flora educates Elfine:
In the evening, she proposed that the three of them should visit the Pit Theatre, in Stench Street, Seven Dials, to see a new play by Brandt Slurb called 'Manallalive-O!', a Neo-Expressionist attempt to give dramatic form to the mental reactions of a man employed as a waiter in a restaurant who dreams that he is the double of another man who is employed as a steward on a liner, and who, on awakening and realizing that he is still a waiter employed in a restaurant and not a steward employed on a liner, goes mad and shoots his reflection in a mirror and dies. It had seventeen scenes and only one character. A pest-house, a laundry, a lavatory, a court of law, a room in a leper's settlement and the middle of Piccadilly Circus were included in the scenes.
'Why,' asked Julia, 'do you want to see a play like that?'
'I don't, but I think it would be so good for Elfine, so that she will know what to avoid when she is married.'
And finally, towards the end of the climactic scene where Aunt Ada Doom has been trying to force everyone to bend to her will:
Flora was desperately sleepy: she felt as though she were at one of Eugene O'Neill's plays; that kind that goes on for hours and hours and hours, until the R.S.P.C Audiences batters the doors of the theatre in and insists on a tea interval.
...for more Americans the car is becoming a longevity-driven commodity like the Maytag washing machine. New-vehicle sales fell 38.4% in the first quarter compared with the year-ago period, according to Autodata Corp. A recently released annual survey from R.L. Polk & Co. found that the median age of American vehicles in operation has risen to a record 9.4 years from 9.2 the previous two years.
And perhaps most worrisome for the industry is the recent disappearance of that iconic American character: the new-car enthusiast, otherwise known as the tuner, motor head, speed freak, buff, nut and zealot. The percentage of trade-ins newer than two years had hovered for years between 9% and 10%, says J.D. Power and Associates. Last year it slipped to 8.4%, and in the first two months of this year it fell to 6.6%, says J.D. Power.
The worst recession in recent memory has a lot to do with that. When unemployment rises and investment portfolios decline, new cars are a clear target of cutbacks.
There are other factors. Back in the 1960s, '70s and '80s, buying a new car every year or two was a tradition for many Americans...
Now, however, the instant a new car is driven off the lot its value can drop as much as 30%, perhaps twice the depreciation rate of the 1970s.