Economics and Government

This column hits, what I feel, is THE major problem facing our world today. Wrapped up in this column is why we are at war in Iraq, why New Orleans is still in shambles, why we still have terror, why there is corruption in our government. Through many readings and thought, one can come to the conclusion that economic factors are, I believe, the prime factor in solving many, if not all, major problems we face today.

As Steven Milloy points out, resources are being transferred to an inconvenient truth- a truth that is not yet based on solid and indisputable facts. The "in" thing nowadays is global climate change (and just a note that we have gone from global warming to global climate change, due to the fact that we had an exceptionally cold winter so far this year). Milloy, I believe, points out that the "save our children" ploy just isn't working. I wonder why we have strayed from the "feed the children" effort we had many, many years ago. Could it be that the solution offered so many years ago- giving money and food to poor nations- just didn't work. It is well documented today that if you give a corrupt government money for food, they will not use that money for food, but the officials wind up pocketing it. Instead of claiming defeat and seeking a better solution, it would seem that politicians (and other notable public figures) have chosen a problem that, since it has not been completely proven, will be easier to solve.

But what is the solution for starving poverty? I, like others, believe it is economic, with maybe a little bit of coercion. Getting rid of dictatorships and totalitarian states and replacing them with states in which the people have ownership of their property and the freedom to compete in the market place is, simply stated, the answer. I believe we were right in toppling Saddam's regime in Iraq. I am having my doubts about the way in which we are trying to give the people of Iraq the freedoms the deserve. Our government has a lot of learning to do concerning the
process of getting a new nation up and going.

It is very, very sad that those in political power and with political clout have chosen to ignore the children who die everyday for a cause which, again, the market could work out all of its own. I would not be surprised to see new rent seeking laws handed down if the political climate changes too much, too soon.

I just read an article at the washingtonpost.com from Friday, February 23 written by Mark Sanford. He starts off by saying that – due to climate change – people are losing their rights, freedoms, breathing poorer quality air and casing fiscal harm to our children. This sounds an awful lot like an externality. As we know the solutions to an externality is government intervention and the imposition of a corrective tax. This is Sanford’s plea to the conservatives – That they step in take action before the left takes control and, by extensive regulation, our “personal freedom is pushed closer toward extinction.”
He suggests 3 things the conservatives should do.

1 – Replace scare tactics for intervening in climate change with principles such as “responsibility and stewardship”. He cites that many in his area of S. Carolina are seeing the benefit of helping the environment AND their wallets. This seems to be consistent with the Coase theorem.

2 - Corporations such as BP and Shell are investing in alternative fuels which cuts carbon emissions and reduces dependency on OPEC. This will help expand the economy and protect the environment. Seems like a bootleggers argument to me.

3 – Innovation, not regulation is how to address climate change. Encouraging R&D, energy efficiency and being concerned about our children’s future more than whether our exhaust emissions are causing the problem. This seems a little bass-ackward to me. Surely we want to know what the human cause (if any) is, and THEN fix it for our children’s future. Why cut exhaust emissions if the real danger lies in cows’ farting! (Methane).

I don’t claim to know what is the right or wrong thing to do, but it does seem that if the economic incentives exist and the market is able to fix the problem, whatever that is determined to be, then government intervention should naturally tend to diminish.

The Democrats and Republicans came to an agreement on one thing in that something needs to be done about earmarks. In Congress the big spenders are setting all the rules in the way in which earmarks are getting passed. The new way that these earmarks are getting passed is a technique outside the legislation process that is also kept hidden from the public. The point of these earmarks are for a Congress mans home district to get an amount of money to do something productive to make the home district better off. There are Congress man that are taking a step in the right direction on earmarks like David Obey of Wisconsin who had all the earmarks stripped of the 2007 spending bill. Although we dont see any earmarks in the spending bill there are still thousands in the works. In Bush's recent State of the Union address he has comited to make cutting the amount of earmarks in half, and also to find these earmarks in a more transparent way to be analyzed and debated. The administration has taken steps towards cutting this problem of earmarks in half. The steps that have been taken are that the earmarks are required to be identified in most cases and that the administration has a new strict definition of what counts as an earmark. In order for these new earmark plans to hold true Bush needs to pay close attention to what is going on.

In a recent article in the Washington Times, Robert L. Bradley wrote on global warming policy stating:

"Given the importance of wealth in adapting to change of any kind, it is critical we not waste money and resources on mandated conversions to inferior energies or a forced energy diet. Keeping energy plentiful and affordable, and building wealth to deal with problems when they are actually known, is the best climate policy for today."

His idea addresses the fact that global warming is a scientific uncertainty, the study of climate change has for decades been a science with different scientific results. The truth is too little is known about global warming to form policy that will actually impact the situation. Mandated conversions to substitute energies will only result in higher prices to consumers. Bradley believes and I would tend to agree with him that large government subsidies would most likely be used to buy votes than actually try to effect the climate change. So it seems that government policy will have little impact on climate change but will have a huge impact at the voting booth.

Robert Samuelson hits the target with his recent commentary on global warming:

Don't be fooled. The dirty secret about global warming is this: We have no solution. About 80 percent of the world's energy comes from fossil fuels (coal, oil, natural gas), the main sources of man-made greenhouse gases. Energy use sustains economic growth, which -- in all modern societies -- buttresses political and social stability. Until we can replace fossil fuels, or find practical ways to capture their emissions, governments will not sanction the deep energy cuts that would truly affect global warming.

Considering this reality, you should treat the pious exhortations to "do something'' with skepticism, disbelief or contempt. These pronouncements are (take your pick) naive, self-interested, misinformed, stupid or dishonest. Politicians mainly want to be seen as reducing global warming when they're not. Companies want to polish their images and exploit markets created by new environmental regulations.

When considering policy issues it is usually important to consider the incentives faced by our politicians. Samuelson does this and he cuts through all the crap. We should be careful in assessing how seriously to take all the conversation in the public square about global warming, and it would be good to keep in mind an old saying: In politics rhetoric is reality. I suspect Samuelson is correct that most of the politicians concerned about this issue are just trying to look and sound like they want to do something. Unfortunately, since the assumption of rational ignorance for voters makes quite a bit of sense, it is unlikely that enough people will learn Samuelson's lessons to lead to any different rhetoric about global warming any time soon.

I just finished reading an article about Al Gore wanting to have a Live Earth concert. Many imediate thoughts came to mind, some obvious, some not so.

My immediate action was to scroll down and see who would be preforming at the concert event. Whom did I see listed? Snoop Dogg, Red Hot Chili Peppers, among others. Try to remember back with me many years ago when Gore's wife, Tipper, co-founded the Parents Music Resource Center (PMRC). I believe it is because of her that we now have explicit warning labels on our music. I don't see her standing by her husbands side in any of the press photos. I wonder if we'll even see her at the concert.

Most assumably, there will be funds rasied during the concert. Where wil they go? Proceeds from the concerts will fund initiatives by the Save Our Selves (S.O.S.) campaign. Where will the money go then? I think the trail will wind as such:

Al Gore's first movie did not do as well as it was predidcted. This must be true, otherwise would we need a concert of such magnatude? So, there is definately a need for funds, but for what. Can Save Our Selves give money to the planet, like Farm Aid gave money to farmers or Live Aid gave money to Africa? I'm not sure how the money can be used to directly stop global change. I am, however, pretty certain how it can indirectly turn into a bootlegger.

Save Our Selves needs to do more than just run a web site or place ads telling us how we are causing global climate change. Obviously for Gore, he is not getting the response he wants by asking people to change their habits, or even making a movie about global climate change(although I'm pretty sure it will be a shoe-in for an Oscar, Hollywood loves politics). What else can he do? He will need a way to coerse people into change. My bet is that if the concert makes enough money to influence the right person (oh, I don't know- maybe Hillary who just recently endorsed bio-fuels in Iowa), then we will definately see legislature spring into action creating at least new laws, or even new taxes to coerse me into giving up some, if not a lot, of economic freedoms.

I remember hearing that in the last election how the youth vote was not even close to what the Dems wanted. The movie for sure did not reach the youth it wanted to either. I wonder, will music stars now be able to sing about global change and bring the youth on board?

On the Save Our Selves website, they have ways in which to save energy. One is to use compact fluorescent (CFL) light bulbs. I heard on the radio the other day some one in government wants to ban incandescent light bulbs. Hmm, GE makes and sells the most CFL bulbs. I wonder if they are the bootleggers. If you see GE as a sponsor at the event, I'd be suspicious. On the S.O.S. website they say; "If each person in the U.S. installed CFLs, 100 power plants could be retired today. " Which power plants would close? I'm pretty sure we would see some sort of legislation from the government protecting them. Maybe a subsidy?

Take a look at the S.O.S. website http://liveearth.msn.com/?GT1=9033. Microsoft just happens to be a sponsor of the concert. What do they get? Maybe less hassle about being a monopoly? Will we see more support for the dems from microsoft in the next election?

Check out the short porkbusters post. Here is the punchline:

"As John Hawkins puts it: "So we have a poorly run railroad going to their former lobbyist, John Thune, and getting him to use taxpayer money to give them a loan that no one in private industry would ever make."