Coyote Blog

Here is the top 10 in the bracket challenge after the first week.  Sadly, both of my brackets are in the bottom half.  Apparently, it is statistically impossible for me to do better than 15th place  (thank God for technology so that hope is dashed and I can no longer fool myself about my future chances).  Even worse, my son made the top 10.  More results here.

It is good to see the President take time out of his busy schedule to submit a bracket in our competition.

Via the WSJ, discussing the US's Siberian Gulag in the Caribbean:

The Obama administration on Monday announced plans for new Guantanamo Bay military trials and for the first time laid out its legal strategy to indefinitely detain prisoners who can't be tried but are too dangerous to be freed.

President Barack Obama issued an executive order to conduct periodic reviews of the cases of the nearly 50 detainees who will be detained indefinitely.

It used to be that people who had never been convicted of any crime but that certain people in the government considered dangerous were called "free men."

The recent naming of GE's Jeffrey Immelt to head a presidential commission on, err, something or other seems to have been an occasion for bipartisan gnashing of teeth about what I call the growth of the American corporate state.  I was encouraged by the bipartisan negative reaction from the left, right, and of course the libertarians, the latter of whom have always understood the difference between being pro-capitalism and pro-business.

But all it takes is a nomenclature change of this corporate welfare to "green jobs" or "investment in the future" or "bridge to the future" or similar bullsh*t and suddenly many of the exact same people, at least on the left, are swooning again.  Why is it not obvious that, for example, green energy subsidies are just the same old corporate welfare?

Here is one aggravating example

Despite millions in government grants and subsidies, the Manitowoc company President Barack Obama called a glimpse of the future lost $4.2 million last year and cannot promise shareholders it will be profitable in the foreseeable future....

“We may continue to incur further net losses and there can be no assurance that we will be able to increase our revenue, expand our customer base or be profitable,” the report indicates.

Investors have responded to the company’s volatility, and Orion stock has plummeted in the past four years.  It closed 2007 at $18.82 a share.  By the end of 2010 it was $3.34.

Regardless, President Obama is putting his, and the U.S. taxpayers’, money on companies like Orion.

“It’s important to remember that this plant, this company has also been supported over the years not just by the Department of Agriculture and the Small Business Administration, but by tax credits and awards we created to give a leg up to renewable energy companies,” Obama said at the Orion plant on Wednesday.

The State of Wisconsin has also given its share trying to help Orion to succeed.  Since 2005, the state has given the company $350,000 in community development zone tax credits, $506,000 in economic development funds, and $420,000 from the Wisconsin Energy Independence Fund.  Plus the company got another $260,000 in stimulus funds for a State Energy project.

In addition to direct aid, public policy has also helped the struggling company.  Wisconsin law requires that 10 percent of all electricity sold in the state come from renewable sources by 2015.  Orion knows that without government intervention like that, there would be little prospect for the green economy.

“The reduction, elimination or expiration of government mandates and subsidies or economic or tax rebates, credits and/or incentives for alternative renewable energy systems would likely substantially reduce the demand for, and economic feasibility of, any solar photovoltaic and/or wind electricity generating products, applications or services and could materially reduce any prospects for our successfully introducing any new products, applications or services using such technologies,” the SEC report states.

By the way, in 2010, while the government was pouring taxpayer money into Orion, its founder and CEO was pulling his out, selling (by my count of SEC filings) 130,000 shares, despite equity prices that were at a five year low.    It is dangerous to draw conclusions form insider sales (we don't know what personal financial issues may be driving their actions) but it is interesting that the president and founder is taking the exact opposite point of view on the company's prospects than is President Obama.

It appears that for a principled defense of property rights, the exercise of religion in America, and limited government we have to turn to ... liberal blogger Kevin Drum

We already know that a large majority of Americans are opposed to building it, but here are the results of an Economist poll on a slightly different question:

Whether or not you think the Islamic cultural centre and mosque should be built near the World Trade Center site, do you think that Muslims have a constitutional right to build a mosque there?

Technically, I think the wording of this question should have been turned around: not whether Muslims have the right to build a mosque on Park Place, but whether the government has the constitutional right to stop them from building a mosque on Park Place.

Still, I think everyone probably understands what this means, and it's just depressing as hell. It's one thing to oppose the mosque just because you don't like the idea, but to deny that Muslims even have a constitutional right to build it? That should be a no-brainer. Of course they do.

Seriously, this is from a man who probably does not think you have the Constitutional right to choose your own doctor. Why are Republicans ceding the high ground on this to Democrats? Well, it turns out that is the theme of my new column this week in Forbes.

...prospective mosque-banners would argue that I simply don't understand how utterly, deeply offensive the proposed location of this mosque is to them. But that is not the case. I am offended as well by what might be a laudatory memorial to a terrorist incident. But the question for me is, do we have a right not to be offended?

The irony is that for the last decade or so, conservatives have fought the political correctness movement over exactly this issue. Conservative commentators, rightly I think, were up in arms over the "hate speech" trial of Mark Steyn in Canada, and more recently the cancellation of Ann Coulter's Canadian speaking tour. In both cases Canadian government and university officials argued that Steyn's and Coulter's criticisms of radical Islam were too divisive, too defamatory to Muslims, and in general too offensive to be allowed public voice....

This is what truly floors me about the Ground Zero controversy: Republicans all over the country are standing up and begging House Speaker Nancy Pelosi and President Barack Obama to void the property rights of a private entity, shut down the construction of a church, and do so to protect some mythical right not to be offended, a right that, until recently, conservatives argued did not exist. Do Republicans really want to encourage the federal government to tear up property rights and First Amendment protections, all in the name of hurt feelings? If conservatives set this precedent today, they are almost certainly not going to like how it is used tomorrow.

Postscript: I notice something in this poll that I have seen several times lately.  Traditionally, poll results for independents always fell somewhere between Republicans and Democrats.  In this poll, as in several others I have seen, Independent responses actually fell outside of these bounds.  Increasingly independents are shedding the "moderate" label and actually pacing the two political parties.  I find this encouraging, though it is probably too much to hope for that this is the leading indicator of some type of radical ideological restructuring of the Coke and Pepsi parties.

My first column at Forbes.com is up here (and on the opinion home page, which is kind of cool), and extends on some thoughts I have already posted on my blog about why government decisions in multi-agency task forces, such as those running the Gulf cleanup effort, seem to be made in such a stupid manner.

As most scientists know, one of the best tests of a theory is whether it makes correct predictions about future events.  Since I wrote this article several days ago, we have seen this new story which is absolutely consistent with the decision-making paradigm I describe in the article (from Q&O)

Louisiana has been busily building berms about a mile out from the coast to halt the infiltration of oil into its sensitive marshes, wetlands and prime fishing areas. This process was greatly delayed by federal red tape, and now that the state has permits in hand it's being order to stop because, according to the U.S. Fish and Wildlife Department, it's doing it wrong:

The federal government is shutting down the dredging that was being done to create protective sand berms in the Gulf of Mexico.

The berms are meant to protect the Louisiana coastline from oil. But the U.S. Fish and Wildlife Department has concerns about the dredging is being done.

Plaquemines Parish President Billy Nungesser, who was one of the most vocal advocates of the dredging plan, has sent a letter to President Barack Obama, pleading for the work to continue.

[...]

Nungesser has asked for the dredging to continue for the next seven days, the amount of time it would take to move the dredging operations two miles and out resume work.

Work is scheduled to halt at midnight Wednesday.

Pat Austin is trying to understand the federal obstruction, but finds that political reasoning is the only thing that makes sense of it all:

I'm trying to see both sides here; I'm trying to understand the "coastal scientists" who contend that the berms will "change tidal patterns" and lead to more long term erosion of the islands, but if the islands are killed off by the oil what difference does it make? To borrow from Greta Perry's analogy, if my house is on fire, what does it matter what room I try to extinguish first? It's all doing down.

Read the Forbes article -- why exactly this decision was not only possible but inevitable is discussed in detail.

Remember all that BS about the Obama administration only being ruled by facts and science?  This is a mythology at the core of the progressive movement, that it is possible to have a wise dictator who uses the heavy hand of government coercion only for the best interests of the country, driven only by science and not by political influence.

This is of course a crock.  It was a popular point of view in the early 20th century, and at the heart of efforts like Mussolini's fascism, which in turn was much admired by FDR and emulated in US efforts like the NRA (the blue eagle, not the gun organization).  Over time, history has demonstrated folks like Hayek right on the knowlege problem (no one can possibly be smart enough to make optimum decisions for everyone, particularly when everyone has different preferences) while we have plenty of evidence to demonstrate the incentives for politicians are skewed so badly as to make good decisions almost impossible.

But the myth persists, even in the face of obvious counter-examples, like this (emphasis added):

The economic report released last week by Health and Human Services, which indicated that President Barack Obama's health care "reform" law would actually increase the cost of health care and impose higher costs on consumers, had been submitted to the office of HHS Secretary Kathleen Sebelius more than a week before the Congressional votes on the bill, according to career HHS sources, who added that Sebelius's staff refused to review the document before the vote was taken."The reason we were given was that they did not want to influence the vote," says an HHS source. "Which is actually the point of having a review like this, you would think."

The analysis, performed by Medicare's Office of the Actuary, which in the past has been identified as a "nonpolitical" office, set off alarm bells when submitted. "We know a copy was sent to the White House via their legislative affairs staff," says the HHS staffer, "and there were a number of meetings here almost right after the analysis was submitted to the secretary's office. Everyone went into lockdown, and people here were too scared to go public with the report."

In the end, the report was released several weeks after the vote -- the review by the secretary's office reportedly took less than three days -- and bore a note that the analysis was not the official position of the Obama administration.

Wouldn't want to influence a vote with actual facts.

For a while now I have been saying that Obama is not promoting Socialism, but rather an European-style corporate state -- where a troika of large unions, powerful politicians, and favored corporations worked together mainly to get themselves in power and to protect each other from competition.

It seems that Ron Paul sees it the same way:

Republicans and tea party activists are fond of accusing President Barack Obama of being a socialist, but today party gadfly Ron Paul said they had it wrong."In the technical sense, in the economic definition, he is not a socialist," the Texas Republican said to a smattering of applause at the Southern Republican Leadership Conference.

"He's a corporatist," Paul quickly added, meaning the president takes "care of corporations and corporations take over and run the country."

From the Telegraph, via  Q&O:

Barack Obama's administration has authorised the assassination of the radical Muslim cleric Anwar al-Awlaki, a rare move against an American citizen.

I am reminded of what I wrote on the day of Obama's inauguration:

I will be suitably thrilled if the Obama administration renounces some of the creeping executive power grabs of the last 16 years, but he has been oddly silent about this.  It seems that creeping executive power is a lot more worrisome when someone else is in power.

But don't worry, separation of powers has been respected:

The decision to add him to the US hit list required a National Security Council review because of his citizenship.

You see, before Obama can unilaterally order an American citizen killed, he has to review the decision with, uh, a group of people he appointed and that work directly for him.  From Bruce McQuain:

But who the hell is Barack Obama to arbitrarily and unilaterally waive Constitutional due process (oh, that's right, he's a Constitutional law professor, isn't he?) and order the assassination of a US citizen?  And as an aside "“ where are all the liberal voices who spent every waking hour worrying about George Bush's eavesdropping and loudly denouncing it, forever and ever, amen?  Why are they, for the most part, silent on the subject of assassinating a US citizen?

Via Megan McArdle:

"We need to stand up to the special interests, bring Republicans and Democrats together, and pass the farm bill immediately," Barack Obama

Self-parody in action.

Is there any difference between Hugo Chavez and Barack Obama in terms of how they approach the auto industry?  "Make the kind of cars I thing you should, or the government will take you over."

Mr. Chavez said his socialist government is going to apply strict quotas regarding the number and types of vehicles auto makers can produce. The president also ordered his trade minister, Eduardo Saman, to inspect the Toyota plant, saying it may not be making enough "rustic vehicles," a style of all-terrain vehicle that is much-needed in Venezuela's countryside, where they are often converted into minibuses.

"They'll have to fulfill [the quotas], and if not, they can get out," Mr. Chavez said during a televised address. "We'll bring in another company."

He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it. "We'll take it, we'll expropriate it, we'll pay them what it's worth and immediately call on the Chinese," Mr. Chavez said. Chinese companies, he said, are willing to make vehicles made for the countryside.

It seems like Venezuelan workers want the same deal Obama gave the UAW:

Venezuela's auto sector is in tatters amid recurring labor problems that have led to a lack of productivity. Analysts say many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with that status.

By the way, this seems like a suckers play -- please put more valuable stuff in your store window so when we break in there is more to steal:

Mr. Chavez said late Wednesday the Japanese auto maker needs to transfer more new technologies and manufacturing methods from headquarters to its local unit in Venezuela.

While Mr. Chavez directed most of his criticism at Toyota, he said other auto assemblers, including Fiat SpA and General Motors, are also guilty of not sharing technology from abroad with their Venezuelan units.

The left often seems to imply that the US government is too eager to shed blood to protect American industry overseas, but in point of fact American industry has had to live with the reality for decades that foreign governments often steal billions of dollars in American-owned assets with barely a peep being heard from the US government.  For example, there is really no such thing as a Saudi or Libyan or Venezuelan or even Mexican oil industry - those are just assets paid for and built by private Western concerns and then stolen by local governments.

On January 20th of this year, Barack Obama probably had perhaps the strongest personal position to work from of any President in recent memory.  Everybody wanted to hear what he had to say and many were prepared to do what he asked.

Today, he seems to have frittered away much of this authority and devalued his own brand.  How else to explain that he is relying on a former president (Bill Clinton) to sell his health care agenda in Congress and it took another former president (George W Bush) to visit the Ft. Hood tragedy.

In Europe, economies are run by a troika of politicians, leaders of large corporations, and major unions.  These groups run the economy to their benefit and against entrepeneurs, nwe competitors, foreign competition, low-skilled workers, upstart competitors, and (most of all) consumers.   Q&O discovered someone on the HuffPo of all places starting to see what is going on:

When I heard the word "corporatist" a couple of years ago, I laughed. I thought what a funny, made up, liberal word. I fancy myself a die-hard capitalist, so it seemed vaguely anti-business, so I was put off by it.

Well, as it turns out, it's a great word. It perfectly describes a great majority of our politicians and the infrastructure set up to support the current corporations in the country. It is not just inaccurate to call these people and these corporations capitalists; it is in fact the exact opposite of what they are.

Capitalists believe in choice, free markets and competition. Corporatists believe in the opposite. They don't want any competition at all. They want to eliminate the competition using their power, their entrenched position and usually the politicians they've purchased. They want to capture the system and use it only for their benefit.

This applies to workers as well as employers -- just replace capitalists with "free workers" and corporatists with "unions" in the above paragraph.  This helps to explain why Obama is not actually pro-labor, but pro-union.  Via TJIC:

Workers in Barack Obama's new economic order fall into two categories "” those who are worthy of the president's energies, and those who aren't. You may be surprised to learn where you rank.

Obama doesn't weigh the value of workers based on their paychecks, what they do or whether they slip their feet into wingtips or steel-toed boots in the morning. His sole interest is in whether they have a union card in their wallet.

If they do, the president is in their corner, working hard to make sure they don't get the short end of any stick. But if they are among the 88 percent of American workers who don't belong to a union? Ask Delphi's salaried employees what Obama thinks of them.

As part of Delphi's restructuring in bankruptcy court, the Troy-based auto parts maker dumped its pension plan onto the federal Pension Benefit Guarantee Corp.

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That usually means a continued pension check, but one that is much smaller. And for Delphi's salaried workers, that's what they can expect.

Delphi's union-represented workers, however, will dodge that bullet. The Obama administration swooped in and, in an extraordinary deal, is forcing General Motors to make the 46,000 union workers and retirees whole. GM used to own Delphi, and relies on the supplier for much of its parts.

"The U.S. government is taking care of a select group of people and tossing the rest of us under the bus," Peter Beiter, a retired financial manager for a Delphi plant in Rochester, N.Y., told the New York Times.

And it's doing so with the tax dollars of those like Beiter who aren't in the favored class of workers. GM is operating with more than $50 billion in government bailout money.

That gives Obama the freedom to force GM to subsidize the pensions of union workers it has no legal obligation to, and who are employed by an entirely different company.

If you want to see where we are going, read this (and this) about the National Industrial Recovery Act, which FDR modelled after Mussolin-style fascism, whose economic system he greatly admired.

From Joe Biden, in the debates:

"No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised, whether it's their capital gains tax, their income tax, investment tax, any tax."

Oops:

Under the plan, people who earn between 100% and 300% of the poverty level (or between about $22,000 a year and $66,000 a year for a family of four) would face fees ranging from $750 to $1,500 a year.

For taxpayers with incomes above 300% of poverty, the penalty starts at $950 a year and reaches as high as $3,800 for families. Nearly 12 million people fit in this category, according to the National Institute for Health Care Management.

The idea behind the penalty is that those who can afford insurance but don't buy it are imposing costs on the entire health system. Under the proposal, nearly 12 million people who currently have no insurance could be subject to such fines, according to figures compiled by the National Institute for Health Care Management.

People focus too much on the penalty itself being a new tax.  But the new tax is actually the requirement that individuals buy a product (in this case a health insurance policy) that they feel has no value (or else they would purchase it of their own free will today).  The government stopped pretending long ago that these younger middle class families will get much value from such a policy.  In fact, if they did get value commensurate with the premiums they will be paying, the mandate would not be achieving its purpose.  The whole point is that healthy people pay more into the insurnace system than they get back to support sick people.  If that payment is mandatory, then it is a tax, even if it is called an "insurance mandate" instead.

In fact, this is made all the more clear when politicians also suggest that cheaper high deductible health insurance plans be banned, as they were in Massachusetts.  Again, the whole point is to get young healthy people to overpay for insurance, and allowing them to buy sensible, cheaper, high deductible insurance defeats the whole purpose.

This is a tax on middle America, and Obama knew he was going to propose it way back in the campaign.  This is not something he just thought up or was a victim of changing circumstance.  This is an out and out lie on his part.

Certainly one driver of statism is arrogance -- the technocratic belief that one's intellectual capacity and decision-making ability is superior to that of the masses, and therefore should be substituted (via authoritarian control) for that of the masses.  This was clearly the driver of statism in the early to mid-century.  Its what caused FDR to be so enamored of Mussolini-stype fascism.  A few smart people making the trains run on time.

But I am starting to wonder if there isn't a second driver of statism that comes from the opposite direction -- projecting one's own weaknesses on the rest of humanity and, assuming they share these weaknesses, using this assumption as a reason for mommy-state controls.  This latter reasoning came through in this article summary in my feed reader from the Arizona Republic:

Lamenting his first teenage cigarette, President Barack Obama ruefully admitted on Monday that he's spent his adult life fighting the habit. Then he signed the nation's toughest anti-smoking law, aiming to keep thousands of other teens from getting hooked.

With gays upset that Obama has aligned himself squarely behind DOMA and Don't-ask-don't-tell in the military, he has decided to pay them off rather than address their equal treatment questions:

President Barack Obama, whose gay and lesbian supporters have grown frustrated with his slow movement on their priorities, is extending benefits to same-sex partners of federal employees but stopping short of a guarantee of full health insurance, a White House official said.

The health insurance exception is particularly funny given Obama's current universal-coverage-driven health care proposals.

We all know the problem with oil companies:  They restrict supply to drive up prices to earn profit margins that are nearly a third of those earned by Microsoft while simultaneously keeping prices too low and promoting addiction to oil which produces a lot of CO2 and they never want to reinvest their profits in exploring for new oil so the government needs to restrict drilling in every major prospective US region so the oil companies will be stopped from greedily drilling everywhere and destroying the environment.

Barack Obama seems to be bringing this damned-if-you-do-damned-if-you-don't criticism to the medical industry, and particularly doctors.

On the one hand, he told doctors at the AMA convention yesterday that he was not a fan of tort reform and felt that limits on malpractice cases was a disservice to those who were truly injured.

On the other hand he made this case:

Not long ago, doctors' decisions were rarely questioned. Now they are being blamed for a big part of the wasteful spending in the nation's $2.5 trillion health care system. Studies have shown that as much as 30 cents of the U.S. health care dollar may be going for tests and procedures that are of little or no value to patients.

The Obama administration has cited such findings as evidence that the system is broken. Since doctors are the ones responsible for ordering tests and procedures, health care costs cannot be brought under control unless they change their decision-making habits.

On the third hand, doctors aren't spending enough to address preventable errors:

President Obama himself in his speech cited the "100,000 deaths a year" figure as if it's reliable and well established, as did yesterday's New York Times. And of course it's a figure eagerly spread by the Litigation Lobby. But as Zachary F. Meisel and Jesse M. Pines note in Slate, it's a really, really, really soft number:

...one of the biggest headlines of all was the 1999 Institute of Medicine report To Err Is Human, which announced that up to 98,000 preventable deaths occur each year in U.S. hospitals. Since then, health care improvement organizations such as Leapfrog Group have invested copious resources in reducing preventable errors. But a key issue has been overlooked in this movement: The original estimate -- the 98,000 deaths -- may have been way off. In fact, some of the researchers who conducted the original studies used in the IOM report re-evaluated their data in 2002 and reported that had they used a different calculation method, the number of estimated deaths would have been less than 10 percent of the original. Oops.

I am starting to wonder if Barack Obama crossed the thin red line between traditional American liberalism and socialism yesterday.  Traditionally, liberals in the US have taken pains to generally argue that the rich need to pay for their programs because theyare most able to pay.  This differs a bit from socialists, who would argue that the rich should pay because they are guilty.    For a libertarian like myself, it tends to be a pretty subtle difference, but I think it is important -- are taxes on the rich enforced charity, or are they reparations?

I woke up this morning profoundly depressed, which is unusual for me.   I have a good friend who is having some personal problems, so it is hard for me to separate effects in my mind, but I really feel like Obama stepped over a line yesterday.  TARP pissed me off, but we have bailed out companies before (though not for this much).  The stimulus bill absolutely offended me, but we have seen stupid pork spending insanities before (though not for this much).  But Obama's plan to remake tax law and the budget began with this paragraph:

This crisis is neither the result of a normal turn of the business cycle nor an accident of history, we arrived at this point as a result of an era of profound irresponsibility that engulfed both private and public institutions from some of our largest companies' executive suites to the seats of power in Washington, D.C.

From the rest of the rhetoric in this document, and that of Obama and his supporters, the overriding message is that "the rich are being taxed more because they have sinned.  This is pennance."  This is all the more amazing to me because Obama (and to be fair, his predecesors in the Bush administration) have gone out of their way to interrupt the normal market processes that punish failed behavior.  Normally, if you take out a mortgage you can't afford, you default and lose your home, and are hopefully wiser the next time.  If you lend to someone who can't pay, you lose your principal.  If you make products no one wants to buy, you go bankrupt.

But every one of these market mechanisms are being interrupted.  Its as if Obama and the feds not only want to hand out penance, they want to have a monopoly on the process.  No longer will the market dictate winners and losers -- we in Washington will.  It's thoroughly depressing.

Postscript: I guess I am the last person in America to believe it, but I DO believe that this is "a normal turn of the business cycle," or at least that it started out that way until everyone from Paulson to Obama worked to convince folks otherwise.   It is clear that there was an international over-exuberance of lending that goes far beyond just CDO's as the culprit, or even mortgages in general.  And such bubbles do occur from time to time.

PPS: It will be interesting to see which race is tighter -- Obama's race to spend money so he can take credit for a third quarter recovery which is going to happen anyway, or Obama's race to put in CO2 limits in time to take credit for the global cooling cycle many solar observers are starting to predict.

PPPS: I really didn't want to open global warming discussions in general with the last bit of snark.  I have a whole website for that.  I have a subtle enough understanding of the issue to know both that 1) CO2 is causing some warming 2) warming estimates are likely way overblown, for a variety of reasons that include feedback assumptions and 3) behaviors of temperatures over decade-long periods are not necesarily indicative on long-term trends.  If we want to talk about climate modeling and model accuracy vs. current trends, see this post or this post.

Technocrats love to pick winners.  Leftish technocrats, in particular, love to believe that the complex operations of the entire economy choose technologies that are inferior to those the technocrat would have imposed on the economy had she been in charge.  But here is what happens when they try, in a cautionary tail that is particularly relevant given the number of specific technologies Barack Obama has said he would promote (e.g. a million plug-in hybrids by 2015) (via Tom Nelson)

The federal government has invested billions of dollars over the past 16 years, building a fleet of 112,000 alternative-fuel vehicles to serve as a model for a national movement away from fossil fuels.
But the costly effort to put more workers into vehicles powered by ethanol and other fuel alternatives has been fraught with problems, many of them caused by buying vehicles before fuel stations were in
place to support them, a Washington Post analysis of federal records shows.

"I call it the 'Field of Dreams' plan. If you buy them, they will come," said Wayne Corey, vehicle operations manager with the U.S. Postal Service. "It hasn't happened."

Under a mandate from Congress, federal agencies have gradually increased their fleets of alternative-fuel vehicles, a majority of them "flex-fuel," capable of running on either gasoline or ethanol-based E85 fuel. But many of the vehicles were sent to locations hundreds of miles from any alternative fueling sites, the analysis shows.

As a result, more than 92 percent of the fuel used in the government's alternative-fuel fleet continues to be standard gasoline. A 2005 law -- meant to align the vehicles with alternative-fuel stations -- now requires agencies to seek waivers when a vehicle is more than five miles or 15 minutes from an ethanol pump.

The latest generations of alternative vehicles have compounded the problem. Often, the vehicles come only with larger engines than the ones they replaced in the fleet. Consequently, the federal program --
known as EPAct -- has sometimes increased gasoline consumption and emission rates, the opposite of what was intended....

The Postal Service illustrates the problem. It estimates that its 37,000 newer alternative-fuel delivery vans, which can run on high-grade ethanol, consumed 1.5 million additional gallons of gasoline last fiscal year because of the larger engines.

The article does not even mention that E85 ethanol made mostly from corn does absolutely nothing to reduce total CO2 production (it just shifts it around, due to the amount of energy required to grow corn and convert it to ethanol) while raising food prices.

California did something like this years ago, putting the force of subsidies and state law behind zero-emission vehicles.  This wasted a lot of money on electric and hydrogen vehicles that were not yet technologically mature enough to prosper, while missing out on low (but now zero) emissions approaches that could have had much more impact because they were technologically ready (e.g. CNG for fleet vehicles).

Y'all know where I stand on the dangers of CO2.  But if we really have to do "something", then the only efficient way to do it is with a carbon tax.  But politicians hate this idea, because they don't want to be associated with a tax.  But the fact is, that every other action they are proposing is a tax of some sort too, but just hidden and likely less efficient.  There is no magic free lunch that Barack Obama and his folks can think of and impose, no matter how smart they are.  In fact, to some extent, smarts are a hindrance, because it tempts people into the hubris of thinking that they are smart enough to pick winners.

Postscript: If you are reading this and thinking "well, if I were in charge, I would not be that stupid and I could make it work" then you don't get it.  1)  No one can make it work, for the same reasons the Soviets could not plan their economy from the top -- its just too complex.  At best, policy-makers are choosing between a handful of alternatives to back.  In contrast, every individual has a slate of opportunities to reduce his/her CO2 production at the least cost, and when you add up all these individual portfolios, that means there are hundreds of millions of individual opportunities that must get prioritized.  That is what pricing signals do, but government bureaucrats cannot.  2) The morons and knaves ALWAYS take over.  Even if you are brilliant and well-motivated, your successor likely will not be. For years, folks have generally been comfortable with the outsized role of the Federal Reserve because they thought Greenspan  (and Volker before him) ran it brilliantly.  Well, there are arguments to be made about this, but even if we accept this judgment, what happens when the next guy is in charge and is not brilliant?

Postscript #2: If you want a specific example, let's take plug-in hybrids.  How can anyone be against these?  I personally like the concept of cars being driven by electric traction motors (I like the performance profile of them) and would love a good plug-in hybrid.  But what happens when we find out that many of these cars were bought in coal-burning areas where electricity is particularly cheap, and discover coal-fired electricity pollutes more than an internal combustion engine?  Or when we use a cap and trade system to cut back on coal fired plants, and find that the huge number of plug-in hybrids are exacerbating brown-outs and electricity shortages?  Or we find that the billions of dollars of capital diverted by the government to expanding plug-in hybrids could have easily yielded far more CO2 reduciton had it been applied in another area?  That is why a carbon tax is the only way to go (if we are going to do anything) because it allows individuals to make capital expenditure decisions to reduce CO2 based on their vastly higher knowlege of the opportunities and the pricing signal of the tax.

I worked for several years for AlliedSignal engines, now Honeywell, here in Phoenix.  At our main engine plant here, we endured a couple of union organizing campaigns that both fell just shy of winning a position for the union.  A reasonable manager might expect that under the Democrat's proposed card-check system which replaces anonymous votes with open petitions, that enough hijinx could be brought to bear to put the union over the top.  I don't now if this is what they have in mind, but...

Phoenix-based Honeywell Aerospace plans to move 700 manufacturing jobs from Phoenix to Mexico and the Czech Republic.

Employees were notified Thursday of the cuts, which will begin in the second quarter of 2009 and continue for three years. Most of the job cuts are expected in the first year.

Workers who asked not to be identified said the news caught employees completely off-guard.

I think the timing just a day after election results in, and the level of surprise, are telling.  Time to get this done now, before the owners have to go cap in hand to their employees to ask permission to run their business as they see fit.  I thought this last bit they added brings a nice irony to the situation:

The announcement came two days after Barack Obama, who has promised to take a hard line with companies that move manufacturing jobs overseas, was elected the 44th U.S. president.

Whatever that means, but it does give yet another reason to get out fast.

It's fascinating that our local paper, after months of positive Obama coverage, manages to express its first printed criticism of Obama on ... the day after the election.

With President-elect Barack Obama promising tougher government regulations on some sectors, including the financial markets, a handful of business leaders expressed concern Wednesday.

"The key thing is to not choke us to death with regulation," said Ioanna Morfessis, an economic-development consultant and Greater Phoenix Economic Council founding member.

With the faltering of the financial markets and a massive federal bailout this fall, Obama and congressional Democrats, who expanded their majorities with an upset electorate, have called for more federal oversight on Wall Street. Obama also has called for more regulation in the energy and health-care sectors, and Democrats could more strictly enforce environmental rules....

Morfessis said before lunch Wednesday, she received phone calls from 11 entrepreneurs concerned there would be a "higher premium for taking risks or entering new markets."

At least in economic policy, progressives like Barack Obama are deeply conservative.  They want industries, jobs, real earnings, and class positions to be stable and predictable.  No one ever believes me when I say this, but look at the policies.  Trade protectionism protects current industry incumbents and workers, at the cost of poorer future performance due to lack of competition.  Unions attempt to lock in current jobs through numerous controls on work rules, slow or stop changes in technology and work processes that have the effect of eventually castrating the company (think GM).  Socialized medicine tries to lock in the current standard of care for everyone, while reducing the possibility of future improvements.  Redistribution attempts to lock in the current standard of living for everyone while reducing the possibility of future improvements.  I discussed this more European model last week.

I like how Shannon Love summarized it in the context of Obama:

Obama has no concept of business as a creative and experimental endeavor. On some deep unconscious level, he assumes that material wealth is something akin to a natural phenomenon for which no group of humans can take credit. Therefore, he sees distribution as the only serious economic issue and ignores how politics interferes with the actual process of wealth creation.

Though to be fair, I am not sure McCain or GWB understand this either.     (or here in 2005)

I always laughed at Democrats that tried to woo me to their party.  Now I laugh at Republicans too.  MoveOn may get mileage out of attacking Bush, but he has done more for the left/liberal cause than Clinton.  Clinton had NAFTA, welfare reform, and (moderated by an aggresive Republican Congress) fiscal sanity.

I am happy to see that Barack Obama is not entirely in reality-avoidance mode with his climate policy:

You know, when I was asked earlier about the issue of coal, uh, you know "” Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I'm capping greenhouse gases, coal power plants, you know, natural gas, you name it "” whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.

To folks with any kind of background in economics, this has to be the case.  Reducing the total output of current power plants, and thereby obsoleting all that investment and squeezing supply, at least in the medium term until new capacity of other types can be built, can only lead to a) rationing through blackouts or b) higher prices to ration the shorter supply.  The cost of option a is so high that price is going to have to be the rationing mechanism.  Skyrocket is actually pretty close to what would happen to rates if Obama sticks by his plan of limiting greenhouse gasses to 1990 or earlier levels.  (His explanation is actually pretty poor for the mechanism - pass-through of retrofit costs would likely be minor to the supply / demand balancing effect of shaving 20/30% off supply in a short period of time.

I think a frank discussion of the dangers of a "pollutant" vs. the cost of abatement is a fair one.  I personally think the threat of CO2 is wildly exaggerated, and the cost of doubling or tripling electricity costs will hurt Americans far worse than a few tenths of a degree of warming.

But don't get too excited.  Obama is still living in economic never-never land on other related issues:

yes, there is going to be some increase in electricity rates on the front end, but that over the long term, because of combinations of more efficient energy usage, changing lightbulbs and more efficient appliance, but also technology improving how we can produce clean energy, the economy would benefit.

Sorry, but this is way wrong.  Obsoleting perfectly good infrastructure and wholesale replacing it with trillions of dollars of new infrastructure does not help the economy any more than if a massive earthquake had destroyed the plants.  This is the broken windows fallacy on steroids.  The only benefit from all this cost will be whatever climate benefit we accrue from the CO2 reduction.  For there to be such a benefit, one must assume a) substantial future warming and b) that the current temperature happens to be the best possible temperature we could ever be at.  But that, as they say, is a whole other blog.

Yeah, I think the title is worded awkwardly, but I am trying to curb my enthusiasm for ending sentences with prepositions  (I will continue to boldly split infinitives that no man has split before).

Anyway, in the spirit of this post and this one, I try from time to time to reinforce my support for free speech as an absolute right by publicly supporting the speech rights of those with whom I disagree.  Today's case is the public University of Nebraska-Lincoln deciding to un-invite former terrorist William Ayers to speak on campus.  The reason given was the current weak-ass excuse often used to reverse the invitation of controversial speakers, "we can't gaurantee security." 

Though I would never have hired the guy, Ayers is a professor at a real public university, and what he has to say is particularly relevant given his ties to Barack Obama.  I find the behavior of Nebraska's conservative politicians to be especially absurd here -- after months of calling for more discussion and disclusore of Ayers and his ties to Obama, they want to prevent Ayers from speaking publicly?

Update:  In an odd coincidence, at about the same time I was writing this post, the NY Times blog was posting on split infinitives.

I think a lot of economists are of two minds about Obama.  When they look at his economics team, they are impressed with the talent and depth.  America could do worse than have economic policy guided by this team.  But when Obama opens his mouth to express his own opinions on trade or economics or finance, I get really nervous.  I keep wondering who will guide economic and energy policy -- his smart staff, or the Obama his smart staff keeps trying to hide. 

Ethanol is just one more example:

Robert Bryce, the author of Gusher of Lies, one of the best books on
global energy issues you will ever read, is also a co-editor of Energy
Tribune, a leading monthly. In the October edition, he takes aim at
ethanol calling it a scam and "pure, unadulterated lunacy."

Bryce
writes, "Barack Obama doesn't want to talk about corn ethanol. And it's
no wonder. In early August, his campaign Web site purged several
sections of his energy plan that talked about corn ethanol.

"Before
the purge, Obama was touting corn ethanol as a pivotal element in his
push for "˜energy independence.' His site declared that Obama "˜will
require 36 billion gallons of renewable fuels to be included in the
fuel supply by 2022 and will increase that to at least 60 billion
gallons of advanced biofuels like cellulosic ethanol by 2030."

By
August, however, Obama had come up with a new set of talking points on
energy and "All mentions of corn ethanol were removed," wrote Bryce.
"The word "˜ethanol' only appears once."

Do not be fooled. Obama
is a major proponent of ethanol. Bryce reports that, "In January 2007,
Obama and two other senators, Democrat Tom Harkin of Iowa and
Republican Richard Lugar of Indiana, introduced legislation called the
"˜American Fuels Act of 2007.' It aimed at promoting the use of ethanol
and provided mandates for the use of more biodiesel."

Obama's
national campaign co-chair is Tom Daschle, the former Senate majority
leader and longtime ethanol booster. Daschle serves on the boards of
three key ethanol companies. Obama represents Illinois, a state that
trails only Iowa and Nebraska in ethanol production capacity.

Ethanol is one of those political IQ tests.  It makes such bad energy and environmental policy, but such good pork, that support for it is a great bellweather for what is driving a politician.

Marxism holds that the middle class will eventually disappear, as the world is polarized between a few large business owners and the masses of the proletariat.  Small and independent businesses would disappear, and most of the middle class would be pedestrianized.  The middle class was always a sticking point for Marx, and there is some question whether this is really prediction or wishful thinking.  I say wishful thinking, because Marx knew that he could not achieve his socialist end-state with a middle class in place -- he had to drive the middle class into the proletariat.

In a large sense, that is what was are seeing at the Democratic Convention -- the effort to convince the middle class that, against all reason and reality, they are actually not well-off, that they are marginalized victims.  It is an attempt to pedestrianize the middle class.  Thus we get this classic quote from Rahm Emanuel, via Matt Welch:

The truth is, the Bush crowd has been giving the middle
class a thumping. This November, the middle class is going to give it
right back. This election comes down to a simple question: do we want
four more years of Bush-McCain or do we want the change we need?

There
is only one candidate from the middle class, that understands the
middle class, and that can deliver the change the middle class needs:
Barack Obama. A strong economy depends on a strong middle class. But
George Bush has put the middle class in a hole and John McCain has a
plan to keep digging that hole with George Bush's shovel.