Archive for April, 2011
Easter Bunny’s Burden
From Pennsylvania, bad news for chocolate lovers:
The Hershey Company says it is raising wholesale prices by 9.7% on most of its candy products. The maker of Reese’s, Kit Kat, Hershey’s Kisses and Twizzlers cited increased costs for raw materials, fuel, utilities and transportation.
The costs of two key raw materials—sugar and dairy products—are artificially inflated by federal government policies, the effect of which is to harm U.S. consumers and U.S. food producers, such as Hershey.
Senator Richard Lugar has introduced legislation to reform U.S. sugar policies. His timing is good, as world food prices are rising and some experts predict that sugar prices will soar in coming years.
The best ways to combat rising food prices—which particular harm people with moderate incomes—are free markets, open international trade, and vigorous competition. Unfortunately, those pro-growth and progressive policies are absent in the U.S. dairy and sugar industries, which are subject to Soviet-style central planning. (See here and here).
A consultant study last year (not commissioned by Hershey) indicated that high corporate taxes are also a negative with respect to Hershey’s U.S. production:
Energy Error Continued
When Barack Obama emerged as a serious contender for the presidency, he offered a core menu of curing everything by increased federal intervention in health care, education, and energy. Whenever new problems arose that lessened the urgency of earlier concerns, Obama has crafted assertions that his original prescriptions will also resolve the new difficulties. In energy, this has involved extending his program to new, even more dubious projects. He also has a habit of incessantly repeating the same tired arguments in the vain hope that his skill at persuasion will win the day.
His March 30, 2011 energy speech and accompanying Blueprint are typical. About the only differences between these and his June 15, 2010 speech on energy were more bad ideas. He added to the panic-driven slowdown in offshore oil and gas drilling permits, now rationalized as a prudent response; a post-Japan crisis review of nuclear power; and another for new methods of producing natural gas. For no good reason, he argued that Brazilian oil development needed U.S. government support despite the long history that successful oil development in some of the most backward countries in the world has occurred without major U.S. government aid. (In fact, the aid offered was an Export-Import Bank loan and thus more an exercise in crony capitalism than a useful move.)
Otherwise Obama continued to display the central characteristic of his philosophy — that he and his advisers possess such superior insight that they can guide the average American to better decisions. This is precisely the Progressive error that has led to the present political mess and the cause of the dramatic 2010 shift in the composition of the U.S. House of Representatives. Whenever concerns arise that he has overreached, he claims that he was doing the sensible thing.
His Blueprint constitutes Exhibit A in the case against this interventionism. It is essentially a list of the many mandates that Obama has achieved or desires, ranging from high-speed rail to micromanaging the design of every new building in the United States. This list is dominated by the many provisions of the infamous stimulus bill that indiscriminately threw money at every favored area including energy. Obama seems to believe that seeing where the money went will counteract the outrage at ill-conceived, unnecessary, and counterproductive spending. At least to energy specialists, what actually appears is resounding proof that the voters were right — every idea is bad.
The speech also showcased Obama’s talent at making dubious assertions. Many have commented that he does not deserve the credit that he seems to claim for the rise in U.S. oil output. The very long lead times, which Democrats traditionally use to oppose expanded oil-and-gas leasing, imply that the rise was facilitated by actions in prior administrations. An even greater whopper was his intimation that the existence of many undeveloped leases suggests that no rush exists to lease and license more. The more obvious criticism is that his cumbersome licensing policy contributes to the inability to develop. Less apparent is the likelihood that many of those leases proved, after further examination, to be unattractive while more promising areas are being withheld from leasing.
He similarly selected the most misleading possible way to understate U.S. oil-production potential. He indicated correctly that the United States has only 2 percent of world “proved” reserves of oil. What he ignored is that proved reserves cover only already-known sources and wild methodological differences among countries in how this is calculated make cross-country comparisons dubious. (This situation was worsened by 1970s hysteria. The highly efficient existing U.S. system was replaced because it was run by the supposedly untrustworthy industry. The government created its own far more expensive and far less satisfactory system.) The more reliable measure of actual production shows an 8.5 percent U.S. share in 2009. Neither measure satisfactorily indicates what really matters — the potential efficiently to add production. Obama thus adds to his prior unjustifiable aim to reduce petroleum use by also misstating the petroleum potential. Substantial oil imports remain desirable for the U.S. because of the underlying economics. Nevertheless, the federal government has imposed undesirable restrictions on oil and gas production.
English Riots, Faux Austerity, and Krugman’s Fairy Tale
London was just hit by heavy riots as part of a protest against the “deep” and “savage” budget cuts of the Cameron government. This is not the first time the UK has endured riots. The welfare lobby, bureaucrats, and other recipients of taxpayer largesse are becoming increasingly agitated that their gravy train may be derailed.
The vast majority of protesters have been peaceful, but some hooligans took the opportunity to wreak havoc. These nihilists apparently call themselves anarchists, but are too ignorant to understand the giant disconnect of adopting that title while at the same time rioting for bigger government and more redistribution. My anarcho-capitalist friends must be embarrassed by the potential linkage with these hooligans.
Speaking of rage, Paul Krugman is equally dismayed with Prime Minister David Cameron’s ostensibly penny-pinching budget. Summoning the ghost of John Maynard Keynes, Krugman asserts that such frugality is misguided when an economy is still weak and people are unemployed. Indeed, Krugman argues that the UK economy is weak today precisely because of Cameron’s supposed austerity.
Not surprisingly, the purpose of his argument is to discourage similar policies from being adopted in the United States.
No Foolin’: Tell the Feds to Butt Out
I probably shouldn’t do this on April Fool’s Day — it would be the one day they might go along with it, only to renounce it as a joke later — but Jay Greene’s recent exchange with the Fordham folks reminded me of my call a few weeks ago: Fordham and other national standards supporters should declare publicly and loudly that there should be no federal involvement in “common” standards or anything associated with them. If they really mean what they say — that they want adoption of national standards and curricula to be ”purely” voluntary for states — they should not only stop asking for federal involvement, they should declare any federal meddling utterly unacceptable.
Unfortunately, Jay had to repeat that call because, so far, Fordham hasn’t heeded it:
The claim that Kathleen and Fordham want no more than to nationalize standards without touching curriculum, pedagogy, or assessment is simply disingenuous. For example, Checker once again made common cause with the AFT, Linda Darling-Hammond, etc., … in backing the Shanker Manifesto, which calls for “Developing one or more sets of curriculum guides that map out the core content students need to master the new Common Core State Standards.” Checker may claim that this effort is purely voluntary, but that would only be credible if he and Fordham clearly and forcefully opposed any effort by the national government to “incentivize,” push, prod, or otherwise require the adoption of national curriculum based on the already incentivized national standards.
Come to think of it, even if it were an April Fool’s stunt, having Fordham and other national-standards crusaders renounce federal arm-twisting to get their way would be a big step forward. Heck, at least then everyone would acknowledge that it was a joke.
Postscript: It would be a joke, by the way, sort of like this, which I saw Fordham put up right after I initially submitted this post. I mean, my vocab is always certified family-friendly!
Those Fordham folks — you just never know when they’re being serious…
Obama’s Power Problem, and Ours
I have an op-ed in Politico today that explores what I call President Obama’s power problem, a common theme in my work (my book is now in a Kindle edition!).
Simply stated, when a country has more military power than it needs to defend itself and its core interests, it will expand its definition of “the national interest.” This will, in turn, lead it to intervene militarily in places and disputes that have no connection to the country’s security. That certainly has been the pattern for the United States for at least the last two decades. The problem is nicely encapsulated in the famous exchange between Madeleine Albright and Colin Powell, which Powell recounted in his memoir.
Madeleine Albright, our ambassador to the UN, asked me in frustration “What’s the point of having this superb military that you’re always talking about if we can’t use it?” I thought I would have an aneurysm. American GIs were not toy soldiers to be moved around on some sort of global game board.
This brings us to Libya, and to a new group of people who likely said something similar to Mike Mullen and Bob Gates. Secretary of State Hillary Clinton’s disagreements with Gates were on public display last Sunday, but reports of a whisper campaign within the administration, in which Clinton and her advisers were frustrated by President Obama’s unwillingness to deploy the U.S. military on yet another mission, have been flying around for weeks.
In the end, the Valkyries got their war. Clinton’s advice, along with that of Samantha Power and Susan Rice, who have all loudly called for U.S. military intervention in the past, convinced President Obama to override Gates and Mullen’s objections, and to launch what Colorado Congressman Mike Coffman aptly characterized yesterday as “just the most muddled definition of an operation probably in U.S. military history.” Anne-Marie Slaughter, who recently returned to Princeton after a stint at State’s policy planning staff, was sniping from the sidelines. Pressure from our European allies, especially France’s Nicolas Sarkozy and David Cameron in the UK, also appears to have been decisive.
Friday Links
- They passed the bill, and now we’re finding out what’s in it.
- We’re finding out that the war in Libya could really be about protecting European interests.
- In Atlas Shrugged, Ayn Rand described a world in which government both partly produced and partly subsidized goods; we’re finding out she wasn’t far off the mark.
- We’re finding out that “American exceptionalism” is a cloak for military adventurism.
- The longer America fights a war on drugs, the more we find out about how detrimental it is to our fiscal outlook:
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