Barack Hussein Obama’s solution to the high fuel cost problem is to raise the cost of fuel. He wants to impose a “windfall profits tax” on the oil companies, which will of course be passed on to fuel users. After noticing that the oil companies are still making a nice profit, Barack will probably push to raise his windfall profits tax and so on. Apparently the man hates profits. Never mind that his largest constituent base’s retirement funds depend heavily on corporate profits.
And there’s this other little fact that Barack ignores. The government profits a lot more than the oil companies from each gallon of fuel sold. Some estimates show the government profiting three times as much. Do you think Barack will levy a windfall profits tax on the government?
Since I was a teenager the percent increase in the cost of a Coca-Cola is as much or more than a gallon of fuel. And it has been reported that Coca-Cola’s profit rate last year was greater than the oil companies’ profit rates (where profit rate is roughly defined as the amount of profit divided by the amount of money invested in making that profit.) But we don’t hear any calls from Barack for a windfall profits tax on Coca-Cola.
Some people point out that the concern is about the “obscene” amount of the oil company profits, not the profit rate. Well, that’s like complaining to a bank that your neighbor is making more off his savings than you although both of you are getting the same interest rate, while ignoring the fact that your neighbor has ten times as much money in his account as you have in yours.
It is also argued that the focus is on the oil companies because their products are essential to our everyday lives and products like Coca-Cola are not. Well genius, that is why the oil companies’ gross revenues and profits are huge compared to companies like Coca-Cola. In times of shortages it is easier to do without Coke than fuel.
It is also worth noting that liberal Democrats will argue at the same time that oil is essential to our everyday lives and that we should implement extreme measures to limit its supply.
At the risk of appearing to be a shill for Sowell I’m recommending that you read another series of his columns:
Sowell makes it easy for people other than devious politicians with inflated egos to understand the effects of supply and demand versus the politicians’ actions on the “affordability” of those products that we need or want.
All three presidential contenders want to enact one or another price control on fuel but none of them wants to tap our greatest reserves of oil.
Barack Obama wants to levy an additional tax on the oil companies, which will increase the price of fuel. Apparently he sees it as punishment for their supposed greed. But guess who eventually gets punished. Clue: It’s not Obama or the oil companies.
Most of the liberal politicians today want to increase the income taxes of the “wealthy” taxpayers. Think about it. How do you actually tax the wealthy? The vast majority of them are in controlling positions relative to their income. Tax their businesses’ profits and they will pass it on to consumers of their products. Tax their salaries and they will raise them — and pass the cost on to consumers.
Consumers of products and services pay all the taxes regardless of their income. Since the non-wealthy consume vastly more products and services than the wealthy, the non-wealthy pay vastly more of the taxes. It doesn’t matter who files the return and sends a check to the IRS, we all pay too much in taxes in the end.
Have you heard someone boast that they don’t have to pay income taxes? Next time give them a lesson in trickle-down taxes and economics.
The government got it wrong again. Ethanol produced from corn, or any other substance, is not the answer to the world fuel shortage and the high prices the shortage generates. An MSNBC article and a Fox News column fill in the details. Using corn for fuel is not expected to alleviate the fuel shortage, but it has and is expected to continue to cause a world food shortage. Some even say that we should start hoarding nonperishable foods.
This is a prime example of what can happen when the government interferes in the market. Without the government ethanol mandates and subsidies the diversion of corn from food to fuel would not have proceeded at the current pace and we wouldn’t be facing a food crisis.
On the other side of the coin the federal and state governments are shutting off cheaper sources of fuel and other energy. They are restricting the exploration and development of new oil supplies and are restricting the building of new nuclear power plants. They won’t allow us to tap the massive supply of oil in the lower Gulf of Mexico because some Florida beach might get a few dark spots. All the presidential candidates have said they won’t allow the extraction of the huge oil reserves from the Arctic National Wildlife Refuge because it might upset a few animals.
What good is a pristine stretch of beach in Florida if you can’t afford to drive there to enjoy it? How much food can you grow on a white sand beach? The Florida tourism economy is likely to be hurt as much by high fuel prices as spoiled beaches. Do you think the ANWR animals might choose to learn to live with a few oil wells and pipelines rather than be slaughtered for food?
We should be reducing government interference in energy, food and other markets instead of calling for more controls. National and world markets are too complex for a few officials to be able to manage them effectively. Consider the orange juice market. The Juice Authority sets the price of a gallon of OJ at X dollars. The JA then has to (1) issue a specification for the quality of OJ to prevent its producers from watering it down, (2) establish an inspection agency to see that the specification is met, (3) set prices for the oranges and other supplies that are needed to produce the OJ, (4) set prices for the seed, fertilizer and equipment needed by the orange growers, (5) set prices for the supplies needed by the orange growers’ suppliers, and on and on down the chain.
So, setting the price of OJ means that the price of steel must also be set, because it is needed to build the equipment used by the orange growers. The price of fuel must be set, because it is used in large quantities by the orange growers and the truckers that haul the oranges to the OJ producer’s plant. If all these and other prices aren’t set correctly the OJ production process will break down and no more OJ will be produced — unless Congress also gives the JA the additional power to force the OJ producer and all the suppliers to continue the process at a loss. Then we have socialism in all its faded glory. And this is what Barack Obama wants to give us if he becomes President.
An e-mail from Senator Mel Martinez contained these statements:
Senator Martinez called for more assistance to the aerospace industry in response to NASA’s estimate of job losses at Kennedy Space Center. “The aerospace industry is critical for our state and our country,” said Senator Martinez. “There is no simple fix to this problem, but we know where to focus our efforts. We need to accelerate the Orion and Ares programs, we need to foster a competitive environment for commercial space operations, and we need to assist the individuals and businesses affected by the transition. The aerospace industry is critical for our state and our country. This is more than a huge economic threat to our region; there is the real potential for a larger loss of human capital for our country at a time when we can’t afford to lose those who’ve dedicated their lives to specializing in engineering and science.”
Notice that he called for more assistance, implying that the aerospace industry is already being subsidized by the government. I know that a large segment of the aerospace industry derives most, if not all, its revenue from the government through defense and space programs, but I was not aware of direct subsidies.
If a supposedly conservative senator believes that engineers and scientists are in need of welfare he must have little confidence in them or our country. I say let the aerospace industry survive or fail on its own. If it fails the scientists and engineers can find or start another industry. Such resources should flow toward current needs, not be artificially sustained in an industry for which there is weakening or no demand.
If we continue down this slippery slope of propping up every troubled industry and individual who has made bad decisions, the last vestiges of our free market will vanish and we will be left with a socialized government and economy. This is a stated goal of Senator Obama but I wouldn’t expect it from a Republican senator.
February 25, 2008 – 10:59 am
CBS News reports that factory workers in Ohio doubt that either Obama or Clinton’s ideas go far enough to stem the tide of manufacturing jobs leaving Ohio.
Those ideas are welcome here in heavily unionized and heavily Democratic northwest Ohio, but at the same time, no one seems to believe they go far enough to reverse the powerful tide of globalization that many blame for the constant manufacturing job losses.
Democrats love labor unions. Labor unions love Democrats. Labor unions are the biggest reason that manufacturing jobs first migrated South and now migrate abroad. Factory workers love unions and Democrats. Go figure!
Factory workers that make washing machines want their pay forced up as high as possible, but they don’t want to have to buy a television set built with the same high-cost labor.
High pay rates seem nice but if your cost of living increases proportionately you haven’t improved your life style. In fact you may have lost ground due to having to pay a higher tax rate.
Democrats and labor unions (and Republicans) should get out of the way and let the free market work.
January 24, 2008 – 5:47 pm
It looks as if Congress will approve rebates of several hundred dollars each for most all Americans — whether they paid any income tax or not. These rebates are supposed to stimulate the economy and prevent us from having to endure a recession. Congress is assuming that everyone will run right out and spend all that money. They’re probably right.
I already did my part. A couple of weeks ago I bought a luxury motorhome. Looks like I’ll continue to do my part because operating that thing costs about 45 cents per mile just for fuel. That is, I’ll be doing my part to stimulate the economy but not to help us become energy independent.
I would consider giving my rebate to someone who needs it more than I do, but they’re getting a rebate too — and they probably don’t have a luxury motorhome to maintain and operate. Anyway, it looks like I’ll have to spend my rebate on repairs needed by my luxury motorhome, because it was born as a luxury motorhome over ten years ago. The previous owner used up a lot of the luxury.
It’s probably going to take all of my rebate, and my brother’s too, to pay for all the needed repairs. But that’s okay because he owns half of the luxury motorhome. We haven’t worked out which half yet. I thought about foisting off on him the half that includes the fuel tank but then I realized that half also contains the bedroom and bathroom.
In case Congress is listening and another rebate is considered for next year, we need to have a satellite television antenna installed on the roof of our luxury motorhome.
January 20, 2008 – 5:50 pm
Liberal politicians and pundits like to chuckle or snort when conservatives talk about supply-side economics. Proponents of supply-side economics roughly believe that reduced tax rates cause the economy to expand to the point that the government will collect as much or more tax revenue as it would have at the old higher rates. There have been studies that verify this and others that dispute it.
It’s clear that people disagree on what the right tax rate is, but do you suppose they can all agree that neither zero taxes nor a 100% tax rate is the right answer? Probably not, but I think most will. Even fiscal conservatives agree that some amount of government is necessary. We need to at least maintain order and defend the nation. I think sane liberals (that excludes Dennis Kucinich) would agree that a 100% tax rate would cause our economy to collapse. Not many people would continue to work for someone else when they are taking no pay home. They would have to self-produce some of the essentials of life and barter for the rest.
So, if a sane liberal — or anyone else — actually does believe that a 100% tax rate will destroy the economy and result in reduced government revenue, that person believes in supply-side economics. They believe that a tax rate lower than 100% will result in greater government revenue.
The real disagreement then is not on the theory of supply-side economics but on what rate is the right rate. A theoretician might argue that the right rate is the rate that maximizes government revenue. Conservatives think that rate is lower than the current rate; liberals think it is higher. Unfortunately we don’t have economists smart enough to give us the right answer, so we are left with experimentation.
Two of the last four presidents have significantly reduced tax rates with favorable results. If the next president is a Democrat (heaven forbid) and she raises taxes, at least we will get a data point in the other direction.
September 13, 2007 – 7:16 am
FoxNews.com has an update on the saga of deported illegal immigrant Elvira Arellano and Saul, her American-born son. Yesterday Saul participated in a demonstration to lobby Congress to help bring his mother back to the USA.
Meanwhile, Elvira says her son will move to Mexico and start schools next month. Together, she vows they’ll continue their immigration crusade, but from the other side of the border.
Now let me understand this. She doesn’t like our laws but she very very much wants to come here. And she is willing to leave her son in our hands for a few months. She apparently doesn’t think Mexico is a fit place to live and raise her son, but I don’t hear of any crusade that she plans to wage against the Mexican government.
I wonder if she believes that all Mexicans should be allowed to move here or just her and Saul. Is she capable of understanding that if the floodgates are opened our country will be swamped with people looking for work and she might soon find that it’s no easier to make a living here than in Mexico?
If the hordes of Mexicans entering the USA legally and illegally focused their energy on reforming their own government instead of ours, they would achieve a better outcome for all of us — especially in the long-term. There is no large difference between the USA and Mexico in terms of per-capita land area and natural resources. The working class lives better here than the working class in Mexico because our socio-economic system is more conducive to individual prosperity and our government is less corrupt. If they will get rid of their corrupt government and open up their markets, Mexicans can prosper at home.
I hope they will decide to fix things down there before some American president decides to send in the troops and fix it for them. After all, what ails Mexico now seems to be affecting us more than what ailed Iraq before we sent the troops in there.
January 14, 2007 – 10:39 am
The Associated Press reports that tortilla prices in Mexico jumped nearly 14 percent over the past year. The Mexican government and economists say that increased US production of ethanol from corn contributes to the problem.
So, here in the US our government is encouraging the production of ethanol as an alternative to gasoline, which uses corn that otherwise might be used to produce tortillas, which drives up the cost of tortillas in Mexico, which potentially causes a lot more Mexicans to come to the US so they can make enough money to buy tortillas. Central planning never works as intended; the variables are too numerous and too complex for mere humans to comprehend.
You might ask, why isn’t corn production in the US increasing to meet the additional demand? I don’t know; I’m a mere human. But I suspect it’s because of government manipulation of agriculture. We support the price of some commodities. We limit the production of other commodities. Governments need to get out of the way and let a free market handle these supply and demand problems.
The biggest question in my mind is, why can’t Mexico produce enough corn to supply all the tortillas they need at a reasonable price? The answer is probably the same as the above: government manipulation.
December 29, 2006 – 12:59 pm
Thomas Sowell has a series of columns on Townhall.com titled, A Dangerous Obsession. The columns are about the media’s and academia’s unending obsession with “gaps” and “disparities” in income. I highly recommend that you read them — and anything else he writes. If politicians paid more attention to what he says the world would be a better place. To date he has published four columns in the series: Part I, Part II, Part III and Part IV.
Update: Here’s Part V.
