What we’re witnessing in Washington this week is not a Wall Street bailout, it’s a bailout of the politicians. The members of Congress are afraid, and they should be, that if there is a major near-term meltdown of our economy most of them won’t be elected the next time they’re up for re-election. They prefer that the economy be dragged down gradually over several years so that it won’t be so directly linked to them.

Make no mistake about it. It’s a zero-sum game. The economy has already taken the hit; we just haven’t seen all the effects yet. The question is do we want to take the punishment now or do we want to spread it out over time? I say take it now. Let’s gulp down the medicine and get on with the healing.

Let the weak companies fail. Let the strong (or new) companies step in to take their place. Put more weight on what the economists who don’t have strong ties to Wall Street have to say than on what Wall Street executives and former executives have to say.

Let those who bought more house than they could afford lose the house. Let the lenders who gave them the opportunity lose their money. Rescind the laws that encourage bad lending practices. The worst thing we can do for the economy is to endlessly continue to prop up bad decisions.

I heard Senator Barbara Boxer this morning mock John McCain for saying last week that the fundamentals of the economy are strong. I don’t know if she was just being political or is dumb enough not to know that McCain is right. I suspect the latter. I suspect she doesn’t understand that the fundamentals of the economy are the skilled workforce, the capital infrastructure and the entrepreneurship that exist in this country. I suspect that she thinks it is the amount of control the government has over the economy.

The fundamentals are going to still be there whether Wall Street crashes or doesn’t crash. We will bounce back if the government will get out of the way. I prefer that we start the bounce sooner rather than later.

In discussing the proposed financial institution bailout in his column yesterday Dr Thomas Sowell said that “many people have trouble even forming some notion of what such numbers as billion and trillion mean.” To get some idea of the magnitude of a trillion he suggests thinking about it in terms of what was going on in the world a trillion seconds ago. The answer is not much. No one on the planet knew how to read. That could have been because no one knew how to write. It was over 31,709 years ago. I suspect there were no politicians around back then.

If you could earn a dollar a second (that’s $3,600 per hour) and worked 24/7 with no sleep or vacations it would take you over 31,709 years to earn a trillion dollars. You would be earning over $32 million per year but it would still take you more than 31,709 years to earn a trillion dollars. If you don’t think you can work that long and if you can recruit 31,708 people with the same earning ability to help out, you can earn the trillion dollars in about a year.

If the trillion dollar debt the government is about to incur is divided equally among 300 million Americans it will come to $3,333.33 per person. It seems to me that will drag down the economy as much or more than letting a few rogue companies go belly up.

I can’t turn on the television these days without hearing some politician advocating the achievement of energy independence. Not a single time have I heard one pushing for banana independence. Yet we import all our bananas from foreign countries and some of them don’t like us all that much.

The only half-way valid argument for energy independence is national security. If our foreign sources of oil were cut off we could be practically dead in the water after our strategic petroleum reserves are exhausted. For that reason we should be preparing all our known oil fields for production and exploring for more. We should also be developing alternative sources of energy.

But there is no reason to stop importing foreign oil as long as its price is competitive with domestically produced oil. It makes sense to me to keep using the foreign oil as long as we can get it and afford it, and save ours for later. That is, use theirs and hoard ours. If foreign oil becomes unaffordable and threatens our economy we could increase domestic production to hold the price down.

The politicians also rant about the hundreds of billions of dollars we are sending to the Middle East each year to satisfy our “addiction” to oil. They speak as if the money is being poured down a rat hole. Actually, if the foreign recipients of our dollars are pouring them down a rat hole or storing them in a vault, the oil we get from them is effectively free. We could just print more money to replace what they are holding.

But that’s not how it works. We engage in a voluntary transaction with the foreigners in which we get oil and they get US dollars. The only place on the planet where US dollars can be redeemed is in the US. The dollars that they accept in exchange for their oil are effectively promises that they can come to the US later and exchange them for goods, services or property. They may choose to trade the dollars to some other country but that country still has to spend the dollars in the US. So, in the end, all that money sent abroad has to eventually come back and when it does it creates commerce (and jobs) here. This is true of all other forms of foreign trade as well.

This process still might work to our disadvantage if we pay too much per barrel of oil. We were recently paying about $140 per barrel. A Saudi could (but probably wouldn’t) stay overnight in a decent hotel in the US for that amount. We get about 20 gallons of gasoline and numerous side products from the barrel of oil. Is that a good trade? I don’t know but a free market will.

Energy independence sounds good but let’s not go there as long as foreign oil is comparable in price to domestic oil and we are ready to tap into our known deposits in case of a national emergency.

My wife just returned from the supermarket “shocked” at having to pay $15 for a gallon of Mazola corn oil. This is a direct result of Congress’ decision to subsidize the diversion of corn to the production of ethanol for fuel. Thanks to those geniuses we now have high-priced fuel and cooking oil.

It’s kind of ironic that all those people I’ve heard about who have converted their cars to run on cooking oil may now have to convert them back because gasoline is now probably less expensive than used cooking oil.

This is one more piece of evidence that the government can’t run the economy. Every time it tries to fix one thing it breaks something else. Congress is now trying to throttle back the oil speculators. Who knows what kind of chaos that will cause? Gasoline prices may swing up and down by a dollar or more over the course of a few weeks, causing every vehicle operator to become a speculator. Do I fill up all my cans this week or wait one more? Do I start using my reserves now or fill up again from the pump?

If you don’t appreciate the complexity of our economy you should read this essay: I, Pencil: My Family Tree as told to Leonard E. Read. After you’ve read it consider the likely outcome of 535 politicians trying to improve the process of manufacturing pencils.

In an article on drilling activity off Florida’s Northwestern shore the AP quotes our bonehead senator:

U.S. Sen. Bill Nelson, who has led opposition to offshore drilling among the state’s Congressional delegation, criticized the governor for reversing his position, accusing Crist and McCain of putting oil company profits before protecting the state’s $65 billion annual tourism industry.

“Oil companies and their allies are using the shockingly high price of oil and gasoline, which largely is the result not of a supply problem but speculative fever, to scare the public into thinking coastal drilling offers a real solution to our dependency on oil,” he said in an e-mailed statement.

Where do I start?

How does Nelson know that Crist and McCain are putting oil company profits before protecting the state’s tourism industry? I would guess that they might be thinking of taking some action to mitigate this energy crunch somewhere down the road, instead of bowing to the environment prophets several times a day.

I suppose it hasn’t occurred to Nelson that tourists need lots of fuel to get to Florida’s attractions. Higher and higher priced fuel will kill the tourism industry a lot quicker than a few oil spills. Anyway, when did the government become responsible for protecting the tourism industry?

So, Senator Bill thinks there is no oil supply problem and that the “shockingly” high prices are due to speculation. It would be great if he’s right. That would mean that the market will collapse soon and prices will fall dramatically. How does he think speculators can sustain control of a gargantuan market in which supply exceeds demand? They might be able to do it for a short time but the wealthiest people on this planet would eventually have an overwhelming cash flow problem, including the oil producing monarchies and dictatorships. After hearing talk in the US about opening up oil exploration the Saudis reversed themselves and agreed to increase production; the slightest hint of less demand for their oil spurred them into action.

The power and influence of speculators is way oversold. Look at what just happened in the housing industry. Yes, they helped drive up the price of homes, but they couldn’t sustain it. Eventually the market collapsed and they lost their shirts. Look at what happened in the high-technology industry in the late 90s. Speculators went crazy investing in start-up companies but the market couldn’t accommodate their fervor, so many of them went bankrupt. Listening to the leftist media you would think that all speculators are guaranteed wealth. Not so. Even the successful ones lose money almost as often as they make money.

Coastal drilling may not offer “a real solution to our dependency on oil” and it may not offer a complete solution, but I think it would really help a lot while we look for that real solution. What doesn’t help is for one of our supposed leaders to keep spewing politically convenient crap when others are trying to seriously debate the viability of proposed solutions.

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:

• Too “Complex”?: Part I
• Too “Complex”?: Part II
• Too “Complex”?: Part III

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.

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.