How very strange is the viewpoint of many of the world's other nations. Syria has just been chosen by the nations of the United Nations to serve on a UNESCO committee that deals with human rights violations. Despite killing 3,500 protestors to the ruling Syrian regime, Syria was just reappointed to serve on the UN Committee on Conventions and Recommendations. This committee examines the violations of nations of human rights in education, science, and communications, among other areas. The United States just recently froze its funding of UNESCO because it had admitted Palestine as a member. Terrorist nations are thought by many U.N. countries to be best put in charge of monitoring human rights violations. More rational observers will clearly recognize that means the U.N. views human rights as a farce.
The United States backed draft resolution in the United Nations condemning Iran of human rights violations passed by a vote of 86 - 32. But of the ten largest recipients of our foreign aid, only Israel voted for the resolution, while the two largest aid dependents, Afghanistan and Pakistan, voted against the resolution. Iraq did not vote at all, while Egypt, Jordan, South Africa, Kenya, Ethiopia, and Nigeria all abstained. As is commonly the case, Russia and China voted against us. India, which used to usually vote against us, but more recently has been more likely to see its interests as more consistent with ours, also voted against the resolution condemning Iran. Our ever greater commercial ties with India and China have not caused either nation to become consistently rational in its foreign policies. Such additional lines of communication as exist with the people of these countries has not led to their understanding that tyrannical governments are morally repugnant and make bad friends. Once again, many nations of the world express their disdain for individual rights.
The defense of individual rights has to be maintained with vigor around the world and within the United States. While Obama, Biden, Pelosi, and Reid have little regard for many of our individual rights, they are trending in the direction of the crueler and more ruthless nations of the world, but are not yet a match for them. We need badly to choose American leaders who will work to establish the many essential individual rights that are now so widely ignored even in the United States. When the United States lives up to its own standards of rights as proclaimed in its Declaration of Independence and as sustained by the Constitution, perhaps many of the people of the many rogue nations today will also be inspired to assert their own individual rights. The best foreign aid we could offer would be a better example of devotion to individual rights for Americans.
27 November 2011
26 November 2011
ClimateGate 2.0, Climate Uncertainties, and Funding Bias
The latest release of e-mails among the prominent catastrophic man-made global warming scientists at the University of East Anglia and their like-minded scientific colleagues around the world has further established many scientific blunders, uncertainties, political maneuverings and biases among this cabal of scientists. There is evidence for each of the following shortcomings:
1) More uncertainty among these scientists than one would expect given their claim that the science is settled.
2) Admission that the global climate computer models are wrong about how they handle cloud cover. Since cloud cover effects are by themselves easily large enough to account for all the claimed global warming, this is a serious fault.
3) Acknowledgment that the global climate computer models are tuned to match the climate results on the ground claimed by the catastrophic man-made global warming advocates. This is a very serious charge, since if you have a data set of 100 data pairs, a 100th order polynomial will fit that set exactly. The computer models have thousands of adjustable parameters which provide huge leeway for tuning the desired outputs to past climate results over a few decades. The computer model advocates have explicitly met such criticisms in the past with denials. The fact that the models have claimed to match the results of the last few decades in many cases, but have failed to provide predictive matches to the last 12 years or so, is very telling as well as the admission in the e-mails. One also does not hear of studies for which a given computer model that has been tuned for recent times gives accurate climate results for say the Little Ice Age or the Roman Warm Period.
4) There is an admission that many studies have failed to find the computer model predicted warming of the troposphere at altitudes of 8 to 12 km or more and there is only one questionable study that claims to have observed such a warming. If this computer model prediction is wrong, then the science of the computer models is wrong.
5) There is a claim that the solar incident infra-red radiation is underplayed by the alarmists, who rely on one paper which is contrary to several other published papers. This is important because it is critical to know how much of the incoming solar radiation never reaches the ground due to absorption in the atmosphere. Increased water vapor and CO2 will also reduce incoming solar radiation thereby providing a cooling of the ground temperatures as explained in my analysis in a chapter of Slaying the Sky Dragon - Death of the Greenhouse Gas Theory.
6) Admission that the long term temperature reconstructions by the catastrophic man-made global warming advocates were not on a solid footing. Errors were actually so large that comparisons of such data to computer models was of little help if the errors were acknowledged. The Little Ice Age, the Medieval Warm Period, the cool period of the Dark Ages, the Roman Warming and other periods of natural temperature changes are all awkward for those claiming that the recent warming is both unusual and caused by man's emissions of CO2.
7) Admission that Steve McIntyre may be right about how the statistical handling of the temperature data may have been the artifice source of the hockey stick temperature reconstruction of Mann.
8) Admission that none of the climate computer models performs adequately in predicting sea surface temperatures and water vapor concentrations. This is critical because water covers 71% of the Earth's surface and all of the supposed predictions of CO2 warming actually are supposed to cause more warming due to the inducement of higher water vapor concentrations. The water vapor increase will produce more water vapor warming than the CO2 causes warming by itself according to their theory.
9) There is no need for any one global climate computer model to be correct. Does this not admit that the science is not understood, since otherwise one would give a reason for why that model was incorrect and why its non-compliance with other models or reality was not important? The outlier model might be the only good one, if one does not really understand the science. It is interesting to note that when one of the models is run multiple times, it gives many different answers. One wonders how many outlier results are thrown out because they simply are not believed in. Many of the IPCC models were not run enough times to even understand how poor the reproducibility was.
10) There are many discussions of cherry-picking data sets or papers that showed more warming or more harmful effects to demonstrate a more alarming result. This was true of dramatic events such as storms, advice to emphasize iconic animals, plants, and geographic areas, ways to reconstruct past period temperatures, and advice to ignore some climate extremes of the Medieval Warm Period such as droughts.
11) Concerns that the effects of the sun were not given enough strength in the models and if they were, they would greatly reduce the claimed effects of greenhouse gases.
12) Concern that contrary to the models, water vapor over land in the tropics may not have actually increased as CO2 increased.
13) Admission that the melting of the Kilimanjaro glacier was not caused by global warming.
14) Concern that European forests are thriving as CO2 concentrations increase, rather than being harmed by acid rain caused by increased CO2 concentrations.
15) Puzzlement that there is a minimum in the temperature in the lower troposphere which cannot be duplicated in any computer model that allows surface warming.
16) Phil Jones whose paper on the urban heat island effect minimizes the size and variability of such an effect, though studies in the U.S. and China show it to be very large, claims that there is no change in the heat island effect in New York, London, and Vienna in the 20th century! He also claims the oceans have warmed at a rate consistent with the land warming, which is a claim many would say is false.
17) There is more discussion of seeing that only those friendly to the catastrophe hypothesis are chosen for significant positions in the writing of the U.N. IPCC reports and reviewing them.
18) There are more indications that politics is strongly driving the desired scientific outcomes and that those who are not so committed to the political and pro-government stand of the alarmist viewpoint are untrustworthy and to be generally excluded.
19) There is further discussion of the need to hide original and raw data from scientists and the public not deemed to be dependable to the cause even if publications and research based on such data was funded with government money by countries such as the United States and the United Kingdom that have freedom of information acts on the books.
20) There is a claim that officials at the U.S. Department of Energy are complicit in hiding original weather station data. This is important, because the primary claim to warming in the last few decades is mostly supported by land-based data from weather stations. The rural stations do not show such temperature rises as are claimed by various government agencies of the U.S., the United Kingdom, and many other countries around the world, however. The claims of warming are generated by massaged data by interpolation schemes over regions with no weather stations (or whose station data was ignored) or by large corrections made or not made to data from stations affected by urban and suburban sites and with sitings that do not meet required specifications. The urban sites tend to have rising temperatures due to man's local activities and structures. Scientifically, it is very important to be able to examine the raw data and to have independent scientists examine whether any adjustments are performed correctly. Of course, it may well be that an honest scientific assessment would conclude that there is no way to even use such data given the size of the temperature shifts for which one is looking. It is my contention that no data from any station that does not meet specifications should be used and no data from stations affected by urban heat island effects should be used.
21) Claims that the governments want them to tell a very strong story of climate change caused by man with no caveats. The team of advocates has a duty to see to it that this is the case and to serve as active proponents of the political message.
22) Discussions that advocates should talk up the desirability of stable climate and avoid discussing the costs of cutting back on the use of fossil fuels and the sacrifices people would have to make to do so.
I have been pointing out that the science behind catastrophic man-made global warming was largely wrong for years now. One of the most common rebuttals I am given by its proponents is that if the science were so wrong, then many conscientious and eager to prove themselves climate scientists would be aligned with me and making their careers in doing so. Many of these same critics of my viewpoint that the hypothesis of catastrophic man-made global warming science has failed, constantly claim that those who are skeptics and deniers are all in the pay of the fossil fuel companies. That claim is wrong, but catastrophic man-made global warming proponents establish the idea that they think scientists will deliver the desired results of their funders. This may be a projection of their own shortcomings upon others.
Let us use their claim that scientists are so vulnerable and apply it to the many climate scientists who support the hypothesis of catastrophic man-made global warming and ask who funds them. The answer is that they are all funded by governments and the U.N., all of which have a decided interest in having reasons to increase the powers of their governments or the U.N. and increase controls over the activities of individuals and companies. That the government of the U.S. is so biased in favor of this hypothesis and is so determined to declare it settled science, is backed by the e-mail referred to above in which the U.S. Department of Energy was noted to be happy not to make original station data available to scientists not under their funding control. There is huge pressure on all scientists in climate research to provide the results the funding governments want, or their funding will be cut off. There is no comparable replacement source of funds, so almost everyone toes the line or is simply naively influenced by the argument from authority because so many do toe the line.
The U.S. government is doing more harm to science than Stalin did with his Lysenko perversion. Contrary to what government would have you believe, there is no settled climate science on catastrophic man-made global warming, except that any possible warming is greatly exaggerated, as are its consequences. We must always remember that man has always prospered most when the Earth was warm. This has been most clearly the case since the Holocene period began.
1) More uncertainty among these scientists than one would expect given their claim that the science is settled.
2) Admission that the global climate computer models are wrong about how they handle cloud cover. Since cloud cover effects are by themselves easily large enough to account for all the claimed global warming, this is a serious fault.
3) Acknowledgment that the global climate computer models are tuned to match the climate results on the ground claimed by the catastrophic man-made global warming advocates. This is a very serious charge, since if you have a data set of 100 data pairs, a 100th order polynomial will fit that set exactly. The computer models have thousands of adjustable parameters which provide huge leeway for tuning the desired outputs to past climate results over a few decades. The computer model advocates have explicitly met such criticisms in the past with denials. The fact that the models have claimed to match the results of the last few decades in many cases, but have failed to provide predictive matches to the last 12 years or so, is very telling as well as the admission in the e-mails. One also does not hear of studies for which a given computer model that has been tuned for recent times gives accurate climate results for say the Little Ice Age or the Roman Warm Period.
4) There is an admission that many studies have failed to find the computer model predicted warming of the troposphere at altitudes of 8 to 12 km or more and there is only one questionable study that claims to have observed such a warming. If this computer model prediction is wrong, then the science of the computer models is wrong.
5) There is a claim that the solar incident infra-red radiation is underplayed by the alarmists, who rely on one paper which is contrary to several other published papers. This is important because it is critical to know how much of the incoming solar radiation never reaches the ground due to absorption in the atmosphere. Increased water vapor and CO2 will also reduce incoming solar radiation thereby providing a cooling of the ground temperatures as explained in my analysis in a chapter of Slaying the Sky Dragon - Death of the Greenhouse Gas Theory.
6) Admission that the long term temperature reconstructions by the catastrophic man-made global warming advocates were not on a solid footing. Errors were actually so large that comparisons of such data to computer models was of little help if the errors were acknowledged. The Little Ice Age, the Medieval Warm Period, the cool period of the Dark Ages, the Roman Warming and other periods of natural temperature changes are all awkward for those claiming that the recent warming is both unusual and caused by man's emissions of CO2.
7) Admission that Steve McIntyre may be right about how the statistical handling of the temperature data may have been the artifice source of the hockey stick temperature reconstruction of Mann.
8) Admission that none of the climate computer models performs adequately in predicting sea surface temperatures and water vapor concentrations. This is critical because water covers 71% of the Earth's surface and all of the supposed predictions of CO2 warming actually are supposed to cause more warming due to the inducement of higher water vapor concentrations. The water vapor increase will produce more water vapor warming than the CO2 causes warming by itself according to their theory.
9) There is no need for any one global climate computer model to be correct. Does this not admit that the science is not understood, since otherwise one would give a reason for why that model was incorrect and why its non-compliance with other models or reality was not important? The outlier model might be the only good one, if one does not really understand the science. It is interesting to note that when one of the models is run multiple times, it gives many different answers. One wonders how many outlier results are thrown out because they simply are not believed in. Many of the IPCC models were not run enough times to even understand how poor the reproducibility was.
10) There are many discussions of cherry-picking data sets or papers that showed more warming or more harmful effects to demonstrate a more alarming result. This was true of dramatic events such as storms, advice to emphasize iconic animals, plants, and geographic areas, ways to reconstruct past period temperatures, and advice to ignore some climate extremes of the Medieval Warm Period such as droughts.
11) Concerns that the effects of the sun were not given enough strength in the models and if they were, they would greatly reduce the claimed effects of greenhouse gases.
12) Concern that contrary to the models, water vapor over land in the tropics may not have actually increased as CO2 increased.
13) Admission that the melting of the Kilimanjaro glacier was not caused by global warming.
14) Concern that European forests are thriving as CO2 concentrations increase, rather than being harmed by acid rain caused by increased CO2 concentrations.
15) Puzzlement that there is a minimum in the temperature in the lower troposphere which cannot be duplicated in any computer model that allows surface warming.
16) Phil Jones whose paper on the urban heat island effect minimizes the size and variability of such an effect, though studies in the U.S. and China show it to be very large, claims that there is no change in the heat island effect in New York, London, and Vienna in the 20th century! He also claims the oceans have warmed at a rate consistent with the land warming, which is a claim many would say is false.
17) There is more discussion of seeing that only those friendly to the catastrophe hypothesis are chosen for significant positions in the writing of the U.N. IPCC reports and reviewing them.
18) There are more indications that politics is strongly driving the desired scientific outcomes and that those who are not so committed to the political and pro-government stand of the alarmist viewpoint are untrustworthy and to be generally excluded.
19) There is further discussion of the need to hide original and raw data from scientists and the public not deemed to be dependable to the cause even if publications and research based on such data was funded with government money by countries such as the United States and the United Kingdom that have freedom of information acts on the books.
20) There is a claim that officials at the U.S. Department of Energy are complicit in hiding original weather station data. This is important, because the primary claim to warming in the last few decades is mostly supported by land-based data from weather stations. The rural stations do not show such temperature rises as are claimed by various government agencies of the U.S., the United Kingdom, and many other countries around the world, however. The claims of warming are generated by massaged data by interpolation schemes over regions with no weather stations (or whose station data was ignored) or by large corrections made or not made to data from stations affected by urban and suburban sites and with sitings that do not meet required specifications. The urban sites tend to have rising temperatures due to man's local activities and structures. Scientifically, it is very important to be able to examine the raw data and to have independent scientists examine whether any adjustments are performed correctly. Of course, it may well be that an honest scientific assessment would conclude that there is no way to even use such data given the size of the temperature shifts for which one is looking. It is my contention that no data from any station that does not meet specifications should be used and no data from stations affected by urban heat island effects should be used.
21) Claims that the governments want them to tell a very strong story of climate change caused by man with no caveats. The team of advocates has a duty to see to it that this is the case and to serve as active proponents of the political message.
22) Discussions that advocates should talk up the desirability of stable climate and avoid discussing the costs of cutting back on the use of fossil fuels and the sacrifices people would have to make to do so.
I have been pointing out that the science behind catastrophic man-made global warming was largely wrong for years now. One of the most common rebuttals I am given by its proponents is that if the science were so wrong, then many conscientious and eager to prove themselves climate scientists would be aligned with me and making their careers in doing so. Many of these same critics of my viewpoint that the hypothesis of catastrophic man-made global warming science has failed, constantly claim that those who are skeptics and deniers are all in the pay of the fossil fuel companies. That claim is wrong, but catastrophic man-made global warming proponents establish the idea that they think scientists will deliver the desired results of their funders. This may be a projection of their own shortcomings upon others.
Let us use their claim that scientists are so vulnerable and apply it to the many climate scientists who support the hypothesis of catastrophic man-made global warming and ask who funds them. The answer is that they are all funded by governments and the U.N., all of which have a decided interest in having reasons to increase the powers of their governments or the U.N. and increase controls over the activities of individuals and companies. That the government of the U.S. is so biased in favor of this hypothesis and is so determined to declare it settled science, is backed by the e-mail referred to above in which the U.S. Department of Energy was noted to be happy not to make original station data available to scientists not under their funding control. There is huge pressure on all scientists in climate research to provide the results the funding governments want, or their funding will be cut off. There is no comparable replacement source of funds, so almost everyone toes the line or is simply naively influenced by the argument from authority because so many do toe the line.
The U.S. government is doing more harm to science than Stalin did with his Lysenko perversion. Contrary to what government would have you believe, there is no settled climate science on catastrophic man-made global warming, except that any possible warming is greatly exaggerated, as are its consequences. We must always remember that man has always prospered most when the Earth was warm. This has been most clearly the case since the Holocene period began.
21 November 2011
Principled Versus Pragmatic Government
There are essentially two competing choices in government:
1) A government which is highly limited by principle in power and scope to the purpose of protecting the equal, sovereign rights to the individual to life, liberty, property, the ownership of one's own mind and body, and the pursuit of personal happiness. This is the legitimate government envisioned by the Declaration of Independence and the Constitution.
2) A so-called pragmatic government not restricted by principle to a limited scope and with few powers which is inclined to bestow special privileges on special interests. Such a government may be a democracy, an oligarchy, a one-party state, or a dictatorship and it must of necessity trample the rights of the individual because our personal interests are too diverse for government to foster all of our interests. It must pick which interests it will favor and which it will suppress. It violates the principle that government should do no harm. This is the kind of government we now have.
The media generally has failed the People because it does not believe in the principles of limited government and of the equal, sovereign rights of the individual. Rather than being watchdogs of our freedoms, they are mostly advocates of further infringements upon individual rights.
The Democrat Socialist Party scoffs at the very idea the Constitution limits the powers of government and that the Declaration of Independence is even a document with standing in the U.S. Pelosi, Biden, Obama, Waxman, Waters, and many other Democrats have literally confirmed this scoffing attitude with explicit comments.
Many Objectivists and Libertarians are fond of saying the Republicans are just as bad as the Democrats. The Republicans very frequently violate the Constitution, but they do sometimes try to use it to reduce the rate of government expansion and they rarely scoff at it. It is mostly Republicans who have tried to get ObamaCare declared unconstitutional and have tried to defund it in the House of Representatives. Such fairly stout defenders of freedom and individual rights as there are, are in the Republican Party. The valuable Tea Party movement is rightly mostly voting for and supporting Republicans, while trying to reform the party. I can think of no one in the Democrat Party who is a stout defender of freedom beyond a few points of narrow focus, such as opposing DOMA, DADT, and supporting abortion rights. As for Bush being as bad as Obama, that is a gross exaggeration. He was not fiscally responsible, but he was not in a league with Obama in the amount spent and certainly not as bad at just throwing away the money spent.
If we cannot educate the public to demand principled and legitimate government (as defined in the Declaration of Independence), then there is no path to good government. It must of necessity degenerate into special interest politics such as we have now. Those who want to stop the discussion of principles will never matter a wit to substantial improvement in the idea of good government. It can be helpful to get people to listen to principled discussion to point out the absurdities into which pragmatic, special interest government falls and to ridicule it. I do this frequently on my blog. But in the end, no major improvement in government will come about unless the People believe in the equal, sovereign rights of the individual and understand what those rights are.
The special interest nature of our federal government is well-illustrated by some examples in this Washington Examiner editorial, Washington conducts public business for private gain. This paragraph is one of the more interesting from this editorial:
1) A government which is highly limited by principle in power and scope to the purpose of protecting the equal, sovereign rights to the individual to life, liberty, property, the ownership of one's own mind and body, and the pursuit of personal happiness. This is the legitimate government envisioned by the Declaration of Independence and the Constitution.
2) A so-called pragmatic government not restricted by principle to a limited scope and with few powers which is inclined to bestow special privileges on special interests. Such a government may be a democracy, an oligarchy, a one-party state, or a dictatorship and it must of necessity trample the rights of the individual because our personal interests are too diverse for government to foster all of our interests. It must pick which interests it will favor and which it will suppress. It violates the principle that government should do no harm. This is the kind of government we now have.
The media generally has failed the People because it does not believe in the principles of limited government and of the equal, sovereign rights of the individual. Rather than being watchdogs of our freedoms, they are mostly advocates of further infringements upon individual rights.
The Democrat Socialist Party scoffs at the very idea the Constitution limits the powers of government and that the Declaration of Independence is even a document with standing in the U.S. Pelosi, Biden, Obama, Waxman, Waters, and many other Democrats have literally confirmed this scoffing attitude with explicit comments.
Many Objectivists and Libertarians are fond of saying the Republicans are just as bad as the Democrats. The Republicans very frequently violate the Constitution, but they do sometimes try to use it to reduce the rate of government expansion and they rarely scoff at it. It is mostly Republicans who have tried to get ObamaCare declared unconstitutional and have tried to defund it in the House of Representatives. Such fairly stout defenders of freedom and individual rights as there are, are in the Republican Party. The valuable Tea Party movement is rightly mostly voting for and supporting Republicans, while trying to reform the party. I can think of no one in the Democrat Party who is a stout defender of freedom beyond a few points of narrow focus, such as opposing DOMA, DADT, and supporting abortion rights. As for Bush being as bad as Obama, that is a gross exaggeration. He was not fiscally responsible, but he was not in a league with Obama in the amount spent and certainly not as bad at just throwing away the money spent.
If we cannot educate the public to demand principled and legitimate government (as defined in the Declaration of Independence), then there is no path to good government. It must of necessity degenerate into special interest politics such as we have now. Those who want to stop the discussion of principles will never matter a wit to substantial improvement in the idea of good government. It can be helpful to get people to listen to principled discussion to point out the absurdities into which pragmatic, special interest government falls and to ridicule it. I do this frequently on my blog. But in the end, no major improvement in government will come about unless the People believe in the equal, sovereign rights of the individual and understand what those rights are.
The special interest nature of our federal government is well-illustrated by some examples in this Washington Examiner editorial, Washington conducts public business for private gain. This paragraph is one of the more interesting from this editorial:
You'd think that Obama would have locked up the environmentalist vote with the billions of tax dollars that he's sent their way already [before denying the Keystone XL Pipeline]. We learned additional details about that corrupt process this week when it was revealed that more than $16 billion of the $20 billion spent by Obama's clean energy loan program went to companies linked to former members of his White House staff, prominent corporate campaign donors, and campaign contribution bundlers. The U.S. Constitution begins with the words "We, the people," and goes on to frame a government that is supposed to be their servant. It's time Washington was reminded of who serves who.The editorial also addresses the fact that our Congressmen tend to enrich themselves with insider information and the power of their positions. This is the natural state of any government that views itself as pragmatic and does not have any respect for the rights of the individual and the limited government it requires as embodied in the American Principle of our Declaration of Independence and our Constitution.
19 November 2011
Obama Begs Asian Nations to Buy American Goods
Ending his trip to Southeast Asia and his home country of Indonesia, Obama has just given a speech about th many wonderful things he is doing to increase exports that support American jobs. At the end of the speech, he claims he is willing to do everything he can to see to it that American businesses can succeed. This means he should:
1) Greatly lower the corporate tax rate, which is the highest in the developed world.
2) Repeal ObamaCare with its high taxes on health care, its requirements that the young subsidize the old and the healthy subsidize the unhealthy, and its effect of raising health insurance costs so high more and more American companies are no longer providing it as benefit and fewer and fewer people can afford to buy in on their own.
3) Repeal the minimum wage law which keeps under-educated Americans from getting on the job training so they can acquire job skills worthy of higher pay.
4) Stop draining the private sector of its wealth and income to grow the government parasite ever larger.
5) Stop Dodd-Frank and Sarbanes-Oxley which cause American companies so much financial grief.
6) Stop trying to prevent coal mining and the use of coal to provide low cost and dependable electric power.
7) Stop trying to prevent oil and gas field development.
8) Stop preventing the building of oil and gas pipelines which can cheaply deliver their products to industry to make goods for the American economy and for export.
9) Transfer the unpaid tax collecting and filing duties from employers to employees, who then can evaluate the work involved in tax compliance and taxes paid better when they vote.
10) Stop using the government to interfere with freedom of contract in favor of union extortion schemes both in employer-employee agreements and in forcing companies to choose union-controlled states over those which are not union-controlled.
11) Stop mandating that expensive and unreliable so-called green energy must be used for electricity generation, thereby hurting the coal and natural gas industries and every industry and every household that uses energy.
12) Stop subsidizing and requiring the use of ethanol blends in gasoline which drives up the cost of doing business through increased fuel cost, increases our food costs and deprives us of food to export, and leaves consumers with less to spend on other goods and services.
13) Stop the nonsensical EPA declaration that CO2 is a pollutant and the NASA and NOAA claims it is a likely cause of catastrophic man-made global warming.
14) Get the government out of education so we can have the best educated workforce in the world and young people who will not be so indoctrinated into believing that socialism is good and commerce is bad.
15) Reduce FDA, FCC, FAA, SEC, NLRB, OSHA, IRS, and many other agency's direful impact on business efficiency.
16) End the death tax that kills so many small and medium sized American companies or at least sets them back badly upon the death of a primary owner.
17) Reduce the capital gains tax so the the American economy can be sped up and more efficient.
18) Flatten the income tax so personal commercial success is punished less and people have more income to invest in businesses.
19) Stop general government overspending which forces the Federal Reserve to purchase the Federal debt bonds, thereby flooding the economy with money and causing the cost of goods and services to go up.
20) Stop spending more than tax revenues can pay for so that our economy is not hobbled with high taxes to pay interest on the ever-growing government debt.
21) Foster recognition that businessmen are providers of goods and services that the purchasers believe improve their lives, which is why they voluntarily buy them. Thus, businessmen are bringing value to others and doing good. When people do good their government should not be trying to vilify them and punish them.
Do these things and the President of the United States will not be running around the world begging other countries to do business with us. The people who run companies in those countries will be swarming to the U.S. to ask our companies to do business with them. People want to work with the best and we can be the very best if the government gets off our backs.
1) Greatly lower the corporate tax rate, which is the highest in the developed world.
2) Repeal ObamaCare with its high taxes on health care, its requirements that the young subsidize the old and the healthy subsidize the unhealthy, and its effect of raising health insurance costs so high more and more American companies are no longer providing it as benefit and fewer and fewer people can afford to buy in on their own.
3) Repeal the minimum wage law which keeps under-educated Americans from getting on the job training so they can acquire job skills worthy of higher pay.
4) Stop draining the private sector of its wealth and income to grow the government parasite ever larger.
5) Stop Dodd-Frank and Sarbanes-Oxley which cause American companies so much financial grief.
6) Stop trying to prevent coal mining and the use of coal to provide low cost and dependable electric power.
7) Stop trying to prevent oil and gas field development.
8) Stop preventing the building of oil and gas pipelines which can cheaply deliver their products to industry to make goods for the American economy and for export.
9) Transfer the unpaid tax collecting and filing duties from employers to employees, who then can evaluate the work involved in tax compliance and taxes paid better when they vote.
10) Stop using the government to interfere with freedom of contract in favor of union extortion schemes both in employer-employee agreements and in forcing companies to choose union-controlled states over those which are not union-controlled.
11) Stop mandating that expensive and unreliable so-called green energy must be used for electricity generation, thereby hurting the coal and natural gas industries and every industry and every household that uses energy.
12) Stop subsidizing and requiring the use of ethanol blends in gasoline which drives up the cost of doing business through increased fuel cost, increases our food costs and deprives us of food to export, and leaves consumers with less to spend on other goods and services.
13) Stop the nonsensical EPA declaration that CO2 is a pollutant and the NASA and NOAA claims it is a likely cause of catastrophic man-made global warming.
14) Get the government out of education so we can have the best educated workforce in the world and young people who will not be so indoctrinated into believing that socialism is good and commerce is bad.
15) Reduce FDA, FCC, FAA, SEC, NLRB, OSHA, IRS, and many other agency's direful impact on business efficiency.
16) End the death tax that kills so many small and medium sized American companies or at least sets them back badly upon the death of a primary owner.
17) Reduce the capital gains tax so the the American economy can be sped up and more efficient.
18) Flatten the income tax so personal commercial success is punished less and people have more income to invest in businesses.
19) Stop general government overspending which forces the Federal Reserve to purchase the Federal debt bonds, thereby flooding the economy with money and causing the cost of goods and services to go up.
20) Stop spending more than tax revenues can pay for so that our economy is not hobbled with high taxes to pay interest on the ever-growing government debt.
21) Foster recognition that businessmen are providers of goods and services that the purchasers believe improve their lives, which is why they voluntarily buy them. Thus, businessmen are bringing value to others and doing good. When people do good their government should not be trying to vilify them and punish them.
Do these things and the President of the United States will not be running around the world begging other countries to do business with us. The people who run companies in those countries will be swarming to the U.S. to ask our companies to do business with them. People want to work with the best and we can be the very best if the government gets off our backs.
Private Pipeline Sector Runs Around Obama Block
In an interesting development following the Obama block on the Keystone XL Pipeline project which was to bring oil from the Alberta tar sands and the North Dakota/Montana Bakken oil shale formation down to Cushing, OK and on to Houston/Port Arthur, TX, two private companies are seeing to it that the pile-up of oil in Cushing has a pipeline route to Houston. The Seaway Pipeline has carried imported oil from Houston up to the pipeline central routing facilities in Cushing, OK for years. That pipeline was owned half by its operator, Enterprise Products Partners, LP of Houston and half by ConocoPhillips. Enterprise Products Partners has long wanted to reverse the direction of flow to carry the comparatively cheap and plentiful oil in Cushing to Houston area refineries which have been hurting for oil due to diminished supply from Venezuela and Mexico. The pile-up of increased American and Canadian oil in Cushing has caused that oil to sell for as much as $28 a barrel less than the world price. ConocoPhillips did not mind this because it operates oil refineries in Oklahoma which were making a fortune on refining the under-priced oil there.
But, ConocoPhillips just sold its 50% ownership in the Seaway Pipeline for $1.15 billion to Enbridge Inc. and the pipeline flow direction will now be turned around. This is part of a massive trend to correct the U.S. pipeline system for the new internal sources of oil and the overall increase in oil production in the U.S. and Canada. Enbridge is spending $300 million to add new pump stations and to modify old ones. By the 2nd quarter of 2012, the pipeline will be pumping 150,000 barrels a day of crude oil from Cushing to Houston.
By mid-2013, the owners believe they may be able to move up to 400,000 barrels of oil a day with pumping improvements. The rejected Keystone XL Pipeline was to carry up to 700,000 barrels of oil a day from Cushing to Houston. The Wall Street Journal specualated on Thursday, 17 November that the reversal of the Seaway Pipeline might remove the commercial justification for the segment of the Keystone XL Pipeline from Cushing to Houston. I believe there will still be good reason to build that additional pipeline segment, at least if the Hardisty, Alberta to Steele City, Nebraska pipeline segment is ever approved. Perhaps a capacity of a bit less than 700,000 barrels a day will make more sense, but the projected 2013 400,000 barrel capacity of the Seaway Pipeline project could easily be matched.
The reason for all this activity is because U.S. oil production, which had been declining steadily since 1985 and generally since 1970, began to increase in 2009. Production bottomed out in 2008 at 5 million barrels of oil a day and has increased by 10% since, despite every effort of the Obama administration to halt new oil production projects. Our exports of refined petroleum products have doubled in the last three years, with us now exporting 2.6 million barrels a day of oil products. We are now exporting 15% of the gasoline and diesel refined in the U.S. The main market for our exported Gulf Coast refined products is the rapidly growing Latin American market.
Meanwhile, Obama has also blocked the development of the Utica Shale Oil Formation in the large Wayne National Forest in Ohio claiming concerns about fracking effects. A mineral lease auction scheduled for December 2012 has been canceled. There are already nearly 1300 oil and gas wells in that forest and the concerns about hydraulic fracturing are highly bogus. But no excuse to prevent private sector job creation is too flimsy for the Obama cutthroats.
But, ConocoPhillips just sold its 50% ownership in the Seaway Pipeline for $1.15 billion to Enbridge Inc. and the pipeline flow direction will now be turned around. This is part of a massive trend to correct the U.S. pipeline system for the new internal sources of oil and the overall increase in oil production in the U.S. and Canada. Enbridge is spending $300 million to add new pump stations and to modify old ones. By the 2nd quarter of 2012, the pipeline will be pumping 150,000 barrels a day of crude oil from Cushing to Houston.
By mid-2013, the owners believe they may be able to move up to 400,000 barrels of oil a day with pumping improvements. The rejected Keystone XL Pipeline was to carry up to 700,000 barrels of oil a day from Cushing to Houston. The Wall Street Journal specualated on Thursday, 17 November that the reversal of the Seaway Pipeline might remove the commercial justification for the segment of the Keystone XL Pipeline from Cushing to Houston. I believe there will still be good reason to build that additional pipeline segment, at least if the Hardisty, Alberta to Steele City, Nebraska pipeline segment is ever approved. Perhaps a capacity of a bit less than 700,000 barrels a day will make more sense, but the projected 2013 400,000 barrel capacity of the Seaway Pipeline project could easily be matched.
The reason for all this activity is because U.S. oil production, which had been declining steadily since 1985 and generally since 1970, began to increase in 2009. Production bottomed out in 2008 at 5 million barrels of oil a day and has increased by 10% since, despite every effort of the Obama administration to halt new oil production projects. Our exports of refined petroleum products have doubled in the last three years, with us now exporting 2.6 million barrels a day of oil products. We are now exporting 15% of the gasoline and diesel refined in the U.S. The main market for our exported Gulf Coast refined products is the rapidly growing Latin American market.
Meanwhile, Obama has also blocked the development of the Utica Shale Oil Formation in the large Wayne National Forest in Ohio claiming concerns about fracking effects. A mineral lease auction scheduled for December 2012 has been canceled. There are already nearly 1300 oil and gas wells in that forest and the concerns about hydraulic fracturing are highly bogus. But no excuse to prevent private sector job creation is too flimsy for the Obama cutthroats.
16 November 2011
Obama Supporter Buffett Benefits from Keystone XL Denial
Surprise, surprise! Obama supporter Warren Buffett is a huge beneficiary of the Obama denial of the Keystone XL Pipeline, which was to carry Alberta tar sands oil to Gulf Coast oil refineries and siphon off up to 65,000 barrels a day of oil from the Bakken oil shale formation in North Dakota. The Burlington Northern Santa Fe Corporation which runs the BNSF Railway Company became a Berkshire Hathaway, Inc. subsidiary on 12 February 2010 in a huge purchase by Warren Buffett. Between them, the BNSF Railway and the Canadian Pacific Railway are the biggest railway systems able to serve the Bakken Oil Shale Formation with both incoming supplies and moving oil to refineries or to other pipeline terminals. The BNSF Railway through its connections with the Canadian Pacific and Canadian National Railways can also expect considerable business moving the Alberta tar sands oil to U.S. markets. This may be a very lucrative case of crony mercantilism between Obama and one of his biggest supporters.
The map of the BNSF Railway system is shown below:
It is well situated to move crude oil from the Bakken oil shale formation to the Houston, Texas and Port Arthur, Texas area or to the Cushing, Oklahoma super-pipeline terminus. Because it has extensive feedlines to the Canadian Pacific and Canadian National Railways along the North Dakota northern border, it is also well-positioned for considerable traffic from the Alberta tar sands which were the primary reason for the Keystone XL Pipeline. Who knew the the many lines built to move North Dakota wheat to market would one day also be vital for moving oil to market?
Let us get a sense of the size of this business. By the end of this year, there are plans to be drilling 1,800 new wells in the Bakken oil shale formation. Each new well requires 23 rail-cars of drilling pipe, frac sand, clays, and other supplies. At the end of 2010, the daily oil production was already 300,000 barrels and most of it has to be moved by truck to rail-head terminals and then by rail to markets or to pipeline terminals. A 118 car unit train can move 68,000 barrels of oil. It is thought that Bakken oil production may reach 700,000 barrels a day by 2013, so even just a delay on the go-ahead to build the Keystone XL Pipeline until after the 2012 election in 2013 will mean a huge increase in railroad business before the pipeline can be finished. There are projections that Bakken may produce 1 million barrels of oil a day by 2015. Whether the Keystone XL Pipeline is ever built or not, the Buffett-owned BNSF Railway will make good money from both the Bakken and the Alberta Athabasca oilsands.
BNSF Railway is constructing sidings and turnouts and improving its yards along the railways expecting increased Bakken oil shale formation traffic. BNSF is investing $3.5 billion in 2011 to improve its infrastructure. The expenditures are primarily focused on its mid-continent routes, which are the ones needed to move oil from North Dakota to the Gulf Coast. They also move its profitable coal traffic. It was already moving several unit trains a week from the Bakken to Stroud, Oklahoma (near the pipeline center of Cushing, Oklahoma), to Bakersfield, California, to St. James, Louisiana, to New Mexico and to Texas in early 2011. They are spending $450 million to acquire 227 locomotives and another $350 million on freight car and other equipment. Another $300 million will go to terminal, line and intermodal expansion and efficiency projects.
A new multi-user rail terminal is being built in Port Arthur, Texas to allow oil refineries there to be supplied by heavy rail traffic. It is to be opened in the second quarter of 2012 with generous crude-oil storage tank capacity. Oil may also be moved to Corpus Christi, Texas refineries as well. One thing rail transport does is allow more flexibility of destination for oil shipments compared to pipelines. The railroads cost more to move the oil than do pipelines, but they can offer more options to get the oil to where the demand is greatest. They can also ramp up delivery capability much faster than pipelines can because they do not have the long environmental delays! One could say the environmentalists groups are the allies of the railroads. It is also easier to tune the delivery of oil from a field depending upon the cost of production there and the cost of oil on the world market. This is important because Bakken shale oil costs more to extract than say much of the Saudi Arabian oil, so it is conceivable Saudi Arabia might sometime flood the market with cheap oil, so that production of Bakken oil should be cut back. For now, however, Bakken oil is much cheaper than oil on the world market.
The expansion of the railroads is a good thing, but it is not right if one of the considerations in denying the Keystone XL Pipeline construction permits was that the pipeline would hurt Obama's friend Warren Buffett. Given the extent of crony mercantilism in the Obama administration, it is hard not be suspicious.
The map of the BNSF Railway system is shown below:
It is well situated to move crude oil from the Bakken oil shale formation to the Houston, Texas and Port Arthur, Texas area or to the Cushing, Oklahoma super-pipeline terminus. Because it has extensive feedlines to the Canadian Pacific and Canadian National Railways along the North Dakota northern border, it is also well-positioned for considerable traffic from the Alberta tar sands which were the primary reason for the Keystone XL Pipeline. Who knew the the many lines built to move North Dakota wheat to market would one day also be vital for moving oil to market?
Let us get a sense of the size of this business. By the end of this year, there are plans to be drilling 1,800 new wells in the Bakken oil shale formation. Each new well requires 23 rail-cars of drilling pipe, frac sand, clays, and other supplies. At the end of 2010, the daily oil production was already 300,000 barrels and most of it has to be moved by truck to rail-head terminals and then by rail to markets or to pipeline terminals. A 118 car unit train can move 68,000 barrels of oil. It is thought that Bakken oil production may reach 700,000 barrels a day by 2013, so even just a delay on the go-ahead to build the Keystone XL Pipeline until after the 2012 election in 2013 will mean a huge increase in railroad business before the pipeline can be finished. There are projections that Bakken may produce 1 million barrels of oil a day by 2015. Whether the Keystone XL Pipeline is ever built or not, the Buffett-owned BNSF Railway will make good money from both the Bakken and the Alberta Athabasca oilsands.
BNSF Railway is constructing sidings and turnouts and improving its yards along the railways expecting increased Bakken oil shale formation traffic. BNSF is investing $3.5 billion in 2011 to improve its infrastructure. The expenditures are primarily focused on its mid-continent routes, which are the ones needed to move oil from North Dakota to the Gulf Coast. They also move its profitable coal traffic. It was already moving several unit trains a week from the Bakken to Stroud, Oklahoma (near the pipeline center of Cushing, Oklahoma), to Bakersfield, California, to St. James, Louisiana, to New Mexico and to Texas in early 2011. They are spending $450 million to acquire 227 locomotives and another $350 million on freight car and other equipment. Another $300 million will go to terminal, line and intermodal expansion and efficiency projects.
A new multi-user rail terminal is being built in Port Arthur, Texas to allow oil refineries there to be supplied by heavy rail traffic. It is to be opened in the second quarter of 2012 with generous crude-oil storage tank capacity. Oil may also be moved to Corpus Christi, Texas refineries as well. One thing rail transport does is allow more flexibility of destination for oil shipments compared to pipelines. The railroads cost more to move the oil than do pipelines, but they can offer more options to get the oil to where the demand is greatest. They can also ramp up delivery capability much faster than pipelines can because they do not have the long environmental delays! One could say the environmentalists groups are the allies of the railroads. It is also easier to tune the delivery of oil from a field depending upon the cost of production there and the cost of oil on the world market. This is important because Bakken shale oil costs more to extract than say much of the Saudi Arabian oil, so it is conceivable Saudi Arabia might sometime flood the market with cheap oil, so that production of Bakken oil should be cut back. For now, however, Bakken oil is much cheaper than oil on the world market.
The expansion of the railroads is a good thing, but it is not right if one of the considerations in denying the Keystone XL Pipeline construction permits was that the pipeline would hurt Obama's friend Warren Buffett. Given the extent of crony mercantilism in the Obama administration, it is hard not be suspicious.
15 November 2011
Democrat Socialism, Energy, and Pipeline Hysteria
Obama's dictate that the private sector not create 20,000 construction jobs now and up to 465,000 future jobs in the U.S. by denying the Keystone XL pipeline, is a highly enlightening illustration of the environmental and global warming hysteria of many of the supporters of the Democrat Socialist Party. Let us examine this pipeline and energy hysteria more closely and learn.
In 2009, there were 148,622 miles of oil and oil product pipelines in the U.S. There were also 1,539,911 miles of natural gas pipeline in the U.S. The Keystone XL project wanted to add 1,661 miles of oil pipeline to this massive network of pipelines. Some of the major pipelines now in existence are shown in the map below.
The green-coded pipelines are major oil pipelines, the red lines are major gas pipelines, and the blue lines are product pipelines. The Keystone XL pipeline will bring 830,000 barrels a day of Canadian tar sand crude oil from Alberta down through Montana, South Dakota, and Nebraska to link to an already operating 298 mile pipeline segment across Kansas to the important storage and transit center of Cushing, Oklahoma. It will then build a segment from Cushing on to the Gulf Coast oil refineries at Port Arthur and Houston, Texas. These Gulf Coast refineries have been hurting recently due to reduced production of Mexican and Venezuelan oil by the inefficient national oil companies of those countries. This supply of dependable Canadian oil will be a godsend to these important oil refineries. The pipeline would be built at an actual construction cost of $7 billion for the portion in the U.S. by TransCanada to supplement a smaller pipeline capacity of 435,000 barrles a day already in use bringing Canadian tar sands oil to oil refineries at Wood River and Patoka, Illinois near St. Louis with a branch to Cushing, Oklahoma. The Keystone XL and present TransCanada pipelines are shown in the map below:
The red and blue lines are the existing lines, while the dashed lines are the new pipelines to be built. One of the objections to the pipeline is that it crosses the Ogallala Aquifer (misspelled in the US State Dept. map) shown in blue. This aquifer is found in 8 states and is a very important aquifer. If you examine the map of major pipelines above, you will find that a great many pipelines already cross the Ogallala Aquifer. These pipelines were built with older pipeline technology and without anywhere near the critical examination given to the Keystone XL Pipeline project. Most general oil spill concerns by environmentalists would be better directed at the 149,000 miles of older oil pipelines. For instance, many of these pass under riverbeds at a depth of 8 feet, while the Keystone XL Pipeline will be buried 25 feet below riverbeds. The Keystone XL Pipeline will have the latest in protective coatings and be built with more corrosion resistant and stronger steel than many older pipelines.
The single environmentalist objection that may have some merit is that the Keystone XL pipeline will cross the permeable sands of the Sand Hills in Nebraska where the Ogallala Aquifer is particularly shallow and vulnerable. After the Obama administration decision to delay a decision on the pipeline until 2013, TransCanada has just announced that it is considering several route changes to avoid or minimize the transit distance of the pipeline in the Sand Hills. The Sand Hills cover the northern and western areas of Nebraska. At least two of the existing major oil pipelines shown in the upper pipeline map above cross both the Sand Hills and the Ogallala Aquifer under them. If this were a problem, the State Department should have made an early decision against the pipeline and demanded it be rerouted then. If this is a critical environmental matter, the existing pipelines through the Sand Hills and over the Ogallala Aquifer should be shut down.
My expectation is that this is not that critical an environmental matter because there are already huge natural oil and gas deposits in and around the Ogallala Aquifer. Check out the shale oil deposits map below:
We see that the Palo Duro, Niobrara, and Excello/Mulky shale oil deposits are co-located with the Ogallala Aquifer. There are also extensive traditional oil fields in the Texas panhandle and western Oklahoma. The southwestern area of Kansas has many natural gas fields. Oil oozes to the surface in many areas of Texas and Oklahoma and yet the water supplies are rarely contaminated. Many major oil fields are crossed by rivers and yet there is no significant pollution of those rivers. Over-active imaginations can create many nightmare situations, but they actually require more unusual circumstances than one would expect to occur.
While one would hope that at worst a rerouting of the Keystone XL pipeline will still allow it to be built, one can count on the environmentalists to continue their many other objections and to do everything they can to prevent the pipeline. One of their biggest beefs is that they claim that much CO2 is emitted in extracting the bitumen and oil from the tar sands in northern Alberta. Concern about this is based on the fallacious hypothesis that CO2 emissions will result in catastrophic global warming. In any case, improved extraction methods have reduced the emitted CO2 by 38%.
There are other environmental concerns expressed pertaining to water use in Canada, but these are concerns we should leave to the Canadians. In any case, they are going to proceed to develop their tar sands projects and will sell the oil to the Chinese if we refuse it. Still another environmentalist objection to the import of Canadian oil from the tar sands is that it is an obnoxious oil to refine. Our Gulf Coast refineries will be using it to replace Venezuelan oil in large part and Venezuelan oil is also a nasty oil to refine. Our refineries are quite capable of handling nasty oil, while satisfying the EPA.
Among the great advantages of the Keystone XL pipeline is that it skirts the western edge of the Bakken shale oil formation in North Dakota, Montana, and Saskatchewan. It will be able to take on 65,000 barrels a day of the light and sweet crude oil from the Bakken formation. This oil is highly valued by oil refineries since it is very easy to process. There is a very great need to add to the pipeline capacity for transporting our own Bakken shale oil to the refineries of the Gulf Coast. It is estimated that the pipeline will save $36 million to $146 million a year in costs for Bakken oil.
Oil and gas related jobs have risen by almost 200,000 since 2003, making this one of the few bright spots in the U.S. economy. This has happened despite consistent opposition from Democrat Socialist environmental groups. U.S. oil production has risen for the first time since the mid-1980s and natural gas output has far exceeded expectations to the point that natural gas prices are now very low. Gulf Coast refiners would save $473 million a year if only 400,000 barrels a day of oil were delivered to them.
TransCanada has already invested $2 billion in the Keystone XL Pipeline and is suffering from a lack of income from money it has borrowed due to having already waited for 33 months to get approval. The total investment by TransCanada will be $13 billion, but with other related investments by other companies, the total investment may come to $20 billion. The Wall Street Journal reports that there will be 131,000 jobs created during the construction phase with 13,000 working on the actual construction of the pipeline. During the construction phase, state and local tax revenues will increase by $600 million. After construction, the pipeline will increase property tax revenues by $5.2 billion over its lifetime.
The environmentalist objections, to which the Obama administration has acceded, are mostly bogus and wrongheaded. Greater problems exist with already installed pipelines, though such problems are exaggerated. The one problem with some justification is going to be addressed with a route change now, but this was mishandled and could have been dealt with long ago so that jobs would be created now in the private sector. Even this objection to the Sand Hills transit is likely exaggerated and misplaced in that other pipelines with older technology and practices already transit the Sand Hills and the underlying Ogallala Aquifer.
More fundamentally the environmentalists are objecting to the use of inexpensive and reliable energy sources while falsely claiming that we can meet our needs with so-called green energy. Never mind that the so-called green energy is expensive and unreliable and whenever any particular project is considered it almost always meets determined opposition from environmentalists.
Obama denied the TransCanada application to build the Keystone XL pipeline until at least 2013 because the Democrat Socialist Party is fundamentally opposed to man improving his lifestyle and security through his voluntary cooperation with others in the private sector. It demands control of every individual's value choices and the power to squelch their independent choices is maintained by demanding that it micromanage our individual lives. Gaining control of all of our commercial, livelihood activities requires complete control over our use of energy. This is why the EPA, State Department, Dept. of Energy, NOAA, and NASA are all united with environmentalist groups everywhere to keep Americans from having inexpensive and reliable fossil fuel energy by any means possible. This is why, despite constant rhetoric about being focused on creating jobs, this Obama administration is only in the business of killing private sector jobs.
It is by no means clear that the great effort of TransCanada to create many jobs throughout our economy and the Canadian economy will succeed in the end. We are far better off with Canadian oil taking the place of Venezuelan and Saudi Arabian oil from the reliability of supply standpoint. It is much wiser to enrich Canadians than to enrich Hugo Chavez or the Saudi Princes. Besides just being better people, the Canadians will spend much more of their added wealth on American goods and services than will Venezuelans and Saudis.
Our having the option of a larger supply of Canadian oil always gives us the chance of acquiring less expensive oil and that gives us a general advantage throughout our economy. Manufacturing and transportation costs will come down and that will make us much more competitive in international markets. Americans will be able to raise their standard of living due to lower costs, more jobs, and increased exports. These are very serious advantages and we should be adamant in opposing the Democrat Socialist Party in its consistent efforts to deny these advantages to Americans. While many followers of that party are simply thoughtless and ignorant, there are many also who are simply mean-hearted, brutal, and too envious to think straight.
There are plenty of Democrat Socialists who do not have the personal ethics to refrain from doing great damage to their fellow man. Indeed, this knowledge that they lack such personal ethics is part of the reason they project such maliciousness of intent upon everyone in the private sector. Strangely, they block knowledge that if this were the nature of man, then the actions of man in the government sector would be as bad, indeed worse. Because it is mostly Progressive Elitists who are drawn to roles in government, we generally do observe avarice, mean-heartedness, and ruthless suppression of others at the heart of our over-grown and unconstitutional government. Obama is their leader and he must depart in 2012 if our economy and lifestyle are to improve.
In 2009, there were 148,622 miles of oil and oil product pipelines in the U.S. There were also 1,539,911 miles of natural gas pipeline in the U.S. The Keystone XL project wanted to add 1,661 miles of oil pipeline to this massive network of pipelines. Some of the major pipelines now in existence are shown in the map below.
The green-coded pipelines are major oil pipelines, the red lines are major gas pipelines, and the blue lines are product pipelines. The Keystone XL pipeline will bring 830,000 barrels a day of Canadian tar sand crude oil from Alberta down through Montana, South Dakota, and Nebraska to link to an already operating 298 mile pipeline segment across Kansas to the important storage and transit center of Cushing, Oklahoma. It will then build a segment from Cushing on to the Gulf Coast oil refineries at Port Arthur and Houston, Texas. These Gulf Coast refineries have been hurting recently due to reduced production of Mexican and Venezuelan oil by the inefficient national oil companies of those countries. This supply of dependable Canadian oil will be a godsend to these important oil refineries. The pipeline would be built at an actual construction cost of $7 billion for the portion in the U.S. by TransCanada to supplement a smaller pipeline capacity of 435,000 barrles a day already in use bringing Canadian tar sands oil to oil refineries at Wood River and Patoka, Illinois near St. Louis with a branch to Cushing, Oklahoma. The Keystone XL and present TransCanada pipelines are shown in the map below:
The single environmentalist objection that may have some merit is that the Keystone XL pipeline will cross the permeable sands of the Sand Hills in Nebraska where the Ogallala Aquifer is particularly shallow and vulnerable. After the Obama administration decision to delay a decision on the pipeline until 2013, TransCanada has just announced that it is considering several route changes to avoid or minimize the transit distance of the pipeline in the Sand Hills. The Sand Hills cover the northern and western areas of Nebraska. At least two of the existing major oil pipelines shown in the upper pipeline map above cross both the Sand Hills and the Ogallala Aquifer under them. If this were a problem, the State Department should have made an early decision against the pipeline and demanded it be rerouted then. If this is a critical environmental matter, the existing pipelines through the Sand Hills and over the Ogallala Aquifer should be shut down.
My expectation is that this is not that critical an environmental matter because there are already huge natural oil and gas deposits in and around the Ogallala Aquifer. Check out the shale oil deposits map below:
We see that the Palo Duro, Niobrara, and Excello/Mulky shale oil deposits are co-located with the Ogallala Aquifer. There are also extensive traditional oil fields in the Texas panhandle and western Oklahoma. The southwestern area of Kansas has many natural gas fields. Oil oozes to the surface in many areas of Texas and Oklahoma and yet the water supplies are rarely contaminated. Many major oil fields are crossed by rivers and yet there is no significant pollution of those rivers. Over-active imaginations can create many nightmare situations, but they actually require more unusual circumstances than one would expect to occur.
While one would hope that at worst a rerouting of the Keystone XL pipeline will still allow it to be built, one can count on the environmentalists to continue their many other objections and to do everything they can to prevent the pipeline. One of their biggest beefs is that they claim that much CO2 is emitted in extracting the bitumen and oil from the tar sands in northern Alberta. Concern about this is based on the fallacious hypothesis that CO2 emissions will result in catastrophic global warming. In any case, improved extraction methods have reduced the emitted CO2 by 38%.
There are other environmental concerns expressed pertaining to water use in Canada, but these are concerns we should leave to the Canadians. In any case, they are going to proceed to develop their tar sands projects and will sell the oil to the Chinese if we refuse it. Still another environmentalist objection to the import of Canadian oil from the tar sands is that it is an obnoxious oil to refine. Our Gulf Coast refineries will be using it to replace Venezuelan oil in large part and Venezuelan oil is also a nasty oil to refine. Our refineries are quite capable of handling nasty oil, while satisfying the EPA.
Among the great advantages of the Keystone XL pipeline is that it skirts the western edge of the Bakken shale oil formation in North Dakota, Montana, and Saskatchewan. It will be able to take on 65,000 barrels a day of the light and sweet crude oil from the Bakken formation. This oil is highly valued by oil refineries since it is very easy to process. There is a very great need to add to the pipeline capacity for transporting our own Bakken shale oil to the refineries of the Gulf Coast. It is estimated that the pipeline will save $36 million to $146 million a year in costs for Bakken oil.
Oil and gas related jobs have risen by almost 200,000 since 2003, making this one of the few bright spots in the U.S. economy. This has happened despite consistent opposition from Democrat Socialist environmental groups. U.S. oil production has risen for the first time since the mid-1980s and natural gas output has far exceeded expectations to the point that natural gas prices are now very low. Gulf Coast refiners would save $473 million a year if only 400,000 barrels a day of oil were delivered to them.
TransCanada has already invested $2 billion in the Keystone XL Pipeline and is suffering from a lack of income from money it has borrowed due to having already waited for 33 months to get approval. The total investment by TransCanada will be $13 billion, but with other related investments by other companies, the total investment may come to $20 billion. The Wall Street Journal reports that there will be 131,000 jobs created during the construction phase with 13,000 working on the actual construction of the pipeline. During the construction phase, state and local tax revenues will increase by $600 million. After construction, the pipeline will increase property tax revenues by $5.2 billion over its lifetime.
The environmentalist objections, to which the Obama administration has acceded, are mostly bogus and wrongheaded. Greater problems exist with already installed pipelines, though such problems are exaggerated. The one problem with some justification is going to be addressed with a route change now, but this was mishandled and could have been dealt with long ago so that jobs would be created now in the private sector. Even this objection to the Sand Hills transit is likely exaggerated and misplaced in that other pipelines with older technology and practices already transit the Sand Hills and the underlying Ogallala Aquifer.
More fundamentally the environmentalists are objecting to the use of inexpensive and reliable energy sources while falsely claiming that we can meet our needs with so-called green energy. Never mind that the so-called green energy is expensive and unreliable and whenever any particular project is considered it almost always meets determined opposition from environmentalists.
Obama denied the TransCanada application to build the Keystone XL pipeline until at least 2013 because the Democrat Socialist Party is fundamentally opposed to man improving his lifestyle and security through his voluntary cooperation with others in the private sector. It demands control of every individual's value choices and the power to squelch their independent choices is maintained by demanding that it micromanage our individual lives. Gaining control of all of our commercial, livelihood activities requires complete control over our use of energy. This is why the EPA, State Department, Dept. of Energy, NOAA, and NASA are all united with environmentalist groups everywhere to keep Americans from having inexpensive and reliable fossil fuel energy by any means possible. This is why, despite constant rhetoric about being focused on creating jobs, this Obama administration is only in the business of killing private sector jobs.
It is by no means clear that the great effort of TransCanada to create many jobs throughout our economy and the Canadian economy will succeed in the end. We are far better off with Canadian oil taking the place of Venezuelan and Saudi Arabian oil from the reliability of supply standpoint. It is much wiser to enrich Canadians than to enrich Hugo Chavez or the Saudi Princes. Besides just being better people, the Canadians will spend much more of their added wealth on American goods and services than will Venezuelans and Saudis.
Our having the option of a larger supply of Canadian oil always gives us the chance of acquiring less expensive oil and that gives us a general advantage throughout our economy. Manufacturing and transportation costs will come down and that will make us much more competitive in international markets. Americans will be able to raise their standard of living due to lower costs, more jobs, and increased exports. These are very serious advantages and we should be adamant in opposing the Democrat Socialist Party in its consistent efforts to deny these advantages to Americans. While many followers of that party are simply thoughtless and ignorant, there are many also who are simply mean-hearted, brutal, and too envious to think straight.
There are plenty of Democrat Socialists who do not have the personal ethics to refrain from doing great damage to their fellow man. Indeed, this knowledge that they lack such personal ethics is part of the reason they project such maliciousness of intent upon everyone in the private sector. Strangely, they block knowledge that if this were the nature of man, then the actions of man in the government sector would be as bad, indeed worse. Because it is mostly Progressive Elitists who are drawn to roles in government, we generally do observe avarice, mean-heartedness, and ruthless suppression of others at the heart of our over-grown and unconstitutional government. Obama is their leader and he must depart in 2012 if our economy and lifestyle are to improve.
12 November 2011
Thoughts on Veteran's Day
I was drafted out of graduate school to serve in the Army during the during the late phase of the Vietnam War. We had not been winning that war early, but were winning in its later phases under General Abrams. Being involved in this war was a strange experience. We had won a war that academia and the media thought we had lost and eventually the American People bought into that wrong assessment. Then we did leave dishonorably, having abandoned the South Vietnamese to the North Vietnamese Army when our Congress shut off all support, but the USSR and China continued support to North Vietnam. Our national interest had not been great enough to get into the war and to use a draft to provide the manpower to fight it, but once you tell a nation you have their back because you believe in freedom and the universal rights of the individual, you do not abandon them in a dark alley surrounded by the enemies of freedom and the individual.
America has not lacked for brave and dedicated men and women to save it from foreign threats to our security. What it has lacked is enough Americans who understand what legitimate government is. Our Declaration of Independence defined that as government that protects the equal, sovereign rights of the individual to life, liberty, and the pursuit of happiness. At that time, it was well-understood that this implied property rights, freedom of contract, and the right to earn a living were all secure from government interference. The Constitution was a mandate from the People to the government that it had very limited powers for the purpose of protecting our individual rights and for dealing with foreign governments and persons. Its internal powers were very few and limited to a postal service, post roads, patent protection, copyright protection, and establishing a uniform system of weights and measurements.
Unfortunately, we Americans have corrupted that legitimate concept of government in favor of a tyranny that offers a veneer of material security at the cost of our individual rights. The real battle for our freedom today is not with foreign powers, though that matters, but with our own understanding of why we need limited government and a healthy and vibrant private sector in which we each choose our own values and have the freedom of association to cooperate with whomever we want for the purposes we want on a voluntary basis. Government is always a last resort because government dictates values and suppresses the individual whenever it exceeds the very limited function of protecting the rights of the individual to life, liberty, property, the ownership of one's own mind and body, and the pursuit of individual happiness. Government cannot deal with the complexity and uniqueness of the individual, which is why it can only function usefully to protect our basic rights. It is the private sector that allows us to be who we are and accommodate to the fact that we are all very different, have many needs to cooperate with one another, and have unique hierarchies of personal values and goals. To understand this is to understand the American Principle.
I salute the Americans who have served in our armed forces. But, even more critically, I salute those Americans who understand and stand for, the American Principle. May you ever Stand Sure!
America has not lacked for brave and dedicated men and women to save it from foreign threats to our security. What it has lacked is enough Americans who understand what legitimate government is. Our Declaration of Independence defined that as government that protects the equal, sovereign rights of the individual to life, liberty, and the pursuit of happiness. At that time, it was well-understood that this implied property rights, freedom of contract, and the right to earn a living were all secure from government interference. The Constitution was a mandate from the People to the government that it had very limited powers for the purpose of protecting our individual rights and for dealing with foreign governments and persons. Its internal powers were very few and limited to a postal service, post roads, patent protection, copyright protection, and establishing a uniform system of weights and measurements.
Unfortunately, we Americans have corrupted that legitimate concept of government in favor of a tyranny that offers a veneer of material security at the cost of our individual rights. The real battle for our freedom today is not with foreign powers, though that matters, but with our own understanding of why we need limited government and a healthy and vibrant private sector in which we each choose our own values and have the freedom of association to cooperate with whomever we want for the purposes we want on a voluntary basis. Government is always a last resort because government dictates values and suppresses the individual whenever it exceeds the very limited function of protecting the rights of the individual to life, liberty, property, the ownership of one's own mind and body, and the pursuit of individual happiness. Government cannot deal with the complexity and uniqueness of the individual, which is why it can only function usefully to protect our basic rights. It is the private sector that allows us to be who we are and accommodate to the fact that we are all very different, have many needs to cooperate with one another, and have unique hierarchies of personal values and goals. To understand this is to understand the American Principle.
I salute the Americans who have served in our armed forces. But, even more critically, I salute those Americans who understand and stand for, the American Principle. May you ever Stand Sure!
08 November 2011
No Decrease in Missing Jobs Over the Last Two Years
After nearly four years of a recessionary period, the normally reported unemployment rate means very little due to people giving up on finding a job. Of course someone unemployed might become self-employed, but with the many hassles our governments, local, state, and federal have chosen to create for businessmen, not everyone has the stamina, or is it the foolhardiness, to become an employer. Let us check up on the real unemployment situation through October 2011.
Once again, I will calculate the real number of missing jobs in our economy compared to January 2000 when jobs were plentiful and pay and benefits were sufficient to entice many Americans to choose to work. The unemployment rate was then 4.04% and there was a shortage of only 5,689,000 jobs, though much of that was really normal turnover as people chose to change jobs or career paths. The number of missing jobs can be calculated by assuming that 67.49% of Americans would want jobs now if they were available and offered good compensation as they did in January 2000. Due to the bursting of the dot com bubble in the early part of the first decade, by December 2005 the real number of missing jobs had climbed to 6.98% and that rate of missing jobs was almost identically the same when the current recession started. As we shall see, the number of missing jobs soared higher in this recession and the jobs recession has never ended. We are now missing 21,171,000 jobs, which is almost identical to the number of missing jobs in October 2010 and more than the missing job number of November 2009. There has been no progress in decreasing the number of missing jobs in the last year or the last two years.
The real unemployment rate is that given in the last row of the table. In July it was 13.21%, in August it was 13.31%, and in September it was 13.28%. In other words, there was no significant change and no improvement in the jobless rate in those three consecutive months. There appears to be a small improvement in October, though the statistical significance of any one month is usually low. The rate for October 2011 was slightly improved to 13.06%. There are no fewer missing jobs than in October 2010, however. At the October rate of improvement, this jobs recession will never end. This is hardly surprising given that the Obama administration remains as determined as ever to pursue policies contrary to the needs of employers and the economic freedoms they require and have every individual right to require.
Let us examine a chart of the number of missing jobs for the last 11 years:
There are more missing jobs at the start of November 2011 than there were in November 2009. Two more years of Obama and we have only fallen backward on the jobs situation. The man who wants to harm whole American industries such as the coal, oil, and natural gas industries and all those industries dependent upon these industries, knows everything there is to know about how to keep America from recovering from a severe recession. The man who gave us ObamaCare against the People's wishes and against the interests of employers and the man who penalized good financial institutions and most borrowers with Dodd-Frank financial "reform", knows how to squelch investment and employment like no one else. Repeated stimulus efforts, quantitative easings of bad loans or the federal debt, subsidies of weak industries such as the green energy industries, and bailouts of overspent state and local governments have had the certain effect of weakening the private sector at the expense of a parasitic cabal of governments and crony mercantilists.
Americans want to work and to create jobs, but at every turn, government policies are mounting to discourage the creation of jobs. These sorry government policies have proven very effective in creating this jobs stasis. A massive decrease in government regulations, mandates, subsidies, corporate and investment taxes, and spending is the only way out of this mess. Obama and the Democrat Socialists have a big government and anti-private sector agenda which will not allow any jobs creation to occur. The result is exactly what a rational observer would expect: A never-ending jobs recession.
Once again, I will calculate the real number of missing jobs in our economy compared to January 2000 when jobs were plentiful and pay and benefits were sufficient to entice many Americans to choose to work. The unemployment rate was then 4.04% and there was a shortage of only 5,689,000 jobs, though much of that was really normal turnover as people chose to change jobs or career paths. The number of missing jobs can be calculated by assuming that 67.49% of Americans would want jobs now if they were available and offered good compensation as they did in January 2000. Due to the bursting of the dot com bubble in the early part of the first decade, by December 2005 the real number of missing jobs had climbed to 6.98% and that rate of missing jobs was almost identically the same when the current recession started. As we shall see, the number of missing jobs soared higher in this recession and the jobs recession has never ended. We are now missing 21,171,000 jobs, which is almost identical to the number of missing jobs in October 2010 and more than the missing job number of November 2009. There has been no progress in decreasing the number of missing jobs in the last year or the last two years.
The real unemployment rate is that given in the last row of the table. In July it was 13.21%, in August it was 13.31%, and in September it was 13.28%. In other words, there was no significant change and no improvement in the jobless rate in those three consecutive months. There appears to be a small improvement in October, though the statistical significance of any one month is usually low. The rate for October 2011 was slightly improved to 13.06%. There are no fewer missing jobs than in October 2010, however. At the October rate of improvement, this jobs recession will never end. This is hardly surprising given that the Obama administration remains as determined as ever to pursue policies contrary to the needs of employers and the economic freedoms they require and have every individual right to require.
Let us examine a chart of the number of missing jobs for the last 11 years:
There are more missing jobs at the start of November 2011 than there were in November 2009. Two more years of Obama and we have only fallen backward on the jobs situation. The man who wants to harm whole American industries such as the coal, oil, and natural gas industries and all those industries dependent upon these industries, knows everything there is to know about how to keep America from recovering from a severe recession. The man who gave us ObamaCare against the People's wishes and against the interests of employers and the man who penalized good financial institutions and most borrowers with Dodd-Frank financial "reform", knows how to squelch investment and employment like no one else. Repeated stimulus efforts, quantitative easings of bad loans or the federal debt, subsidies of weak industries such as the green energy industries, and bailouts of overspent state and local governments have had the certain effect of weakening the private sector at the expense of a parasitic cabal of governments and crony mercantilists.
Americans want to work and to create jobs, but at every turn, government policies are mounting to discourage the creation of jobs. These sorry government policies have proven very effective in creating this jobs stasis. A massive decrease in government regulations, mandates, subsidies, corporate and investment taxes, and spending is the only way out of this mess. Obama and the Democrat Socialists have a big government and anti-private sector agenda which will not allow any jobs creation to occur. The result is exactly what a rational observer would expect: A never-ending jobs recession.
02 November 2011
North Dakota Oil, Truckers, Railroads, Jobs
Government energy policy is presently directed at propping up unsustainable companies such as Solyndra which provide expensive and unreliable so-called green energy. Solyndra and others of these companies subsidized by the government have already failed with massive losses of government loan or loan guarantee money.
Meanwhile, in the private sector, the massive Bakken shale oil formation in North Dakota, Montana, and Saskatchewan is producing oil so cheaply that it is selling for $30 a barrel less than Brent crude, which is used as a world oil market benchmark for light, sweet crude oil. The Bakken crude oil is of high quality and much in demand by refiners. North Dakota's oil output is now 450,000 barrels a day and may double by the 2015. This output is exceeding the capacity of present oil pipelines and more are being built, but will not come on-line until 2013. At that time, production is still expected to exceed pipeline capacity.
The Bakken formation is large and fleets of oil tanker trucks are used to consolidate 70% of the oil from the wells to railroad terminals. This has led to a boom for the railroads between northwest North Dakota and Louisiana. Trucking outfits are booming, oil terminals are being built, and it is expected that two trains, each with about 104 oil tanker cars, will be filled each week. The North Dakota Pipeline Authority thinks it will have 700,000 barrels a day rail terminal capacity by next year.
Moving oil by train, rather than pipeline, adds $5 to $10 per barrel of cost. But, this highly desirable light sweet crude oil is so inexpensive that adding this cost to the price still leaves it in great demand. The demand is so great that trucks, truck drivers, and tank cars are in short supply. Truckers are being supplied with free housing as well as high pay. Local trucker Lunderby Trucking, of Sidney, Montana, grew from 1 truck to 18 in the last year. Lease prices for tank cars have doubled in the last year and a half to about $1,000 a month per car. Tank car manufacturer's have backlogs and no available cars.
Rational people have to wonder why our government threw away more than half a billion dollars on Solyndra so it could expand its production just before it collapsed. Similar large sums are being spent on numerous other so-called green energy company subsidies. Now, this is not a proper function of government and the stupid "investments" are no surprise. But if it were an appropriate function of government to invest in energy production, it would be more rational to help companies produce more pipelines and more tanker cars! Fortunately, we have a private sector, that though robbed of blood by many government parasites, can still perform such functions in a manner to preserve our individual liberties and to provide us with real power, relatively inexpensively and definitely reliably. And because it can, North Dakota has the lowest unemployment rate in the country at 3.5%!
Obama, get out of the way and allow the private sector to provide for our energy!
Meanwhile, in the private sector, the massive Bakken shale oil formation in North Dakota, Montana, and Saskatchewan is producing oil so cheaply that it is selling for $30 a barrel less than Brent crude, which is used as a world oil market benchmark for light, sweet crude oil. The Bakken crude oil is of high quality and much in demand by refiners. North Dakota's oil output is now 450,000 barrels a day and may double by the 2015. This output is exceeding the capacity of present oil pipelines and more are being built, but will not come on-line until 2013. At that time, production is still expected to exceed pipeline capacity.
The Bakken formation is large and fleets of oil tanker trucks are used to consolidate 70% of the oil from the wells to railroad terminals. This has led to a boom for the railroads between northwest North Dakota and Louisiana. Trucking outfits are booming, oil terminals are being built, and it is expected that two trains, each with about 104 oil tanker cars, will be filled each week. The North Dakota Pipeline Authority thinks it will have 700,000 barrels a day rail terminal capacity by next year.
Moving oil by train, rather than pipeline, adds $5 to $10 per barrel of cost. But, this highly desirable light sweet crude oil is so inexpensive that adding this cost to the price still leaves it in great demand. The demand is so great that trucks, truck drivers, and tank cars are in short supply. Truckers are being supplied with free housing as well as high pay. Local trucker Lunderby Trucking, of Sidney, Montana, grew from 1 truck to 18 in the last year. Lease prices for tank cars have doubled in the last year and a half to about $1,000 a month per car. Tank car manufacturer's have backlogs and no available cars.
Rational people have to wonder why our government threw away more than half a billion dollars on Solyndra so it could expand its production just before it collapsed. Similar large sums are being spent on numerous other so-called green energy company subsidies. Now, this is not a proper function of government and the stupid "investments" are no surprise. But if it were an appropriate function of government to invest in energy production, it would be more rational to help companies produce more pipelines and more tanker cars! Fortunately, we have a private sector, that though robbed of blood by many government parasites, can still perform such functions in a manner to preserve our individual liberties and to provide us with real power, relatively inexpensively and definitely reliably. And because it can, North Dakota has the lowest unemployment rate in the country at 3.5%!
Obama, get out of the way and allow the private sector to provide for our energy!
20 October 2011
What Percent are You?
The Occupy Wall Street crowd claims to stand with the 99% against the 1%. A conservative news service points out that the 1% earn more than $506,000 a year. But when it comes to figuring out legitimate government policy, we are not characterized sufficiently by our income. In fact, our income ought to be as irrelevant as race, religion, sex, or sexuality in government policy. Making it as important as it is commonly made is highly materialistic. Note that it is the socialist left that makes the most of income and in that shows its lack of spirituality and its extreme materialism.
Is it not odd that if a man takes the risks of owning his own company and works 70 hours a week and therefor someday may make a higher income than a man who takes a nice, safe 40 hour a week job as an employee and who watches TV for 30 hours a week, the hardworking businessman is taxed more? The businessman is required to be an unpaid tax collector, is held responsible for all of his employee's safety, is forced to pay for the unemployment of employees whether they ever worked for his company or not, and is supposed to see to it that his company complies with more than 200,000 pages of often-conflicting regulations or suffer crippling fines. The businessman may very well have 45 hours of his life each week taken by force from him for government purposes. The employee is more likely to have only 6 or 8 hours of his life claimed by government each week. These hours taken by force are the equivalent of slavery.
By what right does government enslave one man for many more hours a week than another? Worse yet, the government really only does it for the same reason that Willy Sutton robbed banks. That is where the money is. It just is not easy for the government to figure out how to take anything it wants out of the 30 hours a week our hypothetical employee is watching TV. The government simply wants to steal and it is easy to steal from the hardworking businessman, whether it is his mandated service to the government collecting taxes, complying with regulation, or as safety inspector and provider, or the money he earned with his time. The government is clearly just Willy Sutton.
It is absurd that people spend so much time characterizing themselves in terms of their income. Legitimate government has the sole purpose of protecting the equal, sovereign individual rights to life, liberty, property, and the pursuit of personal happiness. As far as government policy is concerned there are only two numbers that characterize each of us. They are 1 and 0.0000000032. You do know what the later number is, do you not?
Is it not odd that if a man takes the risks of owning his own company and works 70 hours a week and therefor someday may make a higher income than a man who takes a nice, safe 40 hour a week job as an employee and who watches TV for 30 hours a week, the hardworking businessman is taxed more? The businessman is required to be an unpaid tax collector, is held responsible for all of his employee's safety, is forced to pay for the unemployment of employees whether they ever worked for his company or not, and is supposed to see to it that his company complies with more than 200,000 pages of often-conflicting regulations or suffer crippling fines. The businessman may very well have 45 hours of his life each week taken by force from him for government purposes. The employee is more likely to have only 6 or 8 hours of his life claimed by government each week. These hours taken by force are the equivalent of slavery.
By what right does government enslave one man for many more hours a week than another? Worse yet, the government really only does it for the same reason that Willy Sutton robbed banks. That is where the money is. It just is not easy for the government to figure out how to take anything it wants out of the 30 hours a week our hypothetical employee is watching TV. The government simply wants to steal and it is easy to steal from the hardworking businessman, whether it is his mandated service to the government collecting taxes, complying with regulation, or as safety inspector and provider, or the money he earned with his time. The government is clearly just Willy Sutton.
It is absurd that people spend so much time characterizing themselves in terms of their income. Legitimate government has the sole purpose of protecting the equal, sovereign individual rights to life, liberty, property, and the pursuit of personal happiness. As far as government policy is concerned there are only two numbers that characterize each of us. They are 1 and 0.0000000032. You do know what the later number is, do you not?
07 October 2011
Obama Jobs Bill Will Kill Jobs
The Obama Jobs Bill is supposed to cost $447 billion, create as many as 1.9 million jobs according to economists who have already proven they have no clue, and increase the GDP by 2%, again according to those same clueless economists. Let us examine the effects of the Obama Jobs Bill in a simple and rational manner.
The GDP in 2011 is estimated to be $15.012 trillion. Obama's clueless economists say that his jobs bill will increase the GDP by 2% because simply printing money you do not have always increases the size of the economy. Hmmm....., no wonder many of them keep saying we just need bigger stimulus packages and with an outpouring of enough newly printed dollars, the economy will grow and we will all have dream jobs. If this effect works, then the government should print up $15.012 trillion and the economy will take a Great Leap Forward! Apparently some us are just too timid to do this. But Paul Krugman would be happy to push us into it. OK, so yes, I do not believe this is the way the economy works for a minute, or even a second. But still, it is interesting to examine whether the Obama Jobs Bill makes some kind of sense even on the numbers given by the clueless Obama economists.
First, we need to note that the cost of the bill, $447 billion, is 2.98% of the GDP. That is more than the 2% growth of GDP claimed to result from this expenditure! In fact, we can calculate from these numbers that for every dollar spent by the government in this Obama Jobs Bill $0.33 simply vanishes into thin air. The Obama economists are claiming that this government expenditure is only 2/3 as effective as other money in the economy, which already includes huge inefficiencies due to the cost of overblown governments with their over-compensated employees and all of the mandates and regulations they impose without regard to cost upon the much more efficient private sector.
But, it gets worse. Assuming that, most unbelievably, Obama's Job Bill does create the wishful 1.9 million jobs, each job costs $235,263. This comes from dividing $447 billion by 1.9 million jobs. We can compare this number with the cost of the jobs we presently have. Of course the cost of those jobs is already grossly cranked skyward by the many prior costs of government, so we should remember that real private sector jobs cost less than the amount we are about to calculate because we are including all jobs and that includes all of those very expensive government jobs. At present, each job costs ($15.012 trillion)/(140,335,000 jobs) = $106,973, where the present number of jobs comes from the Bureau of Labor Statistics Unemployment Report for September 2011. So a new Obama job will cost 2.2 times as much as the composite of private sector and government jobs presently costs. Surely, taking 2.2 times as much money out of the private sector as it takes to create a job there and giving it to Obama to create a job is not a good idea. It is a great way to bankrupt America and many of its families.
Now, some economists believe in magic and they will disagree with me on what I am about to point out. When you remove 2.2 times as much from the private sector as it takes for the private sector to create a job, you actually destroy 2.2 jobs for every job you create. Yes, Obama will create jobs with his $447 billion expenditure of our money, but he will kill more than 2.2 jobs in the private sector for every job he will create for his campaign contributors. He will create some union jobs to build and repair infrastructure. He will maintain some teaching positions for the teachers unions in public schools. He will create some temporary green energy jobs, but the collapse of those businesses will still occur soon, as it did with Solyndra and numerous other green jobs companies producing expensive and unreliable energy products. Obama will try to point out the jobs created, so this is what will be seen. What will not be seen, except partially in the rising unemployment statistics, will be the 2.2 minimum number of jobs destroyed in the private sector. Obama is counting on our failing to see those jobs die.
What I am saying is based on recognizing that if government spends money, it is taken out of the private sector one way or another. Generally, it is either taken out in taxes, by borrowing it with the payment of interest paid with future taxes, by simply printing it and diluting the value of all other money and assets, and by imposing mandates upon the private sector that cost them time and money. In this case, Obama wants to raise taxes on the "rich" or companies which will remove money from the private sector in a simple and straightforward way to pay for this turkey bill.
Now I do not believe the Obama Jobs Bill will create 1.9 million jobs at all, even if we do not subtract the jobs killed by Obama. We can easily calculate the number of jobs that will be killed. These jobs are jobs that might well have been jobs long sustained by the private sector and they will be replaced by a smaller number of jobs that will not make economic sense once the immediate government expenditure runs out. The private sector jobs killed will be about $447,000,000,000 / $106,973 = 4,178,625 jobs, or more than 4 million jobs, to be replaced with maybe 1 million jobs for Obama's cronies.
As I said, it gets worse. Creating about 1 million temporary jobs while killing more than 4 million longer term jobs cannot be the act of rational men and women. But it is the way the wrongheaded Obama wants badly to drag the country. It is Obama who will throw most of us off the cliff.
Someone should make an ad of a jackbooted Obama marching shackled American workers to a cliff and then pushing them over the edge, one by one, with the calculations above overprinted on the images of a fascist Obama. This would only be justice to pay back the injustice done to Paul Ryan.
The GDP in 2011 is estimated to be $15.012 trillion. Obama's clueless economists say that his jobs bill will increase the GDP by 2% because simply printing money you do not have always increases the size of the economy. Hmmm....., no wonder many of them keep saying we just need bigger stimulus packages and with an outpouring of enough newly printed dollars, the economy will grow and we will all have dream jobs. If this effect works, then the government should print up $15.012 trillion and the economy will take a Great Leap Forward! Apparently some us are just too timid to do this. But Paul Krugman would be happy to push us into it. OK, so yes, I do not believe this is the way the economy works for a minute, or even a second. But still, it is interesting to examine whether the Obama Jobs Bill makes some kind of sense even on the numbers given by the clueless Obama economists.
First, we need to note that the cost of the bill, $447 billion, is 2.98% of the GDP. That is more than the 2% growth of GDP claimed to result from this expenditure! In fact, we can calculate from these numbers that for every dollar spent by the government in this Obama Jobs Bill $0.33 simply vanishes into thin air. The Obama economists are claiming that this government expenditure is only 2/3 as effective as other money in the economy, which already includes huge inefficiencies due to the cost of overblown governments with their over-compensated employees and all of the mandates and regulations they impose without regard to cost upon the much more efficient private sector.
But, it gets worse. Assuming that, most unbelievably, Obama's Job Bill does create the wishful 1.9 million jobs, each job costs $235,263. This comes from dividing $447 billion by 1.9 million jobs. We can compare this number with the cost of the jobs we presently have. Of course the cost of those jobs is already grossly cranked skyward by the many prior costs of government, so we should remember that real private sector jobs cost less than the amount we are about to calculate because we are including all jobs and that includes all of those very expensive government jobs. At present, each job costs ($15.012 trillion)/(140,335,000 jobs) = $106,973, where the present number of jobs comes from the Bureau of Labor Statistics Unemployment Report for September 2011. So a new Obama job will cost 2.2 times as much as the composite of private sector and government jobs presently costs. Surely, taking 2.2 times as much money out of the private sector as it takes to create a job there and giving it to Obama to create a job is not a good idea. It is a great way to bankrupt America and many of its families.
Now, some economists believe in magic and they will disagree with me on what I am about to point out. When you remove 2.2 times as much from the private sector as it takes for the private sector to create a job, you actually destroy 2.2 jobs for every job you create. Yes, Obama will create jobs with his $447 billion expenditure of our money, but he will kill more than 2.2 jobs in the private sector for every job he will create for his campaign contributors. He will create some union jobs to build and repair infrastructure. He will maintain some teaching positions for the teachers unions in public schools. He will create some temporary green energy jobs, but the collapse of those businesses will still occur soon, as it did with Solyndra and numerous other green jobs companies producing expensive and unreliable energy products. Obama will try to point out the jobs created, so this is what will be seen. What will not be seen, except partially in the rising unemployment statistics, will be the 2.2 minimum number of jobs destroyed in the private sector. Obama is counting on our failing to see those jobs die.
What I am saying is based on recognizing that if government spends money, it is taken out of the private sector one way or another. Generally, it is either taken out in taxes, by borrowing it with the payment of interest paid with future taxes, by simply printing it and diluting the value of all other money and assets, and by imposing mandates upon the private sector that cost them time and money. In this case, Obama wants to raise taxes on the "rich" or companies which will remove money from the private sector in a simple and straightforward way to pay for this turkey bill.
Now I do not believe the Obama Jobs Bill will create 1.9 million jobs at all, even if we do not subtract the jobs killed by Obama. We can easily calculate the number of jobs that will be killed. These jobs are jobs that might well have been jobs long sustained by the private sector and they will be replaced by a smaller number of jobs that will not make economic sense once the immediate government expenditure runs out. The private sector jobs killed will be about $447,000,000,000 / $106,973 = 4,178,625 jobs, or more than 4 million jobs, to be replaced with maybe 1 million jobs for Obama's cronies.
As I said, it gets worse. Creating about 1 million temporary jobs while killing more than 4 million longer term jobs cannot be the act of rational men and women. But it is the way the wrongheaded Obama wants badly to drag the country. It is Obama who will throw most of us off the cliff.
Someone should make an ad of a jackbooted Obama marching shackled American workers to a cliff and then pushing them over the edge, one by one, with the calculations above overprinted on the images of a fascist Obama. This would only be justice to pay back the injustice done to Paul Ryan.
19 September 2011
If Jobs are Foremost, This is How the Election Goes
It is often said that the need to create new jobs is priority one in the minds of Americans. This may be, but it is not obvious how much weight people are really putting on jobs versus other concerns. It also is not entirely obvious how many people correctly charge Obama with policies seriously destructive of jobs and which make it difficult for businessmen to calculate whether it makes sense to make a several year investment in a new hire or not.
I am going to make a quesstimate of what such a functional effect on the vote for a generic Republican presidential candidate might reasonably be and apply that function state by state based on the present unemployment rate to predict the shift in electoral votes from Obama's previous 2008 election result. In that campaign, many Americans bothered to learn little about him and his total commitment to socialism, leftist environmentalism, anti-business bias, and his anti-fossil fuel bias, all of which have proven highly destructive of the economy and jobs. I am proposing that many Americans have awoken to this reality. John McCain mounted a feckless campaign and lost big to Obama in the electoral vote. He lost many states that often vote for the Republican presidential candidate. Of course, some states are full of people who will refuse to blame Obama even now for the jobs situation or people who so share his political philosophy of collectivism and anti-man religious environmentalism that they will be little driven to address the jobs problem.
Let us assume that the strength of the vote switch is proportional to how high the unemployment rate in a state is. In fact, I will assume there is no effect for the purposes of this electoral vote projection if the unemployment rate is below 7%. This is unlikely to be the case, but I want to make a reasonably conservative estimate of the shift in electoral votes. Also, many people who recognize Obama as a jobs problem in the U.S. as a whole will still be more inclined to vote against him out of concern for those many Americans in states less fortunate than their own with respect to jobs. The function I will use is:
I am going to make a quesstimate of what such a functional effect on the vote for a generic Republican presidential candidate might reasonably be and apply that function state by state based on the present unemployment rate to predict the shift in electoral votes from Obama's previous 2008 election result. In that campaign, many Americans bothered to learn little about him and his total commitment to socialism, leftist environmentalism, anti-business bias, and his anti-fossil fuel bias, all of which have proven highly destructive of the economy and jobs. I am proposing that many Americans have awoken to this reality. John McCain mounted a feckless campaign and lost big to Obama in the electoral vote. He lost many states that often vote for the Republican presidential candidate. Of course, some states are full of people who will refuse to blame Obama even now for the jobs situation or people who so share his political philosophy of collectivism and anti-man religious environmentalism that they will be little driven to address the jobs problem.
Let us assume that the strength of the vote switch is proportional to how high the unemployment rate in a state is. In fact, I will assume there is no effect for the purposes of this electoral vote projection if the unemployment rate is below 7%. This is unlikely to be the case, but I want to make a reasonably conservative estimate of the shift in electoral votes. Also, many people who recognize Obama as a jobs problem in the U.S. as a whole will still be more inclined to vote against him out of concern for those many Americans in states less fortunate than their own with respect to jobs. The function I will use is:
[ 1 + 8 (State Unemployment % - 7%)/100 ] (% Vote for McCain)
If the projected percentage of the vote for a state becomes 50%, I shift that state's electoral votes to the generic Republican candidate, unless I judge the state's commitment to socialism to be so strong that I do not believe such a shift will occur. Among the factors I consider in making that assessment are which party now controls the Governor's office and the houses of the state legislature. Some states I believe will shift based on recent voting patterns in response to the Obama presidency and not entirely because of the state unemployment rate. The tables below provide the unemployment rate for August 2011 for each state, whether it has gone up or down in the last year, which party controls the governor's office and the legislature, how the state voted in the 2008 election, what the percentage of the vote for McCain was, and my allotment of the electoral votes each state will have in the 2012 election. The states that shift are in larger font. Those in gray and larger font shift because of high unemployment according to the above function.
I will discuss each state with a shift or which may refuse to switch even though the unemployment rate would cause a shift if the people of that state were not completely wrongheaded.
California: Unemployment is very high in CA and my function says the generic Republican should get 52.5% of the vote. He will not, though he will be very competitive, as California goes. No shift.
Colorado: The function says the Republican will get 50.3% of the vote, but the governor and the state senate are controlled by the Democrats and unemployment in CO is somewhat less than the national average. Colorado is full of religious environmentalists. I am not now willing to predict a shift for Colorado.
Florida: Unemployment is very high in Florida. If those on Social Security and Medicare do not get the wrong idea about Republican intentions on those programs, Florida will shift. Even McCain had 48.4% of the vote in 2008 and the formula based on the 10.7% unemployment says the generic Republican should be able to get 62.7% of the vote! Given that Republicans now control the governorship and both state houses, only a goofball Republican would fail to carry the state.
Indiana: The unemployment rate is less than the national average and McCain got 49.0% of the 2008 vote. The function says the generic Republican gets 55.7% of the vote. Since the governorship and both state houses are controlled by Republicans, Indiana will flip.
Maine: The unemployment rate in self-sufficient Maine is only 7.6%, but the state has recently become solidly Republican. I believe Maine will likely flip, but not only because of unemployment in the state.
Michigan: The unemployment rate of 11.2% is very high and the state has moved solidly Republican because of this already. Michigan should flip, since the formula says the generic Republican gets 54.6% of the vote.
Minnesota: Unemployment is only 7.2% so jobs will not be as strong a factor here as in many states. McCain did get 44.0% of the vote and both state houses are controlled by Republicans now. A reasonable Republican candidate should be able to carry Minnesota.
Nevada: The unemployment rate is the worst in the nation at 13.4%. Nevada was booming before the recession and has totally collapsed. It did vote Harry Reid back in, so I could be wrong about this one. But, the formula says the generic Republican could get 64.6% of the vote on jobs, so he has a very good cushion to lose votes on other issues. Nevada probably flips.
New Hampshire: Unemployment is relatively low in NH at 5.3%, but it is a state of relatively minimalist government with both houses controlled by Republicans. They are tired of the bumbling and big government Obama now and ready for a change. NH flips.
North Carolina: Unemployment is awful at 10.4% and McCain did get 49.5% of the vote. Both houses of the legislature are Republican. There should be no question that NC flips.
Ohio: Unemployment is at the national average of 9.1% and McCain received 47.2% of the vote. The Republicans have gained control of the governor's office and both state houses already. The formula says Ohio gives the generic Obama opponent 55.1% of the vote, so he can afford to lose some votes on other issues. Ohio flips.
Pennsylvania: Unemployment is below the national average, perhaps because of the Republicans having already gained control of the governorship and both state houses. Also, unlike Democrat controlled New York, Pennsylvania is eager to develop the rich gas fields in the massive Marcellus Formation and work on that is already providing significant new jobs. Of course Pennsylvania has also been hurt by Obama's anti-coal policies as well. PA flips, but not quite because of the formula.
Virginia: Unemployment is comparatively low at 6.3%, so Virginia does not flip due to the formula. But McCain did receive 46.4% of the vote here and VA has proven that it is not racist by having voted for Obama. The governor and the lower house are Republican. The state has been very actively fighting the constitutionality of ObamaCare. Virginia has no recent history of being so solidly Democrat Socialist that it will stick with the highly socialist Obama. Virginia corrects its prior mistake.
Wisconsin: The unemployment rate is below the national average at 7.9%, so Wisconsin does not flip merely due to the local unemployment. The flip is because the state has moved Republican generally with the Governor and both houses being Republican.
The end result is that the generic Republican, if he will keep the creation of private sector jobs the primary issue along with opposition to ObamaCare and growing government, will win by an electoral vote of 335 to Obama's 203. My prediction of Maine, Minnesota, and Nevada switching sides in Obama's re-election effort are the most questionable at this time. Giving them back to Obama still has him losing 315 to 223.
Of course, I am assuming a reasonable strength in American's interest in jobs here. It will be interesting to see if I have a good sense of what that interest strength is. I will be most interested in any readers thoughts on this.
07 September 2011
GDP and Industrial Output Comparisons by Country
I needed to find out if China was the number 1 manufacturing nation in the world or was it the United States? This proved a bit more difficult question than I thought it would be. But the CIA World Factbook had the information needed to determine this and to calculate the actual value of each of the three sectors into which they divide the GDP for the year 2010. These sectors are Agriculture, Industry, and Services. The results I found for the 7 nations with the largest GDPs expressed in dollars with purchasing power parity are given in the following table:
The answer to my original question is that the value of China's industrial output, which includes mining and construction, is $4.73 trillion, while that for the United States is $3.24 trillion. China's industrial output is 46% greater than that of the United States. No other nation comes close to having so much industrial output as China or the United States. The value of China's agricultural output is also the largest in the world. In this case, it is 6 times that of the United States. It is the delivery of services that the U.S. excels in doing.
The per capital GDP for the United States is more than 6 times that of China. Germany has the second highest per capita GDP on the list and that of the U.S. is 32% higher. The United Kingdom and Japan both have per capita GDPs very nearly as great as that of Germany. This group has a per capita GDP more than twice that of Russia, whose per capita GDP is more than twice that of China, whose per capita GDP is more than twice that of India.
Obama Kills Jobs and Resuscitates the Great Socialist Recession
Let us start off with a chart showing the number of jobs missing from our economy since January 2000 in thousands of jobs. The number of missing jobs in January 2000 was equal to the number of unemployed people then who were looking for jobs or in some cases were simply taking some time off between jobs. Jobs were plentiful then and had been for several years, so unemployment was only 4.0%. Because of the boom and bust nature of the economy since then due to the Federal Reserve setting very low interest rates, the deficits run by our governments, increasing regulations and taxes, added energy costs due to drilling prohibitions, recent added uncertainty caused by ObamaCare and Dodd-Frank financial reform, and considerable class warfare and anti-business rhetoric, the number of missing jobs has increased greatly in the course of the last 11 years.
The number of missing jobs is calculated assuming that the same percentage of Americans would work today as did in January 2000 if good jobs were available. The high tech bubble that burst in 2001 and 2002 had already created a situation with about 5 million more missing jobs than we had had at the beginning of the century. In December 2007, the United States had not yet been much affected by the recession due to a sharp increase in the price of oil that was already hurting most other countries of the world. But in 2008, companies began laying off employees and stopped hiring new employees. This never-ending Great Socialist Recession was underway.
Since Obama occupied the White House, there has been no substantial or sustained return to normalcy. The number of missing jobs for the last four months has been almost constant. There was actually a small increase in the number of missing jobs in August, though the statistics are not really good enough to consider that a real effect. What is real is that over the long term now, there has been no improvement. This is not surprising since almost every action the Federal Government and the Federal Reserve have taken was effective in killing jobs, not in creating them. Jobs are conserved in big businesses and many, many jobs are created by small businesses when the government does little to hurt their businesses. The Federal Government and many state governments have worked very hard to create very tough business conditions and much uncertainty when American business already faced a world largely in recession and stiff competition from abroad.
Obama's socialist viewpoint, his servitude to labor unions, and his academic economic advisers with their belief in Keynesian economic theory, led him and the Democrats down a very wrongheaded path. America is in misery because of this wrongheaded understanding of the economy and business by our ever more controlling central planners in Washington. The private sector and Capitalist free market can do much better.
The number of missing jobs is calculated assuming that the same percentage of Americans would work today as did in January 2000 if good jobs were available. The high tech bubble that burst in 2001 and 2002 had already created a situation with about 5 million more missing jobs than we had had at the beginning of the century. In December 2007, the United States had not yet been much affected by the recession due to a sharp increase in the price of oil that was already hurting most other countries of the world. But in 2008, companies began laying off employees and stopped hiring new employees. This never-ending Great Socialist Recession was underway.
Since Obama occupied the White House, there has been no substantial or sustained return to normalcy. The number of missing jobs for the last four months has been almost constant. There was actually a small increase in the number of missing jobs in August, though the statistics are not really good enough to consider that a real effect. What is real is that over the long term now, there has been no improvement. This is not surprising since almost every action the Federal Government and the Federal Reserve have taken was effective in killing jobs, not in creating them. Jobs are conserved in big businesses and many, many jobs are created by small businesses when the government does little to hurt their businesses. The Federal Government and many state governments have worked very hard to create very tough business conditions and much uncertainty when American business already faced a world largely in recession and stiff competition from abroad.
Obama's socialist viewpoint, his servitude to labor unions, and his academic economic advisers with their belief in Keynesian economic theory, led him and the Democrats down a very wrongheaded path. America is in misery because of this wrongheaded understanding of the economy and business by our ever more controlling central planners in Washington. The private sector and Capitalist free market can do much better.
05 September 2011
Everything in the Democrat Economic Central Planning Arsenal is a Dud
The government told us the GDP growth rate in the first quarter was 1.8%, which is not a healthy growth rate at any time and is especially weak if an economy is recovering from a recession. In May, the government increased that reported first quarter growth rate to 1.9%. This was still not good, but it seemed to leave the door open to optimism that while recovery was slower than in other recessions, it would occur. Then, the bottom fell out. The first quarter GDP growth was revised downward to 0.4% and the second quarter GDP growth was said to be an anemic 1.3%, which has just been revised down to 1.0%.
Jobs growth is not keeping up with the growth in population. The annual Consumer Price Index (CPI) stands at 3.6% and is running much higher in the last half year. The average American worker workweek decreased by 0.1 hours and earnings fell by $0.03, which is no way to keep up with the inflation. Labor productivity has very unusually been falling lately as well. These factors bode ill for further hiring.
The rest of the world economy is not in good shape either, so there is no chance that exports will do much to change the bleak picture of the American economy. The Purchasing Managers' Index (PMI), a measure of business purchasing activity, fell to a two-year low in August to 49.0. Numbers below 50.0 mean contraction of business activity is going on. Among the European countries with reduced activity are Great Britain, France, Spain, Italy, Ireland, and Greece. The positive PMI's of Germany, Sweden, and Switzerland dropped. The PMI of Japan is at a 3-month low and Taiwan's PMI is very negative at 45.2, its lowest value since January 2009. Canada's GDP contracted, largely due to a 2.1% drop in exports. The leading retailer in Australia expects falling sales. China has a PMI on the edge of contraction and its exports to the U.S. have fallen. The world economy is staggering.
In the U.S., the favorite Democrat central planning tools of stimulus spending and quantitative easing, or creating money from thin air, have not worked. What a surprise! Despite the GDP growth of the first half of the year being only 0.7%, the White House is telling us that GDP growth for the year will be 1.7%. Wow, what a howler that is! This means they are predicting growth in the second half of this year at an annual rate of 2.7%. I suppose they think that growth will occur because businessmen and consumers are trusting that Obama's speech on his economic recovery plans this week will solve all of our problems! For that to be so, all Americans would have to regress to the point that they believed that he could stop the oceans from rising and cure all of the diseases of the world, as many did when they first voted for him. I think many even of those favorable voters have learned something since! Even if that were the case, that growth which has not been evident through August, would have to occur entirely in the last 4 months of the year.
Let us examine a few issues with the stimulus approach loved by socialists. The CBO, not really a very reliable source, recently released a report saying that the $787 billion American Reinvestment and Recovery Act has really cost us a $825 billion increase in debt. They claim that they cannot figure out how many jobs were created by it, but it was somewhere between 1.4 million and an unbelievably generous 4 million. I do not think they seriously try to estimate the number of jobs lost due to the bill. So let us divide $825 billion by 1.4 million jobs and we find each job cost $589,300. While some investment is needed to create meaningful jobs, that is enough money to pay someone the median income of $46,300 for 12.7 years! I could readily provide several scientists with jobs with that amount of money, but the federal government is always incompetent and inefficient! While I do not believe there is even a 1% chance that the stimulus bill created 4 million jobs, even if it did, each job would have cost $206,250 which would have allowed me to provide at least 1.5 long-term new jobs in my laboratory instead of a mythical job.
The CBO report claims that printing up $0.825 trillion in a $15 trillion economy added between 0.8% and 2.5% to the GDP in real, inflation-adjusted growth. Printing this amount of money diluted the value of all money by at least 5.5% since 0.825/15 = 0.055. One could argue that the dilution of money value is proportional to the smaller value of money in circulation, making the dilution much greater than this. The act of printing that money did nothing to add to productivity so its effects upon production are transitory. Worse yet, that monetary dilution devalued all property, including the already depressed housing market, and all commodities, such as oil, cotton, corn, wood, and metals. Despite these huge negative effects, the CBO tells us that the expenditure increased the GDP by something in the range from 0.8% to a totally unbelievable 2.5%. Well, this is another instance of the very bad track record of the CBO showing its lack of understanding of economics or its adherence to rules which do not correspond to reality.
The CBO then goes on to say that direct government purchases of goods and services have a multiplier effect of 1.0 to 2.5 for every dollar spent! Well that is very interesting. If that were so then the stimulus bill expenditure of $825 billion would have increased the GDP by between 5.5% and 13.75%! Clearly, direct expenditures by government have no advantageous multiplier effect. In fact, we can calculate the effect from their own numbers for the GDP growth they claim for the stimulus bill. 0.8/5.5 = 0.145 for the lower bound multiplier and the upper bound multiplier would be 2.5/5.5 = 0.45. These calculated multipliers ranging from 0.14 to a clearly too high 0.45 are way below 1.0, which is more like what one expects from an incompetent and inefficient government with no real interest in human productivity.
Alan Reynolds, an unusually insightful economist, has written an excellent article entitled The Fed vs. the Recovery, which first appeared in the Wall Street Journal on 26 August 2011. It is on the CATO Institute website here. He says:
Alan Reynolds notes that
One of the commodities whose price was driven up by QE2 with important and devastating consequences was that of oil. As I have pointed out many times (thanks to reading Alan Reynolds), every postwar recession except that of 1960 has been triggered by a sudden increase in the price of oil. From August 2007 to July 2008 we had such an oil price spike as the value of the dollar fell and oil prices doubled. We had another large oil price increase due to the dollar losing value from late August 2010 when Bernanke announced QE2 until the end of April 2011. The price of oil increased from $72.91 to $112.30, an increase of 54%. Just the price of oil increasing suddenly has a very negative impact on our economy. This is aggravated by our refusal to allow reasonable increases in domestic production, which makes us more vulnerable to fluctuations in the value of the dollar relative to other currencies.
Both the Stimulus and the Quantitative Easing efforts have depressed the growth of the GDP and resulted in giving companies every incentive to hire aboard and every disincentive for hiring at home. Meanwhile, the regulatory, tax, anti-business, promotion of labor cost increases, and anti-energy policies and rhetoric of the Obama cabal has been added to the wrongheaded policies of the Federal Reserve to put us into a never-ending recession.
Jobs growth is not keeping up with the growth in population. The annual Consumer Price Index (CPI) stands at 3.6% and is running much higher in the last half year. The average American worker workweek decreased by 0.1 hours and earnings fell by $0.03, which is no way to keep up with the inflation. Labor productivity has very unusually been falling lately as well. These factors bode ill for further hiring.
The rest of the world economy is not in good shape either, so there is no chance that exports will do much to change the bleak picture of the American economy. The Purchasing Managers' Index (PMI), a measure of business purchasing activity, fell to a two-year low in August to 49.0. Numbers below 50.0 mean contraction of business activity is going on. Among the European countries with reduced activity are Great Britain, France, Spain, Italy, Ireland, and Greece. The positive PMI's of Germany, Sweden, and Switzerland dropped. The PMI of Japan is at a 3-month low and Taiwan's PMI is very negative at 45.2, its lowest value since January 2009. Canada's GDP contracted, largely due to a 2.1% drop in exports. The leading retailer in Australia expects falling sales. China has a PMI on the edge of contraction and its exports to the U.S. have fallen. The world economy is staggering.
In the U.S., the favorite Democrat central planning tools of stimulus spending and quantitative easing, or creating money from thin air, have not worked. What a surprise! Despite the GDP growth of the first half of the year being only 0.7%, the White House is telling us that GDP growth for the year will be 1.7%. Wow, what a howler that is! This means they are predicting growth in the second half of this year at an annual rate of 2.7%. I suppose they think that growth will occur because businessmen and consumers are trusting that Obama's speech on his economic recovery plans this week will solve all of our problems! For that to be so, all Americans would have to regress to the point that they believed that he could stop the oceans from rising and cure all of the diseases of the world, as many did when they first voted for him. I think many even of those favorable voters have learned something since! Even if that were the case, that growth which has not been evident through August, would have to occur entirely in the last 4 months of the year.
Let us examine a few issues with the stimulus approach loved by socialists. The CBO, not really a very reliable source, recently released a report saying that the $787 billion American Reinvestment and Recovery Act has really cost us a $825 billion increase in debt. They claim that they cannot figure out how many jobs were created by it, but it was somewhere between 1.4 million and an unbelievably generous 4 million. I do not think they seriously try to estimate the number of jobs lost due to the bill. So let us divide $825 billion by 1.4 million jobs and we find each job cost $589,300. While some investment is needed to create meaningful jobs, that is enough money to pay someone the median income of $46,300 for 12.7 years! I could readily provide several scientists with jobs with that amount of money, but the federal government is always incompetent and inefficient! While I do not believe there is even a 1% chance that the stimulus bill created 4 million jobs, even if it did, each job would have cost $206,250 which would have allowed me to provide at least 1.5 long-term new jobs in my laboratory instead of a mythical job.
The CBO report claims that printing up $0.825 trillion in a $15 trillion economy added between 0.8% and 2.5% to the GDP in real, inflation-adjusted growth. Printing this amount of money diluted the value of all money by at least 5.5% since 0.825/15 = 0.055. One could argue that the dilution of money value is proportional to the smaller value of money in circulation, making the dilution much greater than this. The act of printing that money did nothing to add to productivity so its effects upon production are transitory. Worse yet, that monetary dilution devalued all property, including the already depressed housing market, and all commodities, such as oil, cotton, corn, wood, and metals. Despite these huge negative effects, the CBO tells us that the expenditure increased the GDP by something in the range from 0.8% to a totally unbelievable 2.5%. Well, this is another instance of the very bad track record of the CBO showing its lack of understanding of economics or its adherence to rules which do not correspond to reality.
The CBO then goes on to say that direct government purchases of goods and services have a multiplier effect of 1.0 to 2.5 for every dollar spent! Well that is very interesting. If that were so then the stimulus bill expenditure of $825 billion would have increased the GDP by between 5.5% and 13.75%! Clearly, direct expenditures by government have no advantageous multiplier effect. In fact, we can calculate the effect from their own numbers for the GDP growth they claim for the stimulus bill. 0.8/5.5 = 0.145 for the lower bound multiplier and the upper bound multiplier would be 2.5/5.5 = 0.45. These calculated multipliers ranging from 0.14 to a clearly too high 0.45 are way below 1.0, which is more like what one expects from an incompetent and inefficient government with no real interest in human productivity.
Alan Reynolds, an unusually insightful economist, has written an excellent article entitled The Fed vs. the Recovery, which first appeared in the Wall Street Journal on 26 August 2011. It is on the CATO Institute website here. He says:
In demand-side theorizing, monetary stimulus means the Fed buys more bonds. The Treasury has certainly been selling a lot of bonds, and the Fed has been buying (monetizing) a huge share of those bonds. That helped push the broad M2 money supply up at a 6.8% rate over the past six months. Yet the only thing we have to show for all that stimulus over the past year has been rapid inflation of producer prices and a simultaneous slowdown in the growth of the private economy. Consumer price inflation also accelerated to 5.2% in the first quarter and 4.1% in the second, from just 1.4% in the third quarter of 2010.He notes that industrial supplies and materials account for 34.5% of our imported goods so far this year and capital equipment and parts add another 23% of imports. Because of the second quantitative easing (QE2) which began in November 2010 and ended in June of 2011, the value of the dollar fell about 15% relative to the Euro. The Economist's commodity-price index went up 50.9% in a year in dollars, but 22.8% in Euros. Our import prices rose by a 15.1% annual rate and our export prices rose by an annual 11.4% over the last three quarters under QE2. These effects reduced the growth of real GDP.
Alan Reynolds notes that
The net effect was to reduce the profitability of manufacturing and distributing products in the United States, and therefore to shift such activities (and jobs) to other countries which were less handicapped by the dollar's weakness.Fortunately for the S&P 500 companies, 46% for their sales came from other countries! As a result, their operating earnings per share rose from $20.40 a year earlier to $24.86 by June 2011. Thanks to our government's policy of printing money, this did most Americans little good.
One of the commodities whose price was driven up by QE2 with important and devastating consequences was that of oil. As I have pointed out many times (thanks to reading Alan Reynolds), every postwar recession except that of 1960 has been triggered by a sudden increase in the price of oil. From August 2007 to July 2008 we had such an oil price spike as the value of the dollar fell and oil prices doubled. We had another large oil price increase due to the dollar losing value from late August 2010 when Bernanke announced QE2 until the end of April 2011. The price of oil increased from $72.91 to $112.30, an increase of 54%. Just the price of oil increasing suddenly has a very negative impact on our economy. This is aggravated by our refusal to allow reasonable increases in domestic production, which makes us more vulnerable to fluctuations in the value of the dollar relative to other currencies.
Both the Stimulus and the Quantitative Easing efforts have depressed the growth of the GDP and resulted in giving companies every incentive to hire aboard and every disincentive for hiring at home. Meanwhile, the regulatory, tax, anti-business, promotion of labor cost increases, and anti-energy policies and rhetoric of the Obama cabal has been added to the wrongheaded policies of the Federal Reserve to put us into a never-ending recession.
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