Compare and contrast: government vs. the private sector

A few days ago I mentioned the manufacturing advocates the Alliance for American Manufacturing (AAM) in a post regarding their convention plans. I wasn’t surprised to see they were very pleased with Hillary Clinton’s remarks, including a plan to “pass the biggest investment in new, good-paying jobs since World War II.” Ah yes, the old “investment” in infrastructure, where taxpayer money will be shoveled to cronies and unions in an effort to build things we may not need or use (like facilities for public transit, bike paths, and so forth) at the artificial “prevailing” wage. Spend five dollars, waste two or three more – they don’t care because it’s all on the credit card anyway.

It sounds to me just like the promises regarding the “stimulus” package from Barack Obama, officially known as the American Recovery and Reinvestment Act (ARRA) of 2009. Those “shovel-ready” jobs actually turned out to be, among other things, government backstopping certain public-sector jobs that may have been destined for the chopping block. Only a small portion of the over $800 billion spent actually went to infrastructure, but ARRA was sold as an investment in infrastructure. So pardon me if I expect little good to come from Hillary’s plan.

Anyway, last night I read a contention that was more interesting (and realistic) from American Enterprise Institute scholar (as well as professor of economics and finance) Mark J. Perry. Here is the money line:

The bottom line is that America’s abundant and low-cost natural gas and electricity have more than offset higher labor costs in the U.S. and have contributed to the strongest profitability in a generation or more for U.S. manufacturers. Within three years, and possibly even sooner, it will be cheaper for most U.S. companies to manufacture goods for the American market at home, compared to producing those same goods in Asia. (Emphasis mine.)

Of course, that prediction is fraught with peril. We could regulate our way out of the energy boom by continuing to mandate the use of expensive, inefficient renewable energy sources (or, in lieu of that, transfer payments from utility providers), we can maintain the oppressive tax climate that has been one of many reasons companies are choosing to go offshore – any bean counter will tell you it’s better to pay 15% tax than 35% – or actually enact the increasing minimum wage that unfortunately Donald Trump is now supporting. Any or all of these are possible regardless of who wins the Oval Office.

And that’s the shame of it all. Over the course of the nation’s history, we have seen America become a great industrial power only to lose its advantage to upstarts like Japan and China. (Then again, we wrested the title from the British in the 1800s so things are always fluid.) These Asian nations took advantage of newer technology and less expensive labor to attract American manufacturing jobs that were in older, less efficient unionized plants, despite the fact these items would have to shipped back thousands of miles to their primary market.

But here we have the chance to get some of this back, and my fear is that too many people want to keep the status quo in place as a political issue rather than solve the problem. We talk about being a free market insofar as trade is concerned, but I contend that we need to work on freeing our own market:

  • Toss out these federal and state regulations and carveouts that only benefit special interests or large, established competitors trying to corner their respective markets.
  • Encourage the adoption of right-to-work laws so unions are forced to compete and sell the benefits they provide for the cost to workers.
  • Instead of debating whether the minimum wage should be increased or not, we should be debating how quickly we phase it out. The true minimum wage is zero, which is what workers who are tossed out of a job when companies can’t afford the increased labor costs will earn.

In reading the GOP platform (and I’m just going to ignore the Democrats on this one, since they aren’t selling themselves as free-market, limited-government types) I saw some attention paid to these issues, although their approach seems to be more of just controlling growth and pruning around the edges than a wholesale reduction. Needless to say, that platform could be completely ignored by the elected members of the party from Donald Trump on down if the idea of enriching their friends, rather than the supporters of the other side that have engorged themselves over the last eight years, remains in place.

Sadly, over most of the last century it hasn’t really mattered which side was in power because government has grown regardless of who was in charge. (The one exception: the Harding-Coolidge era of the 1920s, when the federal budget was drastically reduced – and annually balanced – after World War I. In a time where we are stuck with Trump, Clinton, or maybe Gary Johnson, what we really needed was a Coolidge. Bobby Jindal was probably the closest we had in the GOP field.)

I began this whole process by talking about infrastructure, and there’s a legitimate need for prudent spending on upgrades where it is appropriate. Sometimes there is a need for a new federal or state facility. But I have also seen how the government uses infrastructure to maintain a cash cow, with my favorite example being the Ohio Turnpike I grew up close by.

You see, the original plan was to eliminate the tolls once the bonds to construct the road were paid off in the 1980s. (This was promised when the highway was built in the early 1950s – my dad remembers them staking it out a few miles from his house.) But then they decided that some new exits were necessary (which they were) so they decided to build those. Then it was adding a third lane in each direction between Youngstown and Toledo (a process still going insofar as I know, since I haven’t been that way in a couple years), then renovating all the rest areas (twice in thirty years, and ditto), and so on and so forth. Forget the promise to remove the tolls once the highway was paid off – they constantly spend money on projects that weren’t within the original scope, perpetuating the agency that runs the Turnpike.

In theory, we could spend money from now until doomsday on government-sponsored projects. Some contractors would benefit, but others would be left out in the cold because there’s a certain procedure required to bid on and win public works contracts. But it wouldn’t necessarily be the best use of our funds – and by that I don’t mean the money in the public till but the money that we earn for our collective pockets. If we really want to get manufacturing going and bring it back to America, we need to maximize their potential for meeting our marketplace. They may make mistakes, but that should be up to the market to pick winners and not the government.

Trying to make winners out of losers

Commentary by Marita Noon

By now, most people probably know about one of Secretary Hillary Clinton’s biggest campaign gaffes to date: “we’re going to put a lot of coal miners and coal companies out of business.” As soon as I heard it, I tweeted: “Imagine a presidential candidate running for office based on putting people out of work?”

I wasn’t the only one shocked by the uncharacteristic clarity of her statement. Lacking the usual political-speak, her comments were all the more surprising in that they were not made at a fundraiser in billionaire environmental donor Tom Steyer’s posh San Francisco living room. They were made in Ohio – coal country, where coal production in 2015 was down 22 percent – at a nationally televised CNN town hall and just hours before the important state’s primary election.

In response, Christian Palich, President of the Ohio Coal Association sent this: “Hillary Clinton’s callous statements about coal miners, struggling under the weight of a hostile administration, are reprehensible and will not be forgotten. The way Secretary Clinton spoke so nonchalantly about destroying the way of life for America’s coal families was chilling. Come tomorrow, or next November, Ohioans in coal country will vote to keep their jobs and not for the unemployment line.”

US News reports that Democrats in the coal states of Wyoming, West Virginia, Kentucky, and Ohio have tried to “distance themselves from Clinton’s comments.” Former Ohio Governor Ted Strickland, a Clinton ally who handily won his party’s primary election for Senator, called her slip, “unartful.” Senator Joe Manchin (D-WV), who, last April, endorsed Clinton, took issue with her comments and contacted her campaign.

Facing the backlash, and in damage-control mode, Clinton sent a letter to Manchin: “Simply put, I was mistaken.”

But was she? I don’t think so.

Though her comments may have been “unartful” and, arguably, poorly timed, I believe they reflect private conversations and campaign strategy. It may be no coincidence that rumors of President Obama’s tepid support for Clinton – though the White House denies endorsing her – surfaced after her killing coal comments.

First, it is clear that Clinton needs President Obama’s endorsement. She needs him to generate excitement for her lackluster campaign – something Democrat voters are not feeling for her as they did for him. She needs his campaign machine to get out the votes.

But, he needs her just as much – his legacy hangs on her election. Because so much of what he’s done has been by executive action, his legacy can just as easily be undone – as every remaining Republican candidate would likely do.  Obama is, reportedly, committed to “a hard campaign of legacy preservation.” He is ready to “raise money to fill Democratic coffers and target the key communities that would make up a winning coalition for the party, including blacks, Latinos, educated single women and young voters, to encourage them to go to the polls.”

Following the voluntary climate agreement in Paris, Politico stated: “Barack Obama wants to be remembered as the president who saved the world from climate change.” For this legacy to stick, all of his anti-fossil fuel policies must stay intact. To get his endorsement, a Democrat presidential candidate must embrace what he started and promise to “build upon President Obama’s legacy of environmental protections and climate action,” as Clinton has.

While Obama frequently claims to support an “all of the above” energy policy, actions speak louder than words. From his 2009 stimulus bill throwing billions at speculative green energy projects, his killing coal efforts, his stand that we can’t drill our way to low gas prices, his rejection of the Keystone pipeline, and his threat to veto a bill to lift the oil export ban – just to name a few – he obviously meant “none of the below.”

The White House denies a “war on coal.” In December, after the Paris climate agreement was signed, former Deputy Assistant to the President for Energy and Climate Change, Heather Zichal, defended Obama’s green platform: “Nobody’s screaming that their energy bills are on fire; jobs have not been lost.”

Bill Bissett, President of the Kentucky Coal Association called Zichal’s comments: “insulting and inaccurate.” He told me: “The Obama Administration and its allies have an intentional blind spot to the economic and social damage that their anti-coal policies are causing in the United States and especially in coal country. The top coal producing states in our nation not only benefit from the extraction of coal, but all of us benefit greatly from having low kilowatt-per-hour rates. But that economic advantage is eroding as Obama does everything in his power, and against the will of Congress, to move the United States away from coal production and use.” He added: “More than 8,000 Kentucky coal miners have lost their jobs since Obama took office and countless other Kentuckians have lost their livelihoods through indirect and induced job loss due to his anti-coal agenda. And, yes, our electricity rates are increasing in Kentucky as our country moves away from coal.”

“Ms. Zichal and the administration can spin it any way they like but no one outside of their fringe enviro friends is clamoring for their energy policies,” said Mike Duncan, President of the American Coalition for Clean Coal Electricity.

While much of the electricity price increases associated with the Obama Administration will only be seen later, the fact is, according to an Energy Information Agency data set, the increase in retail electricity prices since 2008 is 12.8 percent.

Clinton’s anti-coal comments got all the press. But she didn’t stop there. Almost under her breath, a few sentences later, she added: “We’ve got to move away from coal and all of the other fossil fuels” – more pandering for Obama’s much needed (and, so far, withheld) endorsement.

But how realistic is the Democrat’s goal of moving away from coal and all the other fossil fuels?

“Unlikely,” according to new research from the University of Chicago. The authors wanted a different answer. Like Clinton, and Obama, they believe fossil fuel use is driving “disruptive climate change” that will lead to “dramatic threats to human well-being” and a “dystopian future.” Reading the 22 pages of the report on their findings, one can almost feel their dismay.

Yet, after discussing “supply theory” – which posits the world will run out of inexpensive fossil fuels – they state: “If the past 35 years is (sic) any guide, not only should we not expect to run out of fossil fuels anytime soon, we should not expect to have less fossil fuels in the future than we do now. In short, the world is likely to be awash in fossil fuels for decades and perhaps even centuries to come.” Complicating matters, the authors acknowledge: “a substantial penetration of electric vehicles would reduce demand for oil. Provided that the supply curve for oil is upward sloping (as it is in almost all markets), this drop in demand would translate to lower oil prices, making gasoline vehicles more attractive.”

Then, on “demand theory” – the economy will stop demanding fossil fuels as alternatives become more cost competitive – they lament: “In the medium-run of the next few decades, none of these alternatives seem to have the potential based on their production costs (that is without the government policies to raise the costs of carbon emissions) to reduce the use of fossil fuels below these projections.” Additionally, they conclude: “Alternative sources of clean energy like solar and wind power, which can be used to both generate electricity and to fuel electric vehicles, have seen substantial progress in reducing costs, but at least in the short- and middle-term, they are unlikely to play a major role in base-load electrical capacity or in replacing petroleum-fueled internal combustion engines.”

While the authors support “activist and aggressive policy choices…to drive reductions in the consumption of fossil fuels and greenhouse gas emissions,” they reluctantly admit the proposed solutions are not apt to be the answer they seek. “Even if countries were to enact policies that raised the cost of fossil fuels, like a carbon tax or cap-and-trade system for carbon emissions, history suggests that technology will work in the opposite direction by reducing costs of extracting fossil fuels and shifting their supply curves out.”

Perhaps, before Clinton – who accuses anyone who doesn’t agree with her climate alarmist view as ignoring the science – makes mistakes, like declaring that she’ll put coal miners and coal companies out of business, she should check the science behind her claims to “move away from coal and all the other fossil fuels.”

Making her March 13 comments seem even more foolish, the following days cast a shadow over the specter of funding more speculative solar power, as she’s proposed to do. Three stimulus-funded solar failures made big headlines.

On Wednesday, March 16, the Wall Street Journal (WSJ)  announced that the massive $2.2 billion ($1.5 billion in federal loans according to WSJ, but other research shows more) Ivanpah Solar Electric Generating System may be forced to shut down because it has failed to produce the expected power. What it has produced: “fetched about $200 a mega-watt hour on average during summer months,” while “power from natural-gas plants went for $35 a mega-watt hour on average in California’s wholesale market.”

On the same day, SunEdison’s troubles worsened. After the company acquired stimulus-funded First Wind last year, it became “the leading renewable energy developer in the world.” Now, its “mounting financial woes” resulted in another delay to the filing of its annual reports. The company’s stock, according to WSJ, has “lost 67% over the past three months and 91% over the past year.” It “slid another 16% to $1.73 in premarket trading.”

The next day, March 17, the New York Times declared that Abengoa, the Spanish company hailed as “the world leader in a technology known as solar thermal, with operations from Algeria to Latin America” has gone from “industry darling to financial invalid.” I’ve written repeatedly on Abenoga – which is on the verge of becoming “the largest bankruptcy in Spanish corporate history.” Note: Abengoa was the second largest recipient of U.S. taxpayer dollars – more than $3 billion – from the green energy portion of Obama’s 2009 stimulus package.

It appears Clinton’s energy policies are aimed at trying to make winners out of losers. How can she help it? That is what the Democrat Party is trying to do with her.

Hopefully, voters know better. But then, as the University of Chicago’s study’s closing words remind us: “hope is too infrequently a successful strategy.”

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.

Harris: Obama job plan ‘stimulus II’

After Congressman Andy Harris heard President Obama’s new proposal for that “one thing – jobs, jobs, jobs, jobs, jobs, jobs, jobs,” as Teamster head James Hoffa would say, his reaction was short, sweet, and direct:

Over Labor Day weekend I met with many small business owners on the Ocean City Boardwalk – a common theme I heard from those potential job creators was their desire to get government out of the way so that they could do what they do best: grow their businesses and create American jobs.  President Obama’s newest spending plan is nothing more than a second Stimulus bill.  Just like the first Stimulus passed by the previous Congress, it will not create jobs, but instead delay recovery, increase the debt and grow the size of government.  I believe that common sense ideas like a balanced budget amendment, elimination of job-destroying regulations and making America energy independent will create American jobs and get us out of this recession.

Well, he’s right, isn’t he? More after the jump.

Continue reading “Harris: Obama job plan ‘stimulus II’”

Friday night videos episode 46

I wasn’t done yet, it was simply a dearth of decent video and some other plans taking up my Friday nights. Here you have the return of FNV after a two-week hiatus.

How about we start with this one? This could be a great movie, although it tells us what we already know.

Another thing we already know is that Sarah Palin remains popular, despite all the naysayers. That and she has her own political action committee.

And we also know that the stimulus is a boondoggle. It’s a little tougher to steal these political roadside signs than to take the neighbor’s O’Malley one – not that I condone the activity.

I may reuse this one in a few weeks.

I will be at the polling place on November 2nd with bells on. There could be a hurricane blowing and I’d be there.

Shifting gears, there’s a little surprise at the end of the Freedom Minute. But I’m curious why they used that particular hospital as a backdrop.I came across this a couple weeks back, and you know, it fits in with the mindset of many perfectly. Besides, the series of commercials from Progressive Insurance (which is owned by uberlefty Peter Lewis) really desperately needed to be made fun of.

It’s not quite Halloween, but here is some more scary stuff in a serious vein to close this edition. Whether you come down in favor of amnesty for illegals or not, this is a good case for closing the borders.

Since I crammed this one sort of full, I’ll skip the music this time. Maybe I’ll do a double dose on the next one.

After one year: feel stimulated yet?

Nope.

Remember when unemployment was 7.6% and not 9.7 percent? That was the rate last February.

And where are the 8,300 jobs promised for our Congressional district, let alone the 66,000 for the state?

Instead, we have fewer people working than the last time when the unemployment rate was 9.7 percent because many have given up on the search – 1.1 million fewer to be exact. Even illegal immigrants are leaving because they can’t find work, not doing the jobs Americans won’t do either.

If unemployment weren’t a big problem, why would Congress continue to subsidize it by extending unemployment benefits to nearly 100 weeks? That’s practically two years.

The only sector which is experiencing growth is the federal public sector. Obviously the First Lady is doing her part by employing 22 assistants, while her husband keeps dozens of “czars” on the payroll.

I thought Rush Limbaugh came up with an intriguing idea last year when the stimulus came out. Take the stimulus money and do two things with it: devote the proportion of it equal to Barack Obama’s vote to his ideas (essentially the stimulus package we have now) and the remainder equal to John McCain’s vote to tax cuts and business-friendly policies, and see which side of this bipartisan compromise did better. Obviously we didn’t get the GOP side so the lack of success all falls on the side of the statists, who keep spending way more money than we have available to us for bailing out favored special interests, unions, and key business contributors on Wall Street.

This is a good timeline to recall just how well the stimulus worked, thanks to Rep. Eric Cantor.