Business and industry – Page 90

The market basket, November 2008

This is the sixth in a continuing series of comparisons between local grocery store prices. Every six months or so since the spring of 2006 I’ve used my regular Sunday shopping trip to do my very non-scientific study of local grocery prices.

I began this to prove a theory I had. Readers may recall that in their 2006 session the Maryland General Assembly overrode Governor Ehrlich’s 2005 veto of the Fair Share Health Care Act, which became better known as the “Wal-Mart bill.” The bill got its name because it was tailored to affect only Wal-Mart; the three other companies in Maryland who qualified based on their number of employees were exempted either for being a non-profit or spending just over the 8% of payroll threshold the state dictated companies should spend on health care benefits for their employees. My theory was that Wal-Mart would eventually lose its extremely competitive position on prices because of the state law, particularly since one of the companies exempted was Giant Foods, obviously a direct competitor for grocery dollars and, unlike Wal-Mart, a unionized grocery chain.

As it turned out, Fair Share was thrown out in court as a violation of federal ERISA statutes but I decided to continue doing this on a semi-annual basis because it’s a nice diversion from political items and also provides a service for local residents. It also serves as a gauge for grocery prices in general. In April I also added one variable, the per-gallon price at the station I drive by on the way to the grocery store. You’ll notice that the price went down 40 percent in six months, in reality it’s about half the mid-summer peak here which was close to $4 per gallon.

Having done this now for 2 1/2 years, it’s interesting to note that Wal-Mart has lost a portion of its onetime large advantage over its local competititors. They still own the lowest prices but have raised their prices somewhat faster than two of their three counterparts.

As I said at the top this is far from a scientific study, and the items I chose were those I regularly consumed at the time. Ironically I’ve stopped eating a fair number of these items because I’ve become much more weight-conscious in that timespan. (In the last three years, I’ve lost 115 pounds.) Still, it gives a snapshot of something that consumers have sensed for quite awhile – prices have gone up pretty quickly in that time. (You may also note that in some cases, the packaging has changed as well. I’m a frequent yogurt eater, so their going to 6 ounce cups really upset me!)

With that said, here are the most recent results I compiled yesterday. As a comparison, I’ll link to the results from last April, one year ago, April 2007, October 2006, and my original survey in April 2006.

The next trend to see is if the drop in gas prices will follow through into food prices next April. It’s not predicted to do so but I’ll be checking to see when the time comes.

When the moat gets into the castle

Today’s item piqued my interest for two reasons: one, it’s related to my “real” profession; and two, there’s been a little controversy over the subject locally in the last few years. So it was up to the International Code Council to make a decision on the matter for the upcoming release of the 2009 International Residential Code.

Now that I’ve used my introductory paragraph as a great teaser, the subject at hand is the mandatory installation of residential sprinklers for new home construction. Proponents naturally see this as a life safety issue to prevent additional damage and loss of life in case of fire, while opponents lobbied on the argument of increased cost and maintenance risk. This is from the October 16th AIA Angle internet newsletter:

The actual cost of installing sprinklers varies depending on who you ask. Installation of sprinklers could increase construction costs by as much as $12 per square foot, according to NAHB (the National Association of Home Builders – ed.) In a report published by the National Fire Protection Association (NFPA), which supported the requirement, states the costs are much less, around $1.61 per square foot.

“Architects who focus on the residential side should be aware of this new mandate when they design homes in states that adopt the code. Currently, 46 states use the IRC. This code will greatly affect how architects design a home in those states,” says Paul Mendelsohn, AIA vice president of Government and Community Relations.

Mendelsohn is correct to an extent, as states do have the right to not adopt certain portions of these model building codes. This may be a fight which comes down to the local and state levels as the cost vs. benefit argument is played out on many and varied stages.

With the housing industry already in the tank for the near-term future, this requirement comes at a bad time. Certainly the increased cost will be passed on to the buyer, and depending on whose estimate you trust that translates into anywhere from $3,220 to $24,000 added into home costs for a 2,000 square foot house. Further, I found it intriguing that the insurance industry fought AGAINST the requirement, with the likely contention that possible water damage from leaks would outstrip the costs of the occasional fire.

Being a firm believer in private property rights, I think that the decision should be up to the homeowner and not dictated from on high. Obviously having a sprinkler system can make a difference in the event of a fire; however, the actual preservation of life is already addressed by the codes with a number of other regulations regarding door and window widths, exit access, and the like. Generally a home is of small enough size that escape from it is possible within seconds, so sprinklers tend to be more for the preservation of property.

It also brings up a point about water consumption. Most houses in urban and suburban areas will be tied to a municipal water source, but would that water source be sized to provide enough flow in the case of a fire? Many cities and towns already have difficulties with water pressure and this may worsen that problem. More importantly, is this new code a backhanded way to promote “smart growth”? The question of access to water supplies sufficient to fill a sprinkler system may be a factor in whether to allow homebuilding in certain rural areas like the one I live in, since I indeed have well water.

Naturally this isn’t a regulation which creates headlines, nor is it a governmental entity which is proposing it. This example points out that there are a lot of do-gooders who wish to make decisions for you about what’s best in your life. Building a new dream house shouldn’t necessarily need to include the additional cost and worry about extra water lines. Maybe it can be a selling point and possibly the life it saves could be yours or a loved one’s, but the choice should still be yours. There’s no need for states or local entities to adopt the 2009 IRC in toto; these new regulations can and should merit more discussion at their level.

Taking the power from the people

Nope, this isn’t another post about the recent election. Faithful readers will recall that I had a backlog of environmentally-related posting ideas and this intermission between the election hangover and the holidays (when news really slows down) seems to me a good time to opine on some of these items.

Back in mid-October, an AP article (via the Forbes website) by Marc Levy detailed efforts by the commonwealth of Pennsylvania to not just slow the growth of but cut electricity usage beginning in 2011. By May 31st of that year, utilities will have to roll back electricity usage by one percent, increasing to three percent by May 31, 2013 – that 2013 deadline also compels usage during the 100 highest peak hours during the year to be cut by 4.5 percent. If the utilities fail in this effort, penalties of up to $20 million can be assessed. So not only do the utilities have to plan for their future needs insofar as supply is concerned, they now face the additional headache of a mandated plan to cut customer usage.

With any of these so-called “green” ideas, one has to ponder the unintended consequences. For example, would it be in a utility’s best interests to extend service to a new job-producing entity like a steel recycling mill if doing so means they’ll likely go over the electricity usage threshold? While there are provisions in the new law for exceptions to the rule, could state regulators who decide on whether a utility should be pardoned and not penalized be trusted with this amount of sayso over the economic livelihood of Pennsylvania based on their personal preferences and beliefs?

Nor will this be cheap. The law allows utilities to bill their ratepayers up to 2 percent of their 2006 revenue to achieve this change; what’s unclear is how much this will either impact the corporate bottom line or reflect in each month’s electric bill. Keystone State residents also face a similar dilemma to that faced in Maryland a couple years back as long-term rate caps will soon go away for the vast majority of them. One bright spot for Maryland is that this could drive businesses and residents back over the border; that is provided our rabidly green legislators in Annapolis don’t attempt to do the same here in Maryland. Energy providers here already have enough of a handicap with renewable energy portfolio mandates let alone trying to trim usage too.

In my profession, energy efficiency is an admirable goal and I encourage those who are using energy do so as prudently as possible. However, there is a point where curtailing usage also curtails lifestyle, allowing economic growth to cease. Just look at a normal home, where the old 60 amp breaker box of my youth is woefully inadequate and 200 or more amperes of usage is demanded because of all the devices which have made our lives easier and more enjoyable. It goes back to the old pie-slice analogy, where making the pie smaller gives everyone a smaller piece unless fewer people wish to have a slice.

Once again, a leftist governor (in this case, Governor Ed Rendell) has placed the ideals of radical green ahead of the realities of seeking prosperity. It bears asking what incentive there is for a utility to wish to sell less of its product or face monetary damage; certainly there’s not a whole lot in it for the investors unless they’re allowed to charge more per unit, and we all know how that flies with the public.

Then again, we in Maryland have our own deterrent to utility friendliness called the Regional Greenhouse Gas Initiative. An article last month in Science Daily points out the results of a study commissioned by the Maryland Department of the Environment which contends that “Maryland officials can reduce electricity use in the state significantly by investing revenues from the Regional Greenhouse Gas Initiative (RGGI) cap-and-trade auctions in energy efficiency programs, (and) neighboring states might benefit as well.” Seriously, our tax dollars paid for this? Like there would be any other conclusion given the provider of the funds to commission the study – no bias here, huh?

The article goes on to note:

The Maryland Department of Environment commissioned the study, The Role of Energy Efficiency Spending in Maryland’s Implementation of the Regional Greenhouse Gas Initiative, to help the state explore the economic and environmental implications of using RGGI revenue in support of energy efficiency programs, as well as to determine the impact on producers, consumers and other stakeholders. The analysis began prior to last month’s auction and the study’s findings are not based on its results.

But the important part to me was this line in the story:

Even though prices may not go down, consumers may see some modest savings because they consume less electricity due to efficiency improvements.

I have news for the eggheads who did this study: prices aren’t going down because the state is also mandating energy providers in the state use more expensive “renewable” resources. And the efficiency improvements could very well come out of the state’s money pot as well through subsidies or using the RGGI auction funds. Perhaps it would be smarter to just tell the utility to hand the money over directly to those consumers who the state helps out but that doesn’t create a job for some pencil-pusher in Annapolis to oversee who “deserves” the funding does it? Nor does it make the recipient more appreciative of the government who gave him the check (and more likely to support his or her local representative therein) if the money instead came from the utility.

Finally, why not make this article about three different states? My blogger friend Bob McCarty writes about a similar carbon credit offer his local utility is trying in Missouri, where he lives. At least there it’s the private sector trying to make a profit from gullability and not the state government.

A second Bill of Rights?

My ears perked up when I heard the name Marcy Kaptur – talk about a blast from the past! I had the profound displeasure of being “represented” by her for 20 years, until the state of Ohio finally redistricted most of Wood County (the southern suburbs of Toledo) out of her district and I could afford to move there.

What she made the news for was a quote from the last line in a Toledo Blade article from way back on the 14th of October:

U.S. Rep. Marcy Kaptur (D. Toledo) whipped the crowd up before Mr. Obama took the stage yesterday telling them that America needed a Second Bill of Rights guaranteeing all Americans a job, health care, homes, an education, and a fair playing field for business and farmers.

What’s more interesting about this particular article is the letter from Blade publisher John Robinson Block just prior to that campaign stop asking the question of Barack Obama:

Does every American who wants to work have the right to a job where they live?

Block also asks the One:

President Roosevelt called for a “Second Bill of Rights” guaranteeing the right to a job, the right to a decent home, the right to adequate medical care, and the right to a good education. Do you agree?

Roosevelt proposed this in early 1944, just as another re-election campaign was getting cranked up. America had been through the Great Depression, and FDR may have believed Americans would credit his early-term policies for bringing America back; however, we were in the midst of fighting World War II (months later the D-Day invasion would take America’s fight to Europe) and much of the economic activity created was to fuel that war effort – as just one example, domestic new car production all but ceased after the 1941 model year. In any case, the proposals were good rhetoric but deposing the twin empires of Nazi Germany and imperial Japan were job one, with domestic policy taking a back seat. Roosevelt indeed won the 1944 election but died in office a few months later; his successor Harry Truman wasn’t as radically leftist as FDR and these ideas weren’t resurrected again until Lyndon Johnson’s “Great Society” of the mid-1960’s.

It’s not surprising to me that Marcy Kaptur would be an advocate of the idea too; indeed, she’s among those liberals in Congress who expend little effort in keeping their seat, racking up 70 to 75 percent of the vote every two years over a game but underfunded GOP opponent. With a district now stretching along the southern shore of Lake Erie from Toledo to Lorain, she has a huge base of union voters and volunteers to keep her in office.

Now that you have an idea about the players, I’m going to answer the question for them. No, we don’t need a Second Bill of Rights, particularly when many of the the items in the one we already have are being so blithely ignored by Obama, Kaptur, Robinson, and their ilk in politics and the press. They’re assaulting in particular the First, Second, Fifth, Ninth and Tenth Amendments therein.

There is a great difference in attitude and philosophy between having equality of opportunity as we strive for now (remember, the Constitution was enacted to form a “more perfect Union”; the Founding Fathers knew better than to expect perfection on this Earth) and having equality of outcome as those abovementioned and their allies among the Democrats and mainstream media (but I repeat myself) would like to see. Their version of utopia has everyone’s slice of the pie being equal but does little to increase the size of the pie. Conversely, with few exceptions, the lifestyle of average Americans has been more prosperous than that of their forebears under the system we have in place. Even the dirt-poor and homeless of our generation have access to luxuries that were undreamed of even two decades ago. My fear is that progress will cease under a more “progressive” government because the incentives to work hard and better one’s self would eventually disappear.

We on the conservative side joke about the Obama redistribution scheme when it comes to Halloween candy, like in this cartoon by William Warren:

But there is a larger point in asking what right those inside the Beltway who have never met Mr. & Mrs. John Q. Public and family can claim to have in taking the wealth they’ve worked hard for and handing it over to someone else who stands there with their hand out waiting for the check to arrive. Generally the situation afflicting the latter arises from poor choices made in life and not because the system held them down. (It’s sort of ironic then that those on the conservative side favor as much choice as possible in education while leftists believe that all school ills can be solved if only more money were shoveled into the public schools. Many times it’s leaving school that places kids on the wrong path in life.)

In about 20 years of living with Miss Kaptur being my representative in Congress, I can’t point to a single thing that she did which impacted my life in a positive way every day. Perhaps she voted on some pork project or bill which helped one aspect of my life, but on a day-to-day basis my family and I basically worked, scrimped, saved, and once in a great while invested in our own future. Did we make poor decisions along the way? You betcha. But we learned and for the most part recovered because we found out which choices were best for us. Moreover, I think my wife and I raised our daughter a lot better than the government ever could; among those values was a work ethic.

What good is a work ethic though if you’ll be penalized for any success you make through a punitive tax system? We already heard Barack Obama’s answer to a similar question posed by Joe Wurzelbacher, but perhaps he, Marcy Kaptur, and John Robinson Block need to answer my corollary one themselves. Just because all of them have managed to do well in life through various means (Obama and Kaptur as public officials, Block as heir to a communications company) doesn’t mean they can slam the door on the rest of us who would like to build up our fortunes. It’s what will likely happen though if they get their way.

Big checks for card check

One thing that we can bet the farm on is that Big Labor is going to try again in the 111th Congress to get the Employee Free Choice Act passed. In essence, the act eliminates the secrecy from union elections by eliminating the election and simply having a signed card be “proof” that an employee wants to join a union. Would you want someone looking over your shoulder in the voting booth? EFCA would allow union organizers to do just that.

It’s worth pointing out that Frank Kratovil has taken over $140,000 from Big Labor in this campaign, and they’re not going to spend this kind of money in a district that doesn’t have a lot of union workers without some sort of quid pro quo. I know people have been up in arms about all the money the Club For Growth has given to Andy Harris, but those contributions are bundled from individual donors giving of their free will. While it’s possible to ask your union not to use your dues for political purposes, in practice that’s difficult to achieve – so thousands of workers are contributing to a candidate they may not agree with, but apparently the ends justify the means insofar as Big Labor and concentrating political power is concerned.

This also gives me an opportunity to reintroduce readers to a group I link to called the Center for Union Facts. Actually, they in turn introduced me to this video of one very pushy labor union leader:

It’s the same kind of thinking that turns the unions onto seek-and-destroy missions like the plumbers’ union letting loose the attack dogs on “Joe the Plumber.” Because of that we know that the national plumbers union were early supporters of Barack Obama.

I’m sure Bill wouldn’t like me either. It’s because something tells me he’s also an Obama backer and he’d love to have people like Barack’s ally Frank Kratovil in Congress.

We’re number…45?

According to the Tax Foundation Maryland is now 45th out of 50 states in their measure of business friendliness. This was a plummet rarely seen among the beancounters because our fair state was 24th last year – not great but tolerable. Perhaps that’s why businesses and jobs are fleeing the state? Maybe they’re going to Delaware (#10), Virginia (#15), or Pennsylvania (#28).

With the new rankings, the only states beneath Maryland now are Rhode Island at 46th, my native Ohio holding down 47th, California sitting at number 48, New York 49th, and New Jersey having the dubious dishonor of being 50th. Amazingly, no other state shifted more than 5 spots in either direction for this year’s rankings, making Maryland’s drop Grand Canyon-like in its scope.

I’ll let the Tax Foundation take it from here:

In the midst of an economy in decline that has led to revenue shortfalls in Maryland, the Tax Foundation and the Maryland Public Policy Institute will be holding a press conference tomorrow in Annapolis announcing that Maryland has made the largest decline in the State Business Tax Climate Index, sliding from 24th in 2008 to 45th in 2009 in the annual ranking of the “business-friendliness” of each states’ tax systems. The press conference will come before Gov. O’Malley presents a final list of proposed budget cuts to the Maryland Board of Public Works.

Tax Foundation Staff Economist Josh Barro, author of the study, will be at Lawyer’s Mall near the Maryland State House on Wednesday, October 15, to hold a press conference with the Maryland Public Policy Institute on the Index at 9 AM.

The Index ranks states based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment insurance tax and property tax. States achieve high scores by having low rates, broad tax bases, and simple rules.

Maryland’s drop from 24th to 45th out of 50 states on the Index is attributable to an increase in most of the state’s major taxes for FY 2009. They raised the corporate income tax rate to 8.25% from 7%, the sales tax rate to 6% from 5%, and the cigarette excise tax to $2.00 from $1.00 per pack. Maryland also created four new income tax brackets, raising taxes on filers earning more than $150,000 per year. The state’s top personal income tax rate is now 6.25% (up from 4.75%); that’s on top of a weighted average local option rate of 2.98%. Maryland now has by far the worst personal income tax in the country, with a significantly lower score than second-place California. (Emphasis mine.)

Being only a part-time blogger, I’ll have to take a pass on the press conference. All the Tax Foundation is really doing though is telling those of us in Maryland something we already know through experience – our taxes are too high! But Governor O’Malley and his Democrat allies in the General Assembly really don’t care because they’re assuming the federal government will replace any jobs that are lost in the private sector with both the growth of government and the importation of BRAC jobs from other states. Even better for them in the former case is the vastly higher proportion of unionized federal jobs when compared to the private sector – that means cash in their political coffers to beat back those pesky Republicans who have the audacity to believe that money earned by the citizens of Maryland actually belongs to them!

However, that thinking covers just the I-95 corridor where most of the beneficiaries of federal work and largesse live. Once you get away from the urban areas of Baltimore and DC you run into places where the statewide business climate makes it more difficult for job creators to stay in the state. Furthermore, with most areas of Maryland outside the I-95 corridor within a fairly easy drive to an adjacent state, the marketing strategy of a company which relocates can remain essentially the same.

I wouldn’t be surprised at all to see my e-mail tomorrow have a press release from the Maryland Republican Party outlining many of these same points being brought up by the Tax Foundation. I’m sure Justin Ready and others in the party stop by monoblogue so I’m happy to give them the heads-up if they haven’t already seen it someplace else.

And with the realistic possibility of Democrats expanding their majorities in Congress (why I don’t know given their single-digit approval rating as a body and horrible track record over the last 2 years under Nancy Pelosi and Harry Reid), it’s likely that we as a nation will be saying goodbye to the relatively reasonable tax rates of the last several years and dreading the return of the higher rates installed by President Clinton. (Remember the middle-class tax cut he didn’t deliver? Betcha Barack Obama will fall short there too if he’s elected.) In all, residents of the (not so) Free State may be continuing to absorb the body blows of oppressive taxation at the state level and getting that added sock in the mouth from the feds too.

And if we go to the canvas, it’s still a long count to 45.

‘Carol’ing is a little earlier this year

Something which has been much-hyped in conservative circles over the past couple months is a new movie called An American Carol. Essentially the movie is a spoof of Michael Moore and some of his films, and the marketing angle that is being played is that it’s “almost criminal” in Hollywood to be conservative.

A couple months back, I introduced a short video that was created by the Zucker brothers, who made themselves famous with movies like Airplane! and the Naked Gun series. David Zucker is the brains behind American Carol and obviously he and the movie’s investors are playing to what some may consider a niche market. I’ll let Washington Times (and other outlets) writer Frank Gaffney pick up the story:

It’s election season, so it is appropriate that an important vote will be cast this weekend. No, I am not talking about early balloting in Ohio or Oregon for the November presidential race. Rather, this vote is a national one- and it will be taking place at a theater near you.

This weekend, the returns will be tallied on box-office sales of the opening weekend of An American Carol – a marvelously politically incorrect take-off on the timeless Dickensian morality tale. Set around the Fourth of July in contemporary America rather than a Victorian Yuletide, it has been created and directed by my friend, the zany and wildly successful David Zucker.

This Carol’s Scrooge character, played by Kevin Farley, is a dead-ringer for radical leftist filmmaker Michael Moore. The ghosts who visit him – including John F. Kennedy, George S. Patton, and George Washington – labor to teach their subject about the greatness of this country, the absurdity of the “Blame-America-First” Left’s toxic hatred for it and the opening the latter provides for Islamists bent on our destruction. Punctuated by trademark Zucker slapstick humor (his other credits include Airplane!, The Naked Gun, Scary Movie 3, and assorted sequels), the movie makes a deadly serious point: Everything is on the line in this War for the Free World and those of us who prize our freedoms will lose them if we fail to protect them against enemies foreign and domestic.

In a sense the pilgrimage Zucker chronicles is an autobiographical one. He had his own epiphany after 9/11, prompting him to break with Hollywood’s dominant left-wing politics and reflexive contempt for our government, military, and people (even, amazingly, the movie-going ones). With the passion of a convert, he uses his skills to poke fun at his industry, academia, political and media elites and such mainstays of the radical Left as the ACLU, MoveOn.org, Rosie O’Donnell and, of course, Michael Moore.

Zucker and Farley are joined in this apostasy by other accomplished stars, including Jon Voight, Kelsey Grammer, James Woods, and Robert Davi. Their courage in goring so many of Hollywood’s sacred cows is palpable given that community’s notorious practice of ensuring that those who are shunned never “eat lunch” (read, work) in that town again.

Amidst the sight-gags, the slapstick (often literally), the absurd moments and hilarious quips, there is a scene that is transcendently important and deeply affecting. After the protagonist has proven infuriatingly resistant to mentoring from JFK and Patton, he is given a tour of St. Paul’s Chapel near Wall Street by its most famous parishioner, President Washington. Jon Voight does not act this part; he channels the father of our country. Moore-as-Scrooge comes face to face with the carnage of 9/11 and confronts at last the necessity of taking responsibility for his own destructive actions. It is one of the most powerful pieces of cinematic artistry I have ever seen.

An American Carol is more than a wonderfully entertaining film. It is more even than a forceful political statement on behalf of the values and institutions that have made America, as the bumper sticker has it, thanks to the brave, the land of the free.

David Zucker’s new film is also an opportunity – a chance to show Hollywood in the only way it understands that the people of this country admire those prepared unashamedly to stand up for us and the country we hold dear.

For the film industry, opening weekend box office returns determine whether a film is deemed to be a success or not. A big turn-out demonstrates an appeal that will result in more movie theaters showing the film and for longer runs than will otherwise be the case.

Consequently, we have a chance to do something more than properly reward David Zucker and his gutsy team by turning out this weekend to see their movie. In the process, we can demonstrate in a most tangible and impactful way to others in their industry that there is a market not only for this film but for others who revere this country, rather than demean it.

In short, I urge you to take not just your family and friends to see An American Carol. Ask everyone you know to do the same. If possible, do it this weekend and thereby vote in a contest that may prove to be nearly as far-reaching as that whose balloting will take place a month later.

Perhaps I gave away half the plot by using all of Gaffney’s piece, but we will indeed see if the marketing works in the case of An American Carol; especially since it’s opening on the same weekend as Bill Maher’s Religulous, which questions the role of religion in life and is more of an “establishment” movie with a typcial Hollywood viewpoint. While it may well be a box office smash, my bet is that the success of An American Carol will be dismissed in much the same way as Mel Gibson’s The Passion of the Christ box office revenues were. It’s par for the course for conservatism, so we’ll just have to enjoy yet another well-kept secret from the elites who think they know it all.

Is profit the next entitlement?

As I finally sit down to write this evening, the Senate moments ago passed their version of the $700 billion bailout bill, with the House now slated to vote on Friday. Assuming the House opposition crumbles in the wake of electiontime politics, it soon may be the law of the land that profits are privatized and risk is socialized. Isn’t that known as fascism?

Maybe it doesn’t meet the true definition of the term but this takes a trend of government intervention into other markets like energy and health care and finally seals the fate of our financial companies. No longer will they have to worry about poor investment choices, for Uncle Sam will be right there holding their hand and shoveling whatever amount they need to make it right into their accounts.

But it’s not like we’ve never been here before, as President Carter signed the bailout of Chrysler into law in 1980. In that case, money was simply guaranteed to the company to avoid its collapsing and eventually the loans were paid off. More recently the Big Three came hat in hand to the federal government for another infusion of cash in order to design and build cars to meet the new and tougher CAFE standards. In both cases, rather than allow the market to take its course the taxpayers were tapped for the money. Obviously it worked out all right in the case of Chrysler as the company still exists (albeit with several changes in ownership groups) but only time will tell regarding the latest effort by Washington to prop up Detroit’s (and Toledo’s, and Lordstown’s, and other cities all over the country who depend on the auto industry) sagging fortunes.

In this newest bailout scenario it’s different. Instead of a tangible product which is produced, this infusion of funding courtesy of John Q. Taxpayer (via securities likely to be purchased by China) is propping up an industry that simply exists on paper. It’s those pieces of paper which state that Homeowner X is liable to Bank of Y for repayment on a loan of Z dollars that led to the problem because Bank of Y was told by the federal government to loan Homeowner X the money despite the fact his or her credit wouldn’t necessarily support it. In some respects, this bailout is the price banks are exacting because of ill-considered regulations much like Detroit and its auto industry is remitting its payoff because of other ill-considered regulations.

The larger question to me is the precedent set. There are many on my side who say, yeah, we’re forced to fix this issue now – but it can’t happen again. Well, having lived on this planet for a decent number of years and being somewhat of a student of history I can flat out guarantee you that indeed this will happen again – UNLESS we reassess the situation of how our government functions as a whole.

Last night’s debate was a case in point. We had the Democrat decrying the “greed” of Wall Street, conveniently forgetting that many of the key players there are Democrats – think Jon Corzine as one example, Robert Rubin as another. While the Republican made me cringe when he also mentioned “Wall Street fat cats”, by and large he blamed liberal policy for the mess and that’s much closer to the truth. However, for all the faults of his party, the Libertarian got it right when he said that both parties had been running us into the ground for the past fifty years. I say this because, with some exception for the Reagan Administration and a brief hiatus after the Contract With America, government at all levels has become the source of wealth for more and more Americans at all economic strata.

I state this not just because of the patently obvious handout programs like welfare or Social Security, but in the way regulations are written at the behest of a large corporation or group thereof. Perhaps your little hometown bank was pleased that certain regulations were written in certain ways, but the ones who really cleaned up on the edicts handed down from an alphabet soup of agencies and bureaus were those behemoths who had the large amount of cash necessary to make things go their way and eventually bought out the hometown bank. While it’s a maxim of capitalism that the bigger fish generally have the resources to devour smaller companies sooner or later, I don’t think it’s the place of government to take steps to encourage or discourage market activity. Much as they regulate individual behavior too often via the tax code, the same goes for corporations too.

The large financial entities have slowly but surely shifted the playing field into one where they are simultaneously maximizing profit, swallowing up smaller competitors, and minimizing their risk by unloading their liabilities onto the taxpayer in the name of saving our economy. Coupled with their willingness to help out other large entities like the Big Three, it makes me wonder where the cutoff is for assurance of financial aid if things get tough – do you have to be a Fortune 500 company to qualify? In that case, pity the workers who depend on number 501 for their livelihood because it’s tough toenails for them if the place goes belly-up.

There’s a part of me which fears that this may be the tipping point, a point of no return insofar as American capitalism goes. When one no longer has risk but is assured a good return on investment that Ponzi scheme can’t long be maintained without more investors at the bottom. And when those investors are forced to participate under threat of fines or jail time it creates less of an incentive to excel and a much more difficult situation to extricate one’s self from.

It may be hyperbole to declare this as liberty’s last chance, but as more people see their livelihoods become more dependent on things which occur in the nation’s capital, there’s less hope that any change would come peacefully. As a whole, Americans used to demand better from themselves and their country but far fewer actually want to put in the work to achieve that cause now. More and more, the chains of regulation and taxation bind those who still seek success on their own terms and they’re not going to lay loosely on any of us when the changeover from capitalism to socialism, fascism, or whatever -ism we seem to be headed toward is complete.

The cap and trade redistribution begins

Last Thursday Maryland utilities were among those bidding to pay for the privilege of creating and/or supplying electricity and natural gas. The first Regional Greenhouse Gas Initiative auction netted a total of $38,575,783 to be divided by the six states offering these allowances. Man, you talk about suckers.

On the other hand, perhaps I’m being too hard on the utilities and other bidders because the sole reason this auction occurred is because these respective state legislators were seduced by the twin thoughts of appearing to address the phantom problem of manmade global warming while adding a few dollars to their state treasuries – without overtly raising taxes. (Never mind that these utilities need to get that money back somehow – unfortunately for them they have far fewer methods to raise the revenue to maintain their own profitability.)

So where will this $38 million go to? I’m sure a piece of Maryland’s ill-gotten gains will go to replenish a program which was stiffed in the state budget, the grant program for solar and geothermal energy. Most of the rest will disappear into the maw of Maryland’s Strategic Energy Investment Fund as detailed (look around page 7) in Maryland law. (As it stands, we might get a quarter back on our electric bill. Woohoo!)

Of course, much of our booty is targeted toward low- and moderate-income homeowners. Certainly they could use the help but I’ve never seen the idea of redistribution from a private corporation through a governmental entity (who naturally gets their cut) to a targeted group as one which provides either efficiency or incentive for betterment of the lower class. But it sure provides votes to the elected officials who love nothing better than spreading the largesse around.

This is the first of what should be a quarterly series of RGGI auctions, the next one will occur in December. In an era where financial providers got in huge trouble from buying and selling a somewhat tangible asset like real estate, it’s mind-boggling to sell allowances to be allowed to create something that we humans naturally exhale. But that’s the way of the world these days, and another item which needs to be addressed in order to reestablish government in its proper role.

Black gold and natural gas from an industry point of view

On Friday last I was fortunate enough to be invited to participate in a conference call with the nice folks at the American Petroleum Institute (thanks to Jane Van Ryan for setting me up) along with thirteen other bloggers from across the country. And while I took reasonably copious notes, fortunately I don’t have to replicate the chickenscratchings that my notes tend to turn into when I’m writing quickly; instead the API folks were kind enough to reproduce the call via transcript and in audio form as well. (If you have a spare hour-plus it’s pretty informative, even with that somewhat nasal-voiced guy from monoblogue chipping in.)

We covered a wide range of subjects and I’ll be the first to admit I learned a little more about the business of petroleum. When most people think about the subject they consider just two areas, maybe three: the rig or well where the oil or gas is pumped out of the ground, the refinery where oil is processed, and the gas pump where you bring your car or SUV up to, gazing slack-jawed at the price numbers spinning ever upward. However, there’s a LOT more to the oil business than just those three factors.

I was a couple minutes late to the party, but I did manage to catch the initial topic of discussion – the late and unlamented Congressional moratorium on offshore drilling. Trouble is, like Lazurus, restoring the ban is one of the many aims of Congressional Democrats should they increase their majorities in both bodies and most certainly they would have a backer in Barack Obama if he’s elected. So while the lifting of the moratorium was cause for a little celebration, the industry is still holding its collective breath awaiting further action. (What’s really disgusting about this and many other free-market situations is that we have to rely on Congress to give a green light to items that the federal government has little or no business getting involved with. The business of America used to be business, now I think it’s waiting on political favors.)

On a related note, the topic of supply came up and the recent shortages of gasoline in the southeastern area of the country were mentioned. Right up there in the realm of “stuff I never knew about”, the situation of product movement has created this bottleneck as recovery from both Hurricanes Gustav and Ike is slow. It’s forcing supplies to take a circuituous route to that region and since oil only can travel at a few miles per hour because of pipeline limits, the situation is taking awhile to unravel.

Of course, that led into a discussion about refinery capacity and spreading the wealth, as it were. Most refineries are placed in areas with a healthy supply of crude oil, and even the ones which aren’t still exist near a pipeline which can bring the supply needed to run efficiently. One item I’ve referred to in the past and found intriguing was President Bush’s 2005 proposal to place new refineries on former military bases, but API President and CEO Red Cavaney countered by citing the economics of investing in expansion of existing refineries rather than building new, claiming the extra capacity comes at 60% of the cost of a new facility in half the time.

Perhaps that cost savings comes in part because of the smaller likelihood of legal snags. In terms of getting supply, one giant hurdle is the constant litigation that environmental groups and other gadflies subject energy producers to each time a new field is opened. Cavaney gave the recent example of a lease auction for Alaska’s Chukchi field – the government received $2.7 billion in bids yet not one hole has been drilled in the nearly eight months since the sale because of legal action against each and every lease acquired by the companies. This is one case which screams for tort reform!

Frequent readers of monoblogue know, however, that while I’m foursquare behind drilling here and now to help assure our energy independence my main focus on securing more energy supply is the number of good paying jobs that oil companies could create for Americans if only the hurdles placed in their way were cleared out. My question actually began a pretty robust conversation about the employment aspect, which I thought was a good selling topic for keeping the issue alive as prices declined:

This is Michael Swartz. I write for Monoblogue. Now, earlier, you talked about an education effort to inform the public about your goals. But originally, it was based on a supply. Obviously, when we are paying $4 a gallon for gas, the supply end of it is paramount on people’s minds. But now that gas prices are declining a little bit – it is down to 3.50, 3.40, 3.30 – and on the other hand, the unemployment rate is edging up to 6 and 6.5 percent. Do you – (inaudible) – see a change in strategy that is really required in terms of education and taking it more away from the supply – making a less emphasis on supply and more of an emphasis on the jobs that are created?

MR. CAVANEY: We are going to be doing both because they both are relevant. We have not seen – and obviously, people are on the watch for it – a drop-off in the support for drilling that materialized now that the prices have been falling. But one of the things that is very important to us going back to the discussion we had about the OCS and the moratoria is there are some tremendous job opportunities with well-paying jobs available if people will end up moving forward. These go beyond just the people who are going to man the various rigs and platforms and the like to the fact that particularly if you look at closer in – let’s say 50 miles from shore. Fifty miles from shore where better than half of the crude and natural gas is undiscovered, but technically recoverable has been identified. Those are lands where the technology is such that we can build the platforms. We can build the rigs. We can do all the offshore work in U.S. yards and in U.S. manufacturing operations. So there is a great deal of indirect labor that would flow and be connected to those things – much more so than would be in a case that you are out 100, 150 miles and you are going to rely on most of your platform work and drill ships and the like to be coming from abroad. So it goes to the point I made at the very beginning – if you expand the opportunities for becoming a sort of strategic energy center outside the traditional Gulf area or Southern California or a little bit less – let’s say, outside Philadelphia, there is a pretty good opportunity here for good paying jobs – not just the construction jobs that moderate when you are done, but of a permanent nature because this stuff will – has the potential to continue and grow for years to come.

Yeah, that’s why I write because my words don’t always come out as I’d hoped when I speak. Regardless, Red brought up a good point about all those spinoff jobs. Imagine the impact on the economy of the Eastern Shore if Virginia was brought into play as a producing state – apparently there is some commercially viable product not far offshore. We could use that economic shot in the arm and it would complement all that’s slowly developing around the Wallops Island space facility.

Needless to say, it was a learning experience for me because I’d only participated in something like this one time before and that was on a smaller, statewide scale. It’s most likely I was the little guy involved as far as readership goes but I appreciate the chance to speak with these industry leaders nonetheless – in order to get larger, one needs to hang out with a better crowd and that was one goal I achieved. So I’d like to thank both the API staff involved and the other bloggers who made the call both informative and interesting. A couple of them (Bob McCarty of Bob McCarty Writes and Greg Balch of The Barnyard) already have their take on the call, I’m just adding my thoughts to the list.

Wal-Mart to the rescue

Considering we’re talking about a geographically challenged Democrat governor this could fall under the heading of “blind squirrel” but this story by Jim Nolan in the Richmond Times-Dispatch shows some pretty good thinking by Virginia Governor Tim Kaine.

But it wasn’t necessarily all his doing, as several other states are using Wal-Mart to conduct similar energy audits for their state buildings. The article by Nolan also points out a report from the American Council for an Energy Efficient Economy (ACEEE) that Virginia could cut its energy usage by 20 percent by 2025 if they adopted some steps outlined in the piece. Of course, coming up with the $11 billion to implement all of these recommendations is one difficult part of the equation and what Suzanne Weston of ACEEE doesn’t make clear is the first and most obvious question I would ask: what is the payback period for that $22 billion in savings she promises?

I’ll tell you why the energy audit as performed by Wal-Mart is a pretty brilliant idea: you’re using the resources of a company which is dictated by its market to make things as efficient as possible, thus getting the best possible prices for its customers while assuring themselves and their investors a healthy return on investment. If they’re going in to do an energy audit chances are they’re loaded for bear.

It’s truly unfortunate though that this Wal-Mart approach is only going to apply to energy efficiency in buildings. The issue at hand is that government by nature tends to be less than as streamlined as it could be; mainly it’s the idea of those who draw their paychecks from government not to overwork themselves out of a job. If government ever truly fixed a problem, the department, bureau, or agency set up to deal with it would no longer have a reason for existing.

But fear not, denizens of the left wing, Governor Kaine hasn’t fallen off the liberal wagon yet. As the Nolan piece also notes:

The governor’s climate change panel has set a goal of reducing greenhouse gases 30 percent by 2025. The panel’s full report is due Dec. 15.

Kaine yesterday outlined his strategy for Virginia. It includes conserving 400,000 acres of open space, some 260,000 acres of which already have been preserved.

Kaine also said Virginia has allocated $600 million to Chesapeake Bay cleanup over a two-year period and is limiting development along the oceanside waters of the Eastern Shore.

With 40 percent of the state’s greenhouse gas emissions attributable to transportation, Kaine said the administration is promoting increased use of public transit and commuter and freight transportation by rail.

Would it not make a little more sense to limit development along the bay that they’re paying to clean up? My guess is that the ruling class in Virginia has more money invested in development along the western side of Chesapeake Bay than they do on the Eastern Shore. (If you’re not familiar with Virginia’s Eastern Shore, there’s not a lot there to begin with – its two counties account for less than 1% of Virginia’s population and Governor Kaine is limiting its potential even more.) Certainly the Eastern Shore of Virginia isn’t looming large on the radar screen for mass transit or rail transportation either.

At least the citizens who inhabit that backwater of Virginia do have a Wal-Mart or two to shop at.

California beat us on this one…

Having talked about the concept of “smart growth” last week, it’s time for me to bring up something which was buried a little bit in my e-mail box, but works right in with the theme I was establishing then. Certainly the Green Workplace blog where I noticed this was pleased with this development.

At the tail end of August, the California Assembly passed SB375, which will help achieve the state’s air pollution goals by essentially dictating to local government that their future planning cut the number of vehicle miles traveled. This is how the bill analysis put one example of its topdown planning:

SB 375 requires CARB (the California Air Resources Board), after considering the recommendations from a broadly based advisory committee, to provide targets to the MPOs (Metropolitan Planning Organizations) for greenhouse gas emission reductions for cars and light duty truck trips from the regional land use and transportation system by July 1, 2010.

Basically, as Reason.org’s Samuel Staley opined:

The state government has decided Californians are going to drive less, whether they like it or not. Want to buy a Prius or insulate your home as your contribution to lowering carbon emissions? Sorry, but that’s not doing enough for the government’s tastes. California wants politicians and planners to have a bigger say in where you live, shop and work so that they can make sure you don’t drive that Prius too far.

Senate Bill 375 is the state’s latest far-reaching piece of legislation intended to help to meet one objective: reduce greenhouse gas emissions by 30 percent by 2020.

To cut emissions, the government will take a more active role in where you live, how you get there, and what kind of home you live in. While this legislation thankfully stripped away specific regional targets that would have been far more draconian, the core governing values underlying California’s approach should sound alarms in and out of the state.

If you substitute a few acronyms you could easily picture the liberals in Annapolis adopting much the same thing. After all, Maryland and the Regional Greenhouse Gas Initiative we and nine other suckers states participate in just had our first auction of CO2 allowances – if people thought bundling mortgage-backed securities was pushing the envelope of risky financial investment, try placing a value on breathing. I wonder how much of a CO2 allowance I have to buy if I run a couple blocks after forgetting to use my inhaler first.

But an artificial limitation on the number of vehicle miles traveled has more effects than just a possible drop in greenhouse gases. It also regulates behavior by forcing commuters to live closer to their workplace or depending on slow and taxpayer-subsidized mass transit to get to their job sites. We saw this over the summer with $4 a gallon gas, but in that case it was mostly a function of market forces and not so much government intervention. You may also recall that the clamor wasn’t nearly as much for more mass transit options as it was for reducing the pump price through increased oil exploration and drilling. (Have we forgotten the “Drill Here, Drill Now, Pay Less” movement already?)

Even the movement toward smaller cars which would be enhanced by increasing CAFE standards has deleterious effects on state tax revenue, because per-gallon gasoline taxes obviously don’t supply as much cash if automobiles are more fuel-efficient. That’s one reason some in Congress quietly endorsed a ten cent increase in the federal gasoline tax rate.

It’s another weapon in the anti-personal freedom, anti-property rights arsenal Annapolis Democrats seem to unload every session. Something like this could even supplant the Impervious Surface Fee Annapolis liberals and their allies have tried and failed to enact in recent sessions as legislation that falls into my “love to hate” department. (They did get a Green Fund in the 2007 Special Session with different funding sources.) While I hate to give them ideas, something tells me they’re much more up to speed on the concepts of restricting growth via state mandates than even I am.