Thursday, May 29, 2008

Why Economic Populism Doesn't Work

Bill O'Reilly shows us once again why simply saying what the people want to hear doesn't work...

Here is the tough love solution:
-- All American-made vehicles must get 30 miles per gallon by 2010 or pay a major tax surcharge to the government.

Of course that will provide absolutely no reduction in prices. Why not?

1. It only affects new vehicles. The vast majority of people obviously would face no change here. It would be years, if not decades before this could start to make an impact.
2. This is only American cars. So if consumers want cars that have other options, they'll simply go with foreign cars. We've seen this before.
3. If the car companies ignore this, they have to pay a tax, which just gets passed onto the consumer anyway.

So we're left with a net effect that means more foreign cars are bought, and regulations both take money out of buyers hands and jobs out of America's already struggling automotive markets due to less demand.

-- Oil and commodity speculators must put up 50 percent of their transactions in cash. That would weed out some of the gamblers who are manipulating the market.

ALL speculators are gamblers. So "weeding out the gamblers" is just a way to sound pro-active. As the LA Times noted in December of last year, while they WANT to blame speculators...the countries pumping the oil are simply selling it to us for more than even they think it's worth. Markets all around the world are expanding and OPEC is not increasing supply. People have constantly blamed the spectator while ignoring the simple fact that spectators just make money off of guessing right. The betting is not self fulfilling. If there is betting on increased oil prices and a crisis happens to increase oil prices...the blame falls on the crisis...not the spectator. Are we really to believe that the bets on higher oil cause Hurricanes, equipment breakdowns, or African civil war? While speculators may indeed increase the price, it is by mere cents. While everybody loves to blame the evil spectator, it isn't warranted.

-- American oil companies must supply the federal government with a written explanation every time they raise the price of gas and oil.

That's assinine. The price of gas has always gone up and down. Since gas changes are not monolithic, this will either require gas stations to call individual changes into the head offices, or require regional supervisors to keep tabs on individual stations. This will cost the stations money either way, and man hours, so this will ALSO have a net effect of raising prices. And it would require more government beaurocracy, which would of course be charged to the gas companies, creating a further raise.

We're to throw the government, which moves painfully slow into day to day, and hour to hour changes, and even expect them to keep up? That's unrealistic.

-- Americans would be asked to cut back at least 10 percent on leisure driving and not buy gas at all on Monday.

Today's ask is tomorrow's tell. Eventually, gas stations would be forced to close on Monday, which would just inconvenience everyone. This is a national pundit offering a weekly version of the teenage created "Gas Protest Day" as a serious proposal.

The problem with gas is that for almost the past 8 years we have suffered a president with "Do Something" disease, urged on by a Congress and a media who have been afflicted for decades. And like most "Do Something" patients, it doesn't matter what, as long as something and feels right. The ethanol debacle has raised prices dramatically. And the windfall profits tax debated by our Presidental candidates would raise the price further.
There is indeed something the government can do to lower prices. Step back.

Stop mandating and subsidizing corn based ethanol. Stop putting tariffs on foreign sugar cane based ethanol that artificially raise prices. Stop blocking drilling in ANWR, off the coasts and in environmental hot spots. Stop blocking the building of refineries and the upkeep of current ones. Lower the gas tax, both pre and post product. Allow construction of nuclear power plants and serious alternatives like coal. Stop mandating what kinds of cars we have to have, putting more people out of work.

And realize that you guys' solutions ARE the problem. Much like a doctor who responds to an ingrown toenail by sawing off your foot...then announcing you have a missing foot problem that needs to be addressed...many of us are starting to look at your cure as worse than the damn disease.

No comments: