Wednesday, November 11, 2009

Failure number 7,894,423, give or take a few more million, of socialism

In the wonderful workers paradise that is Venezuela, where all people are equal and there is no strife as Chavez is concurrently Jesus, Castro and Barack Obama combined, El Jefe has made all people equal. Equal to rolling blackouts in one of the most energy rich countries in the Western Hemisphere. From the NYTIMES (of all places)

This country may be an energy colossus, with the largest conventional oil reserves outside the Middle East and one of the world’s mightiest hydroelectric systems, but that has not prevented it from enduring serious electricity and water shortages that seem only to be getting worse.

President Hugo Chávez has been facing a public outcry in recent weeks over power failures that, after six nationwide blackouts in the last two years, are cutting electricity for hours each day in rural areas and in industrial cities like Valencia and Ciudad Guayana. Now, water rationing has been introduced here in the capital.

Over the course of the last decade, Chavez has nationalized the better portion of the utilities industry as oil money flowed into the country and drove growth in Venezuela. Now that we have seen global demand wane, it looks like poor little Hugo is learning, probably for the first time, the inefficiencies inherent in centrally planned economies. As oil revenues poured in, things got better for the greater population in Venezuela right?

The deterioration of services is perplexing to many here, especially because the country had grown used to cheap, plentiful electricity and water in recent decades. But even as the oil boom was enriching his government and Mr. Chávez asserted greater control over utilities and other industries in this decade, public services seemed only to decay, adding to residents’ frustrations.

With oil revenues declining and the economy slowing, the shortages may have no quick fixes in sight. The government announced some emergency measures this week, including limits on imports of air-conditioning systems, rate increases for consumers of large amounts of power and the building of new gas-fired power plants, which would not be completed until the middle of the next decade.

So what does Hugo do? He moves towards a more efficient market based economy right?

In response, the president is embarking on his own crusade: pushing Venezuelans to conserve by mocking their consumption habits.

He began his critique last month with the amount of time citizens spent under their shower heads, saying three-minute showers were sufficient. “I’ve counted and I don’t end up stinking,” he said. “I guarantee it.”

Then he went after the country’s ubiquitous love motels and shopping malls, accusing them of waste. “Buy your own generator,” he threatened, “or I’ll cut off your lights.” He similarly laid blame with “oligarchs,” a frequently used insult here for the rich, for overconsumption of water in gardens and swimming pools.

Damn those clean people. How dare they want to wash themselves. Additionally those money changers are trying to throw their weight around.

Mr. Chávez is even going after his countrymen’s expanding waistlines. “Watch out for the fat people,” he said last month, citing a study finding a jump in obesity. “Time to lose weight through dieting and exercise.”

When Chavez writes his little red book the first political piece of advice will be "fatty, fatty two by four can't fit through the bathroom door." I wonder if that will show up in any of the speeches of Mark Lloyd and Anita Dunn in the future. Fat People are the scourge of existence they don't share their bounty.

Meanwhile, homes and businesses across the country are adapting to the erratic supply of power and, here in Caracas, of water. Sales of small generators, candles and water storage tanks are surging. Reflecting the unease of the already strained industrial base, which developed around access to ample and cheap power, Sidor, a steel maker in Ciudad Guayana, said it was shutting down its furnaces five hours a day because of the cuts.

“If this crisis teaches us something,” said Fernando Branger, an energy expert at the Institute of Superior Administration Studies, a Caracas business school, “it is that the immensity of our energy reserves means nothing if we cannot even get them out of the ground.”

Socialism will never be able to match up to the efficiency of capitalism. Can we finally throw this model on the dustbin of history.(see what I did there, I quoted Trotsky)

Thursday, November 5, 2009

Hey Mr. Bi-Partisan I want ideas that work President, here is a plan that works better. I'm holding my breath as I know that you are my Messiah.

I would have liked to have been a fly on the wall in the White House when the C.B.O released this report. I can imagine that Rahm Emmanuel let loose with the F-bombs like the Allies at Dresden. To commence with the nana-nana-boo-booering

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the amendment would reduce federal deficits by $68 billion over the 2010-2019 period; it would also slightly reduce federal budget deficits in the following decade, relative to those projected under current law, with a total effect during that decade that is in a broad range between zero and one-quarter percent of gross domestic product.

This is good,good news as the bill after the after ten years would almost truly be "deficit neutral" And the hits keep on coming.

Regulatory reforms in the small group and non-group markets, including establishing association health plans (insurance coverage that is offered to members of an association) and individual membership associations, and allowing states to establish interstate compacts with a unified regulatory structure;

This is what Free-marketeers like myself have been calling for, truly increasing competition between evil horrific insurance companies on a state to state basis. The pool of risk will be larger and will drive premiums down. BET ON IT.

Federal funding for states to use for high-risk pools in the individual insurance market and reinsurance programs in the small group market; and Changes to health savings accounts (HSAs) to allow funds in such accounts to be used to pay premiums under certain circumstances, to make net contributions to HSAs eligible for the saver’s tax credit, and to provide a 60-day grace period for medical expenses incurred prior to the establishment of an HSA.

This might be my favorite portion of the amendment. While states are being further empowered with Federal funding(really their own dollars) for high risk pools and re-insurance programs in the small group market; direct Federal intervention is not happening. The idea behind the GOP's Health Care Bill is to put the individual in charge of his/her healthcare with as little Federal intervention as possible.

Here is the really good stuff:

Limits on costs related to medical malpractice (“tort reform”), including capping noneconomic and punitive damages and making changes in the allocation of liability;

Defensive medicine over. Dead, not coming back. The economic incentive that ambulance chasers like John Edwards has to sue over bad breast implants is gone.

CBO anticipates that the combination of provisions in the amendment would reduce average private health insurance premiums per enrollee in the United States, relative to what they would be under current law-by 7 percent to 10 percent in the small group market, by 5 percent to 8 percent for individually purchased insurance, and by zero to 3 percent in the large group market. Those are averages, however, and they are subject to a great deal of uncertainty; some individuals and families in each market would see different results.

Now, these are the initial estimates by the CBO. So, we can expect to see some changes in the numbers. If these numbers hold up, I believe they will, this is a powerful weapon in the fight. What defenders of this bill, you and I, need to do is be able to explain how the inclusion of free-market reforms in this measure will lead to more innovation and lower costs for the population at large. We need to draw the distinct differences between the efficiency of the private markets and the sprawling inefficiency of the government bureaucracy. This is a battle that we can win. History and economics are on our side. Hope and change are on the side of the Democrats, also I believe they may have a centaur, but we'll still survive. Let's Dance.


The Great Thomas Sowell hits the nail on the head.

Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual’s own circumstances and preferences.

Wednesday, November 4, 2009

Ruminations on the Recent Election

A few thoughts about the election last night. First, there is the old axiom that all politics is local. Very true, and one of the reasons that decentralized government is the best form of governance. It was comical to hear hard-core liberals last night pulling out this card. "This has no bearing on the President as all politics are local." If they really believed it, than they would be for a smaller central government and more power in the hands of the state and local governments. But I digress. Some interesting polling data I saw this morning in the New York Times caught my eye. The split in party affiliation is 33% Democrat, 37% Republican and 30% independent.

Pct. of voters Deeds McDonnell
33% Democrat 93% 7%
37% Republican 4% 96%
30% Independent or other 33% 66%

Deeds won 93% of Democrats, 4% of Republicans and 33% of independents. The figure that is not getting attention, and should is the 7% of the Democrat vote that McDonnell was able to siphon off. Almost 1 in 10 democrats decided to vote for the Republican in a state that all of the experts say is trending from purple to blue. McDonnell ran a positive, results oriented campaign and ended up winning big. Bob McDonnell won Virginia, my home state by 18 points. Republicans and conservatives need to run positive results oriented campaigns if they want to win in 2010. I am all for conservative insurgencies in primaries to let the squishes know who is paying them, but we need to focus on results oriented policies if their is to be another Republican revolution in 2010. We can't simply run against the party in power. This is a good start.

Tuesday, November 3, 2009

Al Gore is the Music Man

Al Gore is quite possibly the greatest con man in history. If I was Al Gore's agent, I would book him on a Broadway run of THE MUSIC MAN and cast him as Henry Hill. I can see and hear the Goracle running through his version of the immortal song Trouble.
(Apologies to Meredith Wilson)

Citizens of the world/Well either you're closing your eyes/To a situation you do not wish to acknowledge/ Or you are not aware of the caliber of disaster indicated/ By the presence of carbon in your community./ Well, ya got warming, my friend, right here/ Ya got warming right here in your community./ Why, sure I'm a carbon man/ Certainly mighty proud I say/ I'm always mighty proud to say it/ I consider the hours that I expand carbon/ flying my private jet are golden./ Help you cultivate a green thumb/ and a cool head and a preening eye/ Never take and try to give/ a Nobel Prize from/ a three railed sailing yacht/ But just as I say/ It takes judgment,brains, and pomposity to thrive/ in a rigged game/ I say that any boob kin take/ and shove a cap and trade bill/ and they call that progress/ the first big step on the road to World Sal-Va-/ I say, first, recycling plastic/ then then re-using TP/ An the next thing you know/ your son is trading carbon credits/ in a hemp made suit/ An listenin' to some big out of town movie star/ hearin him talk about sustainable living/ not some communal living but living where the world isn't going to pot/ Like to see some stuck up Commie boy smoking on green patch/ Makes your blood boil/ Well I should say/ Plebes let me tell you what I mean/ You got one, two, three, four, five, six, seven continents in the world/ continents that mark a difference/ between Europeans and a Yank/ With a capital Y/ and proceeded by W and that stands for WARMING/ And all week long your Republican/ youth will be debatin away/ I say your youth will be debating/ debating away their noon time suppertime indoctrination time too/ get the can in the recycling/ never mind doing study/ or reading Adam Smith or Edmund Burke/ never mind being charitable/ til the third world is caught under water/ on a Saturday night and that's warming/ Oh yes we got lot's and lots of warming/ I'm thinking of the kids in India/ bellies poking out cause they can't get any food after school/ That's warming/ with a capital W/ followed by Y and that stands for Yankee/ who everybody blames.

To remember the rhythm

Any-who, Al Gore is set to become the world's first carbon billionaire from his pushing of global warming on us the residents of River City. Pretty similar to the huckster selling the boys band, no actual knowledge of the issues at hand but knows how to sell the sheep.

Hey How about this Front Page Editorializing

From The New York Times

It is probably not wise to draw broad lessons from Tuesday’s results about what might happen in next year’s midterm Congressional elections and high-profile governor’s races. That said, it is worth watching whether Mr. Obama succeeds in turning out his supporters — especially people who voted for the first time last year — in New Jersey and to a lesser extent in Virginia.

That will be an early sign of his ability to transfer his own appeal to other candidates and of whether he has succeeded in building a sustainable new coalition of Democratic voters. That is something that will not be lost on Democratic members of Congress, especially those in moderate and Republican-leaning districts whom he will be pressing to cast tough votes on issues like health care and climate change.

Similarly, in Virginia, keep an eye on whether independent voters who supported Mr. Obama so strongly in 2008 turn out for Mr. Deeds, vote for Mr. McDonnell or just stay home.

History may not repeat itself but it sure does rhyme.

Market Forces Vs. Government Forces

Now, I'm not one to often gloat when I'm right, but the news of the "unexpected" profit by the Ford Motor Company this week just makes me want to dance around in my Milton Friedman Halloween mask. From the New York Times this morning:

While its crosstown rivals stumbled through bankruptcy this summer, the Ford Motor Company pressed its advantage, and delivered surprising news on Monday that its cost-cutting efforts and improving sales helped it earn nearly $1 billion in the third quarter.

Ford could have taken the bail-out money the same way that GM and Chrysler did. It would have been easy and completely understandable. Who says no to free money. Well, Ford did as they had put together a plan to work their way out of near bankruptcy. What is this plan that Ford came up with to once again become a profitable company. I'm sure that it must be something that the masters in DC could push GM and Chrysler to do.

Ford, which earned $997 million in the third quarter and made money in North America for the first time since 2005, has turned itself around largely by cutting costs and introducing cars that consumers want to buy, rather than resorting to deep discounts to lure shoppers into showrooms.

Let me get this right, by producing a product that consumers want to purchase, Ford was able to post a profit. That flies against everything I learned in my economics courses over the years(snark.) Look, this was a foregone conclusion that Ford was going to post a profit as they have been restructuring their business for the last several years with an eye on the future. Certainly, GM and Chrysler were able to clear their books by taking gubmint money, but the psychological and monetary edge that Ford picked up during the government restructuring of Chrysler and GM put Ford at a distinct advantage.

When Ford chose not to ask for government loans, the company was freed to continue spending on new products like its Fusion and Taurus sedans. G.M. and Chrysler, by comparison, had to rein in much of their product development programs to conserve cash while they awaited federal aid.A report by the Government Accountability Office released on Monday said that the federal government was unlikely to recover much of the $81 billion that was invested in G.M. and Chrysler, their suppliers and related financing companies.

Let this be another example for the inefficiency of Government Force Vs. the Power of Market Forces. While Ford investors will begin to see a return on the investment that they are making into Ford Motor Company, you and I, the American taxpayer, will never even sniff the 81 billion that we sunk into GM and Chrysler.