The Auto Industry

In the 1993 film In the Line of Fire, Clint Eastwood’s character makes reference to the fact that everyone has their “pet theories” about the Kennedy assassination. “How it was the Cubans, or the CIA, or the white supremacists, or the Mob. About whether there was one weapon, or whether there was five.” In a similar way, everyone seems to have a pet theory on what caused the meltdown of the US auto industry. Some say the union. Some say inefficient operations. But the most common reason that “everyone knows” is that Detroit has been going for years, making cars and trucks that the American people simply don’t want to buy. If this is true, it’s a powerful image: three venerable mega-corporations racing forward while completely out of touch with the American consumer.

By now, you know what I have to say: it doesn’t hold up to scrutiny!

First of all, the idea that Detroit makes only bloated, gas-guzzling monstrosities while Asian and European manufacturers make high-tech, fuel-efficient cars for the modern age is ridiculous. Automakers in every country have to compete based on what is on the market. So where we have the American SUVs like the Chevy Tahoe and Jeep Wrangler, we also have the Nissan Armada and Toyota FJ Cruiser. Likewise, the Honda Civic and Toyota Camry have the Chevy Impala and Ford Focus to compete with.

Let’s examine the car-buying habits of Americans in the first eleven months of 2008. All sales numbers are from Forbes.com contributor Jacqueline Mitchell. The data represent major consumer automobile brands and exclude high-end luxury and performance vehicles. And all comparisons are in terms of units sold, as opposed to gross sales dollars.

To start with the losers, the worst-selling car of 2008 was not an American car, nor was it an SUV. It was an Asian minivan, the Hyundai Entourage. Despite naming a car after a supposedly popular series on HBO, Hyundai sold less than 5500 of these vans – down from 16,000 in 2007. Still, SUVs made up eight of the ten worst sellers this year, including five American models and three from Asia. If we can equate the decline in SUV sales with the increase in gas prices, it means gas prices finally reached the tipping point. I have said before that, while gas prices are an easy thing to complain about, they were of little real consequence to most people, since consumption was not affected. With the highest highs we saw this year, there has been a change in the real demand for gas as people changed their driving habits or their car of choice. With that in mind, it’s not surprising to see the SUV decline in popularity this year; although one has to wonder what will happen if gas prices stay low.

As for the leaders, what car would you expect to see in the top slot? The Toyota Prius? The VW Golf? The sentiment expressed at the top of this article would imply those little cars would be high on people’s lists. However, neither of them made the Top Ten. You may be even more surprised to learn that the top two spots were held down by American vehicles – trucks no less – the Ford F-150 and the Chevy Silverado. Between those two, over 900,000 units were sold. What can we interpret from two full-size pickups leading the way in US auto sales? Once again, fuel economy is not the most important factor for people buying cars (if it were, everyone would drive a Geo Metro like me). While demand for the SUV may be somewhat elastic, some consumers just need a truck, regardless of gas prices. Could this also mean the American auto industry is not quite so out-of-touch?

Indeed, the top two spots were held down by Detroit, as were five of the Top Ten. Three of the American entrants were pickups, and the other two were the Chevy Impala and the Ford Focus. All the imports on the list were Japanese passenger cars: Honda Accord and Civic, Toyota Corolla and Camry, and Nissan Altima. Outside the Top Ten, there are other bright spots for Detroit. The Dodge Caravan/Chrysler Town & Country were far and away the best selling minivan in January, selling 17,186 units to Toyota Sienna’s 10,406 and Honda Odyssey’s 8,746. And while the Toyota Prius may have been the first hybrid to the table, there have been advances in hybrid technology that out-innovate it in the Chevy Tahoe, the Saturn Vue, and the Ford Escape.

Let’s look at marketing. In recent months, there have been numerous ads released by Toyota to show their trucks as all-American, tried-and-true, legitimate work vehicles. One can imagine that Toyota wants to capture market share in the lucrative full-size truck market. Also, Chevy has been putting out a series that shows innovations in the so-called green vehicle market. These innovations include the afore-mentioned Tahoe hybrid, the line of Flex Fuel vehicles, and the Chevy Volt plug-in car. Since neither of these ad campaigns seem to have had an effect on the consumer market, perhaps Detroit’s bailout can come by replacing TV commercials with something else…

…like telemarketing. Imagine this:
“Hello.”
“Hello, may I please speak to Mr. Wilson?”
“Speaking.”
“Sir, I’m calling on behalf of Chrysler Automotive. Do you currently own a car?”
“Yes, I have-”
“Well, we can offer you a great deal today on a Dodge Grand Caravan, with no money down and 0% APR for 72 months.”
“Actually, I-”
“And please don’t forget that the Grand Caravan has stow-n-go seating, a powerful V6, and room for seven.”
“That’s the whole-”
“In fact, we recently sent you a mailer on the Grand Caravan. Have you received this mailer?”
“I’m not sure, but-”
“Well, it’s a great car for kids. How many kids do you have?”
“None! That’s why-”
“Please, sir. Everyone has kids these days. How many shall I put you down for?”
“Fine. I have seven. Now will you-”
“Oh, well then we can set you up in our 15-passenger Dodge Sprinter. Excellent choice, sir.”
“No, I-”
“What we’re offering today is a no-risk trial that you can cancel at any time within the first month. Should you decide to keep the van, we’ll bill you standard MSRP plus tax, license, and docking fees. Does that sound all right?”
“No, actually, I don’t-”
“Well, sir, this is a free trial, and what I can do is offer you the reduced restocking option in the unlikely event you choose not to keep the van. Let me put you on hold while I run your credit card…”

Perhaps not. In any case, let us not be too hasty in assigning blame on the product offering made by Detroit. A significant number of Americans are still buying.

Following the Election

I'm not going to cry voter suppression. I'm not going to argue that the military absentee ballots haven't been counted yet. I'm not going to call for lawsuits in Ohio, Virginia, or Florida. I'm not going to jump onto the legal team in the suit claiming Obama has no standing to be President. I won't even whine about the Rasmussen poll that shows a majority of Americans think the press helped Obama to win (http://news.yahoo.com/s/rasmussen/20081105/pl_rasmussen/reportershelpedobama20081105). Obama won. McCain lost. Let that sink in for a moment.

Moving on, we must examine the fact that Republicans as a general rule do not run good political campaigns. Exit polls showed that the majority of voters in Ohio listed the economy as the number one concern in their decision. And the numbers from Ohio show 51% voted for Obama. And here begins my frustration with the election. It's not so much that Obama won. It's the false perception with those who voted for him. Let's review:

• Obama's platform was "CHANGE". There was not a group in America that couldn't identify that. Colin Powell called him a transformational candidate. And yet, in 8 years in the Illinois legislature and what will be 4 in the US Senate, he has no record of standing for change.
  
• Obama ran as the guy who will bring everyone together. Again, he has no record of doing this. The legislation he's sponsored with Republicans has been bland stuff that had near-universal support anyway. Doesn't take a lot of political courage to pull that stuff off.
  
• Obama won as the more qualified economist. But the redistribution strategies he supports have never served to get us out of a bad economy. McCain's platform of keeping low tax rates on the top income earners is the same plan that got us out of the worst economy since the Depression.
  
• Obama ran as the reformer, sent to make changes to the way government runs. Again, he has no record of this, and the record he does have shows him supporting corrupt organizations like ACORN, being supported by corrupt organizations like Fannie Mae, and having personal ties to corrupt individuals like Tony Rezko.
  
• Obama is supposed to be the friend of the little guy. However, his days as a community organizer show little to no accomplishment. The attacks from his campaign against Joe the plumber and Sarah Palin show how he treats regular people who don't agree with him. And perhaps the biggest sign out there is that he has numerous family members living in poverty while he and Michelle have cleared tens of millions in recent years.
• Many of the claims of the Obama campaign can be shown to be false or misleading. One example is the idea that Obama is a supporter of gun rights. Another is the tired idea that Republicans give tax breaks for taking jobs away from Americans.
  

Of course, a campaign can position itself as it chooses. I'm disappointed that the McCain campaign didn't do more to highlight the falsehood and talk about facts, ideas, and the middle class. Republicans need to take note of this in 2010.

Speaking of the future, things looked bleak for Republicans in 1976, but it took just four years of Jimmy Carter to revitalize the conservative movement and pave the way for eight years of Reagan. It took just two years of Bill Clinton and a Democrat Congress to usher in a new conservative agenda. So take heart, my conservative friends. And beware, my liberal friends. With the Republican Party squarely out of the spotlight, we'll be watching.

Tomorrow's the ELECTION!

I'm an election-night junkie. I love watching the coverage. In 2004, I set my clock based on what state's polls closed at what time. I love the maps showing the electoral votes with the ticker on the bottom giving exit poll data. Exit polls - are they still legal?

Of course, in 2004, I bought into the mainstream press' ideas that John Kerry was going to be the next President. Today, I've heard the full spectrum of prognostication. Tammy Bruce said this morning that McCain was going to win Pennsylvania or at least make it very close. No Republican has won Pennsylvania in 20 years. But that's okay, she said he'll take Florida, Ohio, and Virginia as well. I like the optimism, because it contrasted nicely with Bill O'Reilly doing a post-mortem on what McCain did wrong to lose the election.

I will be honest, unlike everyone else in the news. I have no idea what to expect tomorrow. There's a chance McCain could win, and there's a chance Obama could win. Either way, I'll be glued to the TV as much as possible.

So, to get back to Dr. A, I wanted to do some responses to her points before the polls open up tomorrow. If I can debunk a few Obama myths in the next few hours, maybe it will help. Take it away, Dr. A!

Obama actually has a rational plan for energy independence that would completely change the nature of our relationship with the oil-producing nations of the Middle East (eg: they wouldn't matter to us anymore), create jobs, and ensure that the US holds the patents on alternative energy technology that would be extremely valuable exportable commodities. McCain's "spending freeze" and lack of support for basic scientific research will only ensure that the US falls further behind technologically and will have to purchase alternative-energy technologies from other nations with better foresight.

No one ever talks about Saudi Arabia, Russia, Venezuela, or Mexico becoming energy-independent. Why is that? Because they are willing to tap their own natural resources. And yet we aren't. Obama has made some recent, token gestures toward offshore drilling, but this is clearly a politically calculated move, because it's never been part of his platform before. What has Obama discussed as far as energy policy goes? CAFE standards, clean coal, wind, and solar. Will any of these initiatives get us out of the Middle East oil market? Not likely.

CAFE standards are the antithesis of free-market capitalism. Here you have the government telling a manufacturer that it must provide vehicles that meet certain fuel economy standards. Last I knew, we are free in this country to purchase as we see fit. Manufacturers, therefore, should be able to sell as they see fit, to meet the market demand. Until this year, fuel economy was not a primary motivational factor for consumers buying cars. If it were, the Geo Metro would be the best selling car of all time. But it's not (good for me, since I got a great deal on a used one). People choose vehicles for a variety of reasons. I know the Left gets hung up on the popularity of the SUV, thinking it is merely a status symbol. First, if that's true, it's a free country! Second, there are many other reasons to drive an SUV, including towing and payload capacity, seating, driving in snow and other adverse conditions, and general safety in an accident.

As fuel costs have risen, the SUV has become less desireable. As such, manufacturers have sunk R&D dollars into more efficient vehicles. Now that there's a stronger market for them, companies are willing to invest. Welcome to the free market. You'll now see the average fuel economy of passenger vehicles increase. And this is coming without changing the statutory minimums.

As for the scientific initiatives, see my post on corn ethanol. I'm all for new ideas and new technologies. I'm all for green technology and paradigm shifts if they make sense. But, again, if there's no market for it, a company is not going to invest in it. That's bad business. If the government chooses to invest in it, it's still bad business, but the difference is something called logrolling, which means you continue down the same path, even if it makes no sense, because it's a government program. You may call the McCain plan a spending freeze, because it doesn't put out taxpayer money like a shopping spree. However, the idea McCain had a few months ago to put up a bounty for a significant technological advance is a great idea. We saw the results from the X Prize, where smart people were given the incentive and someone succeeded in building a privately-funded spacecraft. Do the same thing for energy innovation with government money, and you'll see results.

Obama's healthcare plan isn't perfect, but would help tremendously with the current problems of the uninsured.

Basic principle: healthcare is not the responsibility of the government. Furthermore, it's not something that will improve with the government's "help".

What's missing in the healthcare system is competition. Doctors, hospitals, and insurance companies don't compete for your business. According to the Census Bureau, the majority of Americans have health insurance through their employers. So that's a majority of the American public that doesn't choose a plan based on what's best for them. Where's the incentive to compete? Where's the incentive to innovate? Where's the incentive to operate more efficiently to gain more market share? There is none. By extension, our doctors and our hospitals get captive business from us, based on what our insurance will cover. To take it a step further, they can charge whatever they want, because we largely don't see what they're charging. It's a symbiotic relationship. Healthcare providers charge higher rates so people need insurance to cover the high costs. Insurance companies charge higher premiums to cover the higher costs, and no one shops around, so there's no risk of losing business.

Now, take the idea of government-sponsored healthcare. Does it increase competition? Does it drive costs down? Does it do anything to improve the condition of the market? No. Quite the opposite, it harms the free market. Let me give you this illustration. The government buys cheese to distribute to low-income consumers. It has to pay a premium for this cheese, because it demands a significant quantity and has to make good for the dairy farmers who are selling it. So, if the government is buying cheese at $3/lb., it means that every grocery company will have to pay the same price. A grocer that was getting cheese for $2.25/lb. will soon find that no one is willing to sell to him at that price - not when the government is willing to pay more. So what happens to the price of cheese in that grocer's store? It goes up! Now fewer people can afford cheese and more people have to get it from the government. It continues this way until the government has to socialize the cheese industry.

In actuality, the cheese industry will probably be okay, because there are many options. But in the world of trial lawyers (big Obama contributors) who drive up the cost of being in health care, the health care market is already strained. And a move to involve the government will threaten it further. A move where government uses its position to stimulate the private sector and thus drive down costs through competition is much preferred. Ask Mitt Romney about the plan he signed into law in Massachusetts.

Honestly, one of the things that has impressed me the most about Obama is that he really seems to understand that the reason for US economic superiority in the last half of the 20th century is the amount of technological innovation that happened during WWII and the Space Race.

That's a good analysis. Economic superiority comes from invention and development of industries. Imagine a better product, bring it to market, and suddenly a new industry is born. Jobs are created. People make money, from the top of the corporation down to the guy mopping the bathrooms. Talk about spreading the wealth around! It's a model of economic growth that doesn't punish success, that doesn't rely on redistribution of wealth, and that tears the ceiling off of what could be. Awesome, Dr. A! Unfortunately, I don't hear this model in Obama's plans. Instead, I hear that we need to roll back tax cuts and get the "wealthy" to start paying their "fair share". I hear that we need to punish successful and innovative companies with a "windfall profits tax". I hear that America needs to stop thinking like the world's only superpower and start letting the rest of the world dictate what we eat and drive. His agenda doesn't sound compatible with striving for the greatness America has enjoyed since the Second World War.

McCain mostly advocates research being funded by private corporations. The problem with this is that when you have profits as your bottom line for research & development, the quality of your research suffers... which would you trust more, research on the efficacy of a new medication done by Professor X funded by the NIH or the same study done by Pfizer?

This goes back to my earlier point. Companies have to get results in order to survive. Government programs can go on indefinitely. Companies have to find ideas, find ways to bring them to market, and find out if they are feasible. Government functions as if it had unending resources and lives in a world of limited accountability. Companies have to function as efficiently as possible, since they face competition. Government has no competition. Private industry, while derided by the Left, is an invaluable asset in building innovation for the future. To answer your question, I'd trust the company that has the incentive to bring a better product to market over the government that manages Social Security any day of the week.

I do think Obama knows at least something about economics and knows enough to seek the right expert advisers.

If Obama has any idea how the economy works, he hasn't shown it. His former political mentor is a self-proclaimed communist. He has promised to raise taxes in spite of a poor economy, which has never worked to bring about economic recovery (unlike the opposite, which does have a track record of working). No country has ever taxed its way out of a recession, and I can think of no socialist nation that we could call "thriving". He has proposed hundreds of billions in new spending without matching spending cuts. He has no record in this area, so he can only be judged in his own words, which say quite a bit.

To wrap up, the case against Obama is strong. He has no accomplishments in his tenure as a state legislator or a US Senator. He throws around a lot of concepts that he either doesn't understand or is deliberately misleading people based on who his particular audience is. He would be hard-pressed to get a position of mid- to high-level management in any company in this country, and yet he is asking to be the top executive in government. He claims to be a transformational candidate, yet his record shows no signs of change. He claims to be a new type of politician, but he is running the same old liberal playbook. I want change in this country, but Barack Obama is neither qualified nor willing to bring it.

The Case for Obama (and a few comments from me) Part I

I like jazz and classical music. I have a college degree. I'm under 35, drink imported beer, drive an economy car, and (obviously) have a blog. I have never made over $250,000 in a year, have never started a business, and bought my house on a subprime program. And I think my health insurance costs too much. If we were punching these data points into a computer, it would certainly calculate me as a prime supporter of Obama.

So why don't I support Barack? I think I've laid out my thinking in numerous ways, but is there a blind spot in my thinking? Am I missing something? It would be terribly arrogant for me to think I have all the answers and don't need another perspective. Fortunately for me (and for the one or two people who actually read this blog), I have been blessed with a few smart and rational liberal friends. Smart and rational - meaning they can articulate a position that is based on something other than rhetoric, talking points, and inflamed passions. Friends - meaning they still speak to me even though we get into it pretty good at times. And, even though we typically agree to disagree, the discourse is valuable as it shapes and strengthens our respective knowledge and positions. And they're all women. Funny how things work out. I always wanted to arouse strong passions in the opposite sex and to have them hanging on my every word. Instead I've got a pack of fired up liberal ladies looking to hang me for every word. Close enough, says I.

We'll start with some words from Dr. A. Dr. A. is a New York liberal who I happened to converse with recently. She's a Barack supporter who gave me permission to reprint her comments here. She started with a round of general criticism over the current administration and really the Republican Party in general. I won't devote a lot of time to these, since they aren't central to her argument. She criticized the Republicans for invading the wrong country (I'd devote an entire series to debunking this, if it weren't so 2004), authorizing torture (irrelevant since McCain has come out in opposition to waterboarding), refusing to grant rights to POWs at Guantanamo (not true, and even less true now that the Supreme Court has given detainees standing to file suit), and for destroying the greatest economy of our generation (an economy that was the result of Reagan's fiscal policies, which were in large part undone by the Clinton Administration, as evidenced by the recession prior to the 2000 election).

Like I said, I won't devote a lot of time to those issues, but there was one criticism she put forth that I can't walk away from. To quote: "[The Republicans] allowed massive corporate deregulation that led to the current financial disaster..." I know I heard that same sentiment on an Obama radio ad, but it just doesn't hold up to scrutiny.

Banks and other lending institutions loan money to people based on their ability to pay it back. Someone who is a low risk would get a lower interest rate, while higher credit risks pay a higher rate or are simply disqualified. In addition to the borrower, the lender has to evaluate the property, the neighborhood, and the likelihood that the investment will retain its value over time. That's a classical model of lending. It is not always equitable, and tradition has it that many minorities and many depressed neighborhoods were left out of this lending equation. To respond to this, the Fair Housing Act of 1968 and the Community Reinvestment Act of 1977 were signed into law. These made it illegal to discriminate in the sale of a home or the extension of credit for a home based on race or neighborhood. (Sidenote: I have been told the California home in which I grew up had a provision in the deed that said it could only be occupied by persons of the Caucasian race. While it was not legal or enforceable when we lived there, it was a relic from the 1940s when the home was built.)

Eliminating discrimination is a good thing, but by the late '90s, there was mounting pressure from the White House to increase lending to low- and moderate-income borrowers. This would allow the Clinton legacy to include higher rates of home ownership. There was also pressure from banks for Fannie Mae and Freddie Mac to ease their lending restrictions. This would allow banks to lend money to less qualified borrowers and then sell the high-risk (subprime) mortgages to Fannie and Freddie. Fannie and Freddie eased their restrictions, and the Federal Reserve Bank cut interest rates. Benefits overflowed. Banks got to sell more mortgages. Builders and developers got to sell more homes. Demand for homes went up dramatically, which in turn caused home values to soar. Low-income consumers were able to buy homes where they couldn't before. High-income consumers were able to buy investment properties and bank on the market continuing to rise. Profits at Fannie and Freddie shot up as the balloon continued to rise. Financial services companies grew in value, creating a windfall for investors on Wall Street. Everyone wins, right?

Wrong. The gains were based on bad paper, just like the stock market in 1929, the NASDAQ in the late '90, the S&L industry in the late '80s, and so on. As the value of homes stopped rising, consumers could no longer refinance their way out of trouble. Foreclosures began at an alarming rate. The more foreclosures happen, the more the supply-and-demand of the housing market gets out of whack, and home values continued to fall. Lenders were left with assets that couldn't cover their capital outlay, and it was clear the party was over.

To quote Kevin Bacon, "These are the facts of the case, and they are undisputed." Democrats are quick to blame Republican deregulation efforts, but it was the Clinton Administration that eased lending rules for Fannie and Freddie. It was Clinton who signed the Taxpayer Relief Act of 1997, opening up the market to more home ownership for investment purposes. It was Barney Frank who in 2003 opposed the oversight of Fannie and Freddie by an independent agency, saying the Bush Administration was overstating the potential for trouble. It is Left-wing organizations like ACORN who have mounted campaigns against lenders who do not have a sufficiently diverse mortgage portfolio. ACORN and Fannie Mae have made significant donations to the Obama campaign. And let's not forget that conservatives (I'll stop short of saying Republicans, because the two are not synonymous lately) warned of the potential for problems by easing restrictions. Peter Wallison, senior fellow at the conservative American Enterprise Institute said of the relaxed lending restrictions in 1999, "This is another thrift industry growing up around us. If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."

And, of course, it was John McCain - current Republican candidate for President - who co-sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have tightened up lending policies for Fannie and Freddie. Said McCain, "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole." However, the Democrat-controlled Congress did not support this bill.

So we have McCain, who spoke out about the coming crisis, even though at the time, it was a vastly unpopular position. And we have Obama, who cashed in the crisis, receiving more contributions from Fannie and Freddie in three years than 98 other Senators have received in the last 19 years. We have McCain, whose connections with people like Mitt Romney and Steve Forbes give him proven and successful free-market thinkers to help with the current crisis. And we have Obama, whose connections to people like Tony Rezco and Bill Ayers give him great options for socialism and corruption.

Who would you rather have overseeing the financial system in this country?

The Legend of Barack

Well every story has a hero,
Or at least someone who's main,
But to say that [Barry] was anything less than grotesque
Was bordering on the insane

I don't have the author or the title of that piece I just cannibalized (should be Larry, not Barry), but it's a cowboy poem I first heard when I was a kid. I've always enjoyed old stories, legends, tall tales, and such. I guess it's a reflection of my childhood, growing up hearing great stories told exceptionally well. Sentiments like "Never let the truth get in the way of a good story," or the line from a John Wayne movie, "When the legend becomes fact, print the legend," seem to live in us all. But as citizens in a free society, there are times when a story must be exposed for the falsehood that it is, no matter how much we may want to believe it.

Senator Barack Obama has made many statements during this political cycle. Some of his words have undoubtedly been true. But how much of his rhetoric is based in fact, and how much is pure legend?

The first claim to examine is that he is a new type of politician, running a new type of campaign. It is true that I can't remember any other candidate who was afforded the opportunities to speak on broad topics as part of his or her campaign. Obama's early speeches about hope and change were admittedly stirring. But how has he conducted himself on the campaign trail? Has he abstained from negative campaigning? Has he transcended race and focused on issues? Has he maintained promises? Here are some facts:

• Despite the fact that Obama has asserted that McCain has been running a smear campaign (which is in itself a negative attack, if you think about it), Obama has been running negative ads since before the first of the year. http://blogs.abcnews.com/politicalradar/2007/12/obama-launches.html
  
• According to John Geer of the Washington Post, "Recent data from Nielsen suggest that the campaigns have aired roughly the same number of negative ads." http://www.washingtonpost.com/wp-dyn/content/article/2008/10/10/AR2008101002449.html?hpid=opinionsbox1
• Obama and his surrogates in the media have done far more to bring up race than any of the senator's opponents. Take, for example, the AP story from this week about Sarah Palin's comments regarding Obama and Bill Ayers. The AP characterized Governor Palin's words as having "carried a racially-tinged subtext". I'm not sure how bringing Ayers into the discussion is racist, since he and most of his Weather Underground followers were white.
  
• Obama is running a privately-financed campaign, despite his commitment over a year ago to fund his bid with public monies. So much for keeping the special interests out of it!
  
• In his 2003 bid for the US Senate, Obama both wrote and spoke of his commitment to vote against renewing the USA Patriot Act. However, when the vote came up in the Senate in 2005, he voted to renew it with what he considered to be only "modest" changes. http://firstread.msnbc.msn.com/archive/2008/01/14/575746.aspx

Recent Obama ads I've heard on the radio have implied that Obama would protect the rights of firearm owners. However, these ads appear to be nothing more than an attempt to capture votes in the battleground state I live in, which is fairly gun-friendly. Note there are no links to NRA pages here:

• Obama supported a proposed ban of handguns and assault rifles in the state of Illinois. http://www.ontheissues.org/2008_Dems_Philly.htm
• Obama has expressed support for the 2nd Amendment to be subordinated to local regulations, as in the unconstitutional Washington D.C. handgun ban. http://www.ontheissues.org/2008_Politico.htm
• Obama co-sponsored legislation in Illinois to limit handgun purchases to one per month, and he voted against the necessity doctrine. John K. Wilson, 10/30/07
  
• Obama voted against the Protection of Lawful Commerce in Arms Act. 7/29/05, S-397
• Obama said this spring that guns are what bitter people cling to when they have no hope. http://www.suntimes.com/news/politics/obama/891685,CST-NWS-obama12.article
• Obama does not support concealed carry rights, saying (despite evidence to the contrary) that they could cause innocent people to be shot more often. http://www.pittsburghlive.com/x/pittsburghtrib/search/s_560181.htm

And the biggest legend I'm hearing these days is that Obama the Reformer will fix the financial crisis, while McCain the Incompetent made it happen in the first place. If the truth hurts, Senator, may I recommend aspirin for headaches and Midol for cramps?

• The financial crisis is largely a result of the collapse of the subprime lending industry.
  
• Obama was a community organizer. ACORN, a group of community organizers, has pushed subprime lending as a means of getting low-income people into loans for homes, cars, and consumer goods. This push has come in the form of protests, lawsuits.
• When the housing market began to skyrocket, the subprime mortgage industry was a big profit center in financial institutions and on Wall Street. Thus, its growth was politically expedient.
  
• Despite assurances from Congressional Democrats that all was well in the mortgage industry, John McCain sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have put some controls on the subprime lending industry. Needless to say, the Act did not pass.
• Democratic Congressional leaders - who profited from subprime industry campaign donations - are quick to point the finger but not interested in holding hearings to get the facts on the record. http://www.newsleader.com/apps/pbcs.dll/article?AID=/20081010/OPINION03/810100314
  

Like I said, I love a good yarn, even if it's completely implausible. It's a phenomenon called the suspension of disbelief. And while I can keep that suspension going to overlook plot holes, inconsistencies, and downright nonsense for a good story; one has to draw the line somewhere. Senator Obama has certainly become legendary on the political scene. But it's time to pick the plot apart and see how much of the legend has basis in reality. If it isn't done soon, we'll be suspending disbelief for the next four years.

Obama's Cabinet

I made the mistake this morning of watching the Today Show. Not a good place for a supporter of conservative principles to spend his time. In any case, I watched as they did an "analysis" of the campaigns. The time dedicated to McCain was mostly to show how out-of-touch he is with the American people, and the time for Obama was to show how he's responding to McCain's out-of-touch campaign. They had the split-screen with a McCain staffer and an Obama staffer. The Obama staffer got time to explain how bad McCain is, and the McCain staffer had to spend her time fielding questions along the lines of "Do you really think this McCain campaign strategy is what the American people want to hear?" Yes, the mainstream media do such a great job of being unbiased.

But I've been thinking about Obama's cabinet, since the media are so assured he's going to win. So who would he have in his employ as President? Here are some ideas:

Secretary of State: John Bon Jovi. John has toured Europe and belted out power chords to screaming fans, which gives him exactly the same foreign policy experience as Obama. Not counting the musical talent.

Secretary of the Treasury: Barney Frank. Congressman Frank has done an excellent job overseeing the likes of Fanny Mae and Freddie Mac, so don't you think he'd be ideal to keep the Treasury working right? (Honorable mention for this post is the late Richard Pryor, whose experience in Brewster's Millions of blowing a fortune he didn't earn and having nothing to show for it made him a no-brainer for Obama's cabinet.)

Secretary of Defense: John Kerry. Who better to see to the day-to-day operations of our Genghis Khan-inspired military operations?

Attorney General: Edward M. Bernstein. For those who don't know Ed, he's a personal injury attorney, a TV talk show host, and a former Democratic candidate for US Senate here in Nevada. As an attorney, Bernstein has won many settlements, but rarely, if ever, set foot in a courtroom.

Secretary of the Interior: Michael Vick. The former (and possibly future) quarterback for the Atlanta Falcons is an ideal pick for the top range manager in the country. As everyone knows, good range management means effective thinning of the herds.

Secretary of Agriculture: this position will be eliminated, since the Obama Administration will see to it that all farming capacity is used for corn ethanol production, which would fall under Energy.

Secretary of Commerce: this position will also be eliminated, as the free market as we know it is obsolete and out-of-touch with the world economy. It will be replaced with a Secretary of Nationalized Industry, Vladimir Putin.

Secretary of Labor: Gary Coleman. The diminutive child actor will bring about the type of reform needed to ensure that no child actor is left behind in the workforce. His ideas of asking people to donate money so child stars don't have to work were sheer genius.

Secretary of Health and Human Services: Jose Canseco. The retired baseball player and author of Juiced will put an end to the scourge of steroids. Or maybe he'll say it's necessary to stay competitive - I really can't tell what he's preaching. But the unrighteous indignation will fit nicely.

Secretary of Housing and Urban Development: Chris Rock. Rock's description of growing up in a bad neighborhood from Lethal Weapon 4 was compelling. Maybe Danny Glover and Mel Gibson will be part of his staff as well.

Secretary of Transportation: Dean Kamen. The inventor of the Segway revolutionized transportation to the point that in some parts of the country, they don't even walk anymore. Imagine public transportation where a bus full of people needs only to lean forward to get to the next stop.

Secretary of Energy: Al Gore. Gore has been looking for opportunities to talk about global warming, carbon footprint, and the impending disasters untold if too many Americans live the life he currently lives.

Secretary of Education: Britney Spears. School choice may not be on the table, but Britney's new line of school uniforms will revolutionize the educational system in this country. Plus, she'll have the attention of every student as she shares her views on sex, drugs, and reduced lunch tickets.

Secretary of Veterans Affairs: Cindy Sheehan. Cindy's relentless support of her late son's memory qualifies her to look after veterans. Her sentiments that "This country is not worth dying for" seem to line up with the Obama platform.

Homeland Security Chief: William Ayers. I can think of no one better to run our domestic war on terror than a confessed domestic terrorist. His sage advice not only has helped to form Barack Obama's views, but also thousands of students who have passed through his classroom.

White House Chief of Staff: Jeremiah Wright. Reverend Wright will set the tone for the Administration. He's very comfortable with the press, he believes the resources of America have been turned against the black man, and he can sidestep any gaffes with a chorus of "God Damn America".

White House Communications Director: Bill Burkett. The man behind the fraudulent reports on George W. Bush's service record in 2004 will be well qualified to produce evidence to back any claim he makes.

Please feel free to write in with suggestions to modify this list. We also need to find someone to run the EPA, the Office of National Drug Control Policy, the Office of Management and Budget, the Federal Reserve, etc.

Alternative Fuels I: Ethanol

Alternative is a word that always sounds cool. It means you’re different from everyone else and you aren’t afraid to embrace it. It means you have another way to accomplish the same thing. It means you’ve broken out of the same old thinking and you’re living a new paradigm. Isn’t that the American dream? So when we hear discussion of alternative fuels, it just seems like the next evolution in the world of energy. But is this sentiment genuine?

Alternatives should have some value, relative to the norm. For example, disinfectant spray is an alternative to bleach if you want to kill germs. Bleach works better in most cases, but the spray is safer and easier to use. So you can trade off one advantage for another. If, however, one trades the norm for a so-called alternative that has no advantage to weigh out, it’s not really an alternative. This would be like eliminating bleach from your disinfecting regimen and replacing it with vanilla ice cream. Sure it’s different, but it’s not really a viable alternative. The same is true of many proposals to replace petroleum.

There are a few things to bear in mind when considering any discussion of fuels, energy, and transportation. Energy is energy, regardless of its source or form. So, whether one is considering petroleum, electricity, biofuels, or fuel cell technology, the same amount of energy is required to perform the same amount of work. So, for our purposes, let’s compare apples to apples and see the comparative benefits. This topic will take up more than one article, but we’ll keep the methodology as consistent as we can throughout the series.

We’ll start with the most popular alternative out there now – corn ethanol. This is a biofuel, made by fermenting corn. The most common ethanol fuel is E85, which is 85% ethanol and 15% gasoline. This is considered the “summer blend”, while E70 (70% ethanol) is the winter blend. It is touted as a prime and immediate petroleum alternative because it can be derived from domestic sources, it is renewable, and current automotive technology will support it, as seen in flex-fuel vehicles (FFVs). These arguments sound good, but what is the rest of the story?

The first thing to note about ethanol is that is has a lower energy content than gasoline. According to the Department of Energy, a given volume of ethanol contains less than 70% the heat energy of the same volume of gasoline. Put another way, to get the same heat energy as a gallon of gas, one would have to burn about a gallon and a half of ethanol. This speaks to a decline in fuel economy in the same engine. The EPA says that FFVs get an average of 25-30% lower fuel mileage when running on E85 than on gasoline.

The translation is that an FFV will burn 25-30% more fuel when that fuel is E85. All things being equal, one would expect 25-30% more emissions with E85. The EPA asserts that E85 releases 15-20% less greenhouse gases (GHGs) than gasoline. Even so, the reduced emissions balanced with the increased consumption means more emissions overall. Furthermore, the 15-20% figure includes the refining and distribution processes. Since there are significant GHG savings in the fact that ethanol can be sourced locally and that photosynthesis absorbs GHGs, the emissions released at the vehicle are likely even higher.

The question of ethanol’s renewability is somewhat outside my expertise, but some sources indicate that corn cannot be grown indefinitely on the same land. The crop depletes certain minerals and nutrients from the soil and, even with good crop rotation strategies, arrives at a point of diminishing return. I will research this further and include my findings in a follow-up. Whatever the case, agricultural capacity is at a premium, and devoting this capacity to biofuels has already increased food prices around the world. And, while the decision between producing corn for fuel or corn for food comes down to simple economics, the amount of corn needed for 25 gallons of ethanol would provide the average person enough calories for a year.

Finally, instead of fuel economy, one must look to financial economy. Provided one has an FFV and can purchase E85 (there are less than 2000 E85 pumps open to the public in the US, with a literal majority of those in a few Midwestern states), she will find it selling for a national average of $3.02 per gallon. Compared with the current national average for a gallon of gasoline – $3.70 – this is a savings of 18.3% (see e85prices.com). To go 1000 miles in a mid-sized sedan, she would need 50 gallons of gasoline ($185) or 63 gallons of E85 ($190.26). So the prices are comparable, right? Wrong. The price at the pump for E85 is after a government subsidy program has taken its toll. According to The Economist, US ethanol subsidies are equal to $1.90 per gallon. Take that into account, and the price for a consumer (after all, federal subsidies are paid by the American taxpayer) to fuel 1000 miles’ worth of driving rises to a blistering $309.96. That’s an increase of over two thirds over the price of gasoline. It would be like paying $6.20 a gallon for gas.

With these facts in mind, it is clear that E85 is not the answer. It cannot match gasoline in cost, emissions, or fuel economy. The sustainability is questionable, and the impact of food vs. fuel debates cannot be overlooked. Clearly, petroleum supplies are finite and the transition to renewables is inevitable. Still, this transition must be made to a genuine alternative, which ethanol is not.

The Fundamentals of Our Economy

John McCain took heat this week for saying the fundamentals of our economy are strong. In light of the drop in the stock market Monday and the ongoing crises with Fannie Mae, Freddie Mac, and a few large financial services firms, Barack Obama seized on the opportunity to portray McCain as out-of-touch. The upshot of Obama's comments are that the fundamentals of our economy are not strong.

That's an interesting sentiment from Senator Obama, who has repeatedly called for raising capital gains taxes, implying that stocks are solely a rich man's game. Yet, when the stock market dips, suddenly this is a crisis for everyone in America. Which is it, Senator Obama?

As for the mortgage issues, the Democrats need look no further than their own mirror to see where much is this problem came from. If the push for urban redevelopment with little to no oversight leads a private company to fail, what makes us think the same company with a blank check from the American taxpayer will ever be solvent?

And as for our economy, the potential loss of AIG and others should be seen as a serious issue, since these companies employ thousands and have ongoing obligations. But to equate this with a weakness in the general state of our economy is ridiculous. Are we to believe that losing a few firms (which is by no means a certainty at this point) will plunge the US into the Third World? That unemployment will rise from its current level of 6.1% to rival France (7.5%), Germany (8.4%), or the world average (30%)? That profitable businesses and organizations will grind to a halt? That entrepreneurs will stay home? That tomorrow I'll lose the ability to buy gas, food, clothes, and other necessary items? That our very system for buying and selling goods will cease and grow cold?

I think not. The strength of our economy even in slow times shows that the fundamentals are just fine. And to accept analysis from Senator Obama - who proves repeatedly that he has no grasp of economic principles - is as daunting as accepting his plans for economic growth. We can't afford to do either.

Conservative AND Christian

Harry Reid is my senator. He's my representative in Washington. Not because I asked him to be; in fact, I asked him not to be. Hilariously, his 2006 campaign billboard said "Harry Reid - Independent Like Nevada". Since when is the guy who stands to become the Democratic Leader in the US Senate independent? But I digress. In 2001, Senator Reid gave the following quote: "I think it is much easier to be a good member of the Church and a Democrat than a good member of the Church and a Republican." Senator Reid is a Mormon, and, despite all propaganda to the contrary, that's not the same as being a Christian. Still, his quote is timely, since I've heard the same sentiment from liberal Christians - that the liberal ideology is more in line with the Bible. Is it true?

In order to answer that question honestly, we have to define "liberal ideology". One could easily dismiss a claim like Senator Reid's by saying the greatest example of liberalism in the world is communism, which traditionally eschews all religious exercise. But I will concede that's not what Senator Reid or my liberal friends meant. By the same token, I'll avoid the obvious arguments that involve school prayer, the display of the Ten Commandments in public buildings, publicly funded Christmas displays - these are not the argument either. The discussion, in order to have any value, has to relate to the secular.

Probably the greatest secular issue dividing the Left and the Right is taxation. Democrats tend to favor higher taxes to support more government programs. According to Senator Reid's sentiments, these programs are the biggest reason a man of faith would vote Democrat, as they benefit the "least of these" as described by Jesus in Matthew 25. And, after all, Jesus told his disciples in Matthew 22 that they should pay taxes - "Then render to Caesar the things that are Caesar's; and to God the things that are God's." On the surface, it's hard to argue against this chain of thinking. Still, a little scrutiny (as we've seen time and time again) might tell a different story.

Confiscatory tax laws may seem like a violation of the Commandment against stealing, but Jesus' words clearly uphold a government's right to tax. But what of those receiving government money? The government pays subsidies to able-bodied men and women not to work. And many of these subsidies are not limited to a certain timeframe or situation. They may not even be to the people you would envision. We can all conjure up ideas of welfare babies and public funding of free housing projects. But what about farm subsidies? Urban redevelopment? Social security benefits that punish recipients for earning too much on a job? Post-Kelo eminent domain transfers? Clearly, the government gives out a lot of money every year to benefit people who are not working for it. Ephesians 4:28 is clear that one should "work, doing something useful with his own hands, that he may have something to share with those in need."

Beyond the simple command to work and share benefits with those in need, one also must consider the stewardship issue. Throughout the New Testament, there are exhortations to be a good steward of the money, time, talents, and resources entrusted to the believer by God. This means that resources must be put to the best use. If there were a needy person, the most efficient way to put my resources to use for his benefit would be to let him move in with me. Slightly less efficient - but sometimes more practical - would be to give him money to use for his needs. Either way, nothing is lost in the transfer. A step removed from this would be to give money to a local charity organization or church. The organization would then cover its own expenses and dole the money out to help needy folks in my community. So a little money is lost in the transaction, but the organization would likely have a better mechanism to help the needy, so the arrangement still works well. How far removed is it from those options to get involved with a federal bureaucracy that is far from my community and has no incentive to trim expenses? To count on a distant government to force me into paying into a system that is inherently ineffective and corruptible seems like the opposite of good stewardship - particularly when there are real and effective non-profit organizations in every community in America.

Could it be that this drive to tax our way out of poverty is a form of slacktivism? A way of trying to attack a problem without really getting one's hands dirty? Just like an Internet petition or a phony donation plan for every forwarded e-mail, this solution hasn't worked yet. But what about the opposite? What could be accomplished by lowering taxes? Lowering taxes puts more money in people's pockets. Consider the GDP (gross domestic product) model of measuring economic growth. The four components of GDP - gross domestic product - are consumption (what consumers spend), investment (money spent to build capacity in a business), government spending, and net exports (exports minus imports). Liberals tend to seize on the third component, government spending, and use this as a rationalization for taxing, since a government would have to raise the money in order to spend it. But think of it like this: government spending is the opposite of taxation. Lower taxes are like government spending, in the same way that a penny saved is a penny earned. In fact, a penny not sent to the government to spend doesn't have to pay for administrative costs that will send it back into the community. On the other hand, increased consumption leads to economic growth, which is of far more benefit to the needy than a government check in the mail.

To look at it from another perspective, when people have more money in their pockets, they either spend it or save it. Spending it immediately benefits the business who receives this money. This benefit, when aggregated over the whole economy, leads to businesses expanding to keep up with demand. This means more people can find jobs, since more jobs are available. Saving it immediately benefits the savings institution. When a bank has more money on deposit, it has more flexibility to loan it out. A stronger money supply in the lending market means increased home ownership, better ability to expand business, and stronger figures in the durable goods markets. Again, these benefits flow to businesses, consumers, wealthy, and poor. That's why President Reagan called this phenomenon "trickle-down economics". He cut the top marginal income tax rates from some 70% to 28% by 1986. During this time, the economy, weak after the stag-flation of the Carter years, rebounded to the point that tax revenues actually increased. This economic framework was a large part of the prosperity during the Clinton years.

Finally, and this has been touched on already, there are plenty of opportunities to give and share personal wealth with those in need. Private charities - both secular and religious - are in a position to do a far more complete job than a simple check in the mail. We have a local organization that offers temporary housing, food service, counseling, job help, transportation, and many other services to the poor in our community. This organization reaches thousands, based on the financial support of donors. No one is forced to give anything, and yet the needy are served. Incidentally, Syracuse University Professor Arthur Brooks, said of charitable giving, "When you look at the data, it turns out the conservatives give about 30 percent more. And incidentally, conservative-headed families make slightly less money." Brooks gave this quote after completing the study detailed in his book Who Really Cares.

Don't believe it? Ask Senator Joe Biden why, despite being a Democrat and a Roman Catholic to boot, he's given less than a quarter of one percent of his income to charity for the past ten years. The national average is 2%, and Biden was certainly above-average in his income level.

So, my liberal friends, put away the tired class-ism. Lay aside the misguided - if well-intentioned - socialist agenda. It's easy to call for the "rich" to be taxed more when, as the director for the non-partisan Tax Policy Center puts it, "95% of people think they are middle class." It's easy to push for the government to force others to use their resources to solve social problems. It's easy to promote stereotypes of uncaring conservatives while making yourselves out to be the saviors of the poor. But maybe, just maybe, it's better to look in the mirror, take one's hard-earned money or precious time, and put it toward real help for the needy. Real help - not a feel-good moment or a money-toss. Let the government fill the role it should fill. Let's work so we, too, can have something to share with the needy. That's my responsibility as a man of God.

Free Trade

A few months back, John McCain talked free trade with people in Ohio. Didn't Senator McCain know, you can't talk free trade in Ohio? It's bad politics. The Left has claimed free trade as an enemy to life, liberty, and all we hold dear. Never mind the fact that this is the same Left that, under President Clinton, cheered the passage of NAFTA back in 1993. The steady drum beat of the Left is now that free trade is bad because it takes jobs away from Americans and, if you believe Senator Obama, causes them to cling to religion, guns, and antipathy toward those who are different. But is free trade such a bad thing?

When we're discussing economics, we have to take the discussion back to supply and demand. Competitive markets mean that people will buy at the best personal value. In other words, if two firms are selling identical products but one is offering it at a lower price, that company will sell more units. The competition will force the other company either to lower prices and compete or go out of business. So, if a consumer can buy a DVD player, a pair of shoes, or a laptop computer for less money, why wouldn't she? If the quality is good, she would buy, even if it came from another country. That is, until governments attempt to tie the invisible hand up.

Tariffs, a tax imposed on imported goods, have always been a sticky issue. The Smoot-Hawley Tariff Act of 1930 was supposed to protect American jobs by charging a higher tax on imported goods. However, the other nations of the world retaliated with their own tariffs, making it more difficult for US goods to be sold abroad. This cut US exports in half and was a major cause of the Great Depression. In fact, since talk of the Act was ongoing for months prior, there are those who speculate it contributed to the Great Crash of '29. Whatever the case, tariffs attempt to protect one group of sellers by artificially inflating the prices of another. Consumers are punished with higher prices, foreign sellers are punished with less business, and the domestic sellers are exempted from the forces of competition. Without competition to drive down prices, there is no incentive to innovate, reduce costs, or change for the better. While this may help them in the short run, competition catches up over time.

Innovation is really the key to the power of free trade. If the US economy were not so vibrant and capable of imagining new industries, free trade could be a detriment. But the American tradition is finding new ways to run, and this is part of our national identity today. Let's look at an example. There is really no such thing as an American television set. Way back in 1974, Motorola sold off the manufacturing wing for the old Quasar TV group. These TVs were still marketed as Quasars, but they were completely manufactured by Matsushita in Japan. In this way, an entire industry was outsourced. According to the stereotypical view of the Left, there should be throngs of unemployed TV manufacturing employees. But, mysteriously, there aren't. Why is this? Because as jobs are outsourced and industries go offshore, new jobs and new industries are created. The dynamic nature of the American economy is what has kept it strong through the years. One can see this individualism and innovative spirit as far back as the 1790s (see USS Constitution). The model of outsourcing has repeated itself time and time again. American ingenuity develops new industry, industry thrives in US for a while, and then the industry is picked up in places where operating costs are lower. Then the cycle starts over again. And again, and again, and again.

While we're talking trade in a global market, it makes sense to bring up outsourcing as well, since they have a lot of the same effects and motivations. John Kerry in 2004 and Barack Obama this year both promised to take away tax incentives for companies who move jobs offshore. This raises two questions in my mind. First, what direct incentives are offered by the IRS to build a plant in Indonesia? Is there a box to check on a corporate tax return for a job outsourcing deduction, exemption, or tax credit? If there is, I haven't been able to find any information on it. Secondly, will raising taxes on corporate profits provide more or less incentive for companies to earn money outside the US? Raising taxes in itself (which Obama promised to do) creates the opposite incentive.

The other argument against offshoring is that it exploits the Third World as US companies hire local workers for a fraction of what they would be paid in the US. This thinking is absurd, because it fails to take into account local cost of living standards. We see this phenomenon domestically, where firms are moving out of high-rent areas and settling in places where wages, rent, utilities, and transportation are less expensive. This is probably the biggest source of growth for the Reno area, as companies have moved out of the Bay Area in favor of a better tax structure, plentiful labor, cheap real estate, and access to good distribution. Moving to countries with lower costs is just an extension of this idea. Furthermore, when a US company opens a plant in the Third World, it provides jobs for the poorest of poor who often have no opportunity to find work. Yes, of course there are potential chances for abuse, bad working conditions, and other undesirable situations. But a great many companies, large and small, operate businesses in Third World countries that provide a valuable service to the local people.

I suppose the danger of free trade comes when the tax and political environment are not favorable to the development of new industries and growth in existing ones. When taxes are high, businesses large and small have less operating capital to invest in new ideas and products. For those who have never run a business, it's no small thing to come up with something new. It requires creativity, yes, but also analysis of the market, development of supply chains, and sufficient capital to cover operating losses until it takes off. It's a risk, and less capital available - to say nothing of reduced buying power for an over-taxed consumer - means that risk is less likely to be taken.

Here's an example of the misguided thinking of the Left where free trade is concerned. The Colombian Trade Protection Agreement would allow for free trade between the US and Colombia. The Democrat-controlled US Legislature is blocking this treaty from coming to a vote, saying it will harm US workers. While this posturing makes for great soundbites on the six o'clock news, it is, as Shakespeare said, "sound and fury, signifying nothing." The idea is that, by signing such an agreement, the US would have low-price Colombian merchandise flooding the market and putting good American working folks out of work. While that is a poignant image, it just doesn't hold up to scrutiny. First, many Colombian products already enter the US market duty-free, thanks to the Andean Trade Promotion and Drug Eradication Act (ATPDEA). This deal was made to help encourage South American countries to transition away from the sale of narcotics by strengthening other industries. However, the ATPDEA is one-sided. It allows Colombian product into the US duty-free, but US goods are still subject to tariff when sold in Colombia. There are many mining operations in South America, and the US heavy equipment industry sells a lot of tractors, trucks, and other machinery into countries like Colombia. By signing a free trade agreement, it would allow companies like Case and Caterpillar to have a strong advantage over companies like Mitsubishi and Komatsu. In my estimation, that helps the American worker. Yet the Democrat-controlled Congress will not vote on the Agreement, despite the fact it has been in their hands since April of 2007.

In essence, free trade is a good thing. It's good for the consumer, because she can buy products at the lowest possible price and is not punished for where the goods come from. It's good for exporters, because free trade agreements mean that US goods sold in other countries can be brought in without adding burdensome tariffs. The risk of US industries being buried by foreign competition over time is legitimate. However, the strength and innovation of the market has overcome this countless times, and will continue to do so as long as the environment for job creation is preserved. So, rather than spending time fighting the iron horse of the free market, we should be tuning up the engine of our economy by removing obstacles to developing new ideas and new industries.

The Right to Life

Florida is the fourth most populous state in the US. The most populous city in Florida is Jacksonville, with a 2007 number of 805,605. That's more than twice the size of the Reno/Sparks area from which I'm writing. It's bigger than Denver by a third, about 5% bigger than San Francisco, and some 15 times larger than my current home of Carson City. Most parts of the country have no concept of that many people living in one place. That's over eight times the full capacity of the LA Coliseum. It's twice as many people as were at the Million Man March.

But, you know, it's actually less than the number of abortions that take place in the US every year.

Perhaps the abortion debate in this country is heading in the right direction. From 2000 through 2003, the number was around the Jacksonville, FL, level. Back around 1990, it was more along the lines of San Antonio or Philadelphia. Put another way, in 2003, there was one abortion for every 500 people or so. In 1990, it was one for every 200. Still, counting that as a moral victory is like the construction foreman who said, "Only 4 people died on this job, and we had projected 6."

Abortion, for the record, has nothing to do with choice. I do not have the right to choose to rob a convenience store, beat up my neighbor, or run down a traffic cop. Why not? Because these choices interfere with other people's rights. As members of a free society, we are protected from one another's choices by the rule of law. The Fourteenth Amendment gives us equal protection under the law. Equal, that is, unless you are talking about the unborn.

The argument here is that a fetus, as a non-viable mass of tissue, does not have any rights. It would be like a tumor or a wart - an alien presence worthy of disposal. But wait. She's not another species or lower form of life. She's distinctly human, based on her genetic makeup, her developmental pattern, and her potential to become. She's also not part of mom, as she has a unique set of DNA. In the legal system, a fetus can sue for share in an estate. In the criminal justice system, a driver can be booked for two counts of vehicular manslaughter if he kills only a pregnant mother. Clearly the law allows for the fetus as a citizen worthy of rights. The difference seems to be whether or not the baby is wanted. I can't think of another area where we may choose to disregard someone's rights based on the feeling of another.

But she's not viable, the argument goes. Viable? That would indicate she can live on her own. True, a newly conceived fetus has no chance of survival outside the womb. But at what point does she become viable, under that argument? Is it when the chance of survival hits 50%? 25%? With technology improving all the time, that nebulous viability argument becomes a moving target. In other words, what was inviable ten years ago would be viable today. It's very dangerous to take a human individual and put her rights against someone's interpretation of medical science.

The argument that seems to have the most traction in our society is that abortion should be legal in cases of rape, incest, or where the mother's life is in jeopardy. (As a Christian, I believe all life has value, that God has a plan for even children conceived in evil. But wait... some 70% of aborting women identify themselves as either Catholic or Protestant. Clearly, the idea that abortion is unbiblical does not take hold in the actions of everyone.) Before we get into that discussion though, how many abortions actually take place because of rape, incest, or the mother's health? In all reality, data on abortion is not 100% reliable, since many jurisdictions do not require accounting for each abortion performed. And of course, not every aborting mother will declare a reason. But there are some statistics. For example, a 2002 study by the Alan Guttmacher Institute found that 1% of women who had abortions did so because of rape or incest. The Institute also found that some 2.8% of abortions were due to some concern for the mother's health. Leaving out the possibility for rationalization or exaggeration of medical conern, that means that, at best, less than one in 25 abortions fall into the most compelling categories. The rest? Here are the top 5 reasons:
1. I'm not ready for a baby.
2. I can't afford a baby.
3. There are issues with the father.
4. My parents (or others) say I'm too young.
5. I don't want to disrupt my job/schooling.
These reasons account for approximately 21 out of 25 abortions. Imagine if those reasons were given for a standard homicide: "I killed my first-grader because she was interfering with my work." "I killed my sons because their father doesn't want to spend time with them." "I killed my preschooler because she was costing me too much money." And we shouldn't forget the words of Barack Obama in March, paraphrased for our purposes here: "I don't want my daughters to be punished with a baby."

Finally, it's not as if there's not an alternative to abortion. If a mother is not ready to be a mother, if she has financial concerns, if she is too young or too involved in other things; adoption is a great option. The US leads the world in the number of children adopted each year, with over 127,000 children going to adoptive homes. Clearly the demand for children to adopt has not slacked, although since Roe v. Wade in 1973, the number of children adopted out has declined. Today, there is a growing trend to adopt children from other countries, perhaps because of the decrease in available domestic adoptees. Of course, it's a great thing for orphan children from around the world to be adopted into the land of opportunity. It's very sad that this opportunity is not afforded to literally millions of unborn children.

The most telling statement that abortion is immoral comes from the very people who support "abortion rights" in this country. How often have we heard, "I could never have an abortion myself, but that's not a choice I can make for everyone"? If a person "could never" have an abortion, that is a clear indication she believes it is wrong. The fact she is unwilling to carry that conviction to others is simply a lack of moral courage.

One more time, the abortion debate cannot be about choice. A fetus is a human individual with rights and protection under the law. Today, the law both recognizes and fails to recognize a fetus, depending on the whim of the mother. We cannot hide behind the false idea of choice while an entire group's rights are violated. The convenience of another cannot be the justification for killing someone any longer. Our society is ripe with rights - built around the right to life, liberty, and the pursuit of happiness. But without life, no other rights are possible.

The Case for Drilling

Democratic presidential nominee Barack Obama has criticized the notion of drilling for oil on the continental shelf and in Alaska, saying that the benefits are dubious and the costs are too great. Instead, he has proposed fast-tracking alternative energies as a means of transitioning away from foreign dependence on oil. But there are discrepancies between these views and the realities of the situation. Without a firm understanding and clear perspective on the topic, there is no possibility of putting forth a lucid policy.

In 2005, Obama said, "the rest of the world is already moving away from oil," and "our demand is about to jump 40% [over the next 20 years]". Before we go any further in this discussion, allow me to point out that a 40% increase in 20 years equates to an average annual increase of less than 1.75%. To give a contrast from the CIA World Factbook's 2007 estimate, the US has a 2.2% annual GDP growth rate. In other words, the economy produces sustained growth of 2.2% annually, while oil demand will increase only 1.75%. In an economy that is supposedly based around oil, does that truly represent an increase in oil demand?

The fact is that US demand for gasoline in absolute terms has been on the decline since mid-2007. If the trend continues, 2008 would be the first year in 17 years that has seen annual gasoline demand go down. In fact, in a year-over-year comparison, 2008 shows American consumers demanding over 100 million gallons less each month than one year prior. Why is this? Is this because of some policy advanced by the reigning Democrats in the legislative branch? No. Is it because of the words of Senator Obama regarding our so-called dependence on foreign oil? No. Could it be the invisible hand of the free market? An increase in prices causes consumers to change their buying habits.

In all fairness, Senator Obama could not have predicted in 2005 that US gasoline consumption would decrease two years later. Or could he? Adam Smith would have predicted it back in 1776, so perhaps one should consider Obama’s fundamental lack of understanding where it comes to the free market. One can also divine a lack of understanding when in the same speech he said that China is going to be using more oil (driving up demand and prices) and China is going to be using less oil (by making more fuel-efficient vehicles). It reminds me of his off-the-cuff solution of checking your tire pressure to save oil. Sure, the Energy Department says you can save as much as 11 cents per gallon by inflating your tires to the recommended pressure. But didn’t Obama oppose the suspension of federal fuel taxes, which equate to 18.4 cents per gallon?

Clearly, this discussion is not about how to save American families from high prices at the pumps. More likely, it’s about an agenda to transition away from fossil fuels at any cost. To quote former Democratic Presidential candidate Tom Vilsack, “We should be moving away from oil.” Why does the Left want to get away from petroleum altogether? Some would argue that it is the environmental impact of burning oil that leads this push. However, all the alternatives to oil that I have seen would lead to increased emissions (please, someone from the Green Nation send me some information if I’m wrong about that). Some would argue that it is the finite nature of the resource. However, this argument loses steam when you consider the resource becomes more abundant when avenues for exploration and extraction are opened up. Some would argue it is because of the foreign origins of oil, an argument that is also negated by the opposition to domestic drilling. Some even say this country has an oil addiction, which is akin to saying humans have a water or oxygen addiction. Oil has been one of many necessary components to keep America competitive, strong, and moving forward. Perhaps this is why the push is there. Perhaps those eager to apologize for America’s strength see the removal of oil as a way of grinding the American machine to a standstill. While I can’t speak for hidden or ulterior motives, the idea that domestic oil exploration is somehow bad or wrong doesn’t hold up to scrutiny.

The most consistent argument put forth by the Left against domestic drilling is that the effects would not be felt for five to ten years. This figure is thrown about like gospel, but what can anyone tell us about why it will take that long? There is already a petroleum infrastructure in place, and it includes everything from inbound crude to refining to domestic distribution to retailers on nearly every corner. Can the same be said for these mysterious “alternative fuels”? No. The public’s access to E85, hydrogen, and biodiesel is slim-to-none in most parts of the country. In fact, a recent internet search found no public sale of E85 anywhere within 200 miles of this desk. So, despite the presence of vehicles with the sharp-looking “FlexFuel” logo, they are buying good old regular unleaded like the rest of us.

The only piece of the infrastructure that doesn’t currently exist is at the top. Oil has to be found, drilled, extracted, and delivered to a point in the existing supply chain. If the ban on drilling were lifted, a company with a lease to drill in ANWR or on the continental shelf has plenty of incentive to expedite this process. Would it take five years or more? I honestly don’t know, but this should not be a deterrent to starting the process. It’s better to know there will be relief in five years than to have no relief at all. And, since the speculators have come under such fire recently, the development of new drilling operations would have its effect in the futures market first.

Finally, the argument has been raised that says much of the oil currently extracted from Alaska doesn’t come to the US, so new drilling would have no effect on our gas prices. This would be true, except that this is a global market. If the sum of the Alaskan oil went directly to East Asia, then East Asia would inevitably purchase less from Canada, for example. Canada’s surplus would lead those producers to lower their prices to clear inventory. The lower price of Canadian crude would lead to someone else buying it instead of what they are currently buying. Thus, over time, the world oil inventory increases, and prices go down.

Don’t misunderstand. I acknowledge that petroleum is a finite resource and that alternatives will need to be developed. I recognize that conservation of finite resources is good policy. But the premature moratorium on oil serves no purpose. Drilling for new supply is the bridge to new ideas and technologies. And the transition away from oil must not be a mad rush to mediocre substitutes, but rather an intelligent march toward a genuinely better alternative. Sorry, Senator Obama, but that right there sounds like change I can believe in.

Capitalism, Competition and the Free Market

The modern study of economics was begun in large part by a Scottish philosopher named Adam Smith. Smith's most enduring work, An Inquiry into the Nature and Causes of the Wealth of Nations, is still studied and relevant in 2008, despite the fact that it was published in 1776. Smith discusses many things in this writing, but none so important to today's discussion as what he termed "the invisible hand". The invisible hand is the action of a free market economy as people - both suppliers and consumers - seek to make solid decisions. The invisible hand is driven by forces no more sophisticated than simple supply and demand.

Supply and demand are simple concepts, but their effect on the marketplace cannot be overstated. Given a few basic assumptions (people work for their own self-interests, for example), an open and competitive market moves to the beat clapped out by the invisible hand. The first concept to discuss is equilibrium. This is a condition where the quantity supplied equals the quantity demanded. It's a function of price. If the price goes above equilibrium, then fewer people will buy and more people will try to sell. This is a surplus. If the price drops below equilibrium, more people will try to buy and fewer will sell. This is a shortage. Shortages drive prices up, and surpluses drive prices down. As prices change, people will get in and out of either side of the marketplace accordingly, until equilibrium is reached. If supply or demand are affected in any permanent manner, equilibrium will change, but it will still be reached.

Smith's models assumed limitless capacity and complete ease at becoming a supplier of any commodity. While these don't stand up to scrutiny in the real world, the model still works. If demand exceeds supply - a shortage situation - and no further supply could be brought to market, the price would rise until the number of consumers for that commodity decreased to match available supply. This would create a new - higher - equilibrium point. And while people can't wake up today and decide to be selling a certain commodity by the end of the day, the model still works, although equilibrium may take longer to reach.

Many on the Left equate free markets and capitalism with greed and a mechanism to increase the wealth of only the wealthy. But the opposite is actually true. The opposite of a competitive market is one in which monopolies operate. In this case, suppliers are free to charge whatever they want, and there is no competition to drive down prices. An example of this is in the oil industry. Companies selling petroleum in the US (Exxon, Shell, BP, and Chevron are the top four) make between seven and ten cents on every dollar of gross revenue. For you "big oil" haters out there, that's less than a lot of grocery stores. They are all in the same range of profit margin, because the market dictates how they sell their product. However, in the more closed markets of Russia and China, oil companies make close to a 30% profit margin. Here are the numbers from 2007, by means of comparison:
Chevron - Sales: $203.97B - Profits: $18.69B - Margin: 9.16%
Gazprom - Sales: $81.76B - Profits: $23.3B - Margin 28.50%
Gazprom, a Russian company, has 100% of the oil business in Estonia, Lithuania, Latvia, Slovakia, and Finland, as well as most of the business in many other Eastern Bloc nations. With little to no competition, prices are limited only by what consumers can absolutely afford.

Another benefit of competition is supply. As long as there are demands for a commodity, there will be someone to supply it. How often in the '80s were there stories of heating oil shortages and food shortages coming from the Soviet Union? For that matter, were there enough doctors? Enough medical supplies? Self-interest, which advocates of socialism are so quick to decry, is a powerful motivator that can work for the common good.

Finally, the benefits of competition can best be seen where there is essentially none. Name a government program that is poorly run, and you can likely trace it back to inadequate competition. Public schools, for example, have no incentive to change how they operate. In any given area, the vast majority of children will attend public schools, and the government will fund them regardless of results. Imagine if schools had to compete for students and funding. There would be new ideas on how to cut costs, increase effectiveness, and attract business. Schools that didn't produce results would go out of business in favor of schools that did. Schools with competitive programs would bring students in and yield results.

The invisible hand may not be seen, but it is a strong force driving the marketplace. Where it is allowed to run free, its mechanism is undeniable. The consumer is protected, the ambitious are rewarded, and the market goes where it makes sense to go. Where it is tied up, the results are self-evident. Public education, ethanol subsidies, trade protectionism, CAFE standards - most cases where the government tampers with the market, it's both a wasted effort and a detractor for someone.

Looks like Adam Smith had it right!

Policy

From time to time, it becomes necessary for one to set forth his or her statements of policy. Often, in real life, there are not many opportunities to do this, since we are constrained by notions of propriety, etiquette, and the general desire not to anger those around us. For many, the forbidden topics of religion, politics, money, and baseball are taboo and never to be discussed except among the closest of friends. And, for fear of losing those friends, we often stop short of expressing complete thoughts or concepts. But I would like to use this forum to lay out ideas, concepts, and maybe even debunk a little misinformation now and again. So you the reader will be privy to my opinions - if indeed these are worth anything. But I hope you will be privy to facts, reasoning, and a touch of critical thinking. For those who don't know me yet, I'm a C^3 - a Christian, a cynic, and a conservative. In time, I hope you'll come to understand and respect where I'm coming from, even if you disagree.