Friday, January 20, 2012

My View

Random ruminations from your resident curmudgeon...

One of the conceits of government is that the elected leaders know best how to run an economy, a business, or your personal life. Now that last sentence might sound like the ranting of a crazed libertarian, but unfortunately, those in Washington seem to subscribe to the mistaken notion that they know what is best for individuals, businesses, and industries. The latest evidence of this is a proposal from six House Democrats to establish a "reasonable profits board" for the the oil and gas industry. For these misguided Democrats, the oil and gas industry makes "too much money" and those sitting in Washington should be the arbiters of just how much profit a company can make. H.R. Bill 3784, called the Gas Price Spike Act and introduced by Dennis Kucinich (D-Ohio) wants to tax the profits of oil and gas companies from 50 to 100% of their profitability if those profits exceed a "reasonable" level. Who determines the "reasonable" level of profit? Industry leaders? Energy economists? Well, this being Washington, the bill excludes anyone in the energy industry from sitting on the panel that sets the "reasonable" profit target. Now, it might be easy to say that energy companies make too much money; that is an entirely different debate. The fact that elected leaders are seriously considering a bill that determines how much money any company or any industry can make should absolutely scare the daylights out of each and every one of us. Because it will not be just the energy industry that faces this kind of scrutiny if this bill passes. Washington will be emboldened to to move to other industries because of the conceit that they know what is best. Watch this closely, because the impact on our economy and on you and me financially can be horrifically devastating.

When I was younger, I studied to be a magician, but could not pass the exam. It was full of trick questions.

If you observe the way Washington interacts with the business community, it would be reasonable to ask why that relationship is so hostile. It almost appears if Washington views the business community as an entity that can be shaken down at will and from which resources can be arbitrarily extracted. Don't believe me? Consider this: just after the first of the year, PepsiCo, the maker of Pepsi products paid $3.1 million to settle a discrimination suit brought by the Equal Employment Opportunity Commission (EEOC). Good! There is no room for discrimination in the workplace, and those miscreants at Pepsi should pay dearly for their transgression. Think I will drink a Coke now! Well, what was the nature of the discriminatory acts of Pepsi? Pepsi conducted criminal background checks on every job applicant, and those that had arrest records were disqualified, even if it was for a minor offense. According to the EEOC, those disqualified were disproportionately black, and in the Alice in Wonderland world of federal thinking, therefore limited the employment opportunities for blacks. Never mind that blacks have a higher arrest and conviction rate than whites (another- explosive- discussion for another day), Pepsi applied the standard equally across all applicants and all positions. The EEOC did not find one- NOT ONE- instance of a white applicant remaining in the pool of job applicants if they had an arrest record. In fact, the EEOC in their findings said there was no intentional discrimination by Pepsi. If this strikes you as absurd- and it is- you are looking at this logically. Know that despite the lip service from Washington about wanting a healthy business community, the real view is that companies are intrinsically evil and must be brought under the warped world view of Washington's bureaucrats and elected leaders. And if money can be extorted from them in the process, so much the better.

I think my window of opportunity has been painted shut.

Government Motors (formerly known as General Motors) has had trouble selling their electric vehicle, the Chevy Volt. Forget that whole battery exploding into flames thing, the problem with the Volt is that it does not meet the needs of the the market. Yet the car is still being massed produced. So what, you say? Even if you never drive one, you are still on the hook financially for this boondoggle. How so? According to James Hohman, assistant Director of Fiscal Policy at the Mackinac Center for Public Policy, each Volt sold so far has approximately $250,000 in state and federal incentives behind it. According to Hohman, there are 18 government deals that includes loans, grants, and tax credits to GM, its suppliers, and the buyers of the vehicle. Here is your Econ 101 lesson: if the government controls production (and they do indirectly in the case of GM by virtue of their bailout and continued 26% ownership of the company), they can direct a company to build a product for the market. If that product does not sell, production either stops or is heavily subsidized by the government (read: taxpayers; you and me). As you can see, we are paying for the a product that the market does not want but does fit in with the vision of a government that believes it can centrally plan the economy and control the market.

I think the perfect name for a car repair shop would be "Auto Correct".

And that, my friends, is my view.

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