Prices vs. Government Action

Very often on this blog I criticize some ill-conceived government intervention as being bloated and/or ineffective and ill-conceived.  A great example is corn-ethanol, where the government has spent billions and caused consumers to spend additional billions in higher food and gas prices, all for a technology that does nothing to reduce oil consumption or CO2 output.

Too often, I criticize these programs for being stupid and ill-conceived, which they are.  But what I don't take the time to also point out is the necessarily narrow focus of these government actions.  No matter how hard Congress works to stuff energy and farm bills with every micro-managing pork barrel project their campaign donors could wish for, Congress still only has the bandwidth to affect a tiny fraction of a percent of what a single change in market prices can achieve.  Prices have absolutely stunning power of communication.  When gas prices go up, every single citizen likely reassesses his/her behavior and spending in a myriad of ways.  Thousands of entrepreneurs sit at their desk staring at the walls, trying to dream up business opportunities that these new prices may signal.  And thousands of energy producers, from the tiniest to the largest, rethink their investment plans and priorities. 

  • http://klimathot-gameover.blogspot.com/ Magnus

    We have also a problem i Sweden with too much market disturbing government intervention, especially the subsidized "environmental friendly" cars (guess what... = ethanol).

    This will be a too large comment maybe...

    I do not fear global warming and think that acid oceans are unlikely. But I also think that there may be another reasons to cut fossile fuel consumption. That is to reduce the large scale incomes for Saudi Arabia and some other countries with extreme islamism and involved in jihad. E.g. "immigration jihad".

    As a market defender, but not an economist, I have thought about a this:

    Some people say it doesn't matter weather if we burn the oil now or later. But is that correct? And is it wrong to think that anything -- e.g. too large oil incomes for "jihadis" -- can be changed by commitment? First the solution to a problem shall be targeted adequately, and most important now is probably is to stop Saudi sponsored Islamic schools, Mosques etc (I think we got more Islamic schools in Sweeden than in US, and within 10 years we may have 10 percent foreign Muslims in our country; Saudi financed Mosques in in the west I think we can be restrictive towards, because they are or will be quite radical.)

    Well. Back to oil. If we reduce our consumption the price will decline and other (including poorer) countries will buy instead. But lower prices also means less profit for the producer and less incentive to search and dig for new oil resources; thus less total production. Or? In that case somthing is changed...

    If hypothetical awareness about the Saudi extreme Islam makes the western countries reducing its oil consumption by say 5 percent (and Saudi oil by 10 percent) -- and if we assume that the cost for this reduction on our economies fit the benifits (less prospereous expansionistic extreme Saudis), then this reduction change something in a good way? But of course there has to be some close to consensus on the fossile fuel reduction.

    I didnt here specified if such a reduction is voluntary or forced by government (tax burdens), but will a voluntary action be counter productive? And secondly: is there a chance that governmental force is positive and successfully achieve its aim? I'm economically liberal, but... If the answer is no on the second question: Good. I can stop thinking about this! :-) (Anyway we better prioritize not to allow Saudi financed schools as well as restrict immigration; in Sweden immigration is virtually free, social benifits spend on anyone who's coming and >50 percent unemployed among all immigrants.)

  • Solar Lad

    "If hypothetical awareness about the Saudi extreme Islam makes the western countries reducing its oil consumption by say 5 percent (and Saudi oil by 10 percent)..."

    While I agree with you that less money flowing into the Middle East would be a GOOD THING for the West, unfortunately it couldn't work that way:

    1. Oil is largely fungible, so there's no way to reduce global purchases of Saudi oil by more than the overall reduction in purchases;

    2. To the extent that oil is not fungible, the preference is for light, sweet crude - which is exactly what the Saudis mostly produce. So it would be more likely that total global oil usage would go down by 10%, and purchases of Saudi oil by only 5%, because they've got the premium stuff.

  • Will

    We can stop Saudi extreme Islam schools in the West by not allowing the Saudi to build and support their schools, we just need the will to make it happen.

    We can reduce the amount of money going to the Middle East by increasing oil production in the West especially the US. We can turn coal and tar sands into gasoline. But we need a new congress to do that.

    We can reduce the demand for gasoline for transportation by doing things like the GM Volt, that will hit the market in 2010. The Volt is an electric car that can be charged from an outlet or by a gasoline generator while running. Projected mileage is about 150 miles per gallon. This is because most people can charge the car at home, drive to work on the charge and then only need the generator for part of the trip home. The nice thing about this concept is if battery technology improves or hydrogen fuel cells become feasible then just replace the gasoline generator with the batteries/fuel cells.

    We can increase our electric supplies by using nuclear and geothermal.

    Side Bar: Coal, natural gas and oil are not fossil fuels. A fossil by definition is "a plant or animal where the organic material is replace with a mineral". Coal, natural gas and oil are all "biofuels". Biofuels are a "solid, liquid, or gas fuel consisting of, or derived from dead biological material, most commonly plants". What is called fossil fuel fulfill this definition. God or nature (depending upon your belief system) has provided for us ready made biofuels, we just need to use them wisely. Using the ready made biofuels and eating the crops make the most sense.

    Both quotes from Wikipedia.

  • James T. Kirk

    I agree with your post. The problem we have with changing gov't or combating the Al Gores of the world is that there are too few people who understand the concepts of critical thinking, economic thinking, the law of unintended consequences, and thinking about the possible 2nd, 3rd, 4th (and so on) effects of a gov't policy or action (another way of saying "unintended consequences").

    It's actually quite depressing to think about how the majority of people in this country DON'T do these things. Individuals are too narrowly focused and can't really see the big picture. It leads to political manipulation, dumbing down, and over-regulation and over-taxation of the wealth-producing strata in any society.

    I fear we are headed for an early 1970's renaissance and continuing increases in gov't spending and taxation and Congress will use the global warming platform to exploit that in massive ways on a scale never seen before.

    Man, I'm a downer! But, to say I'm concerned is understating it a bit...

  • http://profile.typekey.com/davidzet/ David Zetland

    I say this all the time about water (gov't imposed conservation vs. higher prices), e.g., here: http://aguanomics.com/2008/05/soviet-la.html

  • http://klimathot-gameover.blogspot.com/ Magnus

    Solar Lad: "...there's no way to reduce global purchases of Saudi oil by more than the overall reduction in purchases;
    1. Oil is largely fungible, so there's no way to reduce global purchases of Saudi oil by more than the overall reduction in purchases;
    2. To the extent that oil is not fungible, the preference is for light, sweet crude - which is exactly what the Saudis mostly produce. So it would be more likely that total global oil usage would go down by 10%, and purchases of Saudi oil by only 5%, because they've got the premium stuff."

    You seem to be very definite and confident when use the word "no way", but let me clearify myself and argue your arguments.

    I did argue that -- out of a common big scale awareness (at least as big as the current for "global alarmi...warming" -- less demand for oil (especially that from more radical Muslim countries) will reduce oil prices (maybe especially for radical Muslim countries?) and that a relative price fall will reduce the incentive for oil prosect. Thus the total vaolume will be lower at a lower price level. This has to reduce the revenues for oil producing countries (especially radical Muslim countries). A relatively less demand for Saudi oil should lead to relatively less revenues for them, unless it isn't practically impossible to set up a boycott.

    1. It was possible to reduce the CFC (wether it was necessary or not one can argue), and it was possible to have boycott against South Africa. The biggest obsticle here I think is that a campaign and boycott will be attacked as racism which makes the business not willing to support it and/or a turmoil in the Middle East/Arab world which create a new 1973 (makes the important oil producing countries to stop selling oil in order to harm our economies).

    2. My figures 5 and 10 precent respectively was that a relative boycott, like that against South Africa, is possible. The Saudis, Iran and a few other more radical countries produce so much of all produced oil that a reduction by 10 percent there will reduce the overall figure with 5 percent without any reduction at all in other countries! That's all. I assume a specific boycott, not just an awerall reduction.

    It seems as if you draw your conclusions a little to easily. But maybe it's too hard to achieve this, according to what I mention above (unwillingness, fear, or feasability), and in that case my wishful thinking is wrong. At least I think this is a god idea to discuss! I can't hardly find a better topic to discuss when it comes to the world oil market. I asked if it's possible. Your answer is definitely no, but maybe you're not well-thought enough.

  • http://klimathot-gameover.blogspot.com/ Magnus

    Will: "Coal, natural gas and oil are all "biofuels"."

    Hear hear!

  • John Dewey

    Magnus,

    I agree that reducing demand for oil will reduce by a small amount the overall revenues to Arab oil producers. But reduced demand should increase the world's dependency on Arab oil. Higher cost, non-Arab oil will no longer be pumped.

    Increasing our dependence on Arab oil seems even riskier than continuing to fund the economic growth of that region at current levels.

    I am skeptical about any proposed boycott of Arab oil. Why would China and India participate in such a boycott? Why would most of Europe, for that matter? Boycotting the lowest cost producers would, I think, lead to an increase in oil prices for those who participate in the boycott.

  • Josh

    The Volt is an electric car that can be charged from an outlet or by a gasoline generator while running. Projected mileage is about 150 miles per gallon.

    This comment annoys me. Tell me how much it costs to drive a mile. Miles per gallon? So what? I can make it INFINITY miles per gallon by eliminating the combustion engine and making it run on batteries alone. Does that mean it's free to drive? NO.

  • will

    Josh,

    Sorry that I annoyed you so easily, however, I never said it was "free" to drive, the point was about reducing money going to the Saudi, i.e. dependency on Middle East oil, not about the cost to drive a mile. The Volt charged from an outlet would use whatever the source was that generated the electricity: coal, hydro, wind, nuclear, geothermal, solar or whatever may come along. If you can make you car that uses all batteries, go ahead and make it, you only prove my point, you reduce the need for imported oil.

  • ColoComment

    “...in the long run the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government; and certainly the harm is likely to be counteracted faster.”
    (John Cowperthwaite, Hong Kong financial secretary, 1961-1971)

  • yoshidad

    Wow! Climate change deniers! Next: the controversial "theory" of gravity, and round earth deniers...8^)

    It's hard to defend public policy as perfect -- witness our current $2 trillion adventure in Iraq -- but there's such a thing as throwing the baby out with the bathwater. Elsewhere on this blog, I've read a post saying that government gave the poster "nothing." I responded "What? You don't use roads, legal tender, and you vet your own medications?"

    Public policy is useful because an awful lot of stuff is unmanageable by individuals, no matter how rugged. Roads, legal tender, criminal justice, food and medicine turn out to be just a few. Does the government manage these things well? Not perfectly, but better than nothing. I'll say there's room for improvement, but killing off the government isn't improvement.

    So, sorry my young conservative trogdolytes, there are literally no libertarian countries in the world, except perhaps Iraq. Read the headlines or this to see what a smashing success that is: http://www.harpers.org/archive/2004/09/0080197. If you like 60% unemployment, you'll love libertarianism.

    Meanwhile should we have higher oil prices? The World Resource Institute (wri.org) says that the U.S. subsidizes oil to the tune of $300 billion annually. This includes things like the depletion allowance, a special write-off for oil producers, and militarily defending overseas oilfields and pipelines. The $300 billion estimate predates Iraq I, too, so is undoubtedly low in estimating military costs.

    As free-marketeers everywhere know, subsidies like these make consumption artificially high, and subvert the excellent allocation of resources for which the market is famous. So yes, oil prices should be higher.

    And a "pigovian" tax to fund alternative infrastructure would be what intelligent government would start. Pigovian taxes account for what the economists call "externalities" -- like the cost of healthcare for smokers and their second-hand victims. Depleting oil production, and increasing dependence on unreliable imports, not to mention global warming, are just such externalities.

    Speaking of economics, the suggestion that the U.S. replace oil with oil sands or shale oil (of which the U.S. has more than the Saudis have light, sweet crude) is beyond clueless. The production costs are far too high. Canadian oil sands barely make sense. Besides an environmental nightmare, they produce what was literally scraped out of U.S. refineries and burned as unusable waste. There is only one refinery in the world that can handle this sludge.

    We can assemble individual carbon and hydrogen atoms too, but it doesn't make economic sense. What's running out isn't oil so much as cheap oil.

    The reason corn ethanol is not economic is that the Energy Return on Energy Invested is about 1.4 units for each one invested. East Texas oil was about 100 to 1, and even the deep Gulf drilling returns something like 6 to 1.

    Wind is 4 to 1, and is probably the best renewable prospect. Nuclear is *heavily* subsidized, and besides the waste disposal problems is not economic because of the necessary subsidy (see the Price-Anderson Act making the government the insuror of last resort).

    Even the API (American Petroleum Institute -- the oil lobby) will tell you that U.S. domestic oil production follows a bell-shaped curve that peaked in 1971 ($1.75 a barrel, 30% imports). Nuclear peaks in 2050 unless we build a lot of plants, in which case it peaks in 2015. Coal peaks in 2025 in the most optimistic estimates. M.King Hubbert successfully predicted the oil peak because that bell-shaped curve was mirroring a similar curve of oil discoveries, forty years earlier. When did world oil discoveries peak? About 40 years ago.

    Current U.S. domestic oil consumption at $100+ a barrel is 70% imports.

    If we really want to get the oil monkey off our backs, Wind, Solar, and conservation are the best strategies, and government action to encourage this, just as there's plenty of government action to encourage burning petroleum, is warranted. Government public policies aren't the whole story, but no need to throw the baby out with the bath and reject government intervention altogether. After all, the oil companies have a $300 billion subsidy, right?

    FYI, the government keeping drillers out of the Alaska National Wildlife Refuge isn't significant, except perhaps to the owners of the oil leases. Drilling in ANWR would provide the U.S. 200 - 400 days consumption, and reduce the price of gas by 1¢ per gallon. Chevron just drilled the Jack Field in the Gulf (6 miles below the ocean floor -- very impressive!) and got a find roughly equivalent to ANWR. Notice any difference in the price of gas?

    Former World Bank Economist Herman Daly (author of "Beyond Growth" and one of Leo DiCaprio's stars in "The 11th Hour") goes one further than this, saying that we even mis-categorize oil production in our accounting. It's called "income" in conventional accounting, but really "natural capital" is more like what it should be.

    If you don't know the difference between "income" and "capital," try applying for a mortgage (post sub-prime lending, that is) with the "income" that's in your savings account (which is really capital). They'll throw you out as a crazy person.

    But that's how oil revenue is accounted for in present accounting standards -- an example of bad public policy if ever there was one.

    If you have a capital asset that is depreciating, and are a prudent business person, you set aside replacement money for when it finally breaks. This is, in effect, what the high oil taxes are in Europe (Gas is $8 a gallon!). Dang! Government again!

    And sure enough, the Europeans have an excellent alternative to single-occupant autos in their trains and buses. We Americans prefer to give all the money to Exxon and hope they'll give us something, anything!

    Meanwhile, the euro is kicking the dollar's ass.

    The Brazilians are really doing better than both Europe and America, but the improvement is because of extremely smart public policy, not markets alone. See Jaime Lerner's improvements to Curitiba, for one example.

  • foxmarks

    yoshidad:

    Nice narrative. You must know that the people you insult have refutations for all those guesses about the future not already destroyed by progress, right? Or are you a human progress denier?

    Killing off government is not necessary. Yet. Let's start by constraining it to its Constitutionally-mandated activities.

    One that's rarer: Capital replacement is such only when the reserve is used to replace capital. What are those acclaimed European governments investing in? A quick trip to the Google says Germany has been running a deficit. The fuel tax revenue is apparently NOT being reserved.

    Yoshi does bring up an angle that doesn't get enough play, which helps Magnus. ANWR would last a year if it was the only source, and probably wouldn't change the price much. But, adding that production loosens the margin and increases stability in USA. It takes power away from the oil-owning wackjobs and gives human genius a few more years of biofuel to innovate the future.

  • Mesa Econoguy

    This idiot again:

    Canadian oil sands barely make sense.
    Posted by: yoshidad

    Dude, the break-even was something like $80.

    PS

    Former World Bank Economist Herman Daly (author of "Beyond Growth" and one of Leo DiCaprio's stars in "The 11th Hour")

    Don't piss me off with World Bank "economists" (I usually piss them off, see here.) And never, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever use any reference whatsoever to any movie "star," especially Leo Di Whothehellareyou, when it comes to economics.

    I have several degrees, and multiple professional licenses. I perform, monitor, and supervise multi-million dollar transactions every day.

    He's an overpaid impressionist, with zero scientific training.

    You're an idiot. So is Herman.

  • Josh

    Sorry that I annoyed you so easily

    Passive-aggressive much?

    the point was about reducing money going to the Saudi, i.e. dependency on Middle East oil, not about the cost to drive a mile.

    I see. I never saw the point in this - sure, the Saudis blow their cash on gold-plated Rolls Royces, but hey, so what? I mean, as long as they're selling us oil at prices that make it useful for us to buy, what's the big deal?

  • Mesa Econoguy

    Bizarre:

    Even the API (American Petroleum Institute -- the oil lobby) will tell you that U.S. domestic oil production follows a bell-shaped curve that peaked in 1971 ($1.75 a barrel, 30% imports). Nuclear peaks in 2050 unless we build a lot of plants, [which Democrats won’t allow] in which case it peaks in 2015 [?]…
    Posted by: yoshidad

    ...what the economists call "externalities" -- like the cost of healthcare for smokers and their second-hand victims.
    Posted by: yoshidad

    This is serious stupidity.

    Evidently, Democrats like yoshidad don’t pay attention too much. That requires intelligence. Explains Obama.

    M.King Hubbert successfully predicted the oil peak...
    Posted by: yoshidad

    Oh, I see, so L. Ron Hubbard wasn’t available?

    Shut the fuck up, whacko.

  • Solar Lad

    "Wow! Climate change deniers!"

    You lack reading comprehension skills.

    The global climate may or may not be warming. That is a given. What is unknown is whether humans are contributing to such a trend, if it exists.

    You are a global-warming cultist, i.e., a person who has a FAITH BASED belief that humans are causing global warming. The scientific evidence for such a view is NOT DEFINITIVE, which anyone with even a passing knowledge of climatology must acknowledge.

    Only the global-warming cultists "know" that humans are at fault, or even that the warming trend will continue. Science can't tell us about the latter, either.

  • yoshidad

    Ancient Chinese Riddle:

    Q: When a wise man goes walking with a fool, who learns the most?
    A: A wise man learns, even from a fool. A fool does not learn even from a wise man.

    --

    Here's some follow-up answers to my "conservative" brethren (*** precedes my answers, >>> precedes quotes from their posts) I say "conservative" in quotes because I've yet to see what they're conserving:

    >>>Nice narrative. You must know that the people you insult have refutations for all those guesses about the future not already destroyed by progress, right? Or are you a human progress denier?

    ***Last question first: "You can't say civilization don't advance -- for in every war, they kill you in a new way." -- Will Rogers.

    *** I know climate change deniers have their own bizarre mentation, but let's not call it "refutation." The trouble with most of this kind of "conservative" argument is that there is no interest in the pursuit of truth, it's either name-calling or talking points cooked up by some cranks who have been well-funded by Exxon. It's not from legitimate scientists investigating the truth of the matter; instead it's some oil company's agenda.

    ***As for climate change deniers, they are refuted repeatedly by the overwhelming majority of real climate scientists -- many of whom were reluctant to even answer the deniers because they feared doing so would lend their arguments legitimacy. After all, what do you say to someone who insists the Easter Bunny is real? Not that Elwood and Harvey don't have a special charm all their own.

    The real scientists are now answering deniers, though. For example, read this: http://www.climatesciencewatch.org/index.php/csw/details/maccracken-legates/. It answers everything but the yelling and name-calling. But yelling and name-calling continue because well-funded denial, not debate, is what's going on.

    ***The long list of outrageous falsehoods that continues the non-debate includes the Bush administration's recent push to develop ANWR. I won't repeat what was said previously, but even you have seen how the political and economic agenda trumps truth in this shameful effort.

    ***Effective, intelligent public policy like raising average fuel economy standards for pickups and sport utility vehicles would save more annually than ANWR's peak production. The savings would come sooner than oil from ANWR, and unlike oil from ANWR, the savings would not run out. Where's the call for that policy from the "conservatives"? Answer: it's not funded by Exxon, Cato, AEI, and Heritage, so it doesn't *exist*.

    ***Another signature "conservative" argument I heard recently: Grover Norquist said "Lowering taxes raises revenues" (you can tell he's lying by the way he holds his body when he says it, BTW). But Norquist ignores the obvious -- for one thing: Tax "cutter" Ronnie Reagan's deficits exceeded all previous administrations combined. And that statement ignores the increased collections that occurred when Clinton's administration raised those same taxes. (Reagan raised taxes eight times, but it was the regressive, FICA tax that got raised. Gee, why are the top .001% of incomes up 457% and median income for the general population has stagnated? -- those are real figures, BTW.)

    ***And yes, lowering capital gains taxes may make for a temporary surge in collections as people take profits on that one the occasion, but in the long run (again, as quite obviously demonstrated by the Reagan / Bush / Bush II deficits) lower taxes mean lower revenue. Norquist is not refuting anything; he's practicing "the big lie," and if you believe it, well...I just want to play poker with you, because you'll believe *anything*.

    ***Or how about the "Morning in America"? This is what the Wall St. Journal's editorial page called the economic recovery prompted [?] by Reagan's income tax cuts. Turns out that it was an average business cycle recovery marked by exceptionally low capital investment because the deficits sucked all the oxygen out of the capital markets (see "Peddling Prosperity" by Paul Krugman for details).

    ***Or what about "Honest Ronnie" -- except for Nixon's administration, Reagan's had the most indictments for malfeasance in office of any in U.S. history (29). The supposedly crooked "Slick Willie" Clintons had zero, count 'em zero such indictments. Rolling Stone's article that includes this observation is here: http://www.rollingstone.com/news/profile/story/9961300/the_worst_president_in_history

    ***Or what about "conservative" Ronnie Reagan keeping us strong by invading....Lebanon (then cutting & running) and Grenada?... Oh how mighty he was to fight those belligerent powerhouses of military might! (A threat to our freedom, obviously!)

    ***Reagan famously asked the Mexican President to bless his soon-to-be illegal proxy war in Nicaragua because of the Nicaraguan "threat" to the U.S.... Nicaragua is one of the poorest nations in the hemisphere. The Mexican President replied that he would be happy to oppose the Nicaraguan "threat" to the richest country in the hemisphere if there were any way he could keep the population of Mexico from laughing him out of office.

    ***The World Court later convicted the U.S. of illegally mining Nicaraguan harbors (State sponsored terrorism, anyone?)

    ***Or what about the largest political and financial scandal in U.S. history -- orders of magnitude larger in every way than Teapot Dome and Credit Mobilier -- cooked up by the "conservative" Reagan's "de-regulation" of the S&L's? The Democrats aren't innocent here, but the delusional principles of this policy were all Reagan's. The bill for this little scandal: $150 - $500 billion, depending on how you count the interest. This is what ensnared McCain in the "Keating Five," BTW.

    ***Luckily, Enron / Worldcom / Adelphia's accounting scandals cost $600 billion, so "conservatives" can still legitimately say that private businesses are more effective than public entities...8^)

    ***...So...With this is a long list of "conservative" policies promoting "progress," I think you may be getting the idea. The discussions about the public policies leading to these disasters are not debates, they're elaborate con games. Even if you disagree about one or even two, look at the length of the list. Can you actually continue to believe the impossible "conservative" or libertarian dream? Well of course you can! And the Easter Bunny too!

    ***I don't expect you to say "Oh thank you for straightening me out." I've only ever had marginal success at waking my conservative brethren from their dream. But only an insane perfectionist expects every argument to be that effective, and I'm only an insane imperfectionist, or a fool, if you prefer.

    >>>Killing off government is not necessary. Yet. Let's start by constraining it to its Constitutionally-mandated activities.

    ***Yet? What is the distinction between you and a cave man, really, if not government funded / guided / planned infrastructure? Think that you're that rugged individual? Then grow your own food, clothes, medicine, print your own legal tender, provide your own security, etc., etc., etc. That you would even say "yet" displays a kind of delusion that beggars description.

    ***On the other hand, modern civilization so firmly embeds all of us in a web of interdependencies from which we *cannot* escape (without going back to cave dwelling), so that yearning for life as a self-sufficient super-hero who can escape the bounds of the matrix or some other daydream is certainly understandable. It's just not real, or at least it's not attainable through the kind of policies "conservatives" have been promoting for lo these many years (and maybe not even liberal policies either!...gasp!).

    ****Anyway, the quibbling about deregulation / un-governing is beside the point, mostly, and is typically promoted in the service of the corporatocracy that wants no regulation (Vioxx, anyone?).

    *** Should the strictly interpreted constitution's guidance about healthcare, for example, prevail? And is strict fundamentalist interpretation of the text best for public service? (Even the religious will tell you that the sabbath is made for men, not vice versa.)

    ***Remember that bloodletting, leeches and purges were what passed for healthcare when our constitution was written. Wouldn't it be simpler and cheaper to use government to make policies and institutions that actually served the public. Is a post office OK? But why not, for example, Social Security, or [super-gasp!] single-payer healthcare?

    ***And if the population wants single-payer healthcare -- as plenty of evidence in surveys says it does ("According to a Washington Post-ABC News poll in October 2003,[37][38] 62% of respondents preferred "a universal health insurance program, in which everybody is covered under a program like Medicare that's run by the government and financed by taxpayers,"" -- Wikipedia) -- then let's collect the money and save roughly half the U.S.' current healthcare costs, and get *much* better outcomes (the U.S. currently spends nearly twice what the single-payer plans do, but is ranked 37th in health outcomes by the WHO).

    ***Or do you just prefer ill health because the money collected is called "tax," and such a program is not mentioned in the constitution? Straining at a gnat, swallowing a camel, if you ask me.

    ***One side benefit of single-payer: Populations in single-payer nations are not subject to untested chemicals. Chemicals are guilty until proven harmless in Europe; here, for example, the U.S. has much higher breast cancer rates among black women because hair straighteners are maybe carcinogens, but the proof hasn't arrived yet. That kind of policy defines the word "decadent," for me at least.

    ***Note, please: I'm not defending government as perfect! I'm simply saying its a tool that can be well or ill used. The U.S. can potentially have plenty of intelligent, effective collective action and public policy -- not that we have it now. And that's not some pie-in-the-sky promise for government, either (as are the libertarian survival-of-the-fittest healthcare policy proposals). Plenty of governments do intelligent, effective stuff too, just not the U.S., at least in this area. But then "conservatives," have been in power for the last three decades....8^)

    >>>One that's rarer: Capital replacement is such only when the reserve is used to replace capital. What are those acclaimed European governments investing in? A quick trip to the Google says Germany has been running a deficit. The fuel tax revenue is apparently NOT being reserved.

    ***Germany is still assimilating East Germany. Think of what the U.S. deficit would be if we annexed Mexico and tried to bring their incomes up to ours, for a similar example -- as opposed to, say, passing NAFTA, following which real incomes in Mexico declined by 34%.

    ***(Gee! I wonder why so many Mexicans are immigrating? Could the U.S. have any responsibility for that? Nah! Let's just put up the electric fence so Boeing gets a profitable year, and start persecuting our immigrant populations...Witch burnings, anyone?)

    ***Anyway, the German deficit is slightly smaller (proportionally) than the U.S. deficit, but the U.S. has been "investing" in military equipment to explode in Iraq, not infrastructure here. The U.S. continues to spend more on its military than the rest of the world combined.

    ***Meanwhile, try using transit in most U.S. cities, and compare and contrast to German transit. Did you know that Germany is ahead of schedule to provide nearly 20% of its electricity with renewables? See? That's *infrastructure* -- a B-1 Bomber or "Star Wars" anti-missiles are not.

    ***But never mind the deficit comparisons: Consider this true local U.S. v. Germany example: In the U.S. a land speculator (sometimes called a "developer") can purchase some agricultural land, then persuade a local government to upzone it for development. When the speculator gets his entitlements, he not only earns literally hundreds of times what he paid for the land, those earnings are income tax free if he 1031 exchanges out of it. (Where's the "conservative" movement to close these loopholes, BTW? Answer: AWOL. Liberals ain't a lot better, either.)

    ***So while cities and counties are doing everything from cutting public health expenditures to literally going bankrupt, the land speculators are reaping millions in profits. To give you an idea of the scale of this corruption, a single speculator, Phil Angiledes, when he ran as a Democrat for California governor, declared $11.5 million in income for the year before.

    ***Notice also that this egregious subsidy for petroleum-consuming edge-city sprawl appears as neither taxes nor spending on the local government's books. Little details like these make just taxes v. spending a sideshow, IMHO.

    ***In Germany, meanwhile, developers must sell the land to the local government at the ag land price, then re-purchase it at the upzoned price. The government-created value accrues entirely to the public benefit, not some speculator's private fortune.

    ***As a consequence, German schools don't have hold bake sales or sell candy so they can have after-school sports, or music and arts programs. And the arts budget for the City of Berlin (that's the *CITY*) exceeds the U.S.' National Endowment for the Arts (that's the *NATION*). I couldn't make it up.

    >>>Posted by: foxmarks | Jun 6, 2008 5:13:21 PM This idiot again: Canadian oil sands barely make sense. Posted by: yoshidad Dude, the break-even was something like $80.

    ***Actually, excluding environmental costs, the break even is $78. The point I was making, perhaps poorly, was that processing this sludge, previously discarded by U.S. refiners, is the equivalent of trying to snort the spilled cocaine out of the carpet. It's an indication of how desperate we've become because public policy subsidizes oil consumption ($300 billion annually, says the World Resource Institute) rather than conservation, or infrastructure alternatives like transit, pedestrian-friendly cities, etc.

    ***If you include environmental costs, break even is much higher. The waste water from the mining operations "'contains highly toxic hydrocarbons such as napthenic acids, which are deadly to marine life, plus a host of other chemicals, including arsenic.' Although their safe containment and disposal has yet to be resolved, they are pumped into huge lakes contained by a system of dams that are now the largest bodies of water in the region." -- In other words, we don't know what the real break even is because we haven't figured out what to do with the waste. It's like nuclear, only better, eh? (from http://environmentalism.suite101.com/article.cfm/alberta_tar_sands)

    >>>PS Former World Bank Economist Herman Daly (author of "Beyond Growth" and one of Leo DiCaprio's stars in "The 11th Hour") Don't piss me off with World Bank "economists" (I usually piss them off, see here.) And never, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever use any reference whatsoever to any movie "star," especially Leo Di Whothehellareyou, when it comes to economics.

    ***I believe you'd have to be significant to them to piss them of; and even if you fully inflate yourself, I doubt you'd rise to that level...

    ***And..."Shall I compare thee to a summer's day? Thou art much much much much much much much much more lovely and more temperate!"...Man, don'cha just love the poetry of the right? It's so... so... so... I don't think "eloquent" is the word I'm looking for...Is "brain damaged" more like it? ..8^)

    ***Anyway, this is *just* name-calling. Ad hominem argument may slice some cheese with you, buddy, but calling names is all you've got here. Call me back when the brain heals. Oh, and it was a child who pointed out the emporer's lack of clothes, not some court intellectual. We know you're clever; but how wise?

    >>>I have several degrees, and multiple professional licenses. I perform, monitor, and supervise multi-million dollar transactions every day.

    ***Of course a simpleton like me can't stand up to such brilliance. I recommend the Chinese riddle that began this post to you. Let's all remember: the choices are humility or humiliation -- there is no third choice. Now I'm ready to go to my happy place and relax, but...

    >>>He's an overpaid impressionist, with zero scientific training. You're an idiot. So is Herman.

    ***Ouch! Q.E.D!

    >>>Posted by: Josh | Jun 6, 2008 10:41:27 PM Bizarre: Even the API (American Petroleum Institute -- the oil lobby) will tell you that U.S. domestic oil production follows a bell-shaped curve that peaked in 1971 ($1.75 a barrel, 30% imports). Nuclear peaks in 2050 unless we build a lot of plants, [which Democrats won’t allow] in which case it peaks in 2015 [?]...what the economists call "externalities" -- like the cost of healthcare for smokers and their second-hand victims. Posted by: yoshidad

    >>>This is serious stupidity. Evidently, Democrats like yoshidad don’t pay attention too much. That requires intelligence. Explains Obama. M.King Hubbert successfully predicted the oil peak...Posted by: yoshidad Oh, I see, so L. Ron Hubbard wasn’t available? Shut the fuck up, whacko.

    ***This reminds me of the Saturday Night Live sketch where Bill Murray was the strong caveman (Og), and Steve Martin was the smart one. In the end, Murray kills Martin. "Now Og smart, too!" says Murray.

    ***You can make fun of M.King Hubbert's name all you want -- words can't hurt him now (he's dead) -- but he was a real geologist who worked for Shell oil. I don't agree with everything he said (he promoted nuclear as the alternative fuel), but denigrating him for a tremendous scientific accomplishment of correctly predicting U.S. peak oil doesn't reflect well on your argument. But now that you've dismissed me as a colossal ignoramus, whose argument isn't worth considering, perhaps now you are "smart, too."

    ***There's some controversy about world peak oil, but the peak in U.S. domestic production of oil isn't even slightly controversial. The American Petroleum Institute (api.org) will tell you this. Daniel Yergin's history of the oil business ("The Prize") will tell you this. Anyone who actually *knows* something about the oil business will tell you this... But sadly, you have to actually listen to hear it. As I say, maybe fools (like moi) are the only ones to insist on this fact, so perhaps we can safely ignore it.

    ***On the other hand, Google "Peak Oil" if you don't believe me. (Warning: *very* scary websites, e.g. dieoff.org... The most thoughtful discussions I've found are at theoildrum.com)

    ***One other meaning of the domestic peak oil fact: The U.S. can become increasingly dependent on foreign sources (and wonder "Do they hate us for our freedom?" as we grab the overseas resources), or it can start a serious conservation / alternative infrastructure program. The peak in uranium means exactly the same thing would occur even if we started frantically building nuclear plants, and magically could safely process all their waste.

    ***BTW, I'm guessing that government subsidies are a sore point for most of the "conservatives" reading this. And we agree! But where's the outrage about the subsidy for nuclear power? The Price-Anderson act makes the U.S. government the insurer of last resort. No one else would insure nuclear plants, and none would be built without insurance.

    ***Even the famously "successful" French are going to have problems with their nuclear waste. It's encased in glass that lasts several hundred year, but the waste itself has a half life in the tens of thousands of years.

    ***It's fine with me if we stop all those subsidies -- nuclear, and *especially* for oil. The oil subsidies includes the depletion allowance (a special write-off for oil producers), all the petroleum-use-encouraging infrastructure that gas taxes don't pay for, and the protection for the overseas oilfields and pipelines that leads us to spend more than the rest of the world combined for our military. As has been mentioned before, all this was estimated at $300 billion annually by the World Resource Institute (wri.org) -- and that estimate predated the military expense of even Gulf War I.

    >>>>Posted by: Mesa Econoguy | Jun 7, 2008 12:10:43 AM "Wow! Climate change deniers!" You lack reading comprehension skills. The global climate may or may not be warming. That is a given. What is unknown is whether humans are contributing to such a trend, if it exists. You are a global-warming cultist, i.e., a person who has a FAITH BASED belief that humans are causing global warming. The scientific evidence for such a view is NOT DEFINITIVE, which anyone with even a passing knowledge of climatology must acknowledge.

    >>>>Only the global-warming cultists "know" that humans are at fault, or even that the warming trend will continue. Science can't tell us about the latter, either.

    *** There's a one-in-two-billion margin of error in quantum mechanics too, but we don't hesitate to act according to its advice. Is only the only acceptable "scientific" standard absolute certainty? (Note: no mention of Godel, or Heisenberg uncertainty, just to keep it simple). Only a true believer, really high on that good ol' Koolaid would say "yes."

    ***Since 99.99% of climate scientists agree that human activities contribute to global warming, I'd say the cult members are the ones who insist that the minority position with zero peer-reviewed science is correct. But hey, what do I know, I'm just a low-reading-comprehension fool, right?

    ***And I won't even insist I'm right, but don't the size of the stakes encourage at least a little humility, perhaps even requiring less than perfect evidence be an acceptable guide for public policy?

    ***You also get a two-fer if we stop arguing about who's responsible ("He hit me first!") and actually start reducing C02, conserving, sharing rides, stop building even *more* sprawling infrastructure that guarantees maximum consumption of petroleum, etc. ...Then, not only is climate change addressed, no matter who started it, but we stop what (the very "conservative") Daniel Yergin calls the greatest peacetime transfer of wealth in history to the very places whose political instability has recently caused us so much trouble.

    *****************************

    Finally, some questions for my new "conservative" friends:

    1. What do you get for sticking to such manifestly bankrupt thought processes as name calling and believing crank science sponsored by Exxon? Is there a prize? A toaster? Any chance you stop going down this maze if there's no cheese at the end of it? Mice stop; are they smarter than men?

    2. What would it take for you to change your mind? Remember, I'm not asking for you to do anything physical... just change something as insubstantial as a thought. What would that cost, really? Or should we just imprison Galileo, burn the witches and forget about the whole thing.

    Maybe I'm wrong about this stuff, but that's how it looks from here. I'm sure y'all will point out what's wrong with my thinking here. But hey! I'm just a fool, so what else can you expect?