In Praise of Price Gouging

Price gouging is a good thing. Honestly. And not in the whole "Greed is good" kind of thing. Price gouging, as many call it can be quite beneficial to society. Let me give you a few examples:

Unless you've been hiding under a rock for the last few weeks, you've seen countless pictures of empty shelves, where stores of toilet paper used to be. Maybe you've seen pictures, or witnessed in person, scenes of people buying pickup trucks full of toilet paper or bottled water. Panic buying. You often see it around hurricane season on the coast. People buying plywood to board up windows, building supply companies running out of plywood. As they used to say, "What's a mother to do?"

Now I want you to imagine that you are second in line to buy these necessities. The guy in front of you at Wal-Mart bought their last twenty cases of water, because, even though it was a bit excessive, he could afford it easily. You gaze longingly at the empty shelf and ask if they have any left in the back. No joy.

Same situation, but this time, the retailer dares to raise the price of water, from what it had been the day before, with no further investment on his part, and "gouge" the customer by doubling the price. Tripling the price? Now the guy in front of you says, "That's outrageous! That's price gouging!". But because he really needs some water, buys a case or two anyway, and mirabile dictu, there is water left on the shelf for you and your family and maybe a dozen others. Sure, you'll all complain about the price, but if you need it, you'll buy it, and people will be, in most cases, less likely to hoard it.

I used to get really ticked at gas stations, whenever the price of gasoline went up, they jacked up the price, even though the quantity they already had in the tanks had been purchased at the lower price! They were "profiteering" off the circumstances, weren't they? Not really, because their cost of refilling their tanks the next time was going up and they'll need more cash to buy the product. Would you rather they sold the gas in their tanks, lower than what it would cost to refill them and then risk the possibility of your inconvenience if there's no gas there in the future? Afterwards, when prices fluctuate down again, they'll have to sell that gas they bought at a higher price for a smaller margin, or at cost, as prices come down again.

So, "price gouging" can work as a form of economic rationing, a deterrent to hoarding, to customers, and can flatten spikes in cost to the retailer... is there anything else that might be helpful?

Higher prices can also mitigate risk. What if the retailers were to take it upon themselves to increase the supply to help meet the demand? You order something from Amazon, maybe they ship it to you in a week or two for free. But if you want it overnight, it costs you more. If the retailer hires some guy to make a special trip to get extra product to his customers, over and above his usual delivery, why would he do that if not for monetary consideration. If it provides the necessities his customers need, even if they begrudge him the prices, does it not serve the greater good of the community?

So, how much is too much? Hard to say. That's going to vary. There are some people, like that clown in Tennessee who drove all over the state clearing out stocks of hand sanitizer in every store he visited, hoping to score big. There will always be exceptions to the rule. Obviously not ALL gouging will be good, but penalizing retailers who raise prices in times of shortage can be detrimental, too.

Bernie Sanders and the Millennials

"Alas, poor Karl! I knew him well!"
Saw a story over at Maggie's Notebook about Millennials going ga-ga for Bernie Sanders. I believe the gist of her post was that they were enamored of all the free stuff: free healthcare, free college education...the list goes on. But, I wonder if anyone has really told them about the cost: not tax dollars, per se, but lifestyle changes from what they already have?

Mr. Sanders, for example, was appalled by the wide variety of deodorants he saw on a store shelf.

“You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.”

23? That's just sprays. You also have a choice of solid stick or roll ons, scented, unscented and extra strength! And by "sneakers", the fifties called, Mr. Sanders. They'd like their terminology back!

By "sneakers" did you mean tennis shoes, basketball shoes, cross trainers, or running shoes? Or is it just all those different colors that disturb you? Why should you have comfortable shoes that match your every outfit when you could have a US government approved pair of US Keds, in black, for every occasion?

Part of the beauty of freedom is that if you think that you have a better formula for deodorant, or idea for a way to apply it, or a design for the package that will make people want to buy it, even though it is identical to all the rest, you are free to do so. You can put your own capital at risk, and/or convince other people that your idea or product is superior, and will give you , and them, a return on your money. What's wrong with that?

And what Mr. Socialist Sanders fails to recognize is that in the process of giving the American people (and sometimes the world) another, possibly better option, is that each of those 23 spray deodorant companies is employing people to make their product. They are buying raw materials from suppliers, purchasing real estate and hiring contractors to build their factories, paying taxes to state, local and federal governments to provide the services their communities require. They are buying office supplies and furniture and paying salaries to people who also pay taxes to state, local and federal governments, to pay for defense, safe food and drugs, highways, etc. Oh, and even welfare for the "children who are hungry in this country".

Meanwhile, we have the choice of buying spray or stick, scented or unscented, Mountain Fresh or Spice, Nikes or Addidas, New Balance or Skechers, cross trainer or deck shoe, black or white, blue or gray or whatever. And as long as the people who make these products can keep a majority of their customers satisfied, what business is it of Bernie Sanders to yell, "You kids get off my lawn!"? Sorry! "You kids don't need all this variety of stuff?"

In my humble opinion, if you really want millennials to run screaming from Mr. Sanders, just see if he would apply the same standard to their phones as he does to deodorant? Why do you need a Galaxy Five or LG, or iPhone 6 or 6s and all the rest when children are going hungry?? Let the state decide for you what the best phone is and let the state limit your choices so you aren't wasting precious resources on stuff you really want instead of what the state thinks is best for you?

Actually, Uncle Bernie already has the phone in mind for you! It weighs about ten pounds, it's black, and comes conveniently wired to the wall so you won't lose it all the time, so you can cancel that pesky phone insurance! Your texting charges will drop to zero, and kids... you'll get used to that rotary dial in no time!



Original art by John Cox. More at John Cox Art

Fauxcahontas Fails Finance 101

Fauxcahontas, a.k.a Lotta Wampum, a.k.a. Elizabeth Warren demonstrated the same economic ignorance that seems to beset leadership in the Democrat party. When I heard it recently, it sounded like she was channeling Barack Milhous Obama's "You didn't build that". But I went back to the (admittedly brilliant) piece I did on what Obama said, "The Platte River President* on Economics", and  I rediscovered what I had forgotten, that Obama was cribbing from Elizabeth Warren when he made those pointedly stupid comments!

Here's the Elizabeth Warren quote from 2012:

“There is nobody in this country who got rich on their own. Nobody. You built a factory out there - good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for."

This must be part of her standard stump speech, up to and including the stilted language usage of "fire forces". But let's examine what the Fauxcahontas flavor of populism has to say.

You moved your goods to market on roads the rest of us paid for. That implies that the factory owner somehow didn't pay, but he did. He paid the same sales taxes and income taxes and property taxes as did "the rest of us", but in fact, he probably paid more than we did. If he's prosperous, he lives in a bigger house than we do and pays more taxes. His income is bigger than ours and he pays more taxes. He buys more stuff - more sales taxes. And because he "built a factory", he's paying additional property tax and one of the highest corporate income taxes in the world. In short, he's part of the "rest of us" paying for the roads, etc.

And are not those same roads free for us to take our goods and services to market? Do we not have the same opportunity to hire those that "the rest of us" (but especially he) paid to educate? Are we not safe because of the police and fire services "the rest of us" (including the evil factory owner) pay for?

So, dear Lizzie, if all of the rest of us have the same access to the roads, and educated populace and fire and police protection, must there not be some definable way in which the man who built a factory did do something unique and valuable "on their own" that the rest of us somehow failed to do?

Drive downtown Anywhere, U.S.A. and drive by shops that are closed and possibly boarded up. Did they not have access to the same roads? Same educated workers?? Same police and fire??? Of course they did. But, unlike government, there's no guarantee that any business will have their doors open this same time next year, unless they are providing their customers with quality goods and services at reasonable prices, or unique goods and services at whatever the market will bear.

Because there is no guarantee of return on their investment, those who start businesses (which, incidentally are those who actually hire people, Hillary!), are putting their time and money at risk. A gamble, if you will. It's funny how liberals make such a big deal about what a "risky scheme" it is to allow people to invest a small portion of their Social Security in the stock market, (where they are almost certainly going to get more than the measly 2% return the government gives them on their money), but begrudge businesses the reward for putting their own money at risk, in order to build the factories which provide goods and services we need and hires "the rest of us" who don't have an idea good enough or the confidence to take that big a risk on our own.

If you purchased 50,000 shares of Amalgamated Buggy Whip, in 1908, when the first Model T's were rolling off the production line, you lost your shirt. If you started a buggy whip or button shoe company in 1908, you probably lost your shirt. But, if you'd bought 50,000 shares of Ford Motors, I'd probably be calling you "boss".

There's something Henry Ford did that the buggy whip manufacturers didn't do, even though they had access to the same roads, and educated workers, police and fire, but the Ford Motor company is still here and Amalgamated Buggy Whip is a distant memory. Ford took risks that others didn't take and he convinced people to invest in his ideas for a share in the rewards. They also shared the risks.

That spirit is alive today, but not does not thrive where the politics of envy prevail. As I pointed out before, If 'You Didn't Make That', then It's Okay for Government to Take It, but to suggest that if someone has a thriving business it is only because they did so on the backs of "the rest of us" is simply not true. As a philosophy of government, it is the first step on the road to ruin, or as we refer to it in most places, the "Obama Recovery".



Original art by John Cox. More at John Cox Art



Cross posted at LCR, Political Clown Parade

Golden Oldie: Hillary Clinton & the Unintended Consequences of Raising the Minimum Wage

I was originally thinking of including this example in the piece earlier today, about Obama's demagoguery on the minimum wage, but I was having some difficulty finding it and confirming the details. The video seems to have disappeared.

On April 3rd 2008, Hillary Clinton was on the Tonight How with Jay Leno, where she told this anecdote: (Cafe Hayek still has the transcript)

I was in Indianapolis the other day and I was shaking hands after I spoke. And there was this young boy about eleven years old and he’s trying to tell me something—you know the crowd was yelling—so I leaned over and he said, "You know, my mom makes minimum wage and even though it went up, her hours were cut. So we’re not making any more money. Can you help her?"

At which point Hillary launched into platitudes and bromides about fixing the economy, 'we can do better', etc., but she overlooked a very important lesson: When the cost of anything goes up, you tend to buy less of it. The employer of this little boy's mother did not have a bottomless stash of cash to dip into every time the government decrees that his employees are worth more than the market warrants. To hold expenses in check, the employer reduced the number of hours worked at the new inflated wage.

Mr. Obama, too, presupposes that if the minimum wage is raised that those making minimum raise will automatically receive more money, when in reality, not only will they be receiving dollars made less valuable through inflation, but there is no guarantee that their hours will not be reduced, as happened with this woman, or eliminated entirely through layoffs.

Update: Welcome to those who found their way here via the Pirate's Cove!

If 'You Didn't Make That', then It's Okay for Government to Take It

In 2008, Obama instructed Joe the Plumber on 'sharing the wealth'. In 2012, Obama instructed the rest of us upon what his underlying philosophy rests. Mimicking or channeling the words of Fauxcahontas, Elizabeth Warren, Obama uttered the infamous words, that "if you were successful, you didn't make that!"


Last week, in "The Platte River President* on Economics", we focused on the wrong headed and shallow notion that one's success was more rooted in the infrastructure that government provides, rather than hard work, good ideas and self reliance in making one's business work. It was noted in passing, and elaborated upon in the comments, the inconvenient truth for this administration, that the schools and roads and bridges, among other things, like public libraries, that Obama was crediting with the success of making business prosperous, were in all likelihood paid for in greater proportion by those prosperous businessmen than by society at large.

Since Obama seems more at home in fictional scenarios than running on his actual record, we will for the moment pretend that Obama is the president of Springfield, home to Homer Simpson and his boss, the eeeeeeeevil Charles Montgomery Burns.

Mr. Burns lives in a palatial mansion and owns a nuclear power place. Mr. Burns pays more in property taxes than the hapless Homer who works for him. And though the fictional Mr. Burns must have contributed far more in taxes than his employee, Homer and his family were given access to those same roads, bridges and schools that benefitted the wealthy, while paying but a fraction of their cost.

Mr. Burns was childless and therefore was subsidizing the education or the townspeople with children. Yes, he benefitted from an educated work force and easy access to his business, he paid, by far, a greater percentage of his wealth to build and maintain that infrastructure, in addition to providing the jobs and power the community needs to prosper.

Enough of fiction, you might say! The Simpsons aren't real! Okay. How about this example? You are being bombarded by the Left that Big Oil and Big Business are evil, and greedy and make their wealth at your expense. You are supposed to at least envy them if not hate them. But, consider Andrew Carnegie...

Andrew Carnegie made his wealth from Big Steel. In addition to providing many good paying jobs and products used around the world, Mr. Carnegie was a philanthropist. He contributed millions of dollars to building thousands of libraries here in the US and around the world. (Notice how I snuck "public libraries" into Obama's infrastructure list?) The epitome or acme of a musical performance was once considered to performing at "Carnegie Hall". A beautiful concert hall, contributed to the community by the eeeeeeeevil capitalist, Andrew Carnegie.

Funny what people will do when allowed to keep more of their own money!

But, is it really theirs to give? Ah! According to the Fauxcahontas/Obama wing of the Democrat party, your so called "accomplishments" all took place, the Fauxbamists say , as a product of our collectivist society. Therefore, if you "didn't build it", then why should you solely enjoy its benefits? Is it not the duty of government to "spread that wealth" more equitably among those less fortunate (so long as they vote early and often?).

What Obama proposes in the name of "fairness" is, in reality, a covert attack on personal property rights. It is a rationale for the government to redistribute what you have. After all, if you cannot be credited with having legitimately earning it, then why can't the government come in and relieve you of it?

And that, my friends, is Obama in a nutshell. A government big enough to give things to you is big enough to take things from you.

Cross posted at LCR, Say Anything

The Platte River President* on Economics

By now, you've surely heard Obama's collectivist rant, that if you were successful, you didn't do it on your own. He seems to be channeling the original Fauxcahontas, Elizabeth Warren, who said:

“There is nobody in this country who got rich on their own. Nobody. You built a factory out there - good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for."

Got that? If you are rich, if you are successful, you didn't do it on your own, you got a lot of help from the public** who financed the infrastructure. But, have you ever driven by a strip mall, where one or more of the tenants, but not all of them had gone out of business? Or driven by two businesses side by side where one was open for business and the one right next door was shuttered and boarded up?

Didn't the same roads and bridges supply both businesses? Didn't the same schools educate those who worked in the strip mall? The same fire and police protect them all?

Mr. President, Ms. Fauxcahontas: Did you ever consider that since the same infrastructure is there for both those who succeed and those who fail, that maybe there's something else to whether or not a business succeeds than merely the community infrastructure? And it is possible that some of that something, that allows one man to keep his doors open and make payroll every week, can be weakened, or crippled or even killed off by taxes that are too high.

Raising taxes on businesses makes them less competitive, more likely to fail and less likely to expand and hire more workers. The way to get the economy back on its feet is to stop the frivolous and wasteful government spending, (as you promised when you ran for office in 2008, Mr. Obama) and lower taxes across the board.

But you are on the record as wanting to raise taxes for the sake of "fairness", even if the end result is an equality of misery.


* The Platte River was once said to be a "mile wide and an inch deep". Yeah. That fits!

**The more successful members of the public already paid more than their less successful brethren.

There Ain't No Such Thing As A Free Lunch

There was an article in my local dead tree paper a while back which brought that to my mind. In keeping with good journalistic practice, I invited one of the parties quoted to respond to what I thought was a very simple question. Having received no response, I will let you draw your own conclusions, along with me, as to the veracity of those statements.

The story was a "puff piece". It was not part of any breaking story, merely a down home look at the "wizbang, golly jeeper" happenings around our fair city*.

"(Catherine)Kearney's Nissan Leaf is refueled each day while it sits in a parking spot near her desk at the San Joaquin County Office of Education, which recently installed five charging stations for plug-in electric vehicles. They are among the first free public chargers in the county."

There's that "free" word. Now, were I a big city reporter and not just a lowly blogger, I might have asked a few questions. Maybe something along the lines of "Exactly how much did these stations cost?" or "In tough economic times when there are school cutbacks and teacher layoffs, which part of the county Office of Education budget did this come out of?" and, "Was this the best use of your limited resources?"

And, while it is a nice "perk" for Ms. Kearney to have her electric car charged at no cost to her while she is at work, I wondered not only what it cost to install the charging stations, but what the upkeep on them would be? What are the operating costs?

Here the plot really thickens.

The county Office of Education chargers are attached to a new solar array helping to power the complex. So on a sunny day, when Kearney charges her car, that fuel is direct from the sun - rather than some polluting power plant.

On a sunny day, a solar array charges her car without all that nasty, smelly pollution (unless you count the pollution of manufacturing the array, disposing of the toxic waste by products, the energy it took to manufacture, ship and install the solar array. But, why worry about that? It's free lunch time, right?) That would presume that on less than sunny days, her Nissan Leaf is suckling at the teat of some "polluting power plant"... paying for power from Pacific Gas & Electric, with tax dollars, out of the county's education budget.

Maybe the key word is "helping". We teach that to our kindergarteners as a virtue. But,for the math impaired among us...

The $2.5 million (solar array) project was financed mostly through low-interest loans. Energy savings will eventually pay it off, said Barry Scott, the county office energy coordinator.

"Energy savings will eventually pay it off..." Is this like that lottery for stupid people, where you win a million bucks and they promise to pay you a dollar a year for a million years? I pulled one of my PG&E bills at random to see what I'm being charged for electricity. Depending on what percentage of my "baseline" usage it is, it looks like about 12 to 29 cents per kilowatt hour. Let's assume for the moment that charging electric cars pushes the school district to the maximum residential** rate. (If they get a lower rate, the breakeven takes longer.)

Even rounding the rate up to .333/kwh, to make the math simpler, that solar array would have to generate 7.5 million kilowatts of electricity, plus whatever it would take to pay the interest on the "low interest loans". That's 7.5 Billion watts of electricity for the array to "eventually" pay itself off. (At 12 cents/kwh, make that 20 Billion.)

I asked Mr. Scott about "eventually":

"Would you mind sharing details as to exactly what time frame that is, given the projected and actual output of the system and the current and projected savings against the cost of purchasing power from PG&E?"

Mr. Scott declined to answer. And I don't blame him. I have no idea how much power a $2.5 million dollar solar array puts out on a sunny day. Or how many sunny or partly sunny days they base their return. But, given the fact that solar cells have a limited life span, (Nothing lasts forever, not even your free lunch!), I suspect that even assuming a twenty year life, which I believe is overly generous, that solar array would need to produce 375,000 kwh/year to break even on the principle. Add interest, maintenance and repair, and either that is one honking big solar array (possible visible from space) or the free lunch bunch are pursuing a "green" agenda that will likely never pay for itself, (Gee! Just like "high speed rail"!) and hoping that the education system they are administering will produce enough math impaired people, so as not to question their benevolent overlords.

One criticism of today's reporting, and perhaps part of what is causing the decline in dead tree newspapers, is that we have too few real reporters and too many who just rewrite the press releases given to them. I really would have hoped that a reporter, even one assigned to a "puff piece" would have enough curiosity to ask a few questions, do a little analysis of the numbers and dig a deeper than this. Who knows? Maybe there's even a story in there somewhere? *Sigh*

And finally, if enough of your tax dollars weren't being squirreled down the rat hole, the electric chargers are "free" to anyone who wanders by.

Kearney hopes people driving on nearby Highway 99 will stop by and plug in - if not for a complete charge, at least to "top off" for a few minutes. The office has a café, she said with a smile. "They can have a sandwich, get a few electrons and be on their way," Kearney said.

I wonder if the café offers a free lunch as well?





*Not to be confused with a short story by Robert A. Heinlein with the same name.

**The county may get a break on this, but I was growing old waiting for a reply.


Cross posted at LCR, Lady Cincinnatus , Say Anything

The Muddled Mindset of the Mob

Over at Brutally Honest, there's an essay on some of the "good people" involved in the Occupy movement. One of the "good people" was a lady pastor from Southern California. And a former (we can only hope) if not present, Obama supporter. But, then, let's let her say it:

The people have finally arrived at the place where they are saying, "Enough!" They are making strong statements that are definitive; closing accounts at Bank of America because they are tired of the banksters charging us to use our own money.

"Banksters." Catch that? That oh, so clever way she equates "bankers" with gangsters". I wonder if she thought that up herself or is just repeating it because she thinks it's cute?

Here's something for you to ponder, Pastor Sue: "the labourer is worthy of his hire" -Luke 10:7
The bank provides a service to its customers. Should they do this for free? There is overhead associated with giving you access to your own money. No one is forcing you to put your money in their bank. Keep it in a coffee can in the back yard, or stuffed under your mattress if you like. And if you're on vacation and run short of cash, just run home and get some more!

The fee that's got Pastor Sue's choir robe in a bunch, is the response to the micromanaging of the banks by Congress. A fee that they used to charge to retailers was reduced by Congress, and the banks, who need to make a profit to keep the doors open, pay the tellers and bookkeepers and building maintenance people, the utility companies, the printers, the sign makers, pay for the buildings the furnishings, the slightly larger coffee cans they keep your cash in, and the "free" coffee they serve in the lobby...all those things, and more! Are the people who build and service ATM machines, the data entry people who keep track of your account, the people who answer the phones (yeah, yeah...after "press one for English"), are they not entitled to be paid for what they do?

Or instead of boycotting the banks, maybe Pastor Sue and her friends can pool their money and start their own bank? They can hire lawyers to help them navigate all the state, federal and local regulations, rent or buy a building, pay all those salaries the staff requires...oh, I forgot! This is a volunteer bank! Scratch the salaries! And then, after they have done all this, they can offer free access to their depositors' money, at no charge, twenty four/seven. Assuming they can get any depositors. After all, how are they going to pay any kind of interest if they can't charge for any of their services? And why would anyone want to deposit their money in a bank with no ATMs, that pays no interest and a limited number of locations (1).

Let me know how that works out for y'all as a business model!

VIDEO: Peter Schiff Debates Zucotti Park Occupy Wall Streeters

Crossposted at the Left Coast Rebel

This is simply just too cool. You can almost hear the collective "Occupy-I-am-entitled-to-everything-I-want-simply-because-I-have-a-pulse" synapses misfiring in the crowd as Peter Schiff engages them (poor saps have probably never even heard his viewpoint that he aptly expresses).

There are too many quotable moments from Schiff here, "WalMart doesn't hold a gun to their head" may just go down in interweb infamy:

I love how Allahpundit notes that Schiff pulls this thing off like an Austrian-school ninja.

Indeed.

More from Nick Gillespie at Reason.com:

"Did a corporation end slavery, or did the government end slavery?!?!"

That's the sort of question investment guru and radio show host Peter Schiff fielded as he debated Occupy Wall Street (OWS) protesters last week in New York's Zuccotti Park.

Schiff is no ordinary observer. As the prinicipal of the financial firm Euro Pacific Capital, he's a full-fledged and unapologetic member of "the 1 Percent." As an outspoken radio show host (listen online here) and commentator, he not only predicted the housing crash and financial crisis, he railed bank and auto-sector bailouts as they were happening. Schiff believes that capitalism offers is the only hope for young, frustrated people to have a vibrant and prosperous future (get information on his latest book, How an Economy Grows and Why it Crashes, here). So he went to Occupy Wall Street to engage and debate the protesters.

Touring the Occupy Wall Street scene in New York with a sign that read "I Am the 1%, Let's Talk," Schiff spent more than three hours on the scene, explaining the difference between cronyism and capitalism, bailouts and balance sheets, and more.

"The regulation we want is the market," said Schiff. "That's what works."

Via Memeorandum.

Occupy THIS!

I will confess I haven't been following the Occupy Wall Street nonsense that closely, one, because I haven't as yet had a smelly hippie shoving a sign in my face, and second, the patent absurdity of some of the things they say they "want". More on that in a moment. Today, along with the smelly hippies, I heard there was a group of United and Continental pilots down in the "occupied zone" trying to garner attention for their labor resolutions. Other unions and even Mooove On dot org are trying to run to the head of the parade and shout "Follow me!"

Most notable to me, among the things the original group said they wanted, is the call for the complete forgiveness of debts some of them were asking for. Primarily focusing on their student loans, but, as long as we're storming the Bastille, hey! let's just do away with all of them! Those rich fat cats have enough money, let's just cancel all our loans.

All I ask is that before you initiate this proposal, is give me enough time to make a few down payments on a Lamborghini and some beach front property, and then cancel away! Do away with all those nasty loans!

A couple things come to mind that these geniuses of math and finance probably never thought of. One, after all debts are forgiven, that portion of every bank's assets will evaporate. Expect a run on every single bank in the US. The lucky few at the head of each line (read bankers and their "fat cat" friends) might be made whole, but when those assets dissolve, so do the savings of thousands upon thousands of Americans. And then, better plan on paying cash for your next house, or car, or even your next latte at Starbucks, because no one in their right mind is going to loan anyone any more money if those debts could be dissolved on a whim.

Then, figure whatever relief you received by getting out of debt would be quickly wiped out by inflation. If no one in the US has a house payment, car payment, credit card or student loan payments, then millions of people would have thousands of dollars in disposable income they didn't have before. When more dollars chase the same number of goods and services, the prices those goods and services command will go up.

And just out of curiosity, when we are dissolving everyone's loan debt, does that include Uncle Sam and the states, too? Everyone with a T-bill or municipal bond in their retirement portfolio can kiss their retirement goodbye as well!

All legalities aside, even as economic fantasy, this idea clearly would never fly. Our budding anarchists should go back to school. Or get a job. Preferrably both.

Klaven on the Facts of Life for Liberals

H/T American Power

Is Barack Obama Schizophrenic?

Is Barack Obama Schizophrenic? The reason I ask, is that for three years, Obama has been clamoring to "share the wealth". He wants higher taxes imposed on "the wealthy" - those who earn more than $250,000 a year, even though some of the people in that bracket are actually small businesses who net far less than that each year.

On his first full day of work this year, Obama, in anticipation of bidding press secretary Robert Fibbs adieu, lets slip this gem:

Perhaps it was the long flight back from Hawaii. But President Obama's first full day back on the job suggested a slight case of tone deafness.

In bidding a sort-of farewell to White House spokesman Robert Gibbs, he noted the "relatively modest pay" for which Gibbs has labored.

In fact, he earns $172,200 in a nation where the average family income hovers around $55,000, unemployment is high, record foreclosures persist and wages for most folks are at best stagnant.

So, working for the government, with your office and staff all paid for at government expense, and raking in a guaranteed $172,200 just for yourself, is "modest", but grossing $250,000 before taxes, salaries and expenses is "wealthy"?

Are we to conclude that the difference between "modest" and "wealthy" is about 30%? That doesn't leave much room for the "middle class" now, does it? Especially when the "modest" Gibbs has virtually no overhead and "wealthy" small businesses have crippling loads of it, with no guarantees? What kind of bubble does this guy Obama exist in?

Any wonder his tone deaf approach to small businesses growing the economy has resulted in a massive loss of jobs with little hope for a speedy turnaround?

H/T Memeorandum

Cross posted at LCR, Say Anything.

Nancy Pelosi Argues for Tax Cuts*

*She just doesn't know it.


How much do you know about economics, Ms. Speaker?

"Economists tell us that unemployment insurance returns $2 to the economy for every $1 spent."

-Nancy Pelosi

Critics have said that this illustrates economic illiteracy (or innumeracy) on the part of the current Speaker. But, I'm here to tell you that one does not become Speaker of the House of Representatives by being a "pretty face". (Nancy certainly didn't!)

So, for the moment, let's say that the Speaker has her facts straight: Every dollar spent on unemployment insurance returns two dollars to the economy. Would not the reverse be true as well:
For every dollar taken from someone in taxes, two dollars is removed from the economy?

At best, that would be a wash. Factor in that the government is so inefficient in nearly everything it does, the overhead to get that dollar where it is going may siphon off 70 to 80% in bloated government overhead, and you've got a losing proposition.

Believe your own hype, Ms. Speaker. Stimulate the economy by two dollars for every one you cut in taxes. Better yet, take two tax cuts and call me in the morning.

Alan Grayson's Classless Class Envy

First: When he says "Extend the President Obama tax cuts", he's lying. Obama is only presiding over tax increases. The argument is over how many people's taxes he raises. Not raising your taxes from what they are now is not a "cut".

Second, The "Bush tax cuts" were for the lower and middle class, too, not just the wealthy.

Last, couldn't he find any $600 sneakers for the wealthy to buy? Trips to Spain or India? How much to rent the entire Taj Mahal Hotel?

Thank you, soon to be ex-Rep. Alan Grayson for the view from your colon.

Video via The last Tradition

"Cash For Clunkers" Still Screwing the Working Man

Barack's chickens are coming home...to roost!

Ed Morrissey points to a story that, quite frankly, should surprise no one:

Car buyers on average paid $1,800 more for a used vehicle in July than they paid a year ago at this time, according to Edmunds.com data. That’s a 10.3 percent increase, bringing the average cost of a 3-year-old vehicle to $19,248. The price of a Cadillac Escalade spiked nearly 36 percent. “A lack of confidence in the economy is driving more people to used cars, putting upward pricing pressure on a limited supply of vehicles,” said Joe Spina, a senior analyst for Edmunds.

Let me see...the basic law of supply and demand says that if the demand remains the same or higher, and the supply diminishes, and more dollars chase fewer goods, the price will go up. Let's see a show of hands... how many of you didn't already know that? Anyone? Anyone?? Beuller? Beuller??

If the average man or woman on the street can figure this out, why couldn't the Smartest Men on the Planet™ (according to them) figure it out?

New car sales weren't really increased because of the program. Any increases were just sales that would have been deferred for a few months. It was a subsidy for the wealthy or upper middle class who could afford to purchase new vehicles in spite of looming poor economic times. And any pretense of "saving the environment" was negated by the popularity of vehicles like the Ford F-150.

And now, the poorer among us are going to pay the price for Barack's Folly. They either will be priced out of the market and be forced to drive older, less fuel efficient cars and trucks (Kiss Mother Gaia goodbye!)or pay a higher percentage of their limited incomes on transportation.

Gosh! If only someone could have seen it coming! Barack Obama and the Hummingbird Feeder of Doom
(Okay. Virtually anyone with a brain capable of balancing a checkbook saw it coming!)

More at Hot Air

Cross posted at Left Coast Rebel, Lady Cincinnatus, Say Anything

Paul Ryan Responds to Paul Krugman's Welfare-Statist Rhetorical Flimflam

Krugman lets the cat out of the bag - censoring debate, attacking Paul Ryan,
showing a near religious-fundamentalist faith in the state and disdain for
American 'peasants'


by the Left Coast Rebel

You will recall Friday's Krugman column wherein Paul Krugman took the rhetorical low road of ad hominem against representative Paul Ryan's "Road Map for America" economic plan and Ryan personally. Many may have been surprised (as I) by the even (by propagandist Keynsian Obama/Krugman economics standard) shrill, guttural tone.

The cause of Krugman's shriller than usual voice may prove a simple fact.

Perhaps the dying, finals gasps of air from a failed ideology are simple attack - heck, even useful idiot Ezra Klein sees this. Call it an official arrival when the chief water-carrying propagandist for the progressive-socialist welfare statist cause sees you as a threat.

Paul Ryan responded today to Krugman and offered another teachable moment for fiscal conservatives engaged in debate with the progressive-collectivist left:

Unfortunately, rather than make meaningful contributions to this conversation and bring solutions to the table, Democrats have attempted to win this debate by default. Relying on demagoguery and distortion, the left would prefer that entitlements - often labeled the "third rail" of American politics - remain untouchable, and the column by Paul Krugman of The New York Times is indicative of the partisan attacks leveled against the plan I've offered, a "Roadmap for America's Future."

A brilliant, simple and concise summary:

By dismissing credible proposals as "flimflam," critics such as Krugman contribute nothing to the debate. Standing on the sidelines shouting "boo" amounts to condemning our people to a future of managed decline. Absent serious reform, spending on entitlement programs and interest on government debt will consume more and more of the federal budget, resulting in falling standards of living and higher taxes as we try to sustain an ever larger social welfare state.

What critics such as Krugman fail to understand is that our looming debt crisis is driven by the explosive growth of government spending - not from a lack of tax revenue.

When I ponder the motivation of Krugman's 'knee-deep in the stinky-steamy' leftist blunderbuss-NYT loudhorn ramblings, the truth comes down to several things. Peer pressure to be popular in the elitist 'limousine liberal, cocktail crowd' and retaining a high position as a mouthpiece for the far left ruling class. Krugman's intelligence is consistently outdone by his useful idiot, unrelenting faith in an all-powerful state. Don't forget his disdain for the average American - echoed in the Obama administration on a daily basis as well.

These commenters 'get it' on Paul Krugman over at HotAir:

Even though he revels in NYCDC Cocktail party worship from the Progressive Ruling Class I’m wondering if big thinking Krugalicious might be a bit jealous that Ryan is getting too much attention?

This one is particularly good:

Krugman’s the equivalent of the Molotov cocktail thrower who runs out of the mob to fling his mixture at police, and then dashes back in to the safety of his compatriots before he can be singled out and punished.

He already has cut back on the length of replies his comments section to prevent anyone from going into any detailed criticism of his allegations, and his body language whenever he actually has to do a live face-to-face on TV against any conservative with slightly more coherence than Basil Marceaux is the source of high comedy (he looks like he’s waiting for ABC security to drag George Will out of the studio when they’re on “This Week” at the same time, and his body language four years ago when he was on Tim Russert’s CNBC show with Bill O’Reilly indicated he was truly in fear for his life from the madman Irish wingnut in the other chair).

It would be fun to see the two Pauls go face to face on TV and debate Ryan’s economic plan, but by guess is Krugman won’t do it unless the deck is completely stacked, with a moderator he trusts is 100 percent in the tank for his position and will bail him out and/or co-attack Ryan through the entire program (which means if Ryan’s ready to go on “This Week” with Krugman and Christiane Amanpour while George Will’s locked in a broom closet, Mr. Nobel Prize winner will take that deal).

Don't forget to go here for a must read article on comment policy concerning Krugman's columns (hint - his failed socialist ideas were all too easily rebutted by his readers and he essentially censored lengthy debate). Call it the progressive-collectivist way!

Cross posted to Left Coast Rebel.

(VIDEO) The Broken Window Fallacy

by the Left Coast Rebel

I just checked in tonight and was floored by how incredibly brilliant C-Gen's post on propostion 8 was. After hearing the news today I pondered the angle to take and C-Gen took the words out of my mind and simply hit the ball out of the park.

On a completely unrelated topic to social issue cannon fodder, I came across an illustrative video over at Cubachi. Consider the following video a palate cleansing illustration of the Ponzi scheme that is Keynsian deficit spending - The Broken Window Fallacy:


More from Cubachi:

The video titled “The Broken Window Fallacy” is a play on Frédéric Bastiat’s 1850 essay Ce qu’on voit et ce qu’on ne voit pas (That Which Is Seen and That Which Is Unseen) to illuminate the notion of hidden costs associated with destroying property of others.

Here’s the parable:

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented

Cubachi (among many other things) also reminds of the statist credo - "Never let a good crisis go to waste."

Via Memeorandum.

Cross Posted to the Left Coast Rebel.

Barack Obama and the Hummingbird Feeder of Doom

It is a rare and gifted writer who can craft a headline, so concise and yet so complete that you instantly grasp the entire scope of the article you are about to read. And so it is here, where the subject is, obviously, Cash for Clunkers!

Years and years ago, before the Earth was fully cooled, it was thought that if you put your hummingbird feeder out too late in the year, you risked enticing the diminutive birds with the prospect of free, colored sugar water, and they would resist the urge to fly South for the winter until it was too late. Scores of tiny dead kitty hors d'overs would be sticking out of the snow, flash frozen and strewn about the countryside, like a feline all-you-can-eat buffet!

Today, we have it on the authority of the Audubon Society, that birds have more sense than Democrats and are perfectly capable of taking a last minute snack before taking off for the long migration South.

So what do the unintended consequences of leaving your hummingbird feeder out too long have in common with government’s own hand out of sugar water to the unsuspecting?

Every time I’ve set myself down to list the unintended consequences of this seemingly innocuous government program, it seems a new one pops up every week. I’m up to an even dozen now, and I may have forgotten some since I started! To see how badly the government has bungled the program and how it portends that we never let these people get their hands on our health care, consider the following:

* The cash for clunkers program has marginally increased the cost of a new car, with more dollars chasing the same amount of vehicles. While this may be good for car dealers, it is bad for the consumer.

* The program favors the haves over the have nots. One has to have enough money to finance or purchase a new car outright in order to take advantage of the program. The program does not bode well for the un or underemployed.

* Cash for clunkers decreases the number of serviceable used cars. This will cause the price of those which remain to increase, further affecting the ability of the poorer among us to purchase a car.

* Cash for clunkers encourages people to go into debt, trading an asset for an obligation.

* Cash for clunkers reduces the number and quality of used cars of charities which rely on donations of used cars .

* Fewer serviceable used cars could adversely affect numerous local, small car dealers who deal exclusively in used cars, perhaps driving some out of business.

* By focusing the demand for cars into a shorter timeframe, Cash for clunkers will make intelligent planning more difficult. Do dealers and manufacturers gear up for continued demand and risk being caught with too much inventory? Or do they anticipate a slow down that may not materialize and not have enough inventory to meet demand?

* A program the government expected to last three months used up all its resources in five days.

* Some car dealers have extended credit based on government promises that have as yet to be fulfilled.

* Plus, some consumers traded in “clunkers” which were destroyed immediately (as required by the government), only to discover that their cars did not qualify for the program. I believe this short sighted element of the program has been modified, but only after a loss of wealth sustained by consumers.

* Ostensibly sold as a “Green” initiative, the program as implemented only required a 2 MPG better gas mileage than the trade-in.

* Not to mention the possibility of gaming the system:

And so I asked the question on the minds of millions of my fellow concerned citizens: How can I get my snout into this trough? Easy: I buy a small car qualifying for the $4,500, and keep it for a few months until the cash-for-clunkers boondoggle has run its course. At that point, the supply of used cars will have shrunk and their prices driven up; I will sell the almost-new small car for what I paid for it ($12,629 last Saturday) or more, at worst having driven it for free, and then buy the truck I covet. -Benjamin Zycher

As has been repeatedly pointed out, the idea of handing a sizable portion of the nation’s economy over to the guys who can’t even run a used car program is mind boggling. The idea that the life and death decisions involved in the nation’s health care might be a tad more complicated than used car trade-ins, with farther reaching repercussions is the reason the Cash for Clunkers has been relegated to the back burner and people have taken up their torches and pitchforks to storm the townhall meetings of their elected representatives.

And all their opposition has is AstroTurf!

Update: * And depriving the poorer folk among us of millions of engine parts that might help them to repair the cars they have. (I knew I'd forgotten at least one!)

Cross posted at Say Anything