Category Archives: political economy

“All of the Above” is just Obamatalk

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Kelly David Burke has the sorry tale in a recent Fox News article.

The Bush administration had set aside 1.3 million acres for oil shale and tar sands development in Colorado, Utah and Wyoming.  The new Bureau of Land Management plan cuts that amount by two-thirds, down to 700,000 acres….

I’ll elide Burke’s poor arithmetic—the 600,000 acre reduction amounts to a reduction of a bit under 50%–he is, after all, a journalist; his point remains valid: this is an enormous reduction in oil resource availability.

President Barack Obama’s BLM has its excusesrationale all lined up though.  It’s

…not against oil shale and tar sands development, but will restrict the amount of public lands available for leasing until the processes are proven, and proven safe.

Never mind that Canada has been successfully and safely extracting oil from shale and from tar sands for decades, and US companies have been extracting from shale for nearly as long with similar success and safety.

This is, in the end, just part of Obama’s effort to artificially suppress the price of otherwise unviable solar and wind energy sources with enormous subsidies and loans while trying to restrict the supply of oil (and gas) in an attempt to price these sources up into the stratospheric range of even the subsidized “green” energy…sources.

It’s all of a piece with his decision elsewhere to slow walk oil leases and drilling permits.

Rakoff Was Both Right and Victorious

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Recall Federal District Judge Jed Rakoff’s decision a while ago rejecting an SEC-Citibank settlement, in which Citibank agreed to pay an enormous vigfine to the SEC in return for the latter’s desisting from harassinghectoring the former any further.  Rakoff’s heartburn concerned the lack of statement by either party of guilt or innocence by Citibank—Citi would simply pay the protectionfine and the SEC would stop its threats.

Now there’s an update to the SEC side of this.

The Securities and Exchange Commission intends to make companies and individuals admit wrongdoing as a condition of settling civil charges in certain cases, or be forced to fight the charges in court, the agency’s Chairman Mary Jo White said Tuesday.

Is this a direct result of Rakoff’s rudeness in holding out for actual culpability before a fine gets assessed?  Maybe, but not directly.  This change didn’t occur until after a review of the overall situation initiated by SEC Chairman Mary Jo White when she took over last spring.

It does, though, come after Rakoff’s argument that the ability to avoid admitting liability allows companies to treat settlements as just a “cost of doing business.”  He didn’t argue this explicitly, but I do: it also allows government agencies to extort money and other…concessions…from businesses and individuals with whom those agencies have a disagreement of any sort.  Sort of like the IRS and the DoJ do.

“Victorious” may be too strong, but this clearly is a step in the right direction.

Counterargument

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Via The Spirit of Enterprise comes this plain language advertisement for Texas as the place to be for business (for freedom generally, say I as a proud citizen of Texas).  Naturally, I had to hear it via SoE, no business fool, Governor Rick Perry (R); he has no need to run it in Texas, no need to preach to the choir.

Another thing I’m not hearing in Texas: ads from California or Illinois making the case for high taxes and regulation and litigation and big government and so those states are the happening places to be.

I do see ads from another Bright Blue State, however, New York.  Governor Andrew Cuomo’s (D) advertisers aren’t making the case for high taxes and regulation, though: the Wonderful New York ads are touting the state’s lowering taxes and how the state is working for business rather than the other way around.

Hmm….

Farm Bill Fail

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One of the more controversial provisions the Senate bill [a farm bill that will cost $955 billion if passed] covers is crop insurance.  In the past, farmers have been able to purchase an insurance safety net if their crops fail.  Under the bill, the government would kick in another $5 billion of insurance per year—bringing the total to $12 billion a year—which would cover the deductibles and cushion the blow farmers would have to pay.

And

The House version spends more money on crop insurance, but less for food stamps and conservation efforts.

No, the farm bill needs to eliminate the crop insurance aspect altogether (I’m ignoring here the food stamp wastage), not increase it or even maintain it.  Government has no business interfering with the private market, or protecting any business—including farmers—from the consequences of their decisions.  If the farmers want a safety net against crop failure—an eminently reasonable desire—they should be free to buy it on the open market from crop insurers competing for their business.

Americans, either as taxpayers or as farm customers, should not be forced to pay for farmers’ decisions except through market effects.

Continued Government Interference in our Markets

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…most recently in our financial markets.  Now the Feds are expanding their hectoring of our financial institutions over their fees.  The Federal government already has chosen to prevent them from making money the old fashion way—through lending—with its artificially suppressed interest rates.  It’s already inveighed against them over one set of fees which they charge as a means of earning a profit for their owners—our fellow Americans.

Now the government is going after another set of fees, with their objection centered on the fact that these Know Betters just don’t like the fees.

The Consumer Financial Protection Bureau, a creature of Dodd-Frank that is responsible and responsive to no one, has begun the process of obstructing the collection of overdraft fees—the fees charged when folks write checks with insufficient funds to cover them, so the bank covers the bad checks or transfers funds from the check-writers’ savings accounts (with the check writers’ prior permission) to cover the bad checks.

Usually, such bad checks result from a moment of carelessness.  More than occasionally, though, those bad checks are written by serial offenders, who rely on those overdraft processes to make their bad checks good.

Of course, the CFPB has said

it has no immediate plans to issue or recommend new overdraft-fee rules.

This is disingenuous, though: the criticism by a government agency has its own intimidative effect.  For instance,

In 2011, Bank of America Corp, the second-largest US bank by assets, quickly abandoned plans for a monthly debit-card charge of $5 after it was denounced by lawmakers….

Nevertheless, the CFPB is bellyaching that

heavy users of overdraft coverage pay about $900 a year more than consumers who don’t incur overdraft fees.

This is bad how, exactly?  Why should responsible customers have to subsidize the careless ones for their carelessness?  After all, the costs of making good on those bad checks have to be covered somehow—if not through fees paid by the bad check writers, then by spreading those costs across all the bank’s customers, responsible and…careless…alike.

The best way to hold down the annual costs of writing bad checks is for government to stay out of the market place and for the writers to stop writing bad checks.

The Jack Daniel Employees’ Credit Union charges $10 when a customer overdraws on an account.  Pam Case, manager of the Lynchburg, TN, credit union, said keeping the fee low helps lure customers.  “They like that we don’t have a lot of fees,” she said.

Which demonstrates how well the competition of a free market regulates fees.