I’ve never met Matthew Goldstein, but judging by his bio I don’t think it’s something I’d like to do. It reads like a stereotype of the elitist, leftist intelligentsia. A B.A. in English and History, an M.A. in World and Comparative Literature (whatever that means) and a Ph.D. in English, all from über-liberal universities, and a job at a community college in Oakland, California.

Dr. Goldstein has commented about blogs written last week criticizing Warren Buffett’s recent pronouncement that he doesn’t pay enough taxes (like mine):

Berkshire Hathaway CEO Warren Buffett heated up the blogosphere with a recent New York Times op-ed piece, “Stop Coddling the Super-Rich.”

. . .

But when the Sage of Omaha starts offering old-fashioned soak-the-rich rhetoric, people take notice. And support from those who stand to lose the most from a tax hike can only help the cause of so-called class-warriors, right?

Well, maybe.

When taxes on the nation’s highest earners become an expression of noblesse oblige, they may only reinforce existing economic inequalities. Doesn’t any middle-class society worthy of the name need to make the super-rich pay their taxes?

Well, actually, no. You see, middle-class societies depend on the “super-rich”. Those super-rich people are the ones investing the money in job-creating new businesses, like the investment groups behind Google and Twitter. They invest in existing corporations, like the people buying out the shares of GovernmentGeneral Motors and yes, investors in Berkshire Hathaway. Their money, sitting in banks, is loaned to mom-and-pop stores and workshops, and to middle-class families buying new homes. When that money is ripped-away in the form of taxes to pay for phantom “green jobs”, nanny-state policies and to “protect the poor”, it’s not available to create new or grow existing businesses and hence, new jobs for poor and middle-class workers.

Mr. Goldstein clearly doesn’t understand this, probably because it doesn’t appear he’s ever held a job outside of academia. In fact, I don’t see in Mr. Goldstein’s short biography any indication that he’s at all qualified to comment on economics, business or taxes. Not that it matters to the San Francisco Chronicle or any other newspaper or to the liberals who will read his sophomoric prose and nod their heads appreciatively. He hasn’t been tainted by the world of business or the careful study of the dismal science.

Based upon the previous paragraph, you might ask for my qualifications. Very well: I have a Bachelor of Business Administration (Cum Laude) from a small public university in New England that I’m enough ashamed of (due to poor performance and liberal stupidity–but I repeat myself) that I won’t mention its name, and a Master of Business Administration from the well-regarded Terry College of Business at University of Georgia. I’ve received awards from <a href=”http://www.apics.org” target=”_blank”>APICS</a> and from my employers for work I’ve done on increasing productivity and reducing costs.  I was on a finalist team at the international Moot Corp competition at the University of Texas and the New Venture Championship at the University of Oregon (which my team won). I’ve held jobs ranging from minimum wage retail to hourly grunt work to professional work involving Information Systems Management, accounting and financial planning, operations management and Sarbanes-Oxley compliance. My undergraduate studies included marketing and finance, and my education at UGA involved extended classwork in marketing, economics and entrepreneurship.

In other words, I know my… Er, stuff.

Dr. Goldstein can probably critique my grammar in this post at length, and I wouldn’t dare to lecture Dr. Goldstein about the philosophical ramifications of our changing language structure or the cultural significance of Herman Melville or the Marquis de Sade; nor would I write an op-ed in a major newspaper (or blog) about English or literature. I’m simply not qualified. Hence, having Dr. Goldstein lecture his readers (and by extension, me) on the economic ramifications of heavy taxation upon high-income Americans is at best a wee bit pretentious and at worst naked socialist propaganda.

Enough attacking the messenger. Let’s get down to what he actually said.

Dr. Goldstein recounts a story wherein he was teaching English to a wealthy corporate executive in Bologna, Italy. The executive surprised Dr. Goldstein when he explained that he was, in fact, a socialist.

In a conversation about politics one day–over espresso served on a silver tray by his secretary–he surprised me somewhat by announcing that he was a socialist. When I asked him to explain, he wondered if I’d ever seen Doctor Zhivago.

When I said of course, he asked if I remembered the scene when Omar Sharif returns from the war to find his family estate taken over by hordes of starving peasants. I nodded uncertainly.

“Well, I don’t want those people in my house,” he said.

Elitist? Most decidedly. But he was in fact making a compelling argument, based on enlightened self-interest, for treating society’s most vulnerable decently: take care of the poor or the poor will take care of you.

I could comment on Doctor Zhivago being, in part, an indictment of socialism’s destruction of the individual but as I said I’m no expert in such matters. So let’s look at Dr. Goldstein’s friend: He’s not a socialist for altruistic reasons, and clearly he’s not a practicing socialist wanting equality of outcomes or a spreading of wealth. Rather, he understands that his position is based entirely upon the good graces of the more numerous lower classes. If the lower classes get upset enough at the aristocracy and/or those with wealth, they can overthrow and start a new system. It’s socialism as an insurance policy.

Strikingly, it’s a self-defeating insurance policy. Higher taxes on businesses and wealthy individuals mean less investment in new businesses and new jobs. More people end up in social welfare programs. Eventually, the system doesn’t bring in enough money, so the government just prints more cash resulting in inflation. The inflation makes the social welfare system even less effective and the result is social and economic upheaval. And when the societal enemy is “the Rich”, the insurance policy Dr. Goldstein’s friend chose becomes suicidal.

I can rephrase Dr. Goldstein’s anecdote in just a few words: “Your money or your life.” Give up the money and wealth you’ve worked hard to obtain, or risk a repeat of the Russian Revolution. It’s robbery where the government is the one holding the gun.

There’s another problem with Dr. Goldstein’s article. Read what he says: “Ultimately, though, if we’re really going to have the middle-class society we all say we want–with safe streets, clean water, good schools, etc.–we’re all going to have to learn to love the taxman.”

Um, actually, no, I don’t want a “middle class society”. I want a wealthy society (which, by the way, is what we have–just compare “middle class” Americans to “middle class”–well, anyone else). Settling for everyone being middle class isn’t my idea of progress, and you don’t get a wealthy or a middle class society from progressive taxation. You get an under-performing aristocratic society.

You see, Dr. Goldstein clearly doesn’t understand the difference between income and wealth. We don’t tax wealth. We tax income. We tax people who earn a lot of money, but that’s not necessarily wealth. The vast majority of high-income individuals are people with small businesses who report their business income not in a 10-K filing with the SEC but on their personal 1040 form at the end of the year. Having business income of $250,000 this year doesn’t necessarily translate into a 5,000 square foot house with three BMWs in the garage. Rather, it might translate into a new machine press for the workshop or replacing the outdated telephone system next year.

That, I suspect, is actually why Mr. Buffett likes the idea of raising taxes on “high income” individuals. First, since he pays capital gains taxes, it won’t affect him since the majority of taxes he pays (well, when he pays them) are capital gains, not income taxes. Second, it makes it harder for privately-owned small proprietorships to compete with the corporate businesses he already owns. Third, it makes selling those private businesses to a financier like him an attractive alternative (and, by extension, the lower after-tax profits lowers the buy-out value of some sole-proprietorships). For Buffett, higher personal income taxes benefits him both directly and indirectly. For him, it’s Win-Win.

And there’s an even more sinister reason for Buffett to support progressive taxation: Basically, it amounts to, “I’ve already got mine.” Buffett, after all, is one of the wealthiest people on the planet, at about $47 billion. This grants him power, influence and prestige. More progressive taxes don’t affect him, even if the capital gains rate is raised to meet the income tax rate. Buffett’s income last year was about $41 million, based on the 17% rate Buffett stated in his op-ed and reports that his taxes-paid were $7 million. It doesn’t take a genius, or even 4th grade math skills, to figure out that Buffett’s wealth has increased far beyond the rate of his income.

What am I driving at? Well, Buffett’s got all this power and influence. He’s Top Dog. Personal friends with the President of the United States, Senators, Congressmen, Governors and the like. There’s only a couple of people in the world who have the kind of power and influence he’s got. He can spend almost nothing out of his personal fortune and be king-maker in virtually any political arena he chooses. He has access and influence, and the biggest threat to that access and influence is the nouveau riche.

Okay, I’m not going Gormogon, here, nor is this a Bilderberg conspiracy. I’m just theorizing. Normally, I’m the one tearing down the “rich industrialists trying to take over the world” meme (after all, why be the target when you can just be friends with it?). I’ve only circumstantial evidence that this is actually his reasoning and I don’t suspect he’s acting in any conspiracy but rather solely out of self-interest. This theory just explains Buffett’s hypocritical position on taxes and wealth. I mean, it’s this or he got kicked in the head really hard by a mule awhile back.

“New money” means new people getting access and influence. It diminishes his access and influence, despite his great wealth. After all, there are laws about how much money one person can give to a political candidate. Even if there were no caps on political giving, if Warren suddenly gave, say, one billion dollars to the Obama campaign, it’d look mighty hinky and the blogosphere would go apoplectic about the “Bought and Paid-For President”. So the new rich, even at a much smaller scale than him, are quite a threat to Mr. Buffett’s power and prestige.

The best way to deal with new money, of course, is to keep the hard working individuals from getting it in the first place. That’s what a progressive tax system does. The more money that is taxed from high-income individuals, the less money they have to spend on political candidates, lobbyists, political action committees, or any other political activity. It doesn’t affect Warren: He has wealth. More progressive taxes ensure that his wealth and influence is still among the greatest.

In other words, progressive taxation doesn’t benefit the poor. It ensures the continuation of the existing aristocracy.

I refuse to believe that Warren Buffett doesn’t understand everything I’ve just explained. He’s not a fool. He understands finance and economics and business, as he’s proven time and again with his business deals. He’s experienced the influence and power. He knows.

Dr. Goldstein clearly doesn’t have a clue. His education hasn’t covered this. He’s way out of his sphere of knowledge. As a result, I don’t think Buffett is the willing dupe of the Left, as some have decided. Rather, I suspect individuals like Dr. Goldstein are the willing dupes of Mr. Buffett.

Oh, he phrases it in his polite, even-handed manner that has made Buffet both an investment and media darling. I met Buffett a few years ago and found him to be both charming and generous. He’s really quite funny and personable. He regaled my group of graduate students from the University of Southern California and the University of Georgia with stories of making quick hundred thousand dollar deals on companies in Korea and smart investment decisions going back to his youth. In the op-ed, he’s calm and seemingly even-handed as he chastises Congress for its “coddling” of millionaires and billionaires like him. He even mentions the liberal focus-group-tested phrase, “shared sacrifice.”

Here’s the problem with your views, Mr. Buffett: I want a chance at what you’ve got. I did long before I met you, and I still want it today. Just a piece of it would be nice. Yes, I’d like to be a successful millionaire or even a billionaire someday, but what you’re asking for makes it harder for me to get it.

Here’s just a portion of what Warren Buffett had to say:

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

There’s a telling line in the third paragraph that shows how Mr. Buffett is lying: “The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes.”

Mr. Buffett, you and I both know the majority of your income isn’t from payroll income. It’s from Capital Gains. Capital Gains that come from investing in large corporations and small businesses, dividends from those investments, and the sale of those investments for greater than their purchased value. You’re treating that investment income as though it were the same as regular payroll income, and you know that’s intellectually dishonest.

A few paragraphs later, Buffett brings up capital gains: “…I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.” Yet it’s what he doesn’t say here that is most telling: In tumultuous 1976, there was no place better to invest than the United States. Western Europe’s economy was technically larger, but the regulatory hurdles were greater and taxes were even higher than here. A few parts of Western Europe still hadn’t recovered from World War II. Investing in communist Eastern Europe was forbidden. South America was at best small and hit-or-miss, and Latin America was in turmoil as pro-West and pro-Communist forces battled for control of different countries. Only Japan and Taiwan were real market-movers in Asia, South Korea was just emerging as an industrial power and China was still a communist basket case largely unable to feed itself.

So a 39.9 percent tax rate on capital gains in a troubled but stable United States was still a competitive tax rate, even compared to some countries where the rates were lower. Even after paying nearly 40% in taxes on an American investment, the expected return was still higher than higher-tax Europe or the turmoil-stricken southern hemisphere. Not so today. Since then, Europe has liberalized its income tax structure, favoring the VAT tax (which has its own issues) and Asian markets have exploded. Brazil is morphing into an economic and industrial powerhouse. Chile was and continues to be a small but stable and growing market. Much of Latin America has normalized. Eastern Europe and China have vast human and other resources available to invest and exploit. The world is a very different place from where it was in 1976. Tax rates the world-over declined significantly (thought most governments haven’t cut their budgets to match–just like the US).

Even Mr. Buffett’s assertion that middle-class Americans have tax rates of 15-25 percent is comparing apples to oranges. Buffett talks about his effective tax rate, combining his regular and capital gains taxes, as well as any deductions or tax credits he may enjoy. Then he mentions the total tax rates for middle class taxpayers. There’s just one problem: The majority of middle class taxpayers don’t pay their expressed income tax rate. They have deductions and credits, such as the mortgage interest deduction, student loans interest deductions, the Earned Income Tax Credit; thousands of deductions and credits for doing things that the government wants them to do.

Personally, I have only one deduction: My student loan interest. It doesn’t amount to much. I very nearly pay my expressed tax rate. If anyone should be upset about Mr. Buffett paying just 17 percent of his income in taxes, it should be me! After paying Payroll tax, Federal Income Tax, state taxes and local taxes and fees, I pay nearly double the rate of Mr. Buffett. Yet, I’m glad he pays such a low rate.

What am I, crazy?

Hardly. You see, I agree that Mr. Buffett pays too little compared to most Americans, but that’s not a reason in my mind to raise his taxes. Rather, it’s a reason to lower taxes on the millions of American lower, middle and upper class families and get rid of all these politically-motivated deductions and credits. Rather than raise taxes on a few, lower the overall rates and eliminate the deductions. This would make it possible for every American and business to file their taxes on a single page and not have to spend billions of man hours each year on tax preparation. Besides, if Mr. Buffett really wants to pay more in taxes, he could always pay himself more payroll income. Considering his comparatively small salary and the company’s performance, it won’t be much of a hit to the bottom line at Berkshire-Hathaway.

Raising taxes would be counter-productive. Investors aren’t going to invest in the United States out of patriotism or sentimental feelings. Mr. Buffett himself has invested in numerous companies throughout the world because they were smarter investments with better returns than investing in the US. Raising corporate rates here lowers net incomes, reducing the value of corporations. Raising personal tax rates reduces the income available to small businesses to invest and expand. Raising capital gains reduces the expected return for US investors, encouraging more investment in other markets. No, raising taxes is the wrong move.

Here’s the worst part of it all: Reduced interest in investing in America means reduced interest in investing in me or anyone else with dreams of running and operating their own business. By raising taxes, we raise the bar someone must meet before their business or product idea becomes viable.* We reduce the entrepreneurial capacity that has made this nation the most powerful economy in the world. Sure, tax rates were higher during the Clinton “Boom” years, but so were taxes in Europe and Japan; China was still a bit player and India was who we thought would be a real threat. Our tax rates, higher as they were, were more competitive than those same rates would be today. We can’t fall back on, “We’re the biggest, we can afford it,” anymore. Every great empire, from Babylon to Byzantium to Britain; many great corporations, from the Pennsylvania Railroad to US Steel to General Motors have suffered, or even collapsed, from this erroneous viewpoint.

I agree with Mr. Buffett on another point though, but it takes him nearly the whole op-ed to make the point:

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here.

Buffett goes on to say that about 0.3 percent of Americans (the wealthiest) should get a tax hike, but I and others have already covered how foolish that would be. No, tax hikes aren’t the answer, it’s Buffets first point here: Rolling back the promises we know we can’t sustain or fulfill. We can’t continue spending twice as much on Social Security and Medicare as we get from the FICA taxes that pay for them. We can’t sustain spending billions of dollars on “public art”, or have 80 government programs to help people find transportation. We can’t spend millions of dollars on equipment that the military doesn’t want just because it’s built in a politically important congressional district. We can’t continue to subsidize air service to cities where the market can’t support the service or build high-speed rail lines no one will use. We can’t continue to use the inefficiency of government to provide charity.

Americans are losing faith in Congress, but it’s not because 0.3 percent of Americans are taxed too little. It’s because Congress is like a young man with his first credit card, unable to stop spending far in excess of his means and rapidly losing the ability to ever pay it back. Even if we raised taxes on that 0.3 percent to 100 percent of their income, it wouldn’t begin to cover the deficit this year. The deficit gap is less than 25% due to lost revenues from taxes as the economy has retreated. Rather, the massive increase in spending from 2006 to the present day accounts for the majority of our deficits and a rapidly increasing percentage of our debts.

Mr. Buffett suggests that he pays too little in taxes. I rather suggest that what he’s paying is just fine, and much of the rest of America is just paying too much.

Cross-posted at The Minority Report Blog.

In his comments at the event, Perry specifically disclaimed partisanship. He kept his comments generic: “His agenda is not a political agenda, his agenda is a salvation agenda. . . . He’s a wise, wise God, and he’s wise enough to not be affiliated with any political party, or for that matter, he’s wise enough to not be affiliated with any man-made institutions. He’s calling all Americans, of all walks of life, to seek him, to return to him, to experience his love and his grace and his acceptance, experience a fulfilled life regardless of the circumstances. I want you to join with me as I share his word with you.”

However, this is not to say there weren’t problems with the event.

For starters, Perry had previously insisted that the event welcomed persons of all faiths. But this is what he said on Saturday: “Like all of you, I love this country deeply, and thank you for being here. The only thing you love more is the living Christ.” Not so pluralistic after all.

Why is this “conservative” Jennifer Rubin attacking Rick Perry for expressing his faith at a Christian event? Rubin is basically stating that because this non-denominational Christian event welcomed non-Christians, Perry shouldn’t be mentioning God or Jesus at all. And it gets worse:

So to recap, his words at the event were restrained but not ecumenical. And his use of public office to promote the Christian event was, to me, inappropriate.

…

A a practical matter, the event suggests that Perry, a man of considerable confidence, is not accustomed to operating on a national, rather than Texan, stage. One of his key problems is the degree to which he can expand beyond a base of Christian conservative supporters. This will make the task somewhat more difficult.

However, the most unfortunate aspect to this entire matter is that he has given a club to the left-wing contingent that thinks religion should not be discussed in the public square and that reference to one’s faith as the basis for public-policy positions is somehow illegitimate. In that sense, Perry has done more harm than good to those who believe, that with appropriate modesty and restraint, religious values and viewpoints have a place in the great national debates of our time.

So in other words, because he might upset the fringe Left (who’d never vote for him anyway) by publicly displaying his religion, Perry isn’t qualified to be a Presidential candidate. Instead of defending Perry’s right to be a Christian and express his faith openly, even as a public official, Rubin suggests that Perry is in fact not qualified to be a candidate because he actually embraces his Constitutional rights!

Wait, this woman claims to be a conservative? Never mind the fact that Presidents have since the founding of this nation called for national days of prayer and even (gasp!) openly prayed at events and even during broadcasts!

The United States was founded, at least partly, on the ideal of religious freedom; the concept that people can practice whatever religion they so choose, so long as they’re not harming someone else by doing so (human sacrifice, after all, is just a notch or two too far). Rubin seems to think that all’s just fine, as long as you’re not running for national political office.  Then you might upset those guys on the Left who seem to think that “religion” is a dirty word and expressing a personal belief in God is morally equivalent to extinguishing a cigarette on another person’s body.  Then you’re unelectable.

So, what? We pick an “electable” candidate like we got with John McCain in 2008?

Honestly, it reminds me of what I’ve read about Reagan’s GOP detractors prior to his 1980 presidential campaign. He was “too far to the right” to win, wasn’t he? He didn’t play the game. He’d upset the wrong people.  He’d never win an election being like that.

Right now, that kind of criticism is just fine with me.

As a side note, Governor Perry gave an amazing speech at a side event to the RedState Gathering last year, and he didn’t even have a teleprompter! He’ll be speaking again this year. If you didn’t register, it’s too late, but I understand it’ll be on TV.

For those unfamiliar, this is a list of random, often cynical and (hopefully) humorous thoughts that I’ve been collecting for the past few months.  They’re insensitive and meant to irk you.  And if you’re really offended by them, then I’m really, really happy about that.

Here we go!

1. For the Left, why is it that after 60 days in Iraq it was, “Bush lied, who died?” when after 60 days in Libya it’s, “GET OFF OBAMA’S BACK!!!1!1!!!11eleventy!!!
2. It seems the new immigration law has the illegals leaving Georgia.  Now farmers complain no one wants to work their farms.  Of course not!  Why work in the hot when you can sit on your bum, eat McDonald’s and collect a welfare check?!
3. I don’t feel any need to defend Halperin or go after MSNBC.  After all, if Rachel Maddow or even Bill Kristol had said the same thing about Paul Ryan, we’d be calling for their heads.
4. Speaking of BIll Kristol, today he suggested a Bachmann/Lieberman ticket.  So, just when did he escape from his straight jacket?
5. I haven’t watched one second of the Casey Anthony story on Fox News and I just don’t care.
6. Today was a “day without immigrants”.  Illegals stayed home to show their solidarity.  The only thing that seemed different was that I made it to work without being cut-off by a beat-up minivan with 74 ladders scotch-taped to the roof.
7. As long as Michael Bay is making them, I will continue to boycott “Transformers” movies.
8. If any Americans are killed or injured on the Gaza Flotilla, I will get very, very choked up.  Honestly, there could be tears.
9. If you believed what I wrote in number 7, please click this link.
10. It seems pop singer Adele (who is officially over-played, by the way) doesn’t like paying 50% of her income in taxes…  Welcome to the Conservative Party of Britain, Ms. Adele.
11. Just where in the world is Carmen Sandiego?
12. They printed hundreds of billions of dollars last year to pay for “stimulus” and other spending.  Inflation is well above economic growth levels this year.  If you don’t see a connection please don’t vote.
13. Why is it that our standardized tests are so focused on math, science and English and ignore history and economics?
14. And since those standardized tests are so focused on math, science and English, why are so many people so bad at all three?
15. Anyone who thinks Donald Trump would make a good president should probably invest in a time-share.  The value proposition is the same.
16. If I say, “Number One Combo with Coke Zero, that’s all,” then no I do not want a friggin’ apple pie with that!
17. Michele Bachmann was evicerated for claiming the Founding Father fought against slavery.  If you are one of those who thought her initial claim was uneducated, please beat your head against a wall for 5 hours.
18. I’ve been going to the beach and the pool a lot this year.  I forgot I had an albino birth mark on my chest.
19. Twitter 2.0 sucks worse than you thought.  That is all.
20. I’ve apparently been sent a Google+ invite and have even seen some Google+ notices in my e-mail.  Yet I can’t sign up.  What up, Google?
21. Sunburns on your ankle hurt.  A lot.
22. Some people think the world was created to serve them.  These people are called “Democrats”.
23. If you live in this country and you’ve been to Europe but never bothered with visiting the grandeur that is America, you’re of no use to me.
24. In my experience, the people who are the most likely to call someone out for being a “mooch” are people collecting checks from the government.
25. I’m getting really sick and tired of the President using the phrase “ordinary Americans”.  The whole point of America is that we’re all free to live our lives the way we want.  The whole point is that we can avoid being “ordinary”.
26. Does Adam S. Baldwin (whom you should follow on twitter) still have the hat he wore in the Firefly episode “The Message”?
27. I want that hat.
28. I’m thinking of starting a business to sell carbon credits for 4th of July fireworks.  I just need $412 million in stimulus cash to get started.
29. The NBA is going on strike.  I might care if I weren’t so busy watching paint dry.
30. I laugh at environmentalists who call wind energy “free”.  Yeah, it’s free.  Except for that $5,000 per rated killowatt turbine you’ve got to build first.
31. The world might be flat, as Thomas Friedman says, but the sewer drains via Venezuela.  Apparently directly through Hugo Chavez’ colon.
32. The only hippie for whom I have any respect (besides my aunt and her life mate, or whatever he is) is Cody Lundin.  That man can make fire out of a water-logged handkerchief and the arm of a desk chair.
33. Speaking of Discovery Channel shows, I haven’t been able to watch Deadliest Catch without Phil Harris.
34. If you have a college degree in hyphenated-American Studies, you have two choices:  Government bureaucrat or flipping burgers.  You’re only qualified for the latter.
35. Atlanta’s hockey team has moved to Winnepeg.  By the time Atlanta gets another hockey team, the Cubs will have won a World Series and France will have won a war.
36. (h/t JeffEmanuel) Atheists are flying banners over 27 states this weekend proclaiming “God-LESS America” and “Atheism is Patriotic”.  Backlash in 3… 2… 1…
37. By the way, those atheists apparently had trouble finding pilots to fly the banners behind their planes.  Seems someone forgot to tell them that “Freedom of the Press” belongs to the owner of the press.
38. When my income took a hit in 2009, I cut my expenses and started paying down debt.  The Democrats, faced with the same thing, borrowed $3 trillion and signed on for another massive entitlement program.  I’m officially more qualified to be in Congress than they are.
39. We will not be able to cut the deficit without cutting Medicare/Medicaid and Social Security.  The math just isn’t there.  Get over it now and move on.
40. Marco Rubio is running for President.  Not in 2012, but in 2016 or (hopefully) in 2020.  And I will vote for him.
41. Rick Perry does not have a barbecue smoker.  He has a hole in the ground and a flame-thrower.
42. The Sarbannes-Oxley law is job-security for my day job.  I am embroiled in its consequences every day.  It’s utterly useless.
43. “Flyover Country”.  If you use that term as anything more than a cynical description of where you live, you’re useless.
44. There are ants in Madagascar that apparently raise as livestock other insects.  I find these ants entirely more useful in my daily life than Nancy Pelosi.
45. It is not rational, as atheists claim, to proclaim that there is no God.  The only scientifically rational position to hold is that we don’t know for certain that God(s) exist.  Everything else, be it Christianity, Judaism, Hinduism or atheism, is based upon faith.
46. Socialism and communism aren’t based upon faith.  They’re based upon insanity.
47. New York approved same-sex marriages.  We’ll just call that an “economic stimulus” for divorce lawyers.
48. I might be able to take the whole “Climate Change” thing more seriously if its proponents didn’t claim that everything from flooding to blizzards to traffic jams to toothaches are caused by it.
49. I was relieved to pay just $3.369 for gas the other day.  Then I kicked myself for being happy about $3.369 gas.
50. I have seen more faux-reality and/or Vote-for-your-favorite shows this year than I’ve ever seen in my life.  This must be what going mad feels like.

That’s all I’ve got for now.  Honestly, I strained to get to 50.  Either I’m less crotchety or I just don’t have the energy to be my cynical self these days.

Happy fourth.  Celebrate the founding of your country by blowing up a small part of it.

George Stephanopolous interviewed Congresswoman Bachmann after Politifact rated several statements by her to be false (partial video in linked article). Primary on Stephanolopolous’ mind was her statement that the Founding Fathers worked “tirelessly” to end slavery. Stephanolpolous, like any historically ill-informed liberal, assumed that because the United States ended up with legal slavery after the ratification of the Constitution that this statement must be false.

For what it’s worth, I couldn’t even find an assessment of this particular statement from Bachmann on slaveryby Politifact, which has rated many statements by Bachmann as false.  Though her association of John Quincy Adams with the Foundational period doesn’t hold muster, Stephanolpolous is showing his greater ignorance of history.

In the full interview, Stephanopolous cited the instances of George Washington and Thomas Jefferson as being slave holders. He’s right that they were and so were many others, but he seems to be thinking that because these two Founders were slave holders, it summarily damns the rest of the founding group and that it means slavery wasn’t a contentious, hard-fought issue among the Founders.

The problem with this concept is that it assumes that the Founders came together at the Constitutional Convention as a singular, amorphous group with the same goals and ideals driving their actions. It suggests that the actions of the Founders were largely pre-ordained and that the Constitutional Convention was merely puppet theater.

In reality, the founders had diverse views and goals on many issues, and far from a puppet theater the Convention was held largely in secret with negotiations that were both contentious and heated. Thomas Jefferson wasn’t even in attendance at the Constitutional Convention, largely because he would have opposed it. Alexander Hamilton wanted a strong central government with a great deal of power. Others merely intended to amend the Articles of Confederation, with power distributed to the states and only fixing some glaring errors in the Articles. Representatives from large states wanted representation by population (at the time, a large state meant a large population, and so more power for that state’s residents), while smaller states wanted even representation among the states. The resulting compromise gave us our bicameral legislature, where the House of Represenatatives is divided up by population and the Senate is divided by the States.

The same is true with slavery. Many founders from the North wanted nothing to do with slavery. Some founders from even the southern colonies (where slavery was legal and most common) wanted to use the opportunity to end slavery. Thomas Jefferson, who was not at the Constitutional Convention and has been long ballyhooed as a slave-holding hypocrite, before attending the Continental Congress in 1774 wrote:

“For the most trifling reasons, and sometimes for no conceivable reason at all, his majesty has rejected laws of the most salutary tendency. The abolition of domestic slavery is the great object of desire in those colonies where it was unhappily introduced in their infant state. But previous to the infranchisement of the slaves we have, it is necessary to exclude all further importations from Africa. Yet our repeated attempts to effect this by prohibitions, and by imposing duties which might amount to a prohibition, have been hitherto defeated by his majesty’s negative: thus preferring the immediate advantages of a few British corsairs to the lasting interests of the American states, and to the rights of human nature deeply wounded by this infamous practice.”

- – Thomas Jefferson, A Summary View of the Rights of British America , July 1774 [emphass added]

At the Constitutional Convention, the many in the northern colonies wanted to force the southern colonies to give up their slaves. Certainly none of the northern delegates wanted the southern colonies to have additional representation in the new legislature (and the Electoral College) based upon the population of slaves (who couldn’t vote) living in those colonies. The southern colonies, of course, wanted all of those slaves counted toward their populations so that their representation in Congress and in Presidential elections would be greater. Both sides of the issue were at loggerheads on slavery during the foundational period of the United States. Some northern states threatened to walk out of the negotiations if slaves were counted. So did some southern delegations if they weren’t.

This opposition wasn’t entirely altruistic. The northern delegations used the issue of slavery to forward a political goal (imagine that, using an unreleated issue to obtain a political goal!). Their goal was ensuring greater representation for their colonies, which were generally smaller than the southern colonies and so, they feared, had a limited maximum population. Despite these self-serving goals, many were happy to let the issue of slavery decide the fate of the new nation.

In the end, both sides reluctantly agreed that having the thirteen colonies together was more important than making a final decision on slavery, and developed the “Three Fifths Compromise”. This established that 3/5 of the population of slaves in a state would be counted toward represenation in Congress. While it obviously didn’t end slavery, it does represent that the issue of slavery was being contentiously fought over during the foundational period of this nation.

(As an aside, when you hear pundits talk about “African slaves being counted as only 3/5 of a person” in the Constitution, you now know these people to be uneducated to the realities of history.)

Michele Bachmann made the mistake of defending her position using John Quincy Adams as her reference. John Q. Adams was the son of John Adams, who was a founder, but he was a young boy with little or no influence on matters of state while the Declaration (he wasn’t quite 9) and Constitution (he was barely 20) were being written. Had Bachmann referenced John Jay, Alexander Hamilton or Benjamin Franklin, or had she known the details of Jefferson’s disgust with his own failings regarding slavery, she may have made a better account for herself to George Stephanopolous.

The Founding Fathers were great men, but they were men, not gods. Their development of a balanced system of government and belief in the idea of individual liberty is laudable and should be remembered as the breakthrough that it was. Being men, they did not always live up to the ideals in which they so fervently believed. Political and economic realities often hampered their ultimate goals. They were flawed. Their flaws and their final decisions, however, do not change history. Many Founders did work tirelessly to end slavery for varied reasons ranging from altruistic to malevolent, and Michele Bachmann should not be damned by the media for her slightly-better-than-average understanding of history.

It also seems the President shares the technophobic sentiments of those laborers of yore. In a statement to NBC News, the President stated (h/t Fox Nation and @Keder):

“There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”

So, says President Obama, the reason you’re unemployed isn’t because of poor government policy. Blame those pesky automated kiosks. Except for one thing: Advances in technology and efficiency have always led to more jobs in this country in the past.

A short history lesson: Steam engines gave rise to railroads and riverboats and ocean steamers. It became much more efficient to ship much larger quantities of goods than before. Sure, the ships and locomotives were expensive, but they were much more efficient than sail boats, horse-drawn wagons and un-powered barges. Rather than fewer jobs, the nation’s economy actually grew much faster! Some people initially lost their jobs, but the efficiency of transportation made it much cheaper to ship goods, and perishables could be transported further. More money was available to invest in transportation and the industries that used it. The people who were originally displaced eventually found new jobs in transportation, or the moved to another industry. Instead of employing a few thousand people, transportation industries became one of the largest industrial sectors employing millions of people.

Economists call this exchange of industries and growth “Creative Destruction”. President Obama calls it “Scapegoat”.

It happened again with automobiles. Instead of millions of people working to raise, feed and care for horses, millions of people are now employed manufacturing automobiles and their components, in repair shops and building roads, bridges and other transportation structures. Millions of acres of farmland was transferred from feeding livestock to feeding people, or to newly popular suburban homes–the construction of which has also employed millions of Americans. More Americans were now needed to work in the oil industry (which had only recently usurped whaling and whale oil). Then the automobile industry was automated with robots, and people were needed to build and program those robots. So advances in technology keep leading to more new American jobs.

So what’s the difference today? Why are kiosks and Automated Teller Machines and other automated processes suddenly so bad for our national unemployment rate?

The difference between the past and now is that the United States is no longer as desirable a place to invest. It’s not that we’re any less creative or capable. Our inventors and entrepreneurs are just as inventive and entrepreneurial as before. There’s been no change in Americans as “doers”. Far from it: We’re still the most productive economy on Earth, by almost every measure. Rather, our government has enacted so many anti-business policies, from increasing the minimum wage to refusing to enact permanent tax rates to over-regulation of the financial and other business sectors that investors, both foreign and domestic, no longer see the United States as a viable place to invest.

The United States didn’t build itself with its own money, at least not entirely. J.P. Morgan was a British financier, bringing money from wealthy Britons to the United States to invest in various industrial enterprises. Even as our trade deficit has grown since the 1970s, foreign investment back into our businesses and foreign businesses investing in American operations sustained the “loss” of wealth in our consumer economy. America had competitive tax rates compared to the “developed” world, a stable government that respected individual property rights, and relatively little regulation.

Not so today. Laws like the Sarbannes-Oxley Act, the constant threat of increased taxes on income and investments, and costly government programs like Obamacare and Cap & Trade are scaring away foreign investment have scared away domestic investors. Despite the weakened dollar, which would normally encourage foreign capital to invest in America, government policies have stymied investment by both foreign and American investors.

After all, why invest in a country that can “claw-back” contractual payments, simply because politicians couldn’t see the ramifications of their own excesses and it was politically popular to do so?

Creative Destruction drives a growing economy. Some people will lose their jobs over time. Rather than spend trillions of dollars on stimulus programs and entitlements while blaming the advancement of technology for poor economic performance, the President should be focusing on creating an environment where investors want to invest in America.

From the Atlanta Journal Constitution:

Santana took his turn at the podium on the field in a pre-game ceremony before the Braves-Phillies game to criticize the immigration bill just signed into law by Georgia Gov. Nathan Deal Friday.

“I represent the human race,” the Mexican-born Carlos Santana said. “The people of Arizona, the people of Atlanta, Georgia, you should be ashamed of yourselves.”

The Georgia immigration law, HB 87, cracks down on illegal immigration by increasing enforcement powers and requiring many employers to check the immigration status of new hires.

Ashamed?  Really, Carlos?  What is there in the law that we should be ashamed of it?  Never mind that there are between 10 million and 15 million people living in the United States who have never been screened for disease, crimilar history or terrorism ties.  Never mind that the law is similar to Arizona’s law, which merely requires state and local governments to do what the Federal government should already otherwise be doing.  Never mind that it requires employers to use the Federal e-Verify system to ensure that employees are legal residents of the United States.  Never mind that the law is innocuous in comparrison to Mexican immigration law.  According to Carlos Santana, this is just a return to the 1960s race wars:

“It’s an anti-American law. It’s a cruel law, actually,” Santana said. “If you all remember what it was like here with Martin Luther King and the dogs and the hoses, it’s the same thing, only it’s high tech. So let’s change it.”

That’s right!  Requiring employers to verify their employees are legal residents is just like releasing the dogs and fire hoses on Civil Rights activists!  Requiring government offices to ask for ID before giving out welfare benefits is just an extension of Jim Crow!  The only difference is it’s “high tech”!  It’s just about RAAAAACISM!™

Oy.

Remember, this law simply requires that employers verify the people working for them are legally allowed to work in the United States and the state government verify the immigration status of suspicious persons and persons receiving welfare or other benefits.  The Heritage Foundation notes that Mexican law has similar requirements:

Among the other findings of the Library of Congress, through its “enforcing arm, the National Institute of Migration –INAMI” (the equivalent of ICE here in the USA), the Mexican Police Force, may carry out the following:” (Chapter 10, Article 151)

• Perform verification visits
• Cause a foreigner to appear before immigration authorities
• Receive and present complaints and testimony
• Perform migration inspection operations on routes or at temporary points different from established inspection locations
• Obtain such other elements of proof as may be necessary for the application of the Act, its regulation, and additional administrative provisions

Lastly, “the authorities of the country, whether federal, local, or municipal, and the notaries public and commercial brokers are required to request that the foreigners whom they deal with prove their legal presence in the country” and illegal immigrants who wish to get married to Mexican citizens “must request authorization from the Secretariat of the Interior.”

 If Mexicans (who, by estimates, are the majority of illegal immigrants in the United States) find these laws so objectionable, why don’t they protest them in their own country?

Quite simply, what’s good for the goose isn’t always good for the gander.  Mexico and the race-baiting excusers of illegal aliens want it both ways, with Mexico able to protect itself from illegal entry but force the United States to deal with the massive influx of the economically disposesed from within its own borders.

Let me make it clear for all the liberals out there:  I don’t care if somebody is Mexican or Chinese or German or Irish or Turkish or from the Planet Vulcan.  If they’re in this country illegally, then I want them sent back to wherever they came from.  There is a process for people to enter the United States legally and until someone respects the laws that govern that process, they have no business coming here and telling us how we should treat them when they get caught.

Of course, I have no problems with legal immigration.  I have many friends and co-workers who emigrated to the United States legally, spending their time and money to do so.  Santana emigrated legally.  He can say whatever he wants, but he’s still wrong.  It’s not racism, but the short-circuiting of the legal immigration system that has me, and many like me, so upset.

Cross-posted at The Minority Report Blog.

Herman Cain.

The loser(s)?

Gary Johnson and every candidate who didn’t attend.

Why did Herman Cain win?  Because the “front-runners” weren’t there.  He got his message out.  He made a good impression (Fox’s focus group had several people say he made the most sense and that his business background really showed through).  While others stayed away, Cain showed people he was a serious candidate.  He proved he could hold his own with the established, polished politicos.

Gary Johnson, on the other hand, appeared confused and whiny.  Granted, he had a point that, early in the debate, he hadn’t been asked many questions, but the way he approached it was unprofessional and un-polished.  His history and centrist positions on some issues are going to make it difficult for him to gain support among the base, and he didn’t have a single notable moment in the whole debate, other than his tantrum.

Ron Paul actually showed himself to be on-point in several areas, but he also contradicted himself, particularly in his opposition to Arizona’s controversial immigration law whilst simultaneously supporting state-level control over marriage and drugs.  Even though I think he did well, he’s a fringe candidate who, like in 2008, won’t gain the support of the broad-base of conservatives.

Tim Pawlenty and Rick Santorum performed as expected.  They are, after all, established politicians with experience in debates and campaigning.  They didn’t lose, but they didn’t do anything to establish themselves as big name candidates.  Which because of Cain’s performance, is a bit of a loss for them.

Romney, Gingrich and every other potential candidate who didn’t appear lost a lot of ground tonight.  Until now, Herman Cain has been a relative unknown.  Yes, he had a radio show and has appeared at several Tea Party events, but most people don’t know him by name. Tomorrow, his name will be all over Fox News and the blogs, and that will be a huge help to his chances.

Will he be the nominee?  It’s still unlikely.  He has little political experience and has never served in public office (though, as he stated, Washington is full of politicians and “how’s that working out for you?”).  He is, at best, a long-shot, but showing up to tonight’s debate was a coup for his campaign.  Tonight is probably not the beginning of a dark horse, insurgent campaign leading to Cain’s nomination.

But it might be.  Wouldn’t that be interesting?

Cross-posted at The Minority Report Blog.

Donald Trump, whose popularity as a possible Republican presidential contender shot up after he started questioning the whereabouts of President Obama’s birth certificate, said Wednesday he is “so proud” the president has finally released the forms.

“I am so proud of myself because I’ve accomplished something that nobody else has been able to accomplish,” Trump said from Portsmouth, N.H., where he was giving early primary voters a close-up look at a potential presidential campaign.

“I feel I’ve accomplished something really, really important and I’m honored for it,” Trump said.

The billionaire real estate mogul and host of “Celebrity Apprentice” brought the issue of the president’s birth certificate to the forefront after years of complaints from a small segment of society, come to be known as “birthers,” who said it is not satisfied with the short-form version of the president’s certificate provided during the 2008 presidential campaign.

There is only one reason why Barack Obama would release his birth certificate now after more than three years since Hillary Clinton’s presidential campaign brought it up: Because it benefits him politically to do so.

Since the “Birther” issue came up, Barack Obama, the Democrats and the Leftist media have milked it for all it’s worth. Despite the small number of vocal proponents of the idea that Obama was born outside the United States, the Left has made political hay of the derranged individuals who cling to the idea that if, somehow, some way, Obama could be proved not a U.S. citizen, he could be removed from office! The fact that his mother was a U.S. citizen which gives him birthright citizenship is meaningless! These people are on a mission!

The Birthers, of course, are quite different from regular skeptics. After the question was raised and after the months and years dragged on without a birth certificate, it was healthy to simply wonder about whether Barack Obama was actually born in the United States. Once again, however, his mother was a U.S. citizen, so even if he’d been born in Kenya or Indonesia or Bhutan or on the planet Vulcan, he’s still be a birthright U.S. citizen by virtue of his mother’s citizenship.

None of that has mattered to the Birthers, nor did it matter to Donald Trump whilst he cavorted about the evening news programs, bringing back to the forefront an issue that had long-since faded into the background. After declaring his interest in the Republican Party nomination, the media happily gave him every opportunity to talk about the issue as though it actually mattered. This allowed them to paint the Republican Party and conservatives as a fringe element incapable of rational thought and allowed them to portray (once again) Obama as a victim.

So now the birth certificate has been released, and The Donald is just so happy to take credit for it. He can, of course, take some of the credit for its release. His statements to the press put the issue back in front of everybody, conveniently distracting Americans from some other important issues, like the Debt Ceiling, Libya, Syria, Federal Reserve announcements and the down-grading of the United States’ credit rating. Trump doesn’t realize or doesn’t care, however, that he’s been played.

In a move that would make Machiavelli proud, Obama has given new political credibility to the well-known but politically weak Donald Trump. He made it seem as though The Donald did what no one else could do. The Donald pushed Barack Obama and Obama gave up the goat!

Hardly.

In reality, Obama has pushed back, and hard! Releasing the birth certificate now serves Obama’s motives since Trump is politically inexperienced and is likely to make a great many mistakes should he win the nomination and face Obama in the general election. In particular, the Birther stance will harm Trump’s credibility among centerists and the Left; but his previous actions as an eminent domain abuser will harm him among the conservative base. Further, no matter what happens to his candidacy, Trump harms the GOP in the general, since the GOP will now have a clear association with the Birther movement.

Talk Radio News Washington Bureau chief and Fox News contributor Ellen Ratner agrees with this analysis:

Wednesday’s decision by President Obama to release his long form birth certificate was anything but a response to political pressure applied against him by Donald Trump and other “birthers.” Obama’s team has obviously had this in their quiver for the last two plus years. Like a black widow spider weaving its web, the Obama political army has been sitting, waiting for its prey.

Trump, the wealthiest of the potential 2012 Republican candidates, has loudly questioned Obama’s birthplace, attempting to use his popular brand to bring the “birther” movement into the mainstream. Thanks to Trump, the issue has taken center stage, and recent polls have shown that a fair amount of voters believe that Trump is right to doubt the president’s citizenship.

…

Obama’s move this morning makes the “birthers” look like the fringe group that they are. The news will satisfy the swinging independent bloc, and in this upcoming election that’s all that matters.

Trump has a lot of demons to overcome. His attempt to trademark the statement “You’re fired!” is just one of the more amusing examples of how unhinged he can sometimes be. Add to this the Birther stance and he’ll lose the center. Then add the failed marriages and other personal demons and the social conservatives will eventually abandon him, or at least fail to support him. His abuse of New Jersey’s eminent domain laws and his many financial transgressions (how many times do you have to declare bankruptcy before banks will stop lending you money?) will hurt him among the constitutionalists and fiscally-motivated conservatives.

Already Democrat pollster and operative Brad Bannon has made his opinions known about The Donald and given a clue as to what the Democrats will harp on in 2012, thanks to his Birtherist behavior:

Donald Trump is the king of the birthers. He is the front runner in the GOP race because his party, like him, is a joke. The voters who will select a nominee for the GOP in primaries and caucuses are blinded by hatred and ideological hot flashes. The Tea Partyers and the Christian conservatives don’t want to win; they just want to be right. And since Trump can’t win, he would be the perfect right-wing candidate.

Trump has great credentials for dealing with the economic problems that would test his presidency. He has had companies go bankrupt three times and he owns casinos so he understands the culture of the high rollers on Wall Street who gambled away the jobs and homes of millions of working families.

But Trump’s expertise goes far beyond financial acumen. He clearly understands the role of traditional marriage in American life since he has been married three times. And he is skilled in foreign affairs since two of his three wives have been foreign born. By the way, did he check their birth certificates before the ceremonies?

The fact is, Trump isn’t a conservative. Since I’m convinced he’s not actually an idiot and have no evidence he’s a Democrat Party plant, I conclude that he must be a Populist. Whatever has people talking today will be Trump’s issue du-jour tomorrow. With gasoline prices soaring, look for Trump to attach himself to the “Drill here, drill now” or “Punish Big Oil” or some other Fix-It bandwagon. He may find an oppositional stance on Libya or wonder aloud about our lack of involvement in Syria. If health care or taxes head the next new cycle, expect him to take the stance of the group with the loudest voices. Whatever he does, it will be because it’s popular and grows his support among some constituency, not because he believes it to be the right position.

So why would conservatives support Trump now? Simply put, there’s a lot ot be said for early momentum, even for bad candidates. While dark horse candidates have appeared in the past (that’s why we have the term “dark horse”, after all), most eventual nominess start with strong early support and build upon it throughout the primaries. Early momentum means name recognition, media, organization and most importantly money! After all, as wealthy as he is Trump doesn’t have $1 billion laying around to spend on a political campaign, and that’s the sum the Democrats have been claiming they’ll raise for 2012.

In short, Trump is a terrible candidate for the GOP nomination and the Obama campaign would be thrilled to face him in 2012. By releasing the birth certificate now, when it benefits Donald Trump most, Obama is injecting himself into the GOP campaign before it has even started and given potentially its worst candidate a push toward the nomination.

Cross-posted at The Minority Report Blog.

“The truth is, there’s no silver bullet that can bring down gas prices right away,” Obama said in prepared remarks for his opening statement at a townhall-style meeting in Nevada.

“The Attorney General’s putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices – and that includes the role of traders and speculators. We are going to make sure that no one is taking advantage of the American people for their own short-term gain,” Obama said.

This simply isn’t true. In fact, futures traders have an important job of ensuring that the supply of fuel, food or other products never run out as long as people demand them. Rather, if the President wants to know who is responsible for high fuel prices, he need only look in the mirror. It is the government that has played a heavy hand in raising the cost of fuel and other products to the high levels we see today. The “speculators” are just doing their job and dealing with the consequences of poorly-conceived goverment actions.

Futures traders buy and sell commodities. A commodity is any product that is essentially exactly the same no matter who is providing it. Commodities aren’t affected by from where it’s coming or to what point it’s going. Corn meal, wheat, oranges, coal, iron, pork bellies and petroleum are all commodities. Even many services and finished goods are considered “commodity-like” products, but for the puproses of this discussion only true commodities will be evaluated.

So futures traders spend their whole day studying the marketplace for their particular commodity. Some study weather and pay close attention to drought or frosts or floods to determine what likely price of a bushel of wheat or corn will cost. They may spend hours calculating the current inventory of finished aluminum and the number of 747s Boeing has on its order books to determine next quarter’s bauxite prices. There are literally thousands of resources that these futures traders deal in and work to ensure a stable supply to meet market demand.

Futures traders spend thousands of hours and millions of dollars on computer programs that accurately model market fluctuations based upon factors that most of us don’t even realize are important. New information is received every minute and one small bit of information could drastically affect the result of those models, subsequently affecting the price of a commodity.

The price of a product is a form of communication. The supply factor of price is the producer saying, “This is how much I spent in resources and my valuable time to provide this product to you.” When the price of a product rises, it communicates to everyone that there is a shortage of that product. Consumers have the choice to switch to an alternative or simply use less of it. Producers have an indicator to increase production of it. Entrepreneurs have the option to develop new businesses that produce more of it. It’s immediate communication and the producer and final buyer never even have to know who the other one is.

That’s the communication of supply. There is also communication of demand. No one individual ever says it, but the market communicates, “I demand more of this product!” Producers only have so much product to provide. If there is more demand than there is product, those demanding it start raising their offered price. As the price goes up, some buyers choose to buy less but still have to pay the higher price. Eventually, the amount the buyers are willing to pay matches the amount the producers can afford to provide for that price.

It works the other way around, too: If there is too much supply, consumers will demand a lower price or they won’t consume all of the products. When the price falls, producers know they should switch to producing other products or simply cut production.

All of business, the entire study of economics, is devoted to reaching that point where the amount that people demand of a product matches the supply, and by-and-large the world wide economy does a good job of getting it right. It’s never exact (there are always shortages or surpluses of something, somewhere), but it’s always close.

So the price of oil has risen drastically in the last few months. Producers are communicating that demand has been increasing. Meanwhile, the immediate supply of petroleum hasn’t increased all that much, and the long-term known supply isn’t increasing, either. What’s the cause of this? There are a multitude of factors. Some of the most important ones are:

• Increasing demand in China, Brazil and other developing countries for petroleum and related products for fuel, plastics and fertilizers.
• Tight controls over supply coming from the largest producers including OPEC and Russia.
• Restrictions on drilling for new supplies in developed countries like the United States and other nations.
• Disruptions in supply due to unrest in oil producing countries like Venezuela, Mexico and Libya.

The commodities traders take all of this into account and put the information into their models. They start making predictions based upon those models and they offer futures contracts to producers. “On a particular date, I will buy some barrels of oil from you for a certain price per barrel.” As they add information to their models, the predicted outcomes change and they buy more contracts or sell the ones they have to other traders. The objective is to buy the contracts at a lower price than they will eventually sell them.

In the meantime, the traders are also working on selling their mature commodities to end-users. The final buying price from the producer is set at some point before the commodity is due, but the eventual selling price may still change. At some point, that price is finalized, too, and the traders give the contract to their buyer, who collects the commodity.

In growing markets, the traders tend to do well. If demand keeps increasing with no increase in supply, or supply suddenly decreases with no decrease in demand, the traders have an easier time buying their contracts low and selling the commodities high. That’s what we’re seeing today: Worldwide demand is increasing and supply is not keeping pace. The traders are making their profits on the inevitable increase in price. Conversely, when the markets decline the traders don’t do as well. Their contracts become less valuable and they may sell them at minimal profit or even a loss.

It’s not the futures trader’s fault that the prices are going up. They’re simply putting all the information together to make sure the price (and therefore the demand) matches the supply of the commodities. Someone who doesn’t understand this may look from the outside and think, “They’re controlling the prices and getting rich off of it!” In fact they may be getting rich, but they’re not controlling the prices so much as they’re ensuring the price offered matches the supply demanded.

Once again, the increasing prices are indicating to the market that the supply of oil is not keeping up with demand. In the case of corn meal, it’s an indication to grow more corn. Increasing iron prices indicate a need to mine more iron ore. Rising oil prices indicate a need to drill for more oil.

There’s a hitch, however, in the oil markets. There’s a restriction on the supply of oil. OPEC restricts its member countries from producing oil, but high prices give a strong incentive to cheat (and most OPEC member states do cheat on their quotas to some degree). There’s nothing the United States can do about OPEC other than invade and conquer those countries for their oil. While many on the Left contend that’s what President Bush did in Iraq, it certainly didn’t have the effect of lowering oil prices! Besides, OPEC only controls about 40% of the world’s oil supply, so there are several more countries that would have to be invaded for such a plan to work to the benefit of this country.

There are two other solutions: The first is to drill for more oil. The United States has plenty of oil that isn’t being tapped. The second is to develop a reasonable alternative energy source. There are entrepreneurs working on myriad different solutions to the energy crisis. Unfortunately, the politicos in Washington and some state capitals have decided that drilling is simply too gauche for a modern, enlightened society. Only 60 offshore permits have been issued since the Deepwater Horizon spill, far below the normal number. They’ve further decided that energy security should take a back-seat to providing corporate welfare for agricultural corporations to produce highly inefficient corn ethanol, harming the private sector’s ability to enter the market with a feasible alternative to this wasteful additive.

So we’re stuck. The price of gasoline is already over four dollars per gallon in some areas and is rapidly approaching that level nation-wide. We can’t drill known supplies here, so we have to look for it elsewhere, increasing the time it will take to get to market, raising today’s price at the pump.

The President is making political hay out of the rise in oil prices, whipping up populist fervor against ”Big Oil” and commodities traders.  He’s profiting politically off higher oil prices amongst the economically illiterate. As the President gathers suspects for people manipulating oil prices for personal gain, he’s certain to leave out the most obvious guilty party: Himself.