Rational Irrationality Reviewed

THE POLITICAL ECONOMIST reviews The Myth of the Rational Voter:

"So, in closing, I think Caplan’s book will be regarded as a public choice classic that will be on university course reading lists for decades to come. Caplan provides the ground for a research agenda that can build on his particular conceptualisation of voter behaviour, and his suggestions for institutional improvement in mature democracies. I think there a lot in this book that classical liberals and libertarians would like, and be able to reflect upon. By all means, do yourself a favour and get it!"

This is a review worth reading, especially if you want to skip the book.

The Economy Is Booming

RALPH PETERS:

If current trend-lines continue, it may not be long before Baghdad is safer for Iraqi citizens than the Washington-Baltimore metroplex is for US citizens. Iraq's government is working, its economy is booming - and its military has driven the concentrations of terrorists and militia from every one of Iraq's major cities.

And our troops are coming home. Where's the failure?

Food for thought, eh? And, where can I go to see the evidence the economy is booming? I certainly suspect this is true because I've read several stories from Iraq of new businesses.

Court & Constitution

RANDY BARNETT on Heller:

So what larger lessons does Heller teach? First, the differing methods of interpretation employed by the majority and the dissent demonstrate why appointments to the Supreme Court are so important. In the future, we should be vetting Supreme Court nominees to see if they understand how Justice Scalia reasoned in Heller and if they are committed to doing the same.

We should also seek to get a majority of the Supreme Court to reconsider its previous decisions or "precedents" that are inconsistent with the original public meaning of the text. This shows why elections matter – especially presidential elections – and why we should vet our politicians to see if they appreciate how the Constitution ought to be interpreted.

It seems to me that both the Legislative and Executive branches of government will inherently (because of their natures) be threats to liberty. If we are to have a hope of a government for liberty, then I think it is important that the members of the Supreme Court see their role in our government as defenders of a constitution for individual liberty. It seems the Heller opinion is a good illustration of all of this.

Our Fearless Leaders

ISN'T CONGRESS GRAND:

Today marked a new low for the way congressional Democrats deal with national security. This morning, the House Permanent Select Committee on Intelligence and the House Permanent Select Committee on Energy Independence and Global Warming held a joint hearing on a "National Intelligence Assessment" on global climate change. This analysis was ordered by the Democratic Congress last year and was issued a few weeks ago. Some highlights (or low-lights) from the hearing:

1) In response to a question by Global Warming Committee member Greg Walden (R-OR), the Intelligence Community admitted they had "low to medium confidence" in the accuracy of this estimate because intelligence officers lack the expertise to write such an estimate (it was mostly contracted out to other organizations) and climate change science is so uncertain. As Walden started to ask about why an analysis of such low reliability was issued, Congressman Ed Markey (D-MA), the Global Warming Committee Chairman, cut him off and told him he was out of time even though Markey let all the previous Democrats speak substantially past their time limits.

2) Intelligence Committee Ranking Member Peter Hoekstra asked what intelligence was used for this estimate and whether intelligence collection requirements were prepared. National Intelligence Council Chairman Thomas Fingar said no clandestine intelligence was used and that intelligence officers extrapolated what would happen if the "mid-level estimates" by the UN's Intergovernmental Panel on Climate Change were correct. When Hoekstra asked why the U.S. Intelligence Community would write an major analysis of low to medium confidence that contained no intelligence, Fingar answered, "because you [Congress] told us to."

3) Hoekstra noted that intelligence assessments of high confidence have proven to be wrong and he wondered why an intelligence assessment of low to medium confidence would even be published. In an attempt to dispel the debate over confidence, Intelligence Committee member Congresswoman Anna Eshoo (D-CA) responded by noting that the 2002 Iraq WMD NIE had high confidence in its findings. Some Republicans thought Rep. Eshoo's statement actually made their case about the futility of issuing an intelligence assessment that intelligence officers cannot fully back.

O'Reilly & Economic Illiteracy

GLENN REYNOLDS:

"JEEZ, I'M WATCHING BILL O'REILLY TALK ABOUT OIL 'SPECULATORS' and he's making a fool of himself. He absolutely doesn't understand futures markets."

I remember a year or so ago when Mr. O'Reilly was beside himself that no one could tell him who it was that set the price of gasoline in the United States. Isn't economic illiteracy like a new virus or something? Can't we consider it a threat to our public health?

Our Present Comfort

VICTOR DAVIS HANSON:

"In our present comfort, Americans don't seem to understand nature. We believe that our climate-controlled homes, comfortable offices and easy air and car travel are just like grass or trees; apparently they should sprout up on their own for our benefit.

Americans also harp about the faults of prior generations. We would never make their blunders -- even as we don't seem to mind using the power plants, bridges and buildings that they handed down to us.

Finally, high technology and the good life have turned us into utopians, fussy perfectionists who demand heaven on earth. Anytime a sound proposal seems short of perfect, we consider it not good, rather than good enough.

Hamlet asked, 'To be, or not to be: that is the question.' In our growing shortages of infrastructure, food, fuel and water, we've already answered that: 'Not to be!'"

It often seems to me that our prosperity has led to much being taken for granted. You may want to read the entire piece by VDH. I think there is another take on some of the things VDH writes about. Some of the things he writes about remind me of Mancur Olson's The Logic of Collective Action and The Rise and Decline of Nations. Perhaps our system of political economy is once again in the grip of sclerosis.

Summer Reading

Peter Boettke suggests summer reading:

In my opinion, I told the fellows, the most important books they could read this summer are: Richard Epstein's Free Markets Under Seige, and W. H. Hutt's Politically Impossible? both published by IEA. Epstein emphasizes the low hanging fruit in public policy, and argues that if we just focused on the simple economic problems that politics gets wrong and get them right we would improve the plight of millions of people world wide --- lower tarrifs, lower taxes, cut back regulations, eliminate price and wage controls, etc. LOW HANGING FRUIT. There are complicated issues in economic public policy, but for 90% of the problems we face in the world it is the low hanging fruit issues that distort the world an harm the lives of so many. Think of the current food crisis and examine the rise of protectionist policies world-wide that is preventing the gains from trade from fixing it. LOW HANGING FRUIT.

Hutt, on the other hand, emphasizes that it is the economists responsibility to speak truth as they see it to power, and never to compromise their message. The simple reason is that if the economists water-downs his message, the politican will water-down even more in the policy process, and by the time the advice become actual policy it will be unrecognizable to the economist. Rather than the economic voice being given an hearing, it is completely muted by the economists own consent. NO SPEAK TRUTH TO POWER AND DAMN THE CONSEQUENCES IN TERMS OF YOUR POPULARITY WITHIN THE POLITICAL REALM.

Oil & Politics

Like oil and water, I think oil and politics don't mix.

Today there is WSJ commentary worth looking at regarding the assertion (by many politicians) that speculators are at fault for the recent increases in oil prices:

On Sunday, Barack Obama rolled out a proposal that will supposedly thwart market manipulation by "a few energy lobbyists and speculators." John McCain chimed in that Mr. Obama was merely following his lead; last week, the Republican denounced "some people on Wall Street" for "gaming the system." If there's a Congressman who isn't calling for his own crackdown, he's gone into witness protection. And sure enough, even this week's impromptu oil summit in Jeddah blamed "speculators" for high prices.

The futures market may be a convenient scapegoat, but it's simply a price discovery mechanism. Major energy consumers – refiners, airlines – buy and sell these contracts to lock in goods at a future price, as a hedge against volatility. Essentially, they're guesses about coming oil supply and demand, as well as the rate of inflation. The political theory is that such futures trading is creating a bubble in the spot market (i.e., oil purchased for immediate delivery) beyond oil fundamentals. Thus, $4 gas.

But there's no inherent reason to "bet" that commodities will go up rather than down. Bet wrong – place all your chips on red, say – and you lose. If a company purchases the future right to buy oil at $140 a barrel and it instead sells for $130, the option is worthless. Besides, somebody has to take the other side of any futures contract: Some are trying to predict where the price will go in the future, while the other side is attempting to sell its future price risk. But no one knows how things will end up.

Mr. McCain calls such exchanges "reckless wagering." But speculators – normally known as "traders" – are really managing the exposure risks of American businesses to higher oil prices. Traders not affiliated with major producers or consumers provide liquidity to the market. Without the second group, futures markets would be determined exclusively by commercial participants. Another word for this is a cartel.

What is important here is that "speculators" are taking risks by making guesses about the future. There is no inherent reason why we should expect a speculator's guesses to be right and thereby be rewarded by large profits. The guesses may be wrong and be rewarded by large losses. It is also important to note the idea that the futures market is a price discovery mechanism. The specific idea is that in the present situation it appears that many believe the price of oil is going to be higher in the future. Given politics here in the United States, and given the potential, at present, for conflicts around the world this might well still be a very good guess.

Consider the finish to the WSJ commentary:

On the other hand, inflation does lead to a misallocation of resources, so it's not surprising that the Federal Reserve's weak dollar policy has driven investors to commodities to protect themselves. Loose monetary policy has caused price jumps across nearly all commodities, including surges in grains and precious and base metals. The Fed's rate-cut bender is the most important reason oil is up so sharply since last August.

The other major factor is supply and demand, as prosaic as that might seem amid today's political agitation. Energy consumption is surging in China and India, and global supply is not growing fast enough to keep up. Congress could do something useful if it opened up America's vast natural resources, which are blocked by environmentalist romanticism. But then, it's so much easier to shoot the price messengers.

The simple supply and demand view of a market should be helpful to us when wondering why oil prices are increasing. The price of oil, as well the price of any good or service, will increase if there is an increase in demand, if there is a decrease in supply, or both an increase in demand and a decrease in supply. The last two paragraphs to the WSJ commentary suggest reason to believe that both demand is increasing and supply is decreasing (at least relative to what it could be).

U.S. oil companies could be increasing supplies over time and into the future, but it seems our national politics, at least up to now, prefers to restrict production of oil off-shore, on-shore on public lands (ANWR), and from oil shales. The oil speculators don't make these sorts of political choices, but they can see these choices and guess that oil prices will be even higher in the future. At least some part of the oil price increases seem to me to involve U.S. public policies. Of course, our national politicians are responsible for these policies. As I think I've seen happen often in the past, when the politicians are themselves the culprits with respect to situations the public doesn't like, the politicians rush to the microphones and to the public meetings to claim it is someone else's fault.

Increase supply, of oil or any other good or service, and be assured the price will be lower than would otherwise be the case.

Obama's Illusions & Tyrannies

Have you wondered about Senator Obama's record of accomplishments? Have you assumed his record must be signficant since, after all, he will be his party's nominee for President? HERE IS A SHORT ESSAY that explores Senator Obama's record. This is how the essay ends:

Finally, there is his oratorical skill. Much of Obama’s lofty message of unity and hope really came from campaign consultant David Axelrod, who “long ago hatched the idea that Democrats’ campaigns should revolve more around personality than policy.” Indeed, much of the rhetoric was already test-driven in 2006 by one of Axelrod’s other clients, Gov. Deval Patrick of Massachusetts. Not that such themes are in any way unique to American presidential politics, as demonstrated by Bill “The Man from Hope” Clinton and George W. “Uniter, not a Divider” Bush.

As I have repeatedly noted here at pw, the candidacies of Obama and John McCain are driven by voters pursuing a mirage of changeyness where bipartisanship reigns and the “moneyed special interests” vanish. And we should Hope that it is a mirage:

The appeal is vague precisely because it is illusory… The Framers of the US Constitution recognized – as James Madison explained in Federalist No. 10 – that factions are one of the costs of liberty. There is nothing high-minded about selling the notion that faction can be magically eliminated — a notion that is equal parts snake oil and tyranny.

Again, there is not much to admire in either snake oil, tyranny or flowery speeches trying to sell either. Moreover, remove Obama from a TelePrompTer and he is every bit the gaffer as any other average politician, though few have had the audacity to base their foreign policy on a debate gaffe.

In sum, Barack Obama’s record, judgment and message are at best entirely undistinguished in the field of presidential politics. At worst, we have Axelrod’s campaign of personality attracting a cult of followers so creepy that even many Obama backers are put off by it, to a man who admits he is a “blank screen,” with a message that is either illusory or tyrannical. It is in those people that I find little to admire.

So, after reading the essay, what do you think, does the success of the Senator's campaign seem more the result of RATIONAL IGNORANCE or RATIONAL IRRATIONALITY? Or, perhaps it is the "perfect storm" of both?

With regard to the Senator's message being either "illusory or tyrannical," I certainly see much in the Senator's policy positions that fit the "tryrannical," e.g. his idea that he will make the oil companies invest their profits in the way he sees fit.

There would be less to be concerned about with respect to this presidential election if only there were at least 5 Supreme Court Justices who understood, and agreed with, James Madison's Federalist #10. If there were, then it would be far more likely that our constitution would be read as constituting a constrained and limited government of only enumerated powers, and the tyranny in the politics of presidential policies would be far less likely to be realized during the next presidential administration.

Zimbabwe

I've chanced across a very interesting book, WHEN A CROCODILE EATS THE SUN which is written by Peter Godwin. The book is Mr. Godwin's memoir of Africa and specifically Zimbabwe. Here is an excerpt from Chapter 5 which is titled April 2000.

They are a good-looking middle-aged couple, tanned and fit from an outdoor life, surprisingly calm and considered, given their current situation. We sit down at the dining table for lunch, and Jenny reaches to tinkle the bell to summon the cook, and then remembers it is not there. She apologizes for the second-best cutlery we are using too.

Rob slices the rare roast beef. "This place was mostly unpopulated when we arrived," he says. "There were tsetse flies, so no cattle could survive. No cattle, so no people. Whites used to come here to hunt lion, that's all."

His grandfather came out to Africa as a veterinarian with the British cavalry fighting the Boer War. His father served in the police force of old colonial Bechuanaland (now Botswana). Rob's uncle wrote the Kenyan constitution.

[ . . . ]

But as we drive through it, most of the land -- once some of the most productive in the country -- stands empty of crops, choked with undergrowth. Farms lie abandoned, their buildings stripped of their tin roofs.

"Just look at it," says Webb in dismay. "It's such a terrific waste."

Webb shows me the Farm Development Trust, an old commercial farm converted into a tobacco training center by white farmers. More than a thousand black farmers pass through it every year taking courses to learn how to grow tobacco commercially. "Some of the farmers being trained there are those now invading us," he says. His wife choruses this hymn of despair. "This will never end. If they get more farms, in five years' time when our corn is ten feet tall and theirs is only two feet, they'll come again and say, 'We want your land.'"

Only now does Rob take me on a tour of his own farms -- he has three, combined into one unit. Here he grows coffee, paprika, wheat, sugarcane, soybeans, asparagus, tobacco. At his tall brick tobacco barns, workers are busy grading and packing leaves. "There's millions of dollars' worth of tobacco here," he says. "And they've warned me that they'll burn it all down if they lose the elections."

He employs 620 people, and, with their families, some two thousand live on the property. "We run an elementary school for the laborers' children and a fully staffed clinic."

Rob webb has tone to great lengths to stay on good terms with the ruling party as a political insurance policy for his business. . . .

But this was no use to him when a mob of a hundred people armed with pangas and rocks marched up the drive chanting hostile slogans and beating tom-toms and dancing the toyi-toyi, an African war dance.

"They demanded to speak to me, and when I came down, they shouted, 'We have come to take your land -- that is what we have been told to do.'"

They pegged land claims on his soybean fields, which were just about to be harvested, and demanded they be plowed immediately. When Rob insisted on reaping his crop first, they tried to set fire to it: only the greenness of the shoots prevented it from catching. Now Webb is combine-harvesting day and night to salvage as much of the crop as he can.

[ . . . ]

The farm, a big business built up over decades, in on the verge of collapse. Webb is unable to plant winter wheat, unable to water his soy crop, unable to enter or leave his property without permission. His workers are scared and worried about their future. The occupiers spend much of their time drunk or stoned. . . .They live parasitically, depending on the farm for their survival even as they destroy it. . . .

"As far as I can see, they're nothing but little warlords," says Rob.

There are a few other stories like this, at least one which was deadly in nature, in this chapter on April 2000. One aspect of the stories is that government seems unable or unwilling to protect and enforce the private property rights which seem to me to have been integral to the economic development that was part and parcel of the successful farms. Perhaps government is even doing the telling to the people who are trying to take over the farms. These sorts of stories seem to epitomize an economy of predation, not an economy that will experience much prosperity.

Is this a recession and do we care?

JAMES HAMILTON POSTS some charts that make him bearish on the recession question. Here is one of his charts. Note the periods of recession are shown by the grey bars. You may want to check out his entire post.

Windfall Profits Tax

The Senate is debating S. 3044 today. This bill is called the Consumer-First Energy Act of 2008. Among other things, this bill would impose a "windfall profits tax." You can read the text of the bill for yourself by going here. So what is in the bill, and specifically what is this "windfall profits tax?"

`(a) In General- In addition to any other tax imposed under this title, there is hereby imposed on any applicable taxpayer an excise tax in an amount equal to 25 percent of the excess of--

`(1) the windfall profit of such taxpayer, over

`(2) the excess of--

`(A) the amount of the qualified investments of such applicable taxpayer for such taxable year, over

`(B) the average of the qualified investment of such applicable taxpayer for taxable years beginning during the 2002-2006 taxable year period.

`(b) Applicable Taxpayer- For purposes of this chapter, the term `applicable taxpayer' means any major integrated oil company (as defined in section 167(h)(5)(B))."

The Associated Press article on this includes:

With gasoline prices topping $4 a gallon, Senate Democrats want the government to grab some of the billions of dollars in profits being taken in by the major oil companies.

Senators were to vote Tuesday on whether to consider a windfall profits tax against the five largest U.S. oil companies and rescind $17 billion in tax breaks the companies expect to enjoy over the next decade.

"The oil companies need to know that there is a limit on how much profit they can take in this economy," said Sen. Richard Durbin of Illinois, the Senate's No. 3 Democrat, warning that if energy prices are not reined in "we're going to find ourselves in a deep recession."

So this is a bill that is supposed to be a response to the high prices for petroleum and gasoline. There has recently been quite a bit of political rhetoric from the Democrat presidential primary candidates who both said they support the idea of a windfall profits tax. Reuters reports that Senator Obama said this yesterday:

"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills,"

Before discussing what we could expect to be the result of imposing a windfall profits tax, just a couple of thoughts. First, Senator Durbin's comment in the Reuter's article just doesn't sound like economic liberty to me. The Senator's threat to use government's force to take some of the profits of 5 of the country's corporations makes our Congress appear to be quite a predator rather than a protector of individual liberty and freedom.

Second, just a picky little point about the Constitution and Senator Obama's claim that he will make oil companies pay. Mr. Obama cannot, on his own, make oil companies do anything, either as a member of the Senate or as President. The Constitution gives the power to tax to Congress, not to the Senate, and most certainly not to the President.

Now, what should we expect to be the result of imposing a windfall profits tax? To put this question in context, we should also ask why the prices of oil and gasoline have been increasing recently. There are probably several factors involved in explaining the recent price increases, but basic economic ideas suggest just a couple of general possibilities. Basically for a price to increase, other things constant, either the demand is increasing or the supply is decreasing, or both. With respect to the price of a barrel of oil, it seems to me that price is increasing both because demand is increasing (a good part of this is increasing demand from people and businesses in China and India) and because supply is decreasing or at least not increasing. With respect to the price of a gallon of gasoline, oil is an input into the production of gasoline, and we can expect an increase in the price of an production input to result in an increase in the price of the output, or the price of gasoline in this case.

Ordinarily, economics suggests to us that when profits are above "normal" in an industry that this is a signal or an incentive for businesses to increase supply. And, ordinarily, we would expect that over time, sometimes over a very short period of time, that the above "normal" profits would be bid away by new businesses and by increased supplies by existing businesses. Of course, all of this means that the existence of above "normal" profits can be expected to lead, over time, to increased supply and to a LOWER PRICE. In this case, we could expect above "normal" profits for oil suppliers and for gasoline suppliers to lead over time to lower prices both for oil and for gasoline as supplies for both increase.

But, the Senate, and perhaps then the House and even the President, will decide to intervene in all of this by imposing a "windfall profits" tax on U.S. oil producers. Will a "windfall profits" tax result in increased supplies and lower prices for oil and gasoline? This is not what I would expect to happen. Such a tax should decrease the incentive to produce new oil supplies if for no other reason than that such a tax would be a signal that there was less money to be made in oil production and this would lead to less effort to find new sources of oil and also to less effort to increase production from existing sources.

In other words, we should expect that imposing a "windfall profits" tax will result in higher prices for oil and for gasoline than would otherwise be the case. Wouldn't you like to see lower prices for oil and gasoline? If so, then you might want to support policies that would free producers of these products to respond with increased supplies over time.

There is perhaps a bit of irony in this last point. Congress has for some time now imposed moratoria on both new off shore oil production as well as the production of oil shale. If Congress ended these moratoria we would expect increased production of oil and this should lead to a lower price per barrel of oil which would of course then be expected to lead to a lower price per gallon of gasoline. In political terms, it seems to me the very politicians who support a windfall profits tax because of the "excess" profits due to a high price per barrel of oil are also, mostly, the politicians who support these moratoria on production. Is it ironic that the profits these politicians want to take are, at least in part, due to their own choice to restrict U.S. oil production below what it could, and would, be? Or, are they crazy? Or, do these politicians have another agenda that is promoted by decreased supplies and higher prices for oil and gasoline?

Where's My Summer Job

Kristen Lopez Eastlick:

Finals week is over; summer is here. And thanks to misguided politicians, your teenager is more likely to be sitting in front of the television than waiting tables or scooping ice cream.

This year, it’s harder than ever for teens to find a summer job. Researchers at Northeastern University described summer 2007 as “the worst in post-World War II history” for teen summer employment, and those same researchers say that 2008 is poised to be “even worse.”

[. . . ]

One of the prime reasons for this drastic employment drought is the mandated wage hikes that policymakers have forced down the throats of local businesses. Economic research has shown time and again that increasing the minimum wage destroys jobs for low-skilled workers while doing little to address poverty.

According to economist David Neumark of the University of California-Irvine for every 10 percent increase in the minimum wage, employment for high school dropouts and young black adults and teenagers falls by 8.5 percent. In the past 11 months alone, the United States minimum wage has increased by more than twice that amount.

Sad, eh? Demand curves, even demand curves for young summer employees have negative slopes.

Our fearless leaders in Washington are talking recession, they are concerned for the unemployed, and yet, they have also chosen public policy that makes more unemployed workers than would otherwise be the case. Oh, well, don't worry, be happy for those fearless leaders. Perhaps they know what a great job they have. They get to make policy that creates results they don't want only to be able to make more policy to fix the bad policy results they created earlier. There just always seems to be something to do in Washington. Especially since too few voters seem to understand the economic world.

Change & Media Bias Go Together?

Rasmussen Reports™:

"Just 17% of voters nationwide believe that most reporters try to offer unbiased coverage of election campaigns. A Rasmussen Reports national telephone survey found that four times as many—68%--believe most reporters try to help the candidate that they want to win.

The perception that reporters are advocates rather than observers is held by 82% of Republicans, 56% of Democrats, and 69% of voters not affiliated with either major party. The skepticism about reporters cuts across income, racial, gender, and age barriers."

What is a voter to do when he or she can't trust the media to provide unbiased reports? Well the voter can choose rational ignorance. Or, the voter can choose rational irrationality and simply believe what feels good. Especially if voters choose rational irrationality, I'm thinking a campaign of hope and change just might feel good to a lot of voters.

Adam Smith

HAPPY BIRTHDAY!!

McCain-Obama Townhalls

DRUDGE REPORTS that Senator McCain has asked Senator Obama to participate in townhall meetings before the Democrat convention:

I propose these town hall meetings be as free from the regimented trappings, rules and spectacle of formal debates as possible, and that we pledge to the American people we will not allow the idea to die on the negotiation table as our campaigns work out the details. I suggest we agree to participate in at least ten town halls once a week with the first on June 11 or 12 in New York City at Federal Hall until the week before the Democratic Convention begins at locations to be determined by our campaigns. Federal Hall is particularly fitting as it was the place where George Washington took the oath of office as our first President and the birthplace of American government hosting the first Congress, Supreme Court and Executive Branch offices. These town halls should be attended by an audience of between two to four hundred selected by an independent polling agency, could be sixty to ninety minutes in length, have very limited moderation by an independent local moderator, take blind questions from the audience selected by the moderator and allow for equally proportional time for answers by each of us. All of these are suggestions that can be finalized by our campaigns. What is important is that we commit to participate in these history making meetings to join in the higher level of discourse that Americans clearly would prefer.

It seems to me that such meetings might well offer a "higher level of discourse," at least when compared with the nature of the sound bit debates we are likely to get otherwise. But, why have such townhall meetings before the party conventions?

I wonder if this has anything to do with Senator McCain assuming that voters are rationally ignorant? I believe Senator Obama has a voting record as a Senator which makes him the most liberal member of the Senate since he has been in the Senate, and perhaps this voting record means Senator Obama will be the most liberal politician ever nominated by one of the major parties as a presidential candidate. Generally, the candidate for each party has to run in the primary campaign some distance from the median voter in the national election, and then after the nomination is gained each candidate has to find a way to move toward the center in the general election. Because most voters choose to be rationally ignorant, I suspect this process of moving either from the left or the right toward the center is usually not too difficult because there has often been some time between gaining sufficient votes in the primary and the actual nomination which opens the general election campaign. When September to November rolls around the rationally ignorant voters will probably have forgotton the speechs and policy positions taken by each candidate in the primaries. So, Senator Obama would, normally, have the next 2 months to choose how to reposition and recast himself as a moderate for the general election. If the Senators were to start holding townhall meetings next week, wouldn't there be a lot less opportunity to choose how you want to be redefined for the general election?

Oil Supply

ANTHONY EFFINGER WRITES ABOUT OIL in North Dakota:

John Bartelson, who smokes Marlboro Lights through fingers blackened with tractor grease, may look like an average wheat farmer. He isn't. He's one of North Dakota's new oil barons.

Every month, he gets a check for tens of thousands of dollars from a company in Houston called EOG Resources Inc., which drilled two oil wells on his land last year. He says the day his first royalty check arrived was one to remember.

``I smiled to beat hell, and I went to town and had a beer,'' Bartelson, 65, says.

His new wealth springs from the Bakken formation, a sprawling deposit of high-quality crude beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba. The Bakken may give the U.S. -- the world's biggest importer of oil -- a new domestic energy source at a time when demand from China and India is ratcheting up the global competition for supplies and propelling average U.S. gasoline prices to almost $4 a gallon.

And unlike the tar from Canada's oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It's light - -almost like gasoline -- and sweet, meaning it's low in sulfur.

Best of all, the Bakken could be huge. The U.S. Geological Survey's Leigh Price, a Denver geochemist who died of a heart attack in 2000, estimated that the Bakken might hold a whopping 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels.

So, this is a story of supply and demand. The high oil prices and the increased profits for oil production certainly offer incentives to find and produce more oil. I guess some have said that they believe annual production of oil worldwide has peaked, but stories like this seem to offer a much different picture.

This is a fun story to read, so read the whole piece, especially if you are unhappy about the prices you find at the pump these days. Here is the finish to the piece:

. . . with crude trading above $125 a barrel, it'll be a long time before the rigs leave again, and John Bartelson is likely to be a wealthy man before they do.

Earmarks: Corruption Continues

WALL STREET JOURNAL COMMENTARY:

"Remember those Congressional pledges of earmark reform? Democrats are hoping you don't, as they try to pull a fast one and evade President Bush's pledge to block these special-interest spending projects slipped into legislation without scrutiny.

The battle is over the $601 billion defense authorization bill, which the House passed last week, 384-23. Earmarks are supposed to be included in the text of legislation. Instead, the Members have 'airdropped,' in Beltway parlance, a huge number of them into the conference report that accompanies the bill. And, to ensure that the money is spent on these dark-of-night additions, the Members have included language insisting that federal agencies do so.

This is a blatant attempt to override Mr. Bush's executive order earlier this year on earmarks. That order took direct aim at 'airdropped' earmarks on grounds that they lack the force of law. If Members think their projects are defensible, then put them into actual legislation and vote on them. But because this can be politically embarrassing – think 'bridge to nowhere' – Members prefer to slip their pork into the conference reports that offer instructions on implementation. These reports are written by staff members, aren't debated or voted on by Members, and aren't signed by the President."

The corruption is clear, i.e., money is being spent by individual members of Congress and the entire Congress is participating in hiding these expenditures. Congress, not individual members of Congress, has the constitutional power to make appropriations. Whether the Democrat party or the Republican party controls Congress, and even after an election which emphasized the corruption of earmarks as well as promises to end the practice, the corruption continues. But, perhaps the continuing corruption is worse now, because this Congress seems to have made even greater efforts to hide the earmarks from public view.

Why make promises to reform but then make greater efforts to hide the practice of earmarks? Probably because members of Congress assume, as public choice theory tends to assume, that voters are rationally ignorant. It seems that members of Congress think they can spend tax money on friends, political benefactors, family, and even themselves because voters rationally choose to remain largely ignorant about the politicians they elect.

I'm afraid there is little that can be done unless there is a return to the conceptual understanding of government as a limited government that is constitutionally constrained by specifically enumerated powers.

Gasoline Demand

With the recent concerns about increased oil prices, I've had numerous conversations with students and others about the demand for gasoline. Many have asserted that people simply can't drive less even when the price at the pump increases. Of course, my response is that the demand for gasoline has a negative slope, just like every other demand curve. I also tend to add that the last time gasoline prices were as high in real economic terms as they are today, the decrease in quantity demand was an elastic reponse to higher prices over a relatively short period of time. These pictures, which are REPORTED IN THE NY TIMES, fit well with my expectations about the demand for gasoline.