Energy Conservation

Be a patriot and check your tires daily.

Obama Believes Rational Ignorance

ANN ALTHOUSE considers Senator Obama's inconsistency:

"Does he think we are idiots?"

Just another illustration of a politician assuming voters are rationally ignorant, eh?

On Obama's Sense Of Patriotism

Senator Obama's speech on patriotism includes:

As I got older, that gut instinct - that America is the greatest country on earth - would survive my growing awareness of our nation's imperfections: it's ongoing racial strife; the perversion of our political system laid bare during the Watergate hearings; the wrenching poverty of the Mississippi Delta and the hills of Appalachia. Not only because, in my mind, the joys of American life and culture, its vitality, its variety and its freedom, always outweighed its imperfections, but because I learned that what makes America great has never been its perfection but the belief that it can be made better. I came to understand that our revolution was waged for the sake of that belief - that we could be governed by laws, not men; that we could be equal in the eyes of those laws; that we could be free to say what we want and assemble with whomever we want and worship as we please; that we could have the right to pursue our individual dreams but the obligation to help our fellow citizens pursue theirs.

Unfortunately, the Senator's view seems not to include economic liberty in the things he values. I suspect the men and women of our founding period were much more comfortable believing with John Locke that the endowment of individual liberty included the ownership of the fruit of our labor than they would be believing with Senator Obama today that there is an obligation to others that should be enforced through a government.

The Senator finds patriotism in holding a commitment to ideals:

That is why, for me, patriotism is always more than just loyalty to a place on a map or a certain kind of people. Instead, it is also loyalty to America's ideals - ideals for which anyone can sacrifice, or defend, or give their last full measure of devotion. I believe it is this loyalty that allows a country teeming with different races and ethnicities, religions and customs, to come together as one. It is the application of these ideals that separate us from Zimbabwe, where the opposition party and their supporters have been silently hunted, tortured or killed; or Burma, where tens of thousands continue to struggle for basic food and shelter in the wake of a monstrous storm because a military junta fears opening up the country to outsiders; or Iraq, where despite the heroic efforts of our military, and the courage of many ordinary Iraqis, even limited cooperation between various factions remains far too elusive.

I believe those who attack America's flaws without acknowledging the singular greatness of our ideals, and their proven capacity to inspire a better world, do not truly understand America. [emphasis mine]

Given the Senator's interest in cooperation and understanding, perhaps it is also unfortunate that the Senator ignores one of the most important ideals for the success of our system of political economy. Specifically, his view of the ideals important to this country seem to neglect (perhaps avoid) the obvious idea of a system of free markets.

Perhaps if the Senator becomes president I will have my own opportunity to be a patriot:

We may hope that our leaders and our government stand up for our ideals, and there are many times in our history when that's occurred. But when our laws, our leaders or our government are out of alignment with our ideals, then the dissent of ordinary Americans may prove to be one of the truest expression of patriotism. . . . Recognizing a wrong being committed in this country's name; insisting that we deliver on the promise of our Constitution - these are the acts of patriots, men and women who are defending that which is best in America. . . .

I would like to insist that our elected leaders pay much more attention to our Constitution. Our Constitution is supposed to be a constitution for a limited government, one which has only the powers specifically enumerated in the constitution itself. If those politicians in Congress and in the office of the President defended the Constitution, then government would be much, much smaller and markets would be much, much more free. If the Senator's speech on patriotism included an emphasis on economic liberty, an emphasis perhaps on freeing our markets, then I would think the Senator was indeed a patriot to the ideals on which our country was founded. Because the ideal of economic liberty seems no where to be found in the Senator's speech on patriotism, if he is elected I suspect I will frequently get my chance to be a patriot by pointing out that he and his political colleagues are not delivering on the promise of our Constitution.

Senator Obama also speaks about what we should teach our children:

As we begin our fourth century as a nation, it is easy to take the extraordinary nature of America for granted. But it is our responsibility as Americans and as parents to instill that history in our children, both at home and at school. The loss of quality civic education from so many of our classrooms has left too many young Americans without the most basic knowledge of who our forefathers are, or what they did, or the significance of the founding documents that bear their names. Too many children are ignorant of the sheer effort, the risks and sacrifices made by previous generations, to ensure that this country survived war and depression; through the great struggles for civil, and social, and worker's rights.

It is up to us, then, to teach them. It is up to us to teach them that even though we have faced great challenges and made our share of mistakes, we have always been able to come together and make this nation stronger, and more prosperous, and more united, and more just. It is up to us to teach them that America has been a force for good in the world, and that other nations and other people have looked to us as the last, best hope of Earth. It is up to us to teach them that it is good to give back to one's community; that it is honorable to serve in the military; that it is vital to participate in our democracy and make our voices heard.

And it is up to us to teach our children a lesson that those of us in politics too often forget: that patriotism involves not only defending this country against external threat, but also working constantly to make America a better place for future generations.

Once again it seems to me the Senator's view of this country misses one of the most important reasons for success. Where in his list of things to teach is the value of economic liberty, free markets, and capitalism?

Good Taxes or Bad Taxes?

One of the economic ideas about public policy that comes from the concept of a corrective tax for a negative externality is that in choosing tax bases we should tax the "bad things" (e.g. pollution) while leaving the "good things" (e.g. income, savings, investment) untaxed. GREG LOPEZ has a different view:

My rejection in a nutshell: The knowledge of which things are good or bad, in which circumstances of time and place, and to what dollar amount, are beyond the reach of anyone including policymakers; but even absent the knowledge problem, the incentive problem ensures that the enacted policies would be diverted by compromise from what little we do happen to know of the public interest.

In short, Hayek and Buchanan trump Pigou.

[ Hat Tip: Peter Boettke ]

Oil Prices 101

MARTIN FELDSTEIN explains oil prices:

The relationship between future and current oil prices implies that an expected change in the future price of oil will have an immediate impact on the current price of oil.

Thus, when oil producers concluded that the demand for oil in China and some other countries will grow more rapidly in future years than they had previously expected, they inferred that the future price of oil would be higher than they had previously believed. They responded by reducing supply and raising the spot price enough to bring the expected price rise back to its initial rate.

Hence, with no change in the current demand for oil, the expectation of a greater future demand and a higher future price caused the current price to rise. Similarly, credible reports about the future decline of oil production in Russia and in Mexico implied a higher future global price of oil – and that also required an increase in the current oil price to maintain the initial expected rate of increase in the price of oil.

Once this relation is understood, it is easy to see how news stories, rumors and industry reports can cause substantial fluctuations in current prices – all without anything happening to current demand or supply.

Perhaps one interesting implication of this involves what we should make of all the talk about speculators. Someone who owns oil in the ground may be one of the so-called speculators. Such an oil owner who expects the future price of oil to be higher sees an incentive to keep barrels of oil in the ground today instead of bringing them up for sale today.

But Feldstein notes there can be good news to be found in understanding all of this about oil prices:

Now here is the good news. Any policy that causes the expected future oil price to fall can cause the current price to fall, or to rise less than it would otherwise do. In other words, it is possible to bring down today's price of oil with policies that will have their physical impact on oil demand or supply only in the future.

There is also much talk today that Congress should get busy and end the moratorium on new off shore oil development (among other suggestions about new oil supplies). A frequently heard response is that such a policy change would have no effect because it would necessarily be many years before any oil from such new projects would reach the market. But such a policy change would imply a lower future price for oil and this would mean a lower oil price today.

So, if you would like lower oil and gasoline prices today, then take note that the politicians who are calling for policies that would increase U.S. oil supplies in the future are supporting your interests, and the politicians who want to continue to restrict new U.S. oil production are not.