Be A Hardcore Liberal or Change Politics: Obama's Challenge

All the political pundits have switched from trying to predict the race to defining the challenges facing Barack Obama. Most of them are focusing on the difficulties and problems of the country (and the world), and not on the leadership qualities of Obama. But the difficult situation was staring down whoever won the election, and it is the leadership qualities of the President - not the details of the situation - that will determine the outcome.

Obama's initial leadership dilemma will not be satisfying the sore losers on the right. His challenge involves the differences in the two core factions that elected him. The fundamental liberals expect him to reverse eight years of conservative rule (if you call record spending and deficits conservative) and enact a legion of standard left-wing policies and regulations that they believe will fix the free market and the problems of the lower classes. Meanwhile, the younger hopefuls expect him to usher in a new era of changing the way politics is done. He cannot do both.

We have to wait over two months to see which direction Obama will lean, although we will get a clue by the kinds of people he appoints to surround and advise him. Hopefully he will select some who are well-grounded in business and economic principles - both in theory and experience, since Obama has virtually no experience administering a corporation concerned with inflows and outflows of money - whether a business or the government. (His presidential campaign, which was overflowing with so many donations that he reveled in half-hour blocks of advertising, doesn't count. The organization he is inheriting is a little bit more starved for cash.)

My concern is that he will be encouraged to push for many standard Democratic policies that end up being counterproductive to their own goals. I've been skimming through his "Blueprint for Change," which contains promises such as enforcing equal pay of genders, since for every $1.00 a man makes, a woman only makes $.77.

Thomas Sowell's Basic Economics reminds us that the average person's salary rises significantly over the years as they gain more experience and productivity that makes them more valuable to a company, and that the average woman leaves the workforce for some period or periods of time to bear children, thus giving those women less work experience as well as making it harder for them to keep up in industries that are fast-changing (which, requiring more work and learning, typically pay higher). Sowell claims that when you adjust for the right factors and compare men and women of equal work experience, the pay difference disappears. This makes sense because it is disadvantageous for a company to discriminate against women who are just as productive as men when a competitive company will gladly pay a woman the same amount - or more if she is more productive and more valuable to the company.

So if the government forces an employer to pay the same wages for some high-skilled task to a man who has never left the workforce or a woman who has taken some time off to bear and raise children and thus has less experience and is less efficient, which person would the employer rather hire? He might have hired the woman and paid her the same amount as a different man with the same amount of lower experience and efficiency, but if he has to pay her as much as a man with more experience and efficiency, he is going to be encouraged to hire the man. It will actually be harder for some women to get a job if employers have to pay them more than their work is worth, and make it harder for them to gain the missing experience that makes them as valuable as some men. Thus "fair wage laws" that fail to take into account factors such as childbearing end up hurting the job opportunities of women, not helping them.

There are similar problems with other well-meaning Democratic policies, and hopefully these problems will not be realized to the full extent that economic theory suggests. The best scenario is that Obama saves the planet. The worst is that he fails and we come to think that his election wasn't something groundbreaking, but that he was thrust into this position because it would be groundbreaking - before he was truly ready. That is my concern, and I'm hoping history proves me wrong.

Michelle Obama Wants To Steal Your Pie

And take down basic principles of economics with it.

Today I saw an old quote from April where Michelle Obama spoke about accomplishing some of the necessary things for the poor in America. "The truth is someone is going to have to give up a piece of the pie so someone else can have more."

Nevermind the fact that the Obamas don't practice what they preach - giving 1% of their income to charity from 2000 to 2004 and nudging to 4.7 and 6.1 in 2005 and 2006. What concerns me is that Mrs. Obama's talk about forcing a redistribution of the pie betrays an ignorance of some simple economic principles about wealth and poverty - and the more her kinds of ideas are allowed to flourish, the harder it will be for the poor to rise out of poverty.

When we talk about who has more money than someone else - who has a bigger piece of the pie - it's important to clear up misconceptions about the "pie."

First, it's important not to forget that the pie is always animated, and most people do not stay in the same pie share their entire lives. In Thomas Sowell's Basic Economics, he points out that:

Three-quarters of those Americans who were in the bottom 20 percent in income in 1975 were also in the top 40 percent at some point over the next 16 years. This is not surprising. After 16 years, people usually have had 16 years more experience... It would be surprising if they were not able to earn more money as a result.

...When a large majority of those in the bottom 20 percent in income in 1975 were also in the top 40 percent at some point by 1991, you cannot determine the degree of income inequality between people by looking at inequality between income brackets at a given time.

Second, the pie in a (mostly) free market is not of a fixed size. As resources are allowed to flow to their most productive uses, the overall standard living of the economy as a whole improves - and the pie gets bigger. The bottom 10% of wage earners in America have a much higher standard of living than the bottom 10% did fifty years ago, and also much better than 100% of wage earners in many countries where free markets have not been allowed to raise the standard of living. Even if your share of the pie doesn't change, your share is bigger when the pie gets bigger.

Since both the size of the pie and the relative shares within the pie change so much over time, it's completely meaningless to take a single frame snapshot of the pie and say that some people with more at one point have to give up some of their share to those with less.

If those who have worked hard to rise through the ranks of income brackets - including the Obamas themselves - are not allowed to keep the larger share of the pie that they have earned, we will take away the entrepreneurial incentives that create the innovation that makes the pie grow and increases the standard of living for all.

What's worse than Mrs. Obama's ignorance of basic economic principles is Mr. Obama's implementation of them. His tax plan, while in many ways not as frightening as Mr. McCain claims, basically takes more money from the rich and gives it to the poor who pay no taxes. Kimberley Strassel explains this magic:

Mr. Obama will give 95% of American working families a tax cut, even though 40% of Americans today don't pay income taxes! How can our star enact such mathemagic? How can he "cut" zero? Abracadabra! It's called a "refundable tax credit." It involves the federal government taking money from those who do pay taxes, and writing checks to those who don't.

While the plan is good-intentioned, like many misguided government policies, this kind of plan prevents the free market from pushing resources to their most productive uses and ends up slowing the overall improvement of the economy. As a result, some of our poorest people may temporarily end up with a little more cash - but a large portion of them will rise through the income brackets over time anyway, and the ones trapped in poverty will have fewer opportunities to rise above and cease depending on that little cash handout than they would have had otherwise.

Lyrics For Thought

"Instead of A Show" by Jon Foreman (Listen at myspace.com/jonforeman)

I hate all your show and pretense
the hypocrisy of your praise
the hypocrisy of your festivals
I hate all your show

Away with your noisy worship
Away with your noisy hymns
I stop up my ears when your
singing ‘em
I hate all your show

Instead let there be a flood
of justice
An endless procession of righteous
living, living
Instead let there be a flood
of justice
Instead of a show

your eyes are closed when you’re praying
you sing right along with the band
you shine up your shoes for services
but there’s blood on your hands

you turned your back on the homeless
and the ones that don’t fit in your plans
quit playing religion games
there’s blood on your hands

Instead let there be a flood
of justice
An endless procession of righteous
living, living
Instead let there be a flood
of justice
Instead of a show

Ah! let’s argue this out
if your sins are blood red
let’s argue this out
you’ll be white as the clouds
let’s argue this out
quit fooling around

give love to the ones who can’t love at all
give hope to the ones who got no hope at all
stand up for the ones who can’t stand up at all
instead of a show
I hate all your show

Act Gives Frightening Powers to Paulson

http://www.speaker.gov/pdf/AYO08C04_xml515pm.pdf

I've read some stuff about (and some of the actual text of) the "Emergency Economic Stabilization Act of 2008" that the House is voting on today and it gives some frightening powers to the Secretary of the Treasury. I e-mailed Todd Akin and told him to vote NO.

If it passes, the House votes Wednesday.

I also learned today that the short-sell ban (which every opinion I read about it called it a bad idea) ends Thursday night. So expect another stock market drop on Friday.

Video Blames Dems For Crisis, Vindicates GOP

Here's an interesting video circling the web (to the tune of 600,000+ views in less than 4 days). The text moves fast to stay in the YouTube 10-minute time limit, it looks like it was done in Windows Movie Maker, and it seeks to lay the blame squarely on one side, but there's no denying the powerful facts included.

In summary, it claims that Clinton's adjustments to the Community Reinvestment Act in 1995 forced banks to make more loans to people with bad credit, and that it was only after this action that housing prices rocketed past overall inflation. It further claims that Bush and McCain tried unsuccessfully to stop these actions and that Democrats resisted such moves because they wanted to keep housing "affordable" and because they were getting the most money from Freddie and Fannie. It reveals that Obama worked for a law firm that attacked banks that weren't making as many "affordable" (i.e. bad) loans as the government mandated, and claims that it is total hypocrisy for Obama to blame Bush policies when it was Democratic actions that caused and propped up the housing bubble.

Deas Vail - White Lights EP

(Originally posted at AbsolutePunk.net)
Deas Vail was a pleasant surprise last year with their debut All the Houses Look the Same on the new Brave New World Records. The smart, piano-driven melodies, melded by Mark Lee Townsend's production quality and topped with Wes Blaylock's soaring vocals, have been creating remarkable impressions everywhere. They've wasted no time working on the next chapter in their growing history, and with White Lights they've given us a five-song EP to hold us over until the new full-length releases early next year.

The familiar Deas Vail elements are present here, once again treating us to the cohesion of Laura Blaylock's flowing keys, Kelsey's deliberate rhythms, Justin's nimble bass, and Andy's undulating guitar work. Their strategy of pulling things back for the choruses threatens to feel overused, but it's not regrettable. Fans looking for progression will note the added influence of strings, which throughout the EP sounds not unlike a string quartet coming out of the background to add accentuating flavor. (I confess that the coda of "Balance" reminded me of Relient K's "Failure to Excommunicate".) Background vocals are also given more of a role, complementing Wes at several strong points.

For the most part, the lyrics contain the typical Deas Vail abstractness, although there may be some growth here as well. "White Lights" is simultaneously Wes's most complete metaphor and most straightforward tale to date. "From Priests to Thieves" is a haunting admission of loss: "We're not coming back / It's all our fault / We loved ourselves and lost it all / What have we done / What have we become?" Wes carries it, but it's Laura's softly wrenching harmonies that sell it.

Deftly creating an engaging musical landscape, listeners will wade through smart rhythms and subtle time signatures in an atmosphere of flawless production that brings out the talents of each band member without ever sounding busy. The keys and vocals of the debut reminded many of Mae or Mew; the soothing guitars here are drawing more comparisons to Edison Glass. Complemented by the natural tone of a few strings, this is the perfect EP to experience over and over on a lazy swing as you watch summer turn into fall.

Soothing but not dull, active but not puppy, beautiful but not proud - Deas Vail has captured me again. There's nothing quintessential here that will rival fan favorites such as "Shoreline" or "Rewind," but it's another very strong and satisfying release, and since you can order it for $5 with free shipping, you have no excuse.

Some Thoughts On The First Debate

> Both candidates did a good job responding to each other's jabs by providing fuller context (although Obama conveniently declined to respond to McCain's comment that he's requested $900 million in earmarks in the Senate. Yeah, that's change. Although I would like to know how much McCain's requested.)

> I dislike McCain's continued Doomsday fearmongering that if we don't pass a bailout plan soon the country's gonna collapse. I'm much more concerned about the long-term incentives and effects of whatever may come out of this short-term politicized bill.

> I really like McCain's drive to dissect federal agencies and cut wasteful spending, especially in the bloated defense area, and his continued opposition to ethanol subsidies, which inflexibly prop up one type of energy and prevent the allocation of investing and resources to their most efficient uses.

> I dislike Obama's railing against the ideology of free markets and lack of regulation. It's kind of ironic to blame these ideas when it was some of the obstacles to the free market system (such as letting the government provide loans cheaper to people who really couldn't afford them) that were some of the very causes of our current crisis. It's like watching a ship sink because somebody didn't plug all of the holes and then blaming the policy of hole-plugging as ineffective.

> I was really glad that McCain mentioned that we have the second-highest corporate tax rates in the world, something that is a huge incentive for businesses to move to other countries instead of supporting the American economy. It was also important that Obama mentioned that tax loopholes make it one of the lowest rates. But loopholes do not help businesses equally, and Obama's plan to close these loopholes without lowering the tax rate will only provide an even greater incentive for businesses to leave America, making things worse, not better.

> I really dislike McCain's "League of Democracies." I'd hoped he'd abandoned that idea in the primaries, but I guess not. Our dealings with UN and NATO cause enough headaches - let's collect more world power in a global organization!

> I think (and this is probably the least rigid of my opinions, because it is only based on my unresearched reasoning) I agree with Obama's non-fear of talking to other world leaders without "preconditions." McCain's repeated claim that sitting across the table from a totalitarian and/or a liar somehow inherently legitimizes their claims or actions doesn't quite make sense to me.

Why Gas Prices Jumped: Economics Of The Ike Spike

As I write this something like 95% of our refineries along the Texas gulf area are shut down, or roughly 20% of our nation's capacity. That means prices have to rise, and it's not anybody's greedy fault. Here's why.

First, the demand at the current price will not change at all (in fact, it may even have risen as hundreds of thousands of people rushed to evacuate) even though the supply is suddenly cut short by 20%. Prices have to rise to reduce demand to the level of the supply, and yes, even something as "inelastic" as gas demand can be influenced by raising the price. Just look at how much demand dropped earlier this summer when oil (and subsequently, gas) hit record levels - the number of miles driven by Americans actually dropped significantly, something that almost never happens.

When prices suddenly rise to factor in shorter supply, the supply that is left will go farther. Some people who would have filled up under the old price will only get enough gallons to last a few days under the new price. This lets the supply of gas last for more people, whereas under the old price gas would have run out sooner and some people would have no way of getting much-needed gas, even if they had enough money to buy gas at either price.

Secondly, the transportation of oil and gas has to be adjusted, and the costs of this extra transportation make the gas cost more. If any still-running refineries have extra capacity, they will take on some of the oil from the shut-down refineries, and it costs money to transport them. More importantly, some of the remaining supply of gas has to be transported farther to get to all the stations that normally rely on the gas refined from the shut-down refineries. If prices aren't raised, they won't be able to afford to transport the gas these extra miles, and the stations will not be able to get more supplies of gas.

President Bush has promised that they will be on the look-out for "price-gouging," but they're unlikely to find any. The reason prices temporarily rise is to ensure that more people who need gas will be able to get it. There's no point in forcing prices down for something if you can't get it anywhere.

I Still Don't Like McCain, But I'm Loving His VP Choice...

So get this. She runs for governor of Alaska. The Republicans don't like her cuz she's been ratting on the corrupt ones. She wins the primaries anyway and defeats the Democrat who outspends her. So she starts ratting on corrupt Alaskan Republicans in Washington. She fixes the budget, kills the "bridge to nowhere," shelves 300 pork-barrel projects, and says Alaska needs to be self-sufficient instead of relying on federal money. She replaces a whole board committee that wasn't doing their job right.

Romney wouldn't have excited me. I read up on Pawlenty when he was getting buzz and thougt he was ok. But an initial read up on the no-nonsense integrity of Palin has me more excited about anything political I've been in awhile. She hasn't even been governor for two years, but it's more of an executive record than McCain, Obama, and Biden combined, and it's an impressive one two.

You want a Washington outsider, Democrats? It doesn't get any farther than Alaska.

Russia vs. Georgia: Round Two

As we resume the scene, Russia continues its full-scale launch, pouring columns of tanks into Georgia, staging air raids, and lining up ships on the Black Sea. They claim they're not after civilians, just retaliating for Georgia's advances in South Ossetia, but bombs destroy some apartments in the city of Gori (which is in regular Georgia - not the questionable province - or, as the journalists say, "Georgia proper").

The UN and other powerless busybodies keep crying different versions of "Stop that!" to the deaf ears of Russia. Cheney says their response can't go unanswered, but what that means is unclear.

Georgia pulls their 2,000 troops from Iraq to help out a more urgent front. For awhile both sides claim to control the South Ossetian capital, but overpowered and gunned down, Georgia withdraws from the province and calls for a cease-fire on the same deaf ears.

Now that South Ossetia is back in its own hands (or now is it Russia's?), the fight rages for another province called Abkhazia that also wants to fully break from Georgia. Russia continues to claim that they don't have plans to invade "Georgia proper," - they're just helping out these poor independent provinces that Georgia wants to take back.

But somebody lied. Forget the provinces - Russia is now delving deep into the heart of Georgia - bombing infrastructure, capturing government buildings, and cutting off a crucial highway. There was a claim that they're just punishing Georgia for its aggression, but Russia's current aggression doesn't look like the noble motives of a protector.

Russia's definitely serving its own interests here - "protecting" the breakaway provinces just happens to play into their hand. Just what those interests are is still unknown - I haven't found any reports of what Russia says will make them stop; all they're doing so far is shouting justifications for what they're doing.

Will the breakaway provinces be truly independent or will Russia conveniently take them back under the fold of the ol' USSR? Does it want to recapture all of Georgia? Or is it just invading the whole country to mete out the emerging strains of democracy - and pro-western ambitions - that threaten Russia's backyard? And how long will the US and UN be content to just scream "stop it, stop it"? And what does all this have to do with the oil pipeline that runs through Georgia.....

Stay tuned.