Peder D4

Discussion of politics and other odious things

Wednesday, July 08, 2009

Owning the Issues

Near the end of this post from Eric Black (whom I greatly respect) comes this comment:
Apparently the NRSC missed the memo about the new bipartisanship and has decided that share of responsibility for the nation's problems may have carried over from previous Congresses and administrations has now expired.
The recession was in full swing when the Obama administration came into office so it doesn't make sense to lay all of the blame at their feet. But is it reasonable to suggest that they've had a negative impact in the last five months? Here are three reasons why I think it is:

1) Uncertainty. We've had something of a command and control economy since the change over. Some companies are told how they should run themselves and what contracts they should honor. Others are given huge sums of money and virtually allowed to escape past bad decisions. This makes it very hard for anyone to plan for the future. When corporations feel this way they freeze like a deer in the headlight. Hiring freezes all around and the worsening employment numbers show that.
2) Wild spending. The amount of debt that's been run up in just half a year is truly breathtaking. Set aside whether the spending was justified or well thought out (and I don't think it was either) the sheer amount of debt creates strong doubts about future inflation and the ability of the country to borrow money. This extends the time period of uncertainty. Now a company has to worry further than a year or two and wonder how bad the economic environment will be five or ten years from now. Again they freeze and try not to hire or expand.
3) Cap and trade. At it's essence this is an attempt to artificially raise the price on energy in an attempt to push people to use less. Energy is an infrastructural item and rising prices there effect virtually everything else. So adding to short and long term uncertainty we now raise prices across the board. What do you think companies do then?

All three of these things can be laid at the feet of the Dems since Jan 20, 2009.

The White House told us that the stimulus bill would start dropping unemployment by now. Instead it's grown higher than they said it would if the damn thing wasn't passed. Biden said that they 'misread' the economy. That's possible but isn't it more likely that they just prescribed the wrong medicine?


Blogger James Colby said...

There is some truth there, as you might imagine I have some nits to pick, but I would rather talk about cap and trade.

Talk about a conservative plan if there ever was one. Why are conservatives so up in arms about being asked to take personal responsibilty for their own consumption?

2:38 AM  
Blogger -Peder said...

The biggest problem with cap and trade is that it doesn't really work. Europe has been using it for the last decade or so without dropping their CO2. The other problem is that it drops the standard of living by raising prices on virtually everything. Throw in the huge opportunities for corruption and, well, it's just not very attractive.

4:51 AM  
Blogger James Colby said...

You bring up a good point, Europe's CO2 levels haven't dropped, but they haven't gone up either, while most industrialized places have. It has it's advantages though, and they have made andvances over there in renewable energy that should lead to lower CO2 levels in the future. I think it's working.

Whenever you build something, corruption will find a way in. Build anyway.

10:42 AM  
Blogger -Peder said...

James, the US did a better job of reducing CO2 during the Bush years than the EU did under Kyoto. The very complexity of their Cap and Trade has made it too easy to shift things around and avoid actual reduction. In other words, it hasn't worked.
Complex systems are easier to game than simple ones. Compare our very complex tax system with a simple flat tax. Cheating the current system is somewhat common and a whole system has sprung up to help people legally work the angles to reduce their tax burden. A flat tax that simply takes a percentage cut would be much harder to work around. (The pro and con arguments for a flat tax are, of course, deeper than that.) A simple carbon tax would be a better approach to actually reduce carbon in the air.

5:07 AM  
Blogger James Colby said...

It's refreshing to see a righty endorse a tax.

I used to think a flat tax was the best way to go, I no longer do, but it's better than our current system and I could get behind it.

As far as our carbon emmisions go, let's not downplay the effect that reduced air traffic after 9/11 and industries leaving the US had on reducing carbon emmissions and I would not say those are positive reasons.

As far as Europe is concerned, their cap and trade certainly needs improvement, but it's also a long term plan. In football, you don't abandon the run in the first quarter when the score is tied.

I say tied, not just because their levels are even, but because the money it has brought in is developing some great technologies for alternative energies that when they come to fruition can be a real breakthough for reducing carbon emmisions in the long run.

8:52 AM  

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