Topic: Government and Politics

Is Someone Trying to Buy Your Vote with Low Gasoline Prices?

For the few weeks now, I’ve received an increasing number of calls from reporters and TV & radio producers to discuss the latest of a never-ending spate of conspiracy theories regarding “Big Oil.” This one has it that somebody — oil companies, the Saudis, and/or Goldman Sachs — is manipulating the gasoline market downward in order to reduce public anger over pump prices. Lower prices = less angry voters, and the less angry voters are, the less likely they are to throw Republicans out of office. Or so the theory goes.

I’ve been content to dismiss this stuff as not worth my time, but lo and behold, the Washington Post thinks the story so significant that it warrants a spot on the front of today’s Business section. 

To be fair, Post reporter Steven Mufson does a nice job gently deflating this nonsense, but the fact that these claims need to be addressed is depressing. You know a market-conspiracy theory is really and truly whacked when even Tyson Slocum over at Public Citizen isn’t buying it.

While Mufson’s piece is fine, an even sharper rejoinder was made the other day by Professor James Hamilton, a noted economist who engages in energy economics (among other things) over at the University of California at San Diego. While Hamilton concentrates most of his fire on the Goldman Sachs variation of the conspiracy, he makes a nice point about these sorts of claims in general. To whit, no evidence is ever provided. To believe things without evidence is to be the world’s all-purpose dupe. 

Unfortunately, this particular conspiracy theory will probably continue to gain traction because I suspect gasoline prices will continue to drop at least until the Thanksgiving holiday. That’s because (i) gasoline prices have historically behaved in exactly this fashion for reasons that are utterly unmysterious to energy watchers, and (ii) the drop in crude oil prices has not yet been fully reflected in the drop in gasoline prices (and if you want to know why that probably is, check this out). Accordingly, pump prices may well continue to decline even if oil prices stabilize at current levels.

That ought to really drive the Dems around the bend. Expect a spate of “Big Oil Robbed Us!” stories if the Democrats fail to seize the Congress in November. 

Extremism in Defense of Liberty

Michael Cannon, Mike Tanner, and other libertarian health care gurus may appreciate this.  I recently came across an intriguing quote by Founding Father Benjamin Rush, surgeon general of the Continental Army and signer of the Declaration of Independence.  So I did what everyone does these days and went to Wikipedia.  There I learned that:

Rush believed that Americans should enshrine the right to medical freedom in their Constitution, much as the right to freedom of religion is expressly guaranteed in that document.

Rush is reported to have argued that “Unless we put Medical Freedom into the Constitution, the time will come when medicine will organize into an undercover dictatorship … to restrict the art of healing to one class of men, and deny equal privilege to others, will be to constitute the Bastille of Medical Science. All such laws are un-American and despotic and have no place in a Republic … The Constitution of this Republic should make special privilege for Medical Freedom as well as Religious Freedom.”

(Of course, if you read a little further, you learn that some of his medical theories were not so hot). 

Rush was also a rabid antimilitarist who proposed in 1792 that two captions be painted “over the portals of the Department of War”: “An office for butchering the human species” and “A Widow and Orphan making office”–though that’s an idea that would probably be even less popular today.    

The Real Scandal of ‘Tariff Suspensions’

Two weeks ago (yes, I know, an eternity in blog time, but I’ll explain in a moment), the Washington Post published a gotcha front-page expose on a long-established if little noted congressional practice of suspending miscellaneous tariff duties. The article, headlined “A Quiet Break for Corporations” (September 20, 2006), supposedly uncovered yet another pork-barrel scandal. The real scandal of the story, however, is not that U.S.-based producers seek relief from damaging tariffs, but that those tariffs exist in the first place.

For years, Congress has voted regularly on miscellaneous tariff bills that suspend a hodgepodge of duties on obscure products that often are not even made by companies in the United States. In those cases, the tariffs don’t even perform the dubious duty of “protecting” domestic producers.  They only make it more expensive if not impossible for consumers and producers to import certain products.

The Post article emphasized the potential revenue lost to the government by suspension of the duties, while downplaying the costs to consumers and importing producers from the artificially higher prices imposed by the tariffs. Economics 101 teaches that with almost any tariff, the damage to the economy from higher prices and less efficient production will outweigh the duties collected by the government.

The story implied a scandal in the fact that some American companies would actually be hurt by suspension of tariffs on their foreign competition. But since when is it the duty of the government to protect certain producers against their competition? Should the same government that harasses U.S. companies with anti-trust laws be shielding other U.S. companies from the same competitive forces that anti-trust laws supposedly promote? If Americans can buy dog collars more cheaply from a foreign producer, the federal government should keep its nose out of the deal.

One example in the story involves the proposed suspension of duties on basketballs and volleyballs imported by the sporting-goods company Spalding. Again, the real scandal is why the government imposes any duties at all on such goods. The federal government should not be raising revenue with a special “basketball tax,” in the process making basketballs more expensive for American kids while hurting the sales of an American company.

Supposedly adding to the scandal is that fact that many of the “beneficiaries” of the suspended duties would be foreign-owned affiliates located in the United States, especially German and Swiss chemical companies. That fact does not make the special duties any less damaging to the U.S. economy. Foreign-owned affiliates in the United States employ nearly six million Americans (one out of eight manufacturing workers), pay domestic taxes, and serve American customers.

The story tried to clinch the scandal thesis by citing campaign donations and lobbying expenses by the companies seeking removal of the damaging tariffs. Again, the real scandal is not that these companies are trying to change laws that damage them, but that they need to seek specific relief in the first place.

Import duties invite corruption by giving the government power over a range of otherwise innocent and private transactions. A policy of free trade, without arbitrary duties aimed at punishing foreign producers and protecting domestic ones, would eliminate any need to lobby the government over the imposition or suspension of duties. The latest Economic Freedom of the World  report shows that nations with relatively free and open economies are generally less corrupt than those with closed and government-dominated economies. (Check out the chart on page 26.)

By repealing targeted tariffs that damage our economy and that should never have been imposed in the first place, the proposed miscellaneous tariff bill would make our system a bit less corrupt, not more so.

P.S. So why am I blogging about all this two weeks after the fact? I did not want to jeopardize the chances of the Washington Post actually publishing an edited version of this critique in its letters to the editor section. My patience was rewarded this morning with publication of an edited version of my letter.

Things to Do in Washington When You’re Dead Weight

As public choice theory tells us, bureaucrats tend to act in their own self interest, even though that often comes at the expense of taxpayers. If you’re not yet sold on public choice theory, consider one of the topics at the annual conference of the Senior Executives Association.

Fearful of the possibility of impending budget cuts, this recent meeting of high-ranking federal employees featured a session on “Survival Skills for the Coming Budget Crunch.”

This session could have been an opportunity to instruct senior managers on ways they could reduce or eliminate unnecessary expenditures, pare down the size of their staff, and shed duplicative operations.

Or it could be a lesson on gaming the system and saving one’s own hide.

Here’s how the Federal Times described it:

Managers should consider declaring a crisis in their programs, said Andy Uscher, SEA’s corporate relations director. They should develop relationships with budget examiners and build political support.

If possible, Uscher said, they should connect programs to national security or the president’s management agenda.

They can also argue that cuts have already occurred or assert that reductions would actually increase costs, he said.

They should consider using contractors or consultants instead of new employees, Uscher added.

“Contracting is just not tracked as much as people are,” he said.

So if you’re a senior official in the federal government facing the prospect of a cut to your budget, you should cozy up to politicos, intentionally overstate the importance of your agency, and lie about the implications of budget cuts?

It’s no wonder that the dismal status quo reigns supreme in Washington.

GOP: Online Gambling Poses Threat to U.S. Port Security

Late Friday night, the U.S. Senate passed a ban on Internet gambling.  The ban now awaits President Bush’s signature.

Sen. Bill Frist attached the ban to the port security bill at the last minute on Friday, conveniently allowing the ban to go forward without any debate.  That also means any senator who rightly believes that online poker is none of the government’s business would also have to vote against a national security bill to vote against the ban – making that senator a ripe target for charges of being soft on terrorism.

The major gaming sites – that is, the legitimate companies regulated by British law and traded on the London Stock Exchange – announced over the weekend that they’ll cease offering service to U.S. customers the moment President Bush signs the bill.  What does that mean?  Well, it means the shady, fly-by-night sites that aren’t regulated or publicly traded will now thrive with U.S. customers.  These gray- and black-market sites are more prone to fraud, more likely to be involved in organized crime, and don’t include the child-protection measures the major sites have implemented.

For all the talk from Sen. Frist, Sen. Kyl, and Rep. Goodlatte about the dangers of this “unregulated” industry, the bill they’ve just passed will actually put the well-regulated gambling sites out of reach of U.S. customers.  The end result?  Online poker and other gaming sites will soon be even less regulated, more likely to attract children, and more likely to defraud U.S. consumers than ever before.  Meanwhile, one of the most addictive forms of gambling – state lotteries – will soon make an en masse move online, thanks to an exemption in the bill that effectively creates an online monopoly for them.

In short, in an intrusive, big government effort to protect Americans from themselves, Congress has passed a futile, hypocritical, counter-productive, protectionist piece of legislation that will make it more difficult for millions of Americans to engage in an activity most participate in responsibly and moderately.  For those people, the bill will probably work.  But it’ll do little to prevent problem gambling, children’s access to gaming sites, or online fraud.

One can’t help but think that for Frist, none of that matters so long as the bill helps Republicans keep control of the Senate come November.

A Disservice to the Poor

There’s much ado at the Legal Services Corporation (LSC), the federally funded organization intended to provide legal assistance to the poor.

Last month, the AP catalogued a pattern of excessive spending at the LSC. Then, as I indicated in my National Review Online article, the LSC Board contemplated firing the employee who had unearthed much of the extravagance. This employee, LSC Inspector General Kirt West, has also found other questionable practices at the LSC and begun an investigation of the Board itself. 

Earlier this week, at a congressional hearing, the chairman of the LSC Board denied that board members had considered dismissing West. This was shocking given strong evidence to the contrary — namely, meeting transcripts from January in which the board’s vice-chair said of West, “[H]e’s got to shape up or we will ship him out.” At the same meeting, another board member said flatly, “He doesn’t belong as the Inspector General of this organization.” 

This is yet another sorry chapter in the history of the LSC. For over 20 years, this organization has continued to misuse taxpayer dollars to advocate political causes. Is it time to pick up the mantle of Ronald Reagan and finally abolish the LSC?

America’s “Help Wanted” Signs

While the U.S. House and Senate compete with each other to see who can authorize the longest wall along our border with Mexico, evidence continues to grow that the U.S. economy could use more foreign-born workers. Here are three examples from just the past few days:

The Washington Post reported this morning, in an article headlined, “Visas for skilled workers still frozen,” that the number of H1-B visas available each year remains capped at a number far below the ongoing needs of U.S. employers. As the article explains: “[M]any of the country’s largest technology companies and most prestigious research laboratories have said they are unable to find enough U.S.-born scientists and similar workers to fill their openings. … But only 65,000 H-1B visas are issued each year, and demand has been so high recently that all of them are taken instantaneously.”

Earlier in the week, the president of the Federal Reserve Bank of Dallas, Richard Fisher, noted in a speech in Monterrey, Mexico, that the U.S. economy has reached full employment and is beginning to feel the pinch of labor shortages in certain sectors. As Fisher told his audience:

I am hearing more and more reports about the difficulty of finding labor to work our oil fields or run our chemical plants. Bankers complain of a paucity of bank clerks and tellers. Truckers are experiencing a shortage of drivers. In Houston, we are hearing complaints about the difficulty of finding cashiers for retail establishments. A major hotelier told me last week that there is a shortage of housekeeping staff. … companies are now voicing the kinds of complaints about labor shortages most often heard in a full employment economy.

Adding to the evidence, a major report released Wednesday on the need to modernize America’s agricultural policies included a recommendation that Congress enact comprehensive immigration reform. The report, by a task force appointed by the Chicago Council on Global Affairs, noted, “Immigrants today play a vital role in nearly every aspect of our agricultural and food processing system, often taking jobs that are low-paying or shunned by native-born workers.” The report cited Hmong poultry producers in the Ozarks and Hispanic workers in the meat processing plants in the Midwest, calling such workers “vital to the [agricultural] sector’s competitiveness.”

As members of Congress seek to reform U.S. immigration law, they should keep in mind that our nation’s economy is made stronger and more dynamic when peaceful, hard-working people are allowed to come here legally to fill jobs that not enough Americans are willing or able to fill.