US Economy

[Kirkhill]

Once the rich have bought their first two dozen cars they get tired and start buying autodealers.  A few autodealers to their credit and they want to buy GM (well maybe not GM,  but you should get the point).

 

[SeaKingTacco]

The rich also invest in things.  This provides capital for new business ventures or expansion, which, inevitably require workers to be hired.

QED.

 

[Brad Sallows]

The "rich spend" and "rich do not spend" schools of analysis are both wrong.  The key is investment of capital.  A consideration of what people consume should make it abundantly clear that what comes first is innovation and production (ie. supply side).  Policies which retard the flow and investment of capital, and in particular policies which motivate capital owners to park capital in save havens (eg. tax-free or tax-deferred schemes) are counterproductive if the stated aim is "to create jobs".

There is enough capital available, and tax rates are high enough if economic activity resumes at 2007 levels.  The US just needs policies more favourable to investment and with fewer unknown future costs to be weighed against current known (calculable) margins of profit.

 

[Edward Campbell]

I'm not sure that the US political classes are ready, yet, for "policies more favourable to investment and with fewer unknown future costs to be weighed against current known (calculable) margins of profit." Both sides of the aisle are still much more committed to destroying the other than to rescuing their country. The American culture wars, which are neither uniquely American nor new (they go back, in England, for about 630 years (think Wycliffe's Bible etc)) are still raging and the warriors are much more interested in ideology than public service.

 

[cupper]

The stock market is climbing back to pre melt down levels, and companies are still sitting on over $2 Billion in assets.

Businesses are not going to invest until demand comes back, and they need to hire more workers, upgrade equipment, etc.

As we all know, there are two sides to the coin, Supply AND Demand. If demand isn't there, why bother doing anything to deal with the supply side of the equation.

So instead, all the money sits idle, or they find ways to increase the pool of money by developing risky derivatives based on securitized debt which only really achieves the result of moving money from one pile to the other. It doesn't create jobs or increase consumer confidence, therefore demand stays stagnant.

 

[Rifleman62]

The US Economy will improve when the current President and the Democrats get the boot.

Here is an ad for two men, one a Republican and one a Democrat. You decide:

http://www.therightscoop.com/blistering-new-allen-west-ad-torches-patrick-murphy-for-earlier-arrest-shows-mug-shot-in-ad/

 

[57Chevy]

The U.S. Debt Clock
from US Debt Clock.org
in real time

http://www.usdebtclock.org/

 

[a_majoor]

More real numbers. Whoever is in office on Jan 2013 had better have a real grasp of this (and the House, Senate and all the State Governors and Legislatures need to know as well). The historical data also suggests how to fix the problems:

http://news.investors.com/100312-627990-presidents-case-for-re-election-rests-on-five-claims-all-phony.aspx?p=full

Obama's Re-Election Case Rests On 5 Phony Claims

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY
Posted 10/03/2012 05:06 PM ET
   
In making his case for re-election in the face of historically high unemployment and sluggish growth, President Obama has a simple and straightforward argument.

Things were terrible when I arrived, he says, thanks to Bush-era policies of tax cuts and deregulation. We stopped the decline, but the ditch was so deep that it will take time to get out. Still, we are making progress, even if it isn't as fast as everyone would like.

So the last thing we want to do is return to the failed Bush policies that, he says, drove us into the ditch.

That argument appears to be working. More people continue to blame Bush than Obama for the current poor state of affairs, and some surveys show that consumer confidence has recently increased.

But each part of Obama's argument is based on claims that are not accurate:

• Bush tax cuts and deregulation caused the recession.

At a campaign rally, Obama said Romney is "just churning out the same ideas that we saw in the decade before I took office . . . the same tax cuts and deregulation agenda that helped get us into this mess in the first place."

It's a standard Obama talking point. But it's not true. Bush's tax cuts did not cause the last recession.

In fact, once they were fully in effect in 2003, they sparked stronger growth — generating more than 8 million new jobs over the next four years, and GDP growth averaging close to 3%.

Those tax cuts didn't explode the deficit, either, as Obama frequently claims. Deficits steadily declined after 2003, until the recession hit.

Nor was Bush a deregulator. Conservative Heritage Foundation's regulation expert James Gattuso concluded, after reviewing Bush's record, that "regulation grew substantially during the Bush years."

Even the Washington Post's fact-checker, Glenn Kessler, gave Obama's claim three out of four "Pinocchios," saying "it is time for the Obama campaign to retire this talking point, no matter how much it seems to resonate with voters."

What did cause the economic crisis? The housing bubble. And that, in turn, was the result of a determined federal effort to boost homeownership by, among other things, pressuring banks to lower lending standards.

• I stopped a second Great Depression.

Another frequent Obama claim is that "we did all the right things to prevent a Great Depression." But this, too, is false.

The economy had pretty much hit bottom by the time Obama took office, and long before his policies were in place. The worst declines in monthly GDP and employment, in fact, occurred before he was even sworn in.

What's more, the recovery officially started less than four months after Obama signed the stimulus into effect, when only a small fraction of the stimulus money was actually in the economy. Plus, other Obama economic interventions came either after the recession had ended — including his GM bailout — or have been widely judged to be failures.

When economists Alan Blinder and Mark Zandi tried to determine what ended the so-called Great Recession, they said President Bush's TARP program and actions by the Federal Reserve were "substantially more effective" than anything Obama had done.

• My policies are working.

In his recent two-minute campaign ad, Obama claimed that "as a nation we are moving forward again." But while the overall economy has grown somewhat since Obama's recovery started more than three years ago, several other important indicators have actually gone backward.

Median household incomes, for example, have dropped $3,000 — a 5.7% decline — since the Obama recovery started. Income inequality has reached new heights.

There are 659,000 more long-term unemployed than there were in June 2009, and the share of people working has dropped to levels not seen in 30 years, according to the Bureau of Labor Statistics.

Meanwhile, there are 11.8 million more people on food stamps and nearly 2.7 million more in poverty than when the Obama recovery started.

And while Obama likes to tout the fact that 4 million net new jobs have been created since February 2010, what he doesn't say is that most of those are low-wage jobs that replaced better-paying jobs lost during the recession.

• A slow recovery was inevitable.

Obama dismisses the slow and painful recovery by saying that he knew the road would be long. "I always believed that this was a long-term project (and) that it was going to take more than a year," he has said. "It was going to take more than two years. It was going to take more than one term."

The reason, Obama argues, is that recoveries from financial crises are always slow. "After a financial crisis, typically there's a bigger drag on the economy for a longer period of time," he said. But Obama didn't trot out this excuse until his own economic policies failed to produce the growth he had promised.

Obama's first budget, released in February 2009, predicted "rapid growth" that would "push down the unemployment rate to 5.3% by the end of 2013." In March 2009, Obama boasted that "my long-term projections are highly optimistic."

In August 2009, his economists predicted economic growth rates above 4% this year and next. In April 2010, Vice President Biden predicted job growth of "between 250,000 and 500,000 a month."

It was only after the actual results starting coming in far below expectations that Obama started laying blame on the financial crisis and asking for more time.

And his claim that financial crises inevitably lead to sluggish recoveries is at least open to debate.

While some economists make that claim, others dispute it. A November 2011 paper by economists at Rutgers University and the Cleveland Fed, for example, concluded that "recessions associated with financial crises are generally followed by rapid recoveries."

• Nobody could have done any better.

One of Bill Clinton's biggest applause lines at the Democratic convention was when he said that "no president — not me or any of my predecessors — could have repaired all the damage in just four years."

But historically, deeper recessions have been followed by faster recoveries.

"You can't find a single deep recession that has been followed by a moderate recovery," is how Dean Maki, chief U.S. economist at Barclays Capital, put it in August 2009.

Yet despite the depth of the downturn, Obama has presided over the slowest economic recovery since the Great Depression.

In fact, what has been noteworthy about Obama's recovery is how frequently it has "unexpectedly" underperformed economists' projections.

To get a sense of how dismal Obama's recovery has been, consider this: Since World War II, there have been 10 recoveries before Obama's. Had Obama's merely performed as well the average of all those recoveries, the nation's GDP would be a staggering $1.2 trillion bigger than it is today, and 7.9 million more people would have jobs.

Read More At IBD: http://news.investors.com/100312-627990-presidents-case-for-re-election-rests-on-five-claims-all-phony.aspx#ixzz28NjsPDp9

 

[Edward Campbell]

Unemployment, rigged numbers or not, is down and the Dow closed, today, at a five year high.

Guess who's laughing all the way to the voting booth?
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[Brad Sallows]

Sure, I guess he just captured the votes of everyone who follows the Dow-Jones index and the monthly economic reports.  But October is a hard month on the stock market indices.  It'll be a shame if this is just the calm before the end-of-October storm.

 

[Edward Campbell]

Greg Ip, who is not exactly an Obama partisan, looks ahead at the US economy in this column which is reproduced under the Fair Dealing provisions of the Copyright Act from the Washington Post and suggests that the next president will have cause to thank President Obama for his custodianship of the country over the past few years:

http://www.washingtonpost.com/opinions/why-a-president-romney-would-have-obama-to-thank-for-an-economic-recovery/2012/10/05/bcce947c-0d6d-11e2-a310-2363842b7057_story.html

Why a President Romney would have Obama to thank for an economic recovery

By Greg Ip

Published: October 5

Cast your mind forward to October 2014. The economic rebound for which Barack Obama had worked so hard and hoped so long is finally underway: Growth is humming, unemployment is steadily dropping, and the stock market is hitting one record high after another. But unfortunately for Obama, he’s not in the White House anymore — and President Mitt Romney is the man whose approval ratings are being carried aloft by the Dow.

Romney is widely considered to have won Wednesday night’s presidential debate by attacking Obama’s economic record and promising, if elected, to restore job growth and middle-class incomes. The irony is that, if Romney wins the election and the economy rebounds on his watch, much of the recovery will be due to efforts undertaken during the Obama administration.

Every president faces two painful, immutable truths about the economy: First, he has far less influence over it than voters think. Second, even when his actions make a difference, it is often not felt until after he’s left office, and not always in the expected way.

Consider the two most successful presidents of recent decades. Ronald Reagan is often credited with sparking an economic renaissance by defeating inflation and deregulating the economy. But it was Jimmy Carter’s appointment of Paul Volcker as chairman of the Federal Reserve that spelled the death knell for inflation (not to mention Carter’s reelection bid), and the deregulation of airlines, trucking and railroads all began under Carter’s watch.

Similarly, the economic boom during Bill Clinton’s presidency was kick-started by an extended decline in long-term interest rates, which began with the budget deal George H.W. Bush signed in 1990 at great personal cost. And if you want to go really big-picture, the technology bubble that gilded Clinton’s second term can be traced to investments in computer-network technology that began under President Dwight Eisenhower in the 1950s.

Of course, not everything presidents bequeath to their successors turns out well. Obama’s term has been cursed by the effects of a financial crisis that bears the fingerprints of every president going back to Lyndon Johnson, who turned mortgage giant Fannie Mae over to private shareholders, as well as Carter, who ushered in the era of deregulated finance by loosening interest-rate controls. And for all the problems George W. Bush left for Obama, he also did him one big favor by creating the bailout fund that helped end the crisis.

Paradoxically, the same forces that made for such a weak recovery during Obama’s first term suggest that the next four years will be better, regardless of who holds the White House. Right now, businesses, households and governments are all trying to wrestle down their debts. That “deleveraging” saps spending and blunts the power of low interest rates. But eventually it ends, on average six to seven years after the debt (as a percentage of GDP) peaks, according to the McKinsey Global Institute and a study by economists Carmen and Vince Reinhart.

For the United States, that means sometime between 2013 and 2016, depending on which measure of debt one chooses. Households have already whittled their debts down, often by defaulting; banks have rebuilt their capital; and home prices, which hit bottom in January, are rising steadily.

So, how will historians judge the economic legacy of Obama’s first term? There will be black marks, such as his failure to produce a lasting solution to America’s deficits, in particular the rising cost of Medicare. Indeed, the biggest near-term threat to economic recovery remains tightening government budgets, in particular the“fiscal cliff,” a withering combination of tax increases and spending cuts that could automatically take effect in January. Yet, historians will probably also see many things that laid the groundwork for stronger growth in later years. Here are the most notable:

    Reappointing Ben Bernanke

    Presidents often come to regret their Fed chairman appointments; Volcker helped doom Carter’s reelection chances, and George H.W. Bush suspected Alan Greenspan of doing the same for his.

    Obama announced the 2009 reappointment of Bernanke, a Republican, largely because of Bernanke’s aggressive response to the financial crisis. While the Fed chief has since tried to boost growth with repeated rounds of quantitative easing —
    the purchase of bonds with newly printed money — some Obama supporters have groused that he isn’t trying hard enough.

    Last month, though, the Fed broke new ground by committing to open-ended bond buying until unemployment has fallen substantially, even if inflation tops the Fed’s 2 percent target. Since monetary policy works with a lag,
    this is probably too late to help Obama’s reelection chances much. But it will be a boon to whomever occupies the White House starting next year. Moreover, by waiting until he had built a consensus inside the Fed, Bernanke is more likely
    to see his policy survive, even if a future president replaces him, as Romney promises to do.

    Making the banks safe

    Under Obama, banks have been forced to hold hundreds of billions of dollars in additional capital to absorb potential losses and to exit risky lines of business, such as trading for their own accounts. If they need a bailout,
    they must suffer a draconian government-run restructuring that wipes out their shareholders. Debit cards, credit cards and derivatives are all less lucrative businesses. U.S. banks are the best capitalized they’ve been in at least 20 years.

    Of course, spreading smaller profits over more equity capital is a recipe for lousy shareholder returns. Ed Najarian of the brokerage firm ISI Group estimates that the market now values big banks at 20 percent less than their
    book value while valuing regional banks at 80 percent more — a source of deep frustration to big banks but an effective disincentive to any bank to get too big to fail.

    Much of the new regulation is overkill, and Obama has probably hurt growth and himself by raising the cost of credit. But in the process, he has done future presidents a favor. There will be new financial crises,
    but banks aren’t likely to be the cause for a long time.

    Encouraging innovation

    Government funding has long been critical to basic research that lacks commercial appeal. In the 1950s, Eisenhower’s Pentagon created the Defense Advanced Research Projects Agency, which funded the development of
    network technology that later became the Internet. Gerald Ford’s Energy Department funded demonstration projects and research into technology for extracting natural gas from dense shale rock;
    decades later, abundant shale gas has revolutionized America’s energy supply.

    Obama has emulated those examples, creating a DARPA clone to fund hundreds of small, early-stage energy projects. His stimulus package lavished loans and grants to companies and labs working on alternative energy.

    Every venture capitalist knows that for every big success, there are many failures. Unfortunately for presidents, that means the failures are early and high-profile (think Solyndra), while the successes may not show up for years —
    and may be utterly unrecognizable when they do. Shane Greenstein, a Northwestern University business professor who has traced the history of the Internet, notes that the creators of DARPA never saw it as an incubator of
    commercial technologies; it was “motivated by a desire to do innovative military work outside the structure of the existing military units.”

    Someday, one of the projects the Obama administration has backed is going to produce a breakthrough — probably long after this president has left office.

    Boosting human capital

    While the biggest problem in the job market today is the lack of demand for employees, in the long run it’s the mismatch between the growing demand for college-educated workers and the slower-growing supply. Three decades ago,
    the share of Americans who had graduated from college was the second highest among advanced countries; now, it ranks 15th.

    That’s starting to change. In 2009, a record 70 percent of high school graduates went on to college that fall. Though the rate has slipped slightly since, it remains high by historical standards. Most of the credit goes to simple incentives:
    College graduates earn far more than high school graduates, and high unemployment has diminished the options for those without a degree. But Obama has done his part by significantly increasing the size and number of Pell grants
    for low-income students, enriching the tax credit for college education, overhauling federal student aid and seeking to crack down on for-profit colleges that saddle their students with too much debt and not enough employment success.

    This won’t make a difference to the economy anytime soon, but if enrollment stays high, it will in the years to come ease the shortage of skilled labor that hobbles so many American companies.

    Keeping calm on China

    The final part of Obama’s term for which future presidents may be grateful is that he didn’t start a trade war with China. Ordinarily, you wouldn’t thank a president just for avoiding stupid things. Yet all the ingredients were there:
    a decade of rising Chinese trade surpluses and shrinking American factory employment, a devastating recession, a protectionist Congress and electorate, a Democratic president indebted to organized labor, and a Chinese leadership
    fearful of appearing weak to its people.

    Yet Obama initiated only one serious, unilateral action against China: a tariff on tires in 2009. Other moves were either made by apolitical trade bureaucrats responding to private complaints or initiated through the World Trade Organization,
    a neutral forum that China and the United States scrupulously respect. A study by Chad Bown of the World Bank and Meredith Crowley of the Federal Reserve Bank of Chicago found that protectionism during the last recession was far lower than what previous patterns predicted.

    Obama has faced frequent pressure from many in Congress to label China a currency manipulator and impose compensating tariffs — a development that could trigger a cycle of retaliation between Beijing and Washington
    that would damage trade and raise geopolitical tensions. With the help of House Speaker John Boehner, Obama has sidestepped those pressures. His administration, like Bush’s before it, has instead used the threat of congressional
    action as leverage in back-channel negotiations with the Chinese. And indeed, the yuan has steadily risen and is no longer seriously undervalued — one reason U.S. exports to China have soared and manufacturing employment is on the mend.

    No one knows whether China’s rise will remain peaceful, as that of the United States was in the 1800s, or not, like Germany’s a century ago. Either way, how an American president handles China is one of the few things that,
    a century from now, will really make a difference. Depending on how it ends, both Obama and Bush stand to get plenty of credit — or blame.

It is ironic that presidents are so often accused of short-term thinking when so much of what they do shows results, for better or for worse, only in the very long run. If a few years from now Romney finds himself presiding over an economic boom, he should remember that and offer a quiet word of thanks to his predecessors, including the man he defeated in November.

outlook@washpost.com

Greg Ip is the U.S. economics editor of the Economist and the author of “The Little Book of Economics: How the Economy Works in the Real World.”

Now, many will want to argue with some of Ip's 'pluses,' reappointing Ben Bernanke, for instance, is not seen, by some, as being a good thing, others will argue that President Bush set bank reform in motion and that Obama has been hesitant, not wise, in dealing with China, but Ip's key point is that a turnaround appears to be under way and, if that's true, then it occurred on Obama's watch.

 

[a_majoor]

Further deconstruction of the "You didn't build that" remark. According to the US census there are over 27 million small businesses in the United States, so there is a large pool of offended voters, their employees and families out there...Perhaps the more important result of that remark is it has finally opened the door to discussions about how the US economy (and economics in general) actually works. This sort of information getting broad circulation can eventually fuel  successful movements for regulatory and tax reforms:

http://tigerhawk.blogspot.ca/2012/10/building-it-in-which-i-explain-why-you.html#.UHGUl9VGDRY.facebook

Building it: In which I explain why "you didn't build that" so offended business people
By TigerHawk at 10/07/2012 10:41:00 AM

The American left frames the current election in terms of debt -- what one group of people owes to another. In their formulation, the wealthy owe more to everybody else, their "fair share," in the politically correct expression of the idea. About a year ago, the now Democratic candidate for the United States Senate, Elizabeth Warren, won the hearts of lefties everywhere with a speech that claimed that successful businesses were fundamentally collective instead of individual accomplishments:

    "You built a factory out there? Good for you," she says. "But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did."

This summer just past, President Obama tried to make exactly the same point, but so botched his presentation of it that he handed the right a rallying cry (helpfully rendered in to out-of-context bold below):

    There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

    If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

In all the argument over whether conservatives were taking "you didn't build that" out of context, few on the left acknowledged that he was trying to say what Warren had said to such acclaim from the Democratic base. Even in context, the argument that accomplishment in business is collective is deeply offensive to most people in business, at least when they are not camouflaging themselves at a college town cocktail party. Since many liberals are genuinely baffled about why this should be so, I shall try to explain. Suffice it to say that the reasons are legion.

The very argument is disingenuous. Neither mainstream Republicans nor the Tea Party activists who drove the 2010 election are against public roads, public education, police departments, firefighters (Warren) or, even, technology spin-offs from necessary spending on national defense (Obama, re the Internet). There has been a broad national consensus around each of these for between 100 and 200 years (I am sure we all remember that Eli Whitney's invention of interchangeable parts was in the context of defense spending). To suggest otherwise is to erect and demolish a straw man -- an argument your adversary never made -- the last and worst tactic of a lawyer with a losing case. As any good law professor knows...

Even if, as a liberal might respond, there are many other examples of government spending that helps "successful" people (in Obama's expression) or factory builders (in Warren's), the argument is still a straw man. The argument today is not between minimal government and Communism. Today government at all levels accounts for 39% of GDP, up from 33% or so during the now halcyon Clinton years. That range defines the mainstream debate -- most Republicans would be thrilled to return government's share of GDP to Clinton-era levels, and most Democrats would be outraged. The range might expand to 46% or so at the high end if one includes the 80-100 Democrats in the House who would fully nationalize health care, and falls to perhaps 30% at the bottom if one includes the most conservative Tea Partiers who would privatize Social Security. But that is the widest possible scope of the disagreement, and under no circumstances does it contemplate that we should do away with roads, police, teachers, firefighters, or national defense. To suggest otherwise, as Warren and Obama have done, is so transparently dishonest that it can only be explained as an attack on "successful" people for political advantage. They noticed.

Nobody argues that "successful" people should not pay more tax than, er, unsuccessful people.

Oh. Are you offended by my use of "unsuccessful" people? Well, President Obama was making his point about "successful" people. Who are people who are not "successful" if they are not "unsuccessful"? Do you find that irritating? Well, it is the President's terminology, not mine. Any good businessman knows that success in life takes many forms. Again, the President's implication that "successful" people define success in narrow material terms is offensive, so it is not unfair for us to point out that the opposite of "successful" is "unsuccessful". Not that we would have thought of it that way.

Anyway, I know a great many "successful" people, and not one of them believes that "successful" people should pay less tax, either in absolute terms or as a percentage of their income, than "unsuccessful" people. Further, I am unaware of anybody important who advocates that result. When politicians on the left argue otherwise, they are dishonest. Not only have "successful" people paid an ever higher proportion of direct taxes at all levels, but they are paying a higher proportion relative to their own share of national income. In 2010, I paid 42% of my income in direct taxes -- income, FICA, Medicare, and property -- divided by adjusted gross income. That is a higher proportion than any "unsuccessful" person would pay, and it obviously does not include sales taxes, gasoline taxes, excise taxes, "fees" paid to governments so I can do something I should be allowed to do anyway, taxes on my wages paid by my employer, and corporate taxes paid by companies in which I have invested. If the taxes I pay are not a high enough proportion of my income for Warren and Obama, how high should it be? President Obama believes it should be substantially more and it will be on January 1, 2013 unless Mitt Romney wins. Personally, I do not believe I am failing to pay my "fair share" by forking over more than 42% of everything I earn to the government. If you do, then please tell me how much of my time I "should" work for the benefit of the government? We need to understand what liberals believe.

Now, what about those super-"successful" people, like Mitt Romney, who do not have highly-taxed employment compensation and instead live off dividends and capital gains which are taxed to the individual at much lower rates? Perhaps they do indeed pay too low a proportion of their personal income in taxes (although dividend and capital gains income is mostly (although not always) double-taxed because it is subject to corporate tax (which in the United States is the highest in the world, averaging 35-40% of U.S. income in most states)). The main objection to raising taxes on dividends and capital gains is that capital is mobile, and that high taxes on capital cause it to leave for jurisdictions that tax it less. That would be bad for the United States, which needs as much capital as it can get right now. That is why even socialist countries usually have highly preferential rates for capital gains, and that is why it is unwise to raise our taxes on dividends and capital gains, at least without a significant reduction in corporate tax rates.

Beyond the roads, cops, honest courts, and firefighters, government is an obstacle to entrepreneurs, not the helpful partner that Warren and Obama imply. Liberals, and especially President Obama, think that "business" is best represented by the Fortune 100 and its "chieftains". Most people who "built that" know otherwise, that government serves to entrench huge bureaucratic businesses at the expense of the upstarts that actually create new jobs. First, there are now so many regulations associated with being a "government contractor" that few small businesses can feast at the taxpayer's trough even if they had the political stroke to get the contract in the first place. Second, the ever larger pile of federal, state, and local regulation favors the large over the small, the mature business over the growing. As I wrote a couple of months ago,

    Regulation usually imposes a fixed cost on each affected business regardless of size. Therefore, complex and costly regulation favors large companies (for which the proportionate cost of compliance is relatively small) over small and mid-sized companies. Left liberals almost never recognize that more regulation almost always drives consolidation in the affected industry, forcing smaller companies to sell out to larger ones. In general, you cannot have both heavy regulation and small, diffuse businesses. The first drives out the second in favor of the behemoths for whom large overhead is a small proportion of the total.

Of course, the most frustrating aspect of all of this to business people is that these points seem so obvious as to be self-evident, so when the chattering classes do not recognize them as such we distrust their motives and assume they are all a bunch of cynical parlor pinks. Increasingly, though, I believe that there are a great many people, especially in the educated elites, who are profoundly disconnected with the reality of commerce, and actually have very little idea how small and growing businesses struggle to create the wealth that we all need to support our prosperity. That is to America's great misfortune.

 

[tomahawk6]

Twice the Obama administration has hailed an economic recovery that hasnt materialized. If Romney is elected and rolls out an economic plan that creates jobs,then he will get the credit - not Obama. Obama's failed economy is the result of his policies. He is anti-coal. Anti- oil. Pro-environment mwhich has the EPA running roughshod over entire industries. It regulation that is a huge thorn in the side of business. Obama wants higher oil/gas prices to make his green agenda work.High gas prices Nov 6 may well be Obama's undoing. Or maybe not. California has the highest gas prices in the country because of their anti-oil agenda.Yet democrats keep getting elected there.

 

[Redeye]

California has the highest gas prices in the country because of their anti-oil agenda.Yet democrats keep getting elected there.

Probably comes from an understanding that who sits in the White House has no control over the price of gasoline.

 

[SeaKingTacco]

That is only sort of true.

California has the highest gas prices in the US, because their State Legislature has enacted laws which force oil companies to make special blends, just for that market.  They also tax gasoline more than say, Texas.

All this is to say that indirectly through policy or law, governments at various levels can affect the price of gas.

 

[Redeye]

Correct - but only indirectly. The basis of the price of gasoline remains commodity markets which are beyond the control of politicians in general. When some like to point out how cheap gas was four years ago, it's worth reminding them that at the time, the global economy was in the tank, and demand for crude oil was thoroughly sapped, meaning that the price of a barrel of crude fell dramatically - and world fuel prices along with it.

 

[tomahawk6]

California has aging refineries and hasnt built in a new one in decades all due to the environmentalists. Drilling has been stopped off the coast. These are political decisions,not due to the markets. Throw in California's special blends and it makes it near impossible to overcome shortfalls in supply.

 

[Redeye]

The political decisions, according to people who study the stuff for a living, are moot. That means, pretty much irrelevant. It's only fodder for political discussions because low-information voters don't get that.

Drilling up every ounce offshore of the United States would barely impact the global price of oil. Ever wonder why Democrats/liberals/whatever want to pursue alternatives to oil - solar, wind, everything else? Because in the long run it'll be whole lot cheaper, and as a nice side effect, it's better for people's health.

Yes, I know this is from ThinkProgress, but all is explained here. http://thinkprogress.org/climate/2012/03/01/435330/more-drilling-wont-lower-gas-prices/ It's all referenced, you can go sources like EIA to verify everything to your heart's content. The USA simply doesn't come anywhere near close to influencing the global price of oil. It just doesn't produce enough, and it cannot.

Drilling in the US has increased dramatically under the Obama Administration (see here http://www.chron.com/business/article/U-S-oil-gusher-blows-out-projections-3341919.php), and it's done nothing to bring gas prices down especially. And refineries, while working below capacity, continue to export their products because buyers outside the US will pay more for them - that's just the basics of how the market works. Several sources earlier on at the peak of discussion of Keystone XL highlighted that it would pump product to refineries which primarily export their products - so really, it isn't going to put a lot of new product on the market in the US.

 

[SeaKingTacco]

Ok- I am going to type this slowly so you understand, Redeye.

It is physically impossible (as in the laws of physics do not allow for it, no matter what some people may wish) for solar/wind/everything else to replace oil and gas.

There is simply not enough energy density in those forms of energy and there is no way to reliably store what little power they do generate.  What is even worse, their presence actually destabilizes the power grid, as it is near impossible to match both phase and frequency of those thousands of widely fluctuating windmills and solar panels to the wider grid.  At best, they are niche players, best employed in remote locations that are disconnected from the wider grid.

The best  thing that we could do is invest heavily in nuclear ( perhaps thorium based, instead of uranium) to take care of electricity, while reserving carbon fuels for transport purposes.

 

[kevincanada]

Drilling up every ounce offshore of the United States would barely impact the global price of oil. Ever wonder why Democrats/liberals/whatever want to pursue alternatives to oil - solar, wind, everything else? Because in the long run it'll be whole lot cheaper, and as a nice side effect, it's better for people's health.

They have to keep drilling.  Oil unlike solar is a very limited source.  One day it will be all gone.  A few hundred years from now there will not be a drop left.  Presently the only true abundant long term fuel source is Uranium.  I don't have the numbers off hand, apparently we are good for thousands of years of nuclear energy.

Wind will never work better than it does today,  solar has a slim chance of improving.  For ever cubic foot of wind that pass's through a wind trap, there is only so much associated energy and it's not a lot.  For solar to improve it needs to be radically revamped with new technology.  Our method of capturing it is horrible at best.  There are under water turbines being installed in the United States (still testing phase) that look promising,  They get installed in large high flow rivers and capture the energy that way.  Kind of like how Niagara falls spins a turbine.  They help, but still not a solution.

They have to keep drilling, just like our government keeps pushing the oil pipe lines through.  I see two good reasons for it.  First one being population growth, demand always keeps rising, the second is war.  Best be prepared, than caught with your shorts down.