Great Moments In Projection: Il Doofe Says His Opponents Are Anti-Democratic, Fascist

06 Tuesday Sep 2022

Posted by pnoetx in Democracy, fascism, Uncategorized

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Administrative State, Angelo M. Codaville, Babylon Bee, Benito Mussolini, Classical Liberal, Constitutional Republic, Corporatism, crony capitalism, Dan Klein, Democracy, fascism, FDR, Federalism, Friedrich Hayek, G.W.F. Hegel, Hitler, Il Duce, Joe Biden, Joseph Stalin, Majoritarianism, Nationalism, New Deal, Semi-Fascism, Sheldon Richman, Socialism

When partisans want to make sure they get their way, perhaps we shouldn’t be surprised to hear them claim their opponents are “anti-democratic”. Well, one-party rule is not democratic, just in case that’s unclear to leftists prattling about “hunting down” the opposition. We now have those forces hurling cries of “fascism” and “semi-fascism” at political adversaries for opposing their use of the state’s coercive power to get their way and to punish political enemies.

Restrained Democracy

The U.S. is not a democracy; it is a constitutional republic. The reason it’s not a democracy is that the nation’s founders were wary of the dangers of majoritarianism. There are many checks on unbridled majoritarianism built into our system of government, including the many protections and guarantees of individual rights in the Constitution, as well as federalism and three branches of government intended as coequals.

In a short essay on democracy, Dan Klein refers to a mythology that has developed around the presumed democratic ideal, quoting Friedrich Hayek on the “fantasy of consensus” that tends to afflict democratic absolutists. Broad consensus is possible on many issues, but it might have been an imperative within small bands of primitive humans, when survival of the band was of paramount concern. That’s not the case in modern societies, however. Classical liberals are often derided as “anti-democratic”, but like the founders, their distaste for pure democracy stems from a recognition of the potential for tyrannies of the majority. Klein notes that the liberal emphasis on individual rights is naturally at tension with democracy. Obviously, a majority might selfishly prefer actions that would be very much to the detriment of individuals in the minority, so certain safeguards are necessary.

However, the trepidation of classical liberals for democracy also has to do with the propensity for majorities to “governmentalize” affairs so as to codify their preferences. As Klein says, this often means regulation of many details of life and social interactions. These are encroachments to which classical liberals have a strong aversion. One might fairly say “small government” types like me are “anti-pure democracy”, and as the founders believed, democratic processes are desirable if governing power is distributed and restrained by constitutional principles and guarantees of individual rights.

Democracy has vulnerabilities beyond the danger posed by majoritarian dominance, however. Elections mean nothing if they can be manipulated, and they are easily corrupted at local levels by compromises to the administration of the election process. Indeed, today powerful national interests are seeking to influence voting for local election officials across the country, contributing substantial sums to progressive candidates. It’s therefore ironic to hear charges of racism and anti-democracy leveled at those who advocate measures to protect election integrity or institutions such as federalism.

And here we have the White House Press Secretary insisting that those in the “minority” on certain issues (dependent, of course, on how pollsters phrase the question) are “extremists”! To charge that someone or some policy is “anti-democratic” usually means you didn’t get your way or you’re otherwise motivated by political animus.

Fascism

Biden and others are throwing around the term fascism as well, though few of these partisans can define the term with any precision. Most who pretend to know its meaning imagine that fascism evokes some sort of conservative authoritarianism. Promoting that impression has been the purpose of many years of leftist efforts to redefine fascism to suit their political ends. Stalin actually promoted the view that anything to the right of the Communist Party was inherently fascist. But today, fascism is an accurate description of much of Western governance, dominated as it is by the administrative state.

I quote here from my post “The Fascist Roader” from 2016:

“A large government bureaucracy can coexist with heavily regulated, privately-owned businesses, who are rewarded by their administrative overlords for expending resources on compliance and participating in favored activities. The rewards can take the form of rich subsidies, status-enhancing revolving doors between industry and powerful government appointments, and steady profits afforded by monopoly power, as less monied and politically-adept competitors drop out of the competition for customers. We often call this “corporatism”, or “crony capitalism”, but it is classic fascism, as pioneered by Benito Mussolini’s government in Italy in the 1920s. Here is Sheldon Richman on the term’s derivation:

‘As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax.’”

Meanwhile, Hitler’s style of governing shared some of the characteristics of Mussolini’s fascism, but there were important differences: Hitler persecuted Jews, blaming them for all manner of social problems, and he ultimately had them slaughtered across much of Europe. Mussolini was often brutal with his political enemies. At the same time, he sought to unite an Italian people who were otherwise a fairly diverse lot, but once Mussolini was under Hitler’s thumb, Italian Jews were persecuted as well.

Angelo M. Codevilla provides an excellent account of Mussolini’s political career and the turns in his social philosophy over the years. He always considered himself a dedicated socialist, but the views he professed evolved as dictated by political expediency. So did his definition of fascism. As he took power in Italy with the aid of “street fighters”, fascism came to mean nationalism combined with rule by the administrative state and a corresponding preemption of legislative authority. And there were concerted efforts by Mussolini to control the media and censor critics. Sound familiar? Here’s a quote from Il Duce himself on this matter:

“Because the nature of peoples is variable, and it is easy to persuade them of things, but difficult to keep them thus persuaded. Hence one must make sure that, when they no longer believe, one may be able then to force them to believe.”

Here is Codevilla quoting Mussolini from 1919 on his philosophy of fascism:

“The fascist movement, he said, is ‘a group of people who join together for a time to accomplish certain ends.’ ‘It is about helping any proletarian groups who want to harmonize defense of their class with the national interest.’ ‘We are not, a priori, for class struggle or for class-cooperation. Either may be necessary for the nation according to circumstances.’”

This framing underlies another basic definition of fascism: a system whereby government coercion is used to extract private benefits, whether by class or individual. Codevilla states that Mussolini was focused on formal “representation of labor” in policy-making circles. Today, western labor unions seem to have an important, though indirect, influence on policy, and labor is of course the presumed beneficiary of many modern workplace regulations.

Modern corporatism is directly descended from Mussolini’s fascist state. The symbiosis that exists between large corporations and government has several dimensions, including regulatory capture, subsidies and taxes to direct flows of resources, high rates of government consumption, rich government contracts, and of course cronyism. This carries high social costs, as government dominance of economic affairs gives rise to a culture of rent seeking and diminished real productivity. Here is Codevilla’s brief description of the transition:

“Hegel, as well as the positivist and Progressive movements, had argued for the sovereignty of expert administrators. Fascist Italy was the first country in which the elected legislature gave up its essential powers to the executive, thus abandoning the principle, first enshrined in the Declaration of Independence and the U.S. Constitution, by which people are rightly governed only through laws made by elected representatives. By the outbreak of World War II, most Western countries’ legislatures—the U.S. Congress included—had granted the executive something like ‘full powers,’ each by its own path, thus establishing the modern administrative state.”

Mussolini saw Italian fascism as the forerunner to FDR’s New Deal and took great pride in that. On this point, he said:

“… the state is responsible for the people’s economic well-being, it no longer allows economic forces to run according to their own nature.”

The Babylon Bee’s take on Biden and fascism would have been more accurate had it alluded to Mussolini, but not nearly as funny! The following link (and photoshopped image) is obviously satire, but it has a whiff of eerie truth.

Biden Condemns Fascism in Speech While Also Debuting Attractive New Mustache

Conclusion

Biden’s slur that Republicans are “anti-democratic” is an obvious distortion, and it’s rather ironic at that. The nation’s support for democratic institutions has always been qualified for good reasons: strict majoritarianism tends to disenfranchise voters in the minority, and in fact it can pose real dangers to their lives and liberties. Our constitutional republic offers “relief valves”, such as “voting with your feet”, constitutional protections, and seeking recourse in court. Biden’s party, however, has a suspicious advantage via control of election supervision in many key urban areas of the country. This can be exploited in national elections to win more races as long as the rules on election administration are sufficiently lax. This is a true corruption of democracy, unlike the earnest efforts to improve election integrity now condemned by democrats.

Joe Biden hasn’t the faintest understanding of what fascism means. He uses the term mostly to suggest that Trump, and perhaps most Republicans, have authoritarian and racist sympathies. Meanwhile, he works to entrench the machinery and the breadth of our own fascist state, usurping legislative authority. He is buttressed by a treacherous security apparatus, “street fighters” under the guise of Antifa and BLM, and the private media acting as a propaganda arm of the administration. Joe Biden, you’re our fascist now.

Harms Dismissed In “Standing Dead Zone” of Executive Action

26 Friday Aug 2022

Posted by pnoetx in Checks and Balances, Executive Authority, Student Loans

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Antonin Scalia, CDC, Department of Education, Executive Action, Federal Reserve, HEROES Act, Higher Education Act, Inflation Reduction Act, Jack V. Hoover, Joe Biden, Legal Standing, Lujan v. Defenders of Wildlife, Pandemic, Paycheck Protection Program, regressivity, Remain in Mexico, Standing Dead Zone, Student Loan Forgiveness, Supreme Court, Virginia Law Review

I hate to contribute to the deluge of ink spilled over Joe Biden’s latest executive action, which forgives massive amounts of federal student loan debt, but there’s an angle that hasn’t received adequate treatment. Of course, Biden’s action is an abridgment of taxpayer rights, a violation of the separation of powers, and an affront to borrowers who already paid off their student loans, but it will be nearly impossible for any challenger(s) to show that they have standing in court. Writing in the Virginia Law Review earlier this year, Jack V. Hoover says this kind of action lies within what he calls a “standing dead zone” created by the courts.

I’ll start with a few preliminaries. Note that student loan forgiveness was NOT legislated, unlike the Paycheck Protection Program, which the Administration keeps referencing in defense of the action. And I’d be remiss if I failed to mention that Biden’s action looks like a pathetic attempt to salvage votes ahead of what some democrats fear could be a disastrous midterm election. In addition, the action is regressive, with benefits weighted heavily toward high-income debtors with graduate degrees. The cost (write down, loss) to the federal government was originally said to be near $300 billion, depending on uptake, but independent estimates now put the full cost at $600 billion. This wipes out the hoped-for deficit reduction in the ridiculous but much ballyhooed “Inflation Reduction Act”, and yes, student loan forgiveness may well be inflationary. At a minimum, it makes the Fed’s job of restraining inflation by tamping down demand that much harder. Loan forgiveness will not solve the underlying problem of runaway cost escalation in higher education. In fact, it will exacerbate the problem by encouraging non-payment and additional borrowing, while tuition to colleges and universities will escalate all the more. So this is really bad policy all the way around!

Biden’s action is clearly a huge stretch on statutory grounds. In particular, the Administration invoked the HEROES Act, which authorizes the Secretary of Education to waive loan requirements during periods of national emergency. In this case, the Administration appeals to hardships caused by the pandemic for individuals with student debt. Of course, just two weeks ago, the CDC rolled back their emergency pandemic guidelines on social distancing and quarantines, so the “emergency” seems to be over, officially. Also, the Administration recently ended the “return to Mexico” policy at the border on the pretext that it had only been necessary because of the pandemic! Pardon my incredulity, but playing the “pandemic card” at this point is both dishonest and hypocritical.

“Standing” in the legal sense can’t be found in the text of the Constitution. It was itself created by the courts. Even so, why do taxpayers, Congress, or past borrowers lack standing to challenge the action on student loans through the judicial system? How can that be when the harms are so obvious? Well, courts tend to avoid interfering with the executive branch, and they’d rather leave such disputes up to the political system to hash out. That doesn’t seem like a terribly effective way to practice the game of “checks and balances”. Nevertheless, for many years the courts have relied on a strict test for establishing plaintiff standing promulgated in the Supreme Court decision in Lujan v. Defenders of Wildlife. In that majority opinion, Justice Antonin Scalia laid out a three-part test, which Hoover describes thusly:

“… (1) injury in fact that is actual, concrete, and particularized; (2) a causal connection between the injury and the conduct complained of; and (3) a likelihood that exercise of judicial power will redress the injury.²⁸ The Court furthermore differentiated between cases in which government regulation targets the plaintiff and cases where the plaintiff complains about ‘unlawful regulation (or lack of regulation) of someone else,’ in which case “much more is needed” for standing to exist.²⁹ The Court has regularly reaffirmed this formulation of its standing requirements.^3”

Hoover discusses the executive’s authority to cancel debt under the Higher Education Act (HEA) of 1965. In terms of the impregnability of Biden’s action to legal challenge, Hoover implies that the president might just as well have fallen back on HEA as HEROES. However, the Department of Education (DOE) opined last year that it lacked the power to forgive debt. Here’s what the DOE said in 2021:

“… the Secretary does not have statutory authority to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances, and/or materially modify the repayment amounts or terms thereof, whether due to the COVID-19 pandemic or for any other reason.”

Hoover seems to be saying that it is all but impossible to challenge Biden’s bald assertion of extra-legal power in forgiving student loans. Hoover goes on to discuss all classes of potential litigants who might challenge student loan forgiveness: taxpayers, former borrowers, Congress, state governments, and loan servicers. He is skeptical of all those, citing various reasons for their lack of standing, but I’ll focus on only the first three classes.

Taxpayers: The logic of denying taxpayers standing is at least two-fold. First, taxpayers cannot show direct harm from the action, though they are likely to pay a higher inflation tax over time as a consequence. Second, Congress appropriated funds for student loans, but it did so as an entitlement, and it did not restrict loan amounts nor the executive’s ability to waive “the government’s claim that borrowers must return the funds to the Treasury”. Hoover believes that the courts would defer to the political branches of government in settling such issues. The whole thing sounds rather thin to my ears, but precedent will probably hold sway unless the Supreme Court revisits its position on standing.

Congress: The standing of Congress is another matter. If, in the view of the legislature, an executive agency has exceeded its statutory authority, the matter might reflect as much on Congress as elsewhere, in failing to provide adequate limitations, guideposts, or oversight. However, in this case:,

“Congress duly appropriated funds for student loans,⁸³ and the Executive is responsible for the funding’s disbursement. This means that any claim of standing due to institutional injury from compromising Congress’s control of the federal purse would fail.”

Here again, it will be left to settle by the political branches of government. To avoid such conflicts, it is up to the legislature to write laws that bind the discretion of the executive to varying degrees. Unrestrained entitlements are a damn good way to cede control of the “keys to the Treasury”.

Other borrowers who’ve managed their student loan debt responsibly will also lack standing, according to Hoover. Like taxpayers, they cannot show any direct harm or injury. In addition, standing is difficult to establish when an action or inaction by an executive agency pertains to someone else.

It’s my hope that a court challenge will be brought all the way to the Supreme Court, and at some level a court will define a new standard or test under which plaintiffs can attempt to establish standing against executive or agency actions. This is sorely needed as a check on the explosive growth of the administrative state. Furthermore, the “standing dead zone” allows all sorts of politically-motivated mischief by the executive branch, and the Biden Administration seems more than willing to push executive authority to extremes. However, I’m not too optimistic about the possibility of a new test for standing. Before all is said and done, Biden is likely to expand student loan forgiveness well beyond $20,000 per borrower. Federal finance is looking more precarious with Biden’s every step, and many of those steps cannot be walked back by Congress, no matter who holds the majority.

Fiscal Foolishness a Costly Salve For Midterm Jitters

05 Friday Aug 2022

Posted by pnoetx in Fiscal policy, Inflation

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Alternative Minimum Corporate Tax, Brad Polumbo, Carried Interest, Chuck Schumer, CMS, Drug Price Controls, Eric Boehm, Fossil fuels, Green Energy, Inflation Reduction Act, IRS, Joe Biden, Joe Manchin, Kyrsten Sinema, Lois Lerner, Medicare Part D, Obamacare Subsidies, Private equity, Stock Buybacks, Sweat Equity, Tax Burden, Tax Enforcement, Tax Incidence, Wharton Economics, William C. Randolf

The “Inflation Reduction Act” (IRA) is about as fatuous a name for pork-barrel spending and taxes as its proponents could have dreamt up! But that’s the preposterous appellation given to the reconciliation bill congressional Democrats hope to approve. Are we to believe that Congress suddenly recognizes the inflationary effects of governments deficits? Well, the trouble is the projected revenue enhancements (taxes) and cost savings are heavily backloaded. It’s mostly spending up front, which is exactly how we got to this point. There are a number of provisions intended to increase domestic energy production in the hope of easing cost-push, supply-side price pressures. However, provisions relating to fossil fuel production are dependent on green energy projects in the same locales. So, even if we get more oil, we’ll still be pissing away resources on wind and solar technologies that will never be reliable sources of power. Even worse, the tax provisions in the bill will have burdens falling heavily on wage earners, despite the Administration’s pretensions of taxing only rich corporations and their shareholders.

The Numbers

The IRA (itself an irritating acronym) would add $433 billion of new federal outlays through 2031 (*investments*, because seemingly every federal outlay is an “investment” these days). At least that’s the deal that Chuck Schumer and Joe Manchin agreed to. As the table below shows, these outlays are mostly for climate initiatives, but the figure includes almost $70 billion of extended Obamacare subsidies. There is almost $740 billion of revenue enhancements, which are weighted toward the latter half of the ten-year budget window.

The deal reduces the federal budget deficit by about $300 billion over ten years, but that takes a while… somewhat larger deficits are projected through 2026. I should note that the Congressional Budget Office has issued a new score this week that puts the savings at a much lower $102 billion. However, that “new” score does not reflect the changes demanded by Kyrsten Sinema (R-AZ).

Spending

Budget projections are usually dependent on assumptions about the duration of various measures, among many other things like economic growth. For example, the increased Obamacare subsidies are an extension, and the scoring assumes they end in 2026. It’s hard to believe they won’t be extended again when the time comes. Over ten years, that would cut the deficit reduction roughly in half.

The bill is laden with green energy subsidies intended to reduce CO2 emissions. They will accomplish little in that respect, but what the subsidies will do is enrich well-healed cronies while reducing the stability of the electric grid. Tax credits for electric vehicles will be utilized primarily by wealthier individuals, though there are tax credits for energy-efficient appliances and the like, which might benefit a broader slice of the population. And while there are a few provisions that might address supplies of fossil fuels and investment in nuclear energy, these are but a sop to Joe Manchin and misdirection against critics of Joe Biden’s disastrous energy policies.

Revenue

Should we be impressed that the Democrats have proposed a bill that raises revenue more than spending? For their part, the Democrats insist that the bill will impose no new taxes on those with taxable incomes less than $400,000. That’s unlikely, as explained below. As a matter of macroeconomic stability, with the economy teetering on the edge of recession, it’s probably not a great time to raise taxes on anyone. However, Keynesians could say the same thing about my preferred approach to deficit reduction: cutting spending! So I won’t press that point too much. However, the tax provisions in the IRA are damaging not so much because they depress demand, but because they distort economic incentives. Let’s consider the three major tax components:

1. IRS enforcement: this would provide about $80 billion in extra IRS funding over 10 years. It is expected to result in a substantial number of additional IRS tax audits (placed as high as 1.2 million). Democrats assert that it will raise an additional $400 billion, but the CBO says it’s likely to be much lower($124 billion). This will certainly ensnare a large number of taxpayers earning less than $400,000 and impose substantial compliance costs on individuals and businesses. A simplified tax code would obviate much of this wasteful activity, but our elected representatives can’t seem to find their way to that obvious solution. In any case, pardon my suspicions that this increase in funding to enforce a Byzantine tax code might be used to weaponize the IRS against parties harboring disfavored political positions. Shades of Lois Lerner!

2. Carried Interest: Oops! Apparently the Democrat leadership just bought off Kyrsten Sinema by eliminating this provision and replacing it with another awful tax…. See #3 below. The next paragraph briefly discusses what the tax change for carried interest would have entailed:

The original bill sought to end the favorable tax treatment of “carried interest”, which is earned by private equity managers but is akin to the “sweat equity” earned by anyone making a contribution to the value of an investment without actually contributing a proportionate amount of capital. I’ve written about this before here. Carried interest income is taxed at the long-term capital gains tax rate, which is usually lower than tax rates on ordinary income. This treatment is really the same as for any partnership that allocates gains to partners, but populist rhetoric has it that it is used exclusively by nasty private equity managers. Changing this treatment for private equity firms would represent gross discrimination against firms that make a valuable contribution to the market for the ownership control of business enterprises, which helps to discipline the management of resources in the private sector.

3. Tax on Corporate Stock Buy-Backs: it’s not uncommon for firms to use cash they’ve generated from operations to repurchase shares of stock issued in past. Unaccountably, Democrats regard this as a “wasteful” activity designed to unfairly enrich shareholders. However, it is a perfectly legitimate way for firms to return capital to owners. The tax would create an incentive for managers to choose less efficient alternatives for the use of excess funds. In any case, the unrestricted freedom of owners to empower managers to repurchase shares is a fundamental property right.

A tax on corporate stock buybacks can result in the triple taxation of corporate profits. Profits are taxed at the firm level, and if the firm uses after-tax profits to repurchases shares, then the profits are taxed again, and further, any gain to shareholders would be subject to capital gains tax. This is one more violation of the old principle that income should be taxed once and only once.

The proposed excise tax on buy-backs now added to the IRA is *expected* to raise more revenue than the carried interest revision would have, but adjustments to behavior have a way of stymying expectations. Research has demonstrated that firms who buy back their shares often outperform their peers. But again, there are always politicians who wish to create more frictions in capital markets because firms and investors are easy political marks, and because these politocos do not understand the key role of capital markets in allocating resources efficiently between uses and across time.

4. Corporate taxes: Imposing a minimum tax rate of 15% on corporate book income above $1 billion is a highly controversial part of the IRA. While supporters contend that the burden would fall only on wealthy shareholders, in fact the burden would be heavily distributed across lower income ranges. First, a great many working people are corporate shareholders through their individual or employer-sponsored savings plans. Second, corporate employees shoulder a large percentage of the burden of corporate taxes via reduced wages and benefits. Here’s Brad Polumbo on the incidence of the corporate tax burden:

“William C. Randolph of the Congressional Budget Office found that for every dollar raised by the corporate tax, approximately 70 cents comes out of workers’ wages. Further confirming this finding, research from the Kansas City Federal Reserve concluded that a 10% increase in corporate taxes reduces wages by 7%.”

This again demonstrates the dishonesty of claims that no one with an income below $400,000 will be taxed under the IRA. In addition, almost 50% of the revenue from this minimum tax will come from the manufacturing sector:

As Eric Boehm states at the last link, “So much for improving American manufacturers’ competitiveness!” Incidentally, it’s estimated that the bill would cause differential increases in the effective corporate tax on investments in equipment, structures, and inventories. This is not exactly a prescription for deepening the stock of capital or for insulating the American economy from supply shocks!

5. Medicare Drug Prices: A final source of deficit reduction is the de facto imposition of price controls on certain prescription drugs under Medicare Part D. A small amount of savings to the government are claimed to begin in 2023. However, the rules under which this will be administered probably won’t be established for some time, so the savings may well be exaggerated. It’s unclear when the so-called “negotiations” with drug companies will begin, but they will take place under the threat of massive fines for failing to agree to CMS’s terms. And as with any price control, it’s likely to impinge on supply — the availability of drugs to seniors, and it is questionable whether seniors will reap any savings on drugs that will remain available.

Do Words Have No Meaning?

The IRA’s vaunted anti-inflationary effects are a pipe dream. A Wharton Study found that the reduction in inflation would be minuscule:

“We estimate that the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024. We estimate a 0.25 percentage point fall in the PCE price index by the late 2020s. These point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation.”

Over 230 economists have weighed in on the poor prospects that the IRA will achieve what its name suggests. And let’s face it: not even the general public has any confidence that the IRA will actually reduce inflation:

Conclusion

The Inflation Reduction Act is a destructive piece of legislation and rather galling in its many pretenses. I’m all for deficit reduction, but the key to doing so is to cut the growth in spending! Reducing the government’s coerced absorption of resources relative to the size of the economy prevents “crowding out” of private, voluntary, market-tested activity. It also prevents the need for greater tax distortions that undermine economic performance.

The federal government has played host to huge pandemic relief bills over the past two years. Then we have Joe Biden’s move to forgive student debt, a benefit flowing largely to higher income individuals having accumulated debt while in graduate programs. And then, Congress passed a bill to subsidize chip manufacturers who were already investing heavily in domestic production facilities. All the while, the Biden Administration was doing everything in its power to destroy the fossil fuel industry. So now, Democrats hope to follow-up on all that with a bill stuffed with rewards for cronies in the form of renewable energy subsidies, financed largely on the backs of the same individuals who they’ve sworn they won’t tax! The dishonesty is breathtaking! This crowd is so eager to do anything before the midterm elections that they’ll shoot for the nation’s feet!

Relax: Natural Variability Causes Heatwaves

30 Saturday Jul 2022

Posted by pnoetx in Global Warming

≈ 2 Comments

Tags

Al Gore, Anthony WAtts, Build Back Better, Cliff Mass, Climate Emergency, CO2, Emergency Powers, Forest Management, Greenhouse Gases, Heat Index, Heatwaves, Joe Biden, National Oceanic and Atmospheric Administration, NOAA, Urban Heat Island, Wildfires

Lately almost any passing weather phenomenon is said to have been rooted in climate change and higher carbon concentrations. The recent heatwaves that seared parts of Europe and the U.S. are no exception, and climate change activists always find heat spells ripe for rhetorical exploitation. But while these would-be Cassandras and Gretas push their fearful narrative, there are strong reasons to doubt that these weather events are any cause for alarm. This summer’s heat waves, like all others, were of limited geographic scope, and they certainly weren’t the most severe heat waves on record in terms of either duration or magnitude. More on that below.

Data Problems

Temperature measurements tend to be exaggerated these days because so many “official” temperature records come from local airports or other urban sites rich in impervious cover and heat absorbing building materials. This gives rise to the so-called “urban heat island effect”, which refers to the elevated temperatures measured in urban versus rural areas. It’s even worse than that, however, as the vast majority of active weather stations in the U.S. are sited at “hot spots”, and many of them are poorly maintained. Data problems plague European temperature records as well.

Furthermore, official temperature records are extremely short on climatological scales, going back only about 150 years in the U.S. And these records have been “adjusted” by weather authorities like the National Oceanographic and Atmospheric Administration (NOAA), usually with the early records “cooled” relative to more recent readings. That means the long-term trend in temperatures is biased upward.

Climate Catastrophists

Nevertheless, Joe Biden has been threatening to declare a wholly unjustified “climate emergency“, perhaps thinking these dog days are the perfect time to assume a host of new emergency powers. It’s unclear whether the new “Build Back” bill making its way through Congress will be enough to satisfy the appetite of Biden’s handlers for costly and ultimately ineffective climate measures.

It’s tempting to think delirium from the heat waves is what prompted Al Gore to compare climate change skeptics to the dithering police officers in Uvalde, TX, but Gore’s fever is nothing new. We’re still waiting for the world to end, which he once predicted would occur by 2016.

Even weather reporters on TV are breathless in their descriptions of the heatwaves. They’ve certainly become dramatists for the climate-change cause. And people love good scare stories. It gives them an excuse to polish up their pitchforks! Or to be lazy and stay inside. It’s telling that so many people now quote heat index values (which combine heat and humidity), rather than actual temperatures, in the warm summer months. After all, it’s more thrilling to say it’s 105 outside than it is to say 95.

Anyway, compare the paired maps in each of the graphics below (here are links to sources for the first and second):

The temperatures are comparable, but the use of RED colors on the 2022 maps is so much more frightening! This post from Anthony Watts provides a list of links to news sources taking alarmist perspectives on the heatwaves in the U.S. and Europe, and falsely attributing the heatwaves to CO2.

Same Old High Pressure Domes

Cliff Mass offers a bone to the climate change community. He thinks perhaps 5% – 10% of the recent temperature anomaly in the UK is attributable to greenhouse gases. An effect of that magnitude is hardly worthy of government action, let alone panic. Mass says:

“Natural variability of the atmosphere was the proximate cause of the warmth and does not represent an existential threat to the population of Europe.”

The heat wave phenomenon is typical of slow-moving high-pressure systems that often develop during the summer months. These domes of high pressure vary in temperature and geographic breadth, and they are sandwiched between or adjacent to low-pressure systems with cooler temperatures. That’s been the case in both Europe and the U.S. during this summer’s heat waves, as illustrated by the following graphics, The northern hemisphere is not entirely enveloped in a heat wave.

And the rest of the globe? In the tropics (below 20 degrees latitude), June 2022 was the coolest June in 22 years, according to satellite temperature readings! Furthermore, the monthly anomaly in June was the coolest in 10 years. In the Southern Hemisphere, Australia and South America have had extremely cold winters. Antarctica had its coldest winter on record in 2021. Yet Joe Biden is under the misapprehension that we’re experiencing “a climate emergency”.

These are not the worst heat waves on record. Both the U.S. and Europe experienced higher temperatures and prolonged heat waves during the 1930s. For example, St.Louis, Missouri matched or exceeded 110 degrees four times in the 1930s, and twice in 1954, whereas the city topped out at 102 so far this year, and that was after a cool spring. There was an extreme European heat wave in 1976 that was drier and much lengthier, and others occurred in 1911 and 1906. Of course, available temperature comparisons are distorted because the early readings weren’t as impacted by urban heat islands. There are historical accounts of drastic heat waves much earlier, such as the 1500s and 1700s. Here is more heatwave history, in case you’re interested.

We’ll Be Fine

Heat isn’t the only story, of course. A wide range of other disastrous events are blamed on climate change. Wildfires are a prime example, but as we know, wildfires are not new, and the worst wildfires have more to do with poor forest management than anything else. Likewise, there is little if any association between extreme weather events and climate change. In that context, it’s also worth noting that cold weather is much deadlier than hot weather. The climate today, and going forward, presents far fewer dangers to humanity than in the past.

I did a lot of dirty, outdoor work in my youth, and it was hot! There were times just as hot as this summer, if not worse, I’d venture to say. Anyone old enough to have lived through the 1970s or even the 1950s should recognize the heatwave Chicken Littles as such.

Fueled, Ignored, Misdiagnosed in DC, Inflation Broadens

18 Monday Jul 2022

Posted by pnoetx in Inflation

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Cleveland Fed, Consumer Price Index, Consumer Sentiment, David Beckworth, infrastructure, Joe Biden, Joe Manchin, Median CPI, Pandemic Emergency Powers, Price Controls, Trimmed CPI, Vladimir Putin, Wholesale Price Index

Inflation accelerated at the consumer level in June and the advances continued to broaden. That’s confirmed by the median item in the Consumer Price Index (CPI) and a measure of the CPI that “trims” out items with the largest and smallest price hikes (see chart above from the Cleveland Fed). Wholesale inflation also picked up in June. At this point, there’s a very real danger that increasing expectations of future inflation are getting embedded into current pricing decisions. Once that happens, the cycle is very hard to break. And wage rates are not keeping pace, so inflation is reducing real incomes for many workers. The sad fact is that inflation takes its greatest toll on the well being of low income earners.

And why did inflation accelerate from 1.4% in January 2021 to 9.2% in June? Don’t ask Joe Biden, at least not if you want a straight answer. He’s been changing his tune almost every month, with a rotating cast of the characters coming in for blame. First, the story was that higher inflation was just transitory; then too, the Administration said it only hurt the rich, a wholly preposterous assertion; the blame then shifted to the oil companies; then to Putin; and then big corporations generally; more recently, it’s independent gas retailers! Nothing is said about Biden’s early pledge to shut down fossil fuels. Nothing is said about the federal government’s profligate spending and the money printing that paid for it. Nothing is said about the extended payment of unemployment benefits, which pinched labor supply. More generally, nothing is said about the extension of Biden’s pandemic emergency powers, which allows continued Medicaid and food stamp benefits to many who are otherwise ineligible. The federal spigot has been wide open!

So here’s a quick synopsis of events leading to our inflationary surge: demand strengthened as pandemic restrictions were lifted across the country. Unfortunately, businesses were not ready to meet that level of demand. Operations had been sharply curtailed during the pandemic all along business supply chains. Hiring staff was next to impossible for many firms, especially given the Biden Administration’s ineptitude with respect to labor incentives. The Administration also set out to starve the fossil fuel industry of capital and to shut down drilling and refining operations through restrictions and binding regulations. The price of oil began to soar early in the Administration, which has been working its way into the prices of other goods and services, including food and transportation. Reinforcing these ill effects was the broader regulatory onslaught instigated at many agencies by Biden, actions which tend to increase costs while limiting competition in many industries.

Most of the factors just listed were limitations on supply. However, the price pressure was accelerated on the demand side by government stimulus payments. And in fact, none of this inflation would be sustainable without easy monetary policy — and monetization of government debt.

Later, of course, Vladimir Putin’s invasion of Ukraine exacerbated worldwide energy and food shortages. Meanwhile, Democrat efforts to push through additional social spending, née “infrastructure”, were unrelenting. They are still pushing for more climate change regulation, not to mention funding “investments” intended to improve the “equity” of highways! Thank God for Joe Manchin for shutting it down, though even he seems intent on imposing drug price controls. Biden now says he’ll impose green energy policy via executive order.

Until about March of this year, Federal Reserve policy remained extremely accommodative, despite the central bank having completely missed its so-called inflation target rate of 2% well before that. Take another look at the chart at the top of this post. CPI inflation shot above 2% in early 2021. The Fed did not really react until March 2022. The chart below shows that growth in the GDP deflator was slightly more muted than the CPI, but it too was above 2% in the first quarter of 2021 and accelerated from there. It’s as if there had been no Fed target at all!

The story, again, was “not to worry, it’s transitory”. Moreover, the Fed was convinced the inflation was driven entirely by supply problems. In fairness, it’s true that tighter monetary policy won’t stop inflation from supply shocks without great cost in terms of lost output. But monetary accommodation, which is what happened in 2021, simply validates inflation and runs the risk of allowing inflation expectations to become embedded in pricing. And again, that’s hard to undo.

Despite the dominance of supply-side inflation pressures early in 2021, it’s no wonder that a different kind of pressure has cropped up since then. The following chart from David Beckworth is helpful:

We now have primarily demand-side inflation fueled by the earlier accommodation of supply constraints and the monetization of government deficits. Sure, there remain significant supply constraints, whether induced by the actions of Russia, Biden, or lingering pandemic dysfunctions. But supply-side inflation cannot sustain without monetary accommodation. An early reading for the second-quarter GDP deflator will be available in late July, but it may well show accelerating pressures from both the demand side and the supply side.

There is no way to eliminate the inflation surge without curtailing the growth of liquidity. Unfortunately, the risk that monetary tightening by the Fed will induce a recession is already very high, even a likelihood at this point. A fairly reliable signal of recession is an inversion of the yield curve, and we now see two-year Treasury debt yielding 15 – 20 basis points more than 10-year bonds. Again, real wages are declining. Real retail sales are down two months in a row and down from a year ago. Here’s a chart showing the most recent dismal reading on the index of consumer sentiment:

Whether a recession has already begun is not clear, but inflation certainly hasn’t abated, and the Fed is expected to continue tightening, albeit belatedly. Meanwhile, the Biden Administration and key Democrats don’t seem to want to make the Fed’s job any easier. They simply don’t comprehend the reality and their role in fostering the upward price trends we’re experiencing. They still cling to hopes of another big spending package that would add to deficits and the inflation tax, despite contemplating tax hikes on private employers, but so far Manchin has put the kabash on that. Still, we’re nowhere close to putting our fiscal and monetary houses in order.

Social Insurance, Trust Fund Runoff, and Federal Debt

28 Thursday Apr 2022

Posted by pnoetx in Deficits, Social Security

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Anti-Deficiency Act, Charles Blahous, Deficits, DI, Disability Income, Discretionary Budget, entitlements, Federal Reserve, Fiscal Inflation, Fiscal Tiger, Hospitalization Insurance, Joe Biden, Mandatory Spending, Medicaid, Medicare Part A, Medicare Part B, Medicare Part D, Medicare Reform, Medicare Trust Fund, Monetization, OASI, Old Age and Survivorship Income, Pay-As-You-Go, payroll taxes, SMI, Social Security Reform, Social Security Trust Fund, Student Loan Forgiveness, Supplementary Medical Insurance

The Social Security and Medicare trust funds are starting to shrink, but as they shrink something else expands in tandem, roughly dollar-for-dollar: government debt. There is a widespread misconceptions about these entitlement programs and their trust funds. Many seem to think the trust funds are like “pots of gold” that will allow the government to meet its mandatory obligations to beneficiaries. But, in fact, the government will have to borrow the exact amounts of any “assets” that are “cashed out” of the trust funds, barring other reforms or legislative solutions. So how does that work? And why did I put the words “assets” and “cashed out” in quote marks?

The Trust Funds

First, I should note that there are two Social Security trust funds: one for old age and survivorship income (OASI) and one for disability income (DI). Occasionally, for summary purposes, the accounts for these funds are combined in presentations. There are also two Medicare trust funds: one for hospitalization insurance (HI – Part A) and one for Supplementary Medical Insurance (SMI – Parts B and D). The first three of these trust funds are represented in the chart at the top of this post, which is from the Summary of the 2021 Annual Reports by the Boards of Trustees. It plots a measure of financial adequacy: the ratio of trust fund assets at the start of each year to the annual cost. The funds are all projected to be depleted, HI and OASI much sooner than DI.

Fund Accumulation

The first step in understanding the trust funds requires a clearing up of another misconception: the payroll taxes that workers “contribute” to these systems are not invested specifically for each of those workers. These programs are strictly “pay-as-you-go”, meaning that the payroll taxes (and premiums in the case of Medicare) paid this year by you and/or your employer are generally distributed directly to current beneficiaries.

Back when demographics of the American population were more favorable for these programs, with a larger number of workers relative to retirees, payroll taxes (and premiums) exceeded benefits. The excess was essentially loaned by these programs to the U.S. Treasury to cover other forms of spending. So the trust funds accumulated U.S. Treasury IOUs for many years, and the Treasury pays interest to the trust funds on that debt. On the upside, that meant the Treasury had to borrow less from the public to cover its deficits during those years. So the government spent the excess payroll tax proceeds and wrote IOUs to the trust funds.

Draining the Funds

The demographic profile of the population is no longer favorable to these entitlement programs. The number of retirees has increased so that benefit levels have grown more quickly than program revenue. Benefits now exceed the payroll taxes and premiums collected, so the trust funds must be drawn down. Current estimates are that the Social Security Trust Fund will be depleted in 2034, while the Medicare Trust Fund will last only to 2026. These dates are reflected in the chart above. It is the mechanics of these draw-downs that get to the heart of the first “pot of gold” misconception cited above.

To pay for the excess of benefits over revenue collected, the trust funds must cash-in the IOUs issued to them by the Treasury. And where does the Treasury get the cash? It will almost certainly be borrowed from the public, but the government could hike other forms of taxes or reduce other forms of spending. So, while the earlier accumulation of trust fund assets meant less federal borrowing, the divestment of those assets generally means more federal borrowing and growth in federal debt held by the public.

Given these facts, can you spot the misconception in this quote from Fiscal Tiger? It’s easy to miss:

“In the cases of Social Security, Medicare, and Medicaid, payroll taxes provide some revenue. Social Security also has trust funds that cover some of the program costs. However, when the government is short on funds for these programs after getting the revenue from taxes and trust funds, it must borrow money, which contributes to the deficit.”

This kind of statement is all too common. The fact is the government has to borrow in order to pay off the IOUs as the trust funds are drawn down, roughly dollar-for-dollar.

A second mistake in the quote above is that federal borrowing to pay excess benefits after the trust funds are fully depleted is not really assured. At that time, the Anti-deficiency Act prohibits further payments of benefits in excess of payroll taxes (and premiums), and there is no authority allowing the trust funds to borrow from the general fund of the Treasury. Either benefits must be reduced, payroll taxes increased, premiums hiked (for Medicare), or more radical reforms will be necessary, any of which would require congressional action. In the case of Social Security (combining OASI and DI), the projected growth of “excess benefits” is such that the future, cumulative shortfall represents 25% of projected benefits!

Again, the mandatory entitlement spending programs are technically insolvent. Charles Blahous discusses the implications of closing the funding gap, both in terms of payroll tax increases or benefit cuts, either of which will be extremely unpopular:

“How likely is it that lawmakers would immediately cut benefits by 25% for everyone, rich and poor, retiring next year and beyond? More likely, lawmakers would phase in reforms gradually, necessitating much larger eventual benefit changes for those affected—perhaps 30% or 40%. And if we want to spare lower-income individuals from reductions, they’d need to be still greater for everyone else.”

It should be noted that Medicaid is also a budget drain, though the cost is shared with state governments.

Discretionary vs. Mandatory Budgets

When it comes to federal budget controversies, discretionary budget proposals receive most of the focus. The federal deficit reached unprecedented levels in 2020 and 2021 as pandemic support measures led to huge increases in spending. Even this year (2022), the projected deficit exceeds the 2019 level by over $160 billion. Joe Biden would like to spend much more, of course, though the loss of proceeds from his student loan forgiveness giveaway does not even appear in the Administration’s budget proposal. Biden proposes to pay for the spending with a corporate tax hike and a minimum tax on very high earners, including an unprecedented tax on unrealized capital gains. Those measures would be disappointing in terms of revenue collection, and they are probably worse for the economy and society than bigger deficits. None of that is likely to pass Congress, but we’ll still be running huge deficits indefinitely..

In a further complication, at this point no one really believes that the federal government will ever pay off the mounting public debt. More likely is that the Federal Reserve will make further waves of monetization, buying government bonds in exchange for monetary assets. (Of course, money is also government debt.) The conviction that ever increasing debt levels are permanent is what leads to fiscal inflation, which taxes the public by devaluing the public debt, including (or especially) monetary assets. The insolvency of the trust funds is contributing to this process and its impact is growing..

Again, the budget discussions we typically hear involve discretionary components of the federal budget. Mandatory outlays like Social Security, Medicare, and Medicaid are nearly three times larger. Here is a good primer on the mandatory spending components of the federal budget (which includes interest costs). Blahous notes elsewhere that the funding shortfall in these programs will ultimately dwarf discretionary sources of budgetary imbalance. The deficit will come to be dominated by the borrowing required to fund mandatory programs, along with the burgeoning cost of interest payments on the public debt, which could reach nearly 50% of federal revenues by 2050.

Conclusion

It would be less painful to address these funding shortfalls in mandatory programs immediately than to continue to ignore them. That would enable a more gradual approach to changes in benefits, payroll taxes, and premiums. Politicians would rather not discuss it, however. Any discussion of reforms will be controversial, but it’s only going to get worse over time.

Political incentives being what they are, current workers (future claimants) are likely to bear the brunt of any benefit cuts, rather than retirees already enrolled. Payroll tax hikes are perhaps a harder sell because they are more immediate than trimming benefits for future retirees. Other reforms like self-directed Social Security contributions would create better tradeoffs by allowing investment of contributions at competitive (but more risky) returns. Medicare has premiums as an extra lever, but there are other possible reforms.

Again, the time to act is now, but don’t expect it to happen until the crisis is upon us. By then, our opportunities will have become more hemmed in, and something bad is more likely to be promulgated in the rush to save the day.

Markets Deal With Scarcity, Left Screams “Price Gouging”

11 Monday Apr 2022

Posted by pnoetx in Antitrust, Environmental Fascism, Oil Prices

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Antitrust, Barack Obama, central planning, ESG Scores, FDR, Fossil fuels, Gas Prices, Green New Deal, Intermittancy, Joe Biden, Keystone Pipeline, Lawrence Summers, Oil Prices, Oil Profits, OPEC, Power Grid, Price Gouging, Profit Margins, Profiteering, Renewable energy, Strategic Petroleum Reserve, Ukraine Invasion, Vladimir Putin, West Texas Intermediate

Democrats claim profiteering by oil companies is responsible for the sustained rise in oil prices since Joe Biden’s inauguration (really, his election). That’s among the more laughable attempts at gaslighting in recent memory, right up there with blaming market concentration for the sustained increase in inflation since Biden’s inauguration. At a hearing this week, congressional Democrats, frightened by the prospect of a beat-down just ahead in the mid-term elections, couldn’t resist making “price-gouging” accusations against oil producers. These pols stumble over their own contradictory talking points, insisting on more oil production only when they aren’t hastily sabotaging oil and gas output. Their dishonestly is galling, but so is the foolishness of voters who blindly accept the economic illiteracy issuing from that side of the aisle.

Break It Then Blame It

Those who level “price gouging” charges at oil companies are often the same people seeking to eliminate fossil fuel consumption by making those energy choices unaffordable. The latter is a bad look this close to mid-term elections, so they follow the playbook I described recently in “Break the Market, Blame It, Then Break It Some More“. And this post is instructive: “House Dem: Big Oil is profiteering by, er … doing what we demanded”.

Not only have the Democrats’ policies caused oil prices to soar; for many years they’ve been undermining the stability of the power grid via forced conversion into intermittent renewable energy sources like wind and solar, all while preventing the expansion of safe and carbon-free nuclear power generation. It’s ironic that these would-be industrial planners seem so eager to botch the job, though failure is all too typical of central planning. Just ask the Germans about their own hapless efforts at energy planning.

As economist Lawrence Summers, former Treasury Secretary under Barack Obama, said recently:

“Look, the net effect of the things the administration talks about in terms of micro policies to reduce inflation, this gouging talk is frivolous, nonserious, and utterly ineffectual. A gas price holiday would, ultimately, push up prices by raising demand. … The student loan relief … is injecting resources into the economy at a hundred billion dollar a year annual rate when the economy needs to be cooled off, not heated up. … The administration could be much more constructive than it has been with respect to energy supply.”

The market functions to allocate scarce resources. When conditions of scarcity become more acute, the market mechanism responds by pricing available supplies to both curtail use and incentivize delivery of additional quantities. That involves the processing of vast amounts of information, and it is a balancing at which the market performs extremely well relative to bumbling politicians and central planners, whose actions are too often at the root of acute scarcities.

Antitrust Nonsense

Of course, the Democrats have seized upon the inescapable fact that soaring oil prices cause profits to soar for anyone producing oil or holding stocks of oil. But oil company profits are notoriously volatile. Margins were negative for most of 2020, when demand weakened in the initial stages of the pandemic. And now, some companies are bracing for massive write-downs on abandoned drilling projects in Russia. The oil and gas business is certainly not known for high profit margins. Short-term profits, while they last, must be used to meet the physical or financial needs of the business.

The threats of antitrust action by the Biden Administration are an extension of the price-gouging narrative, even if the threat reflects an injudicious grasp of what it takes to prove collusion. It takes a fertile imagination to think western oil companies could successfully collude on pricing in a market dominated by the following players:

Fat chance. In any case, it’s a global market, and it’s impossible for western oil producers to dictate pricing. Even the OPEC cartel has been unable to dictate prices, not to mention keeping it’s members from violating production quotas. But if a successful conspiracy among oil companies to raise prices was possible, one would guess they’d have done it a lot sooner!

Nor is it possible for the oil majors to dictate prices at the pump, because retail prices are set independently. While the cost of crude oil is only about 54% of the cost of refined gas at retail, fluctuations in prices at the pump correlate strongly with crude oil prices. Here is a ten-year chart of daily price data, where the blue line is the price of West Texas Intermediate crude oil and the orange line is the average price of regular gas in the U.S.:

Here are the same two series for 2022 year-to-date:

Coerced Scarcity

Again, oil prices have been under upward pressure for over a year until a break in early March, following the steep run-up in the immediate wake of the Ukraine invasion. First there was Biden’s stultifying rhetoric, before and after the 2020 election, assisted by radical members of Congress. Then there were executive orders halting drilling on federal lands, killing the Keystone pipeline, efforts to shut down several other existing pipelines, and the imposition of regulatory penalties on drillers. In addition, unrest in certain parts of the Middle East curtailed production, compounded this year by the boycott on Russian oil (which, as a foreign policy matter, was far too late in coming).

However, existing facilities have been capable of squeezing out more oil and gas. Lo and behold, supply curves slope upward, even in the short-run! Despite all of Biden’s efforts to cripple domestic oil production, higher crude prices have brought forth some additional supplies. Biden’s raid on the Strategic Petroleum Reserve has also boosted supply for now, but its magnitude won’t help much, and it must be replaced for use during real U.S. national emergencies, which the war in Ukraine is not, as awful as it is.

That said, investing in new drilling capacity is not wise given the political climate created by Biden and the Democrats: they have been quite clear that they mean to crush the fossil fuel industry. For some time, the oil companies have been busy investing cash flows in “green” initiatives in an effort to bolster their ESG scores, a dubious exercise to say the least. Arguably, in this policy environment, the most responsible thing to do is to return some of the capital over which these firms are stewards to its rightful owners, many of whom are middle-class savers who hold oil stocks in their 401(k) funds. That approach is manifest in the recent stock buybacks and dividend payments oil companies have announced and defended before Congress.

Conclusion

A forced shutdown of fossil fuel energy was much ballyhooed by the Left as a part of Joe Biden’s agenda. Biden himself bought into the “Green New Deal”, imagining it might win him a vaunted place alongside FDR’s legacy in American history. The effort was unwise, but Biden is trying to hang onto the narrative and maintain his punitive measures against American oil companies. All the while, he begs OPEC producers to step up production, bending a knee to despots in countries such as Iran and Venezuela. Why, it’s as if their fossil fuels are somehow cleaner than those extracted in the U.S! The feeble Biden and congressional Democrats are proving just how mendacious they are. They can rightfully blame Vladimir Putin for the recent escalation in oil prices, but they bear much responsibility themselves for the burden of high gas prices, energy bills, and the unnecessary, ongoing scarcity victimizing the American public.

Full Blame for Monstrous Aggression On Putin

14 Monday Mar 2022

Posted by pnoetx in Foreign Policy, Propaganda

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Anders Fogh Rasmussen, Barack Obama, Bashar Assad, Bio-weapons, Biolabs, Chechnya Invasion, Chemical Weapons, Claire Berlinski, De-Nazification, Dmitry Utkin, Donald Trump, George Kennan, Georgia Invasion, Hillary Clinton, Holodomer Genicide, Joe Biden, John Mearscheimer, Kyle Becker, Malaysian Airlines, Matt Vespa, Melanie Willis, NATO, Russian Federal Security Service, Russian Imperial Movement, Stephen Kotkin, Syria, Thermobaric Weapons, Ukraine, Ukraine Invasion, USSR, Vladimir Putin, Volodymyr Zelensky, Wagner Group, WMDs

One would think condemnation of Vladimir Putin’s invasion of Ukraine would be easy for anyone who cares about human rights. This action and the threats he’s made against the West are the work of a psychotic. Yet there are some who place the ultimate blame for his behavior on the West and on NATO in particular. These reactions range from “This is all our fault” to “He’s evil, but we should not have provoked him”. Other reactions are much wilder, such as “We’re hiding something in Ukraine” to “We orchestrated this whole thing.” I am a small-government classical liberal, and no one trusts government power less than I do. However, I certainly place more trust in Western governments than in Russia’s authoritarian regime. If the West deserves any blame here, it’s because we made it easy for Putin.

Authoritarian Longings

For certain Western conservatives who’ve developed a man-crush on the “strong leader” Putin, the first thing you should understand is that he is an inveterate gangster and thug. Brute force fascism has always defined his approach to governance and foreign policy. That’s how this so-called “genius” came to power: three Russian apartment buildings were bombed in 1999, an act believed to have been instigated by the Russian Federal Security Service, of which he was head. Putin blamed Chechen rebels, prompting an attack on Chechnya that led to his ascendency.

Even among more moderate voices we hear statements like this:

“Russia has an existential interest in keeping NATO away from his border.”

Existential? “His” border? NATO may have expanded to include members from Eastern Europe, but that didn’t change its basic defensive posture nor the Putin regime’s expansionist goals. Objectively, it might have been more in Russia’s existential interest to be less belligerent and avoid the kind of rogue-state trap it’s now sprung on itself.

There are a few so-called leading intellectuals in the West who have condemned NATO eastward expansion as the root cause of Russia’s vengeful mind set, such as George Kennan and John Mearsheimer. However, Russian scholar Stephan Kotkin says they have it all backwards:

“The problem with their argument is that it assumes that, had nato not expanded, Russia wouldn’t be the same or very likely close to what it is today. What we have today in Russia is not some kind of surprise. It’s not some kind of deviation from a historical pattern. Way before nato existed—in the nineteenth century—Russia looked like this: it had an autocrat. It had repression. It had militarism. It had suspicion of foreigners and the West. This is a Russia that we know, and it’s not a Russia that arrived yesterday or in the nineteen-nineties. It’s not a response to the actions of the West. There are internal processes in Russia that account for where we are today.

I would even go further. I would say that nato expansion has put us in a better place to deal with this historical pattern in Russia that we’re seeing again today.”

Former NATO Secretary-General Anders Fogh Rasmussen agrees with that assessment, noting several early attempts at outreach to Russia:

“Russia is not a victim. We have reached out to Russia several times during history…. First, we approved the NATO Russia Founding Act in 1997…. Next time, it was in 2002, we reached out once again, established something very special, namely the NATO-Russia Council. And in 2010, we decided at a NATO-Russia summit that we would develop a strategic partnership between Russia and NATO.”

Nazis At the Kremlin

Putin contends that Ukraine must be “de-Nazified”, which is bizarre given the large Jewish population of Ukraine and its representation in leadership. Putin’s claim is also complete projection, as Melanie Willis has written:

“It is in fact Putin himself who has unleashed neo-Nazism on Ukraine using the Wagner Group. This is a private army of mercenaries financed by pro-Kremlin oligarchs. It’s led by Dmitry Utkin, a former Russian military intelligence officer sporting Waffen-SS tattoos who allegedly named his outfit after Hitler’s favourite composer.

Far-right extremists comprise the core of this group, which has committed horrific atrocities across Africa, the Middle East and Ukraine as a front for Russian imperial policy. …

The Russian Imperial Movement, which has fought in Ukraine, was designated a terrorist organisation by the US in 2020 for training and funding neo-Nazi terrorists across the world in its military camps, which operate under the Russian security services’ eye.”

Love Letters To Soviet Monsters

As if to emphasize his bona fides as a vicious authoritarian, Putin lionizes the failed Soviet empire, as if to forgive the horrors perpetrated by the communists: millions of lives lost to the engineered Ukrainian famine of the Holodomer genocide in the 1930s, the widespread raping of Russian, Polish, German women by members of the Red Army at the end of World War II, the millions confined to concentration camps over the entire Soviet era, and the repression, murder, or exile of many others. And this is to say nothing of the long economic nightmare inflicted by communist central planners, including the denial of property rights to ordinary people in the USSR and its satellite states.

Also recall that Putin’s army has made a practice of bombing civilian targets in separate conflicts starting with Chechnya in 1999, Georgia in 2008, and Syria in 2015. Cluster bombs and thermobaric weapons were used against residential areas in all three of these actions, the first two of which were Russian invasions of sovereign nations, and the third was on behalf of the Bashar Assad regime. It’s no surprise that we’re now seeing atrocities committed at Putin’s behest in Ukraine, and it could get far worse.

NATO: Not All About Russia

Another thing to understand: NATO’s original and ongoing purpose goes far beyond simply defending against Soviet and now Russian aggression. Claire Berlinski has a good post on this subject. She quotes “A Short History of NATO”:

“In fact, the Alliance’s creation was part of a broader effort to serve three purposes: deterring Soviet expansionism, forbidding the revival of nationalist militarism in Europe through a strong North American presence on the continent, and encouraging European political integration.”

Much of Europe was reduced to rubble after World War II, with many millions of soldiers and civilians dead. Homelessness and hunger were everywhere. Berlinski points to outbreaks of “militant nationalism” that plagued Europe in the wake of earlier crises.

“The enormity of the destruction transferred the responsibility for preserving Western civilization to the United States. …

Americans who resent Europeans for being reluctant to militarize and for placing so much importance on political integration should remember that this is the world we created. We insisted upon this. Europe had no choice. It’s very strange for Americans suddenly to view the United States’ greatest military and foreign policy achievement as a failure. It was the United States’ plan for Europe to focus on economic growth rather than maintaining large conventional armies …”

Indeed, this point was lost on Donald Trump. There is no question that European states should pay up to their commitments to NATO, and today more balance in those commitments is probably well-advised. However, as Berlinski notes, even when the Berlin Wall fell and the USSR dissolved, NATO’s role in ensuring European stability was still paramount. One might even say it ultimately required NATO expansion to the Eastern European states. And no, Russia was never promised that NATO would not expand to the east. That is a complete myth promoted by Putin and the Russian misinformation apparatus.

The rise of Russian belligerence over the past two decades meant that all three components of NATO’s original mission remained relevant. And through all that, NATO’s posture has remained defensive, not offensive. Yet many in the West have fallen for a continuing barrage of Russian propaganda and misinformation that the U.S. should withdraw from the alliance. On that, Berlinski says,

“It’s an idea very much like unilateral nuclear disarmament.”

The West Did Not Impede Putin

As a staunch Russian nationalist, Putin has always been butt-hurt about the fall of the USSR. And let’s not fool ourselves into thinking he hasn’t been coddled to a significant degree by the West, even as he grew bolder in his provocations and bullying. I already discussed NATO’s attempts to reach out to Putin before 2010. This article recounts, from a series of tweets by Kyle Becker, the subsequent course of affairs. Becker notes the following:

As Secretary of State under Barack Obama, Hillary Clinton approved the Uranium One deal giving Russia 20% of U.S. reserves.
In early 2010, the new START treaty left Russia with huge tactical nuclear advantages, and the agreement had very weak enforcement mechanisms.
Obama’s incredible hot-mic moment in 2012 caught him promising “more flexibility” to the Russians on ballistic missile defense after the November election.
The 2014 takeover of the Crimean Parliament and the subsequent rigged referendum to leave Ukraine was met with ineffective sanctions.
Missiles fired by pro-Russian forces took down a Malaysian Airlines flight over the Dunbas region in 2014. Earlier, Obama had denied Ukraine access to equipment that would have defended against anti-aircraft fire, and might have prevented the tragedy.

Even more recently, Joe Biden in January practically issued a pass to Russia on action against Ukraine: “It’s one thing if it’s a minor incursion…” Well then! Townhall’s Matt Vespa says:

“Russia is invading because they’ve been getting away with using brute force for years, coupled with an eight-year administration in the United States that did all it could to weaken everyone around them. Obama did nothing when Crimea was seized. He did nothing when Russians established themselves in the Middle East… For a solid decade, the use of force has worked, and Biden being Obama’s former VP, he sees a continuation of that weakness. Putin was right in that regard, gaming out the West’s response to a senile U.S. president. What he did not expect was the tenacity of the Ukrainian resistance.”

The Biolabs Pretext

What about those biolabs in the Ukraine? Putin’s propaganda machine went into high gear to characterize the labs as threats of biological warfare on Russia’s border. Many Western populists and conservatives thought this seemed like a rational pretext for Putin’s actions, but without a shred of proof. We really don’t know what’s happening there, but biolabs are not exactly uncommon, and the vast preponderance of biological and virological research is benign. The mere existence of those facilities is certainly not synonymous with “bio-weapons” research, as many have taken for granted. And, of course, a biolab in the West is likely to be engaged in bio-defense research as well. You can be sure, however, that Putin has contemplated the use of bio-weapons against Ukraine.

Conclusion

Vladimir Putin has made ominous threats against NATO countries, but if he didn’t have a huge stockpile of nuclear weapons he’d be merely a bad actor from a low-tier industrial society, and without the clout to frighten the entire world. His belligerence is long-standing and quite out-of-hand, and it is unlikely to stop with Ukraine should he succeed in crushing it. That seems to be his intent. NATO and the West did not do anything to justify Putin’s conspiratorial fantasies. In fact, the West coddled Putin for far too long, to our detriment and to the horror of the Ukrainian people.

I’m trying to maintain some optimism that Putin’s miscalculations in this invasion will eventually lead to Russian defeat. At the very least, it may be impossible for his occupying forces to maintain control without disastrous consequences to them. That might eventually lead to a withdrawal, much as it did in Afghanistan. Meanwhile, Western leaders still hope to find an “off-ramp” for Putin allowing him to save face and perhaps settle for small gains in the separatist regions. If so, I won’t be surprised to see repeat offenses from Putin in the future, either in Ukraine or elsewhere.

Projecting a Wobbly Stick

11 Friday Mar 2022

Posted by pnoetx in Foreign Policy, National Security, War

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Anthony Blinken, Biden Administration, Joe Biden, John Cochrane, NATO, Naval Blockade, No-Fly Zone, Nuclear Threat, Russia, Strategic Ambiguity, Trade Embargo, Ukraine, Vladimir Putin, WMDs, Xi Jinping

Why reveal your intentions when you don’t have to? That’s exactly what the Biden Administration did with respect to the question of a “no-fly zone” over Ukraine, and it might as well apply to all future incursions backed by wild threats from aggressor states possessing WMDs. This was another unforced error by Biden’s team and Secretary of State Anthony Blinken. John Cochrane writes that “strategic ambiguity” has real value in deterring an aggressor, but apparently our current leadership hasn’t thought that through. From Cochrane:

“Once again, the U.S. declares, publicly, ahead of time — ahead of the possible collapse of the Ukrainian government — what we will not do, and elevates it to a matter of principle.

Who else is listening? Well, Xi Jinping. And the Iranians. And the South Koreans, Japanese, Saudi Arabians, and more. …

We have just wrapped Taiwan up and delivered it to China.

Message to Iran: test one nuclear weapon. Invade Syria, Iraq, or whatever. The US will not respond. Message to others. Get nukes. Now.

This war isn’t just about Ukraine. It is about the kind of world we live in for the next generation.”

As Cochrane’s says, the U.S. and NATO calculated that supplying anti-tank and anti-aircraft weapons to Ukraine would not trigger Putin to make good on his larger threats. At the same time, the thinking is a no-fly zone is too chancy. It’s probably true, but there was no reason to say so. It could have and should have waited. It might have given Putin some pause, any instance of which could be of great value to the Ukrainians as they marshal their defense.

This kind of up-front pusillanimity more broadly undermines the credibility of other options we might wish to have against aggressors in the future, such as trade embargoes, naval blockades, or even conventional weapons. Nor do the particulars in this case limit the range of actions a future aggressor might make threats against. We’ve more or less revealed that whatever a future aggressor chooses to forbid, under the menace of some drastic reprisal, is off the table. Acquiescence is adopted as doctrine, and that is a huge blunder.

Every Gentleman Best Heed the Power of Hysterics To Censor

19 Saturday Feb 2022

Posted by pnoetx in Censorship, Gender Differences, Uncategorized

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Abortion, Antifa, BLM, Bullying, Center for the Study of Partisanship and Ideology, Civil Rights Law, Critical Race Theory, Dark Triad, Defense Priorities, Disparate impact, Equal Pay, Eric Landers, Family Leave Mandates, Feminization, First Amendment, Gender Conventions, Gender Studies, Georgetown Law School, Grievance Studies, Harrassment, Hate Speech, Human Resources, Ilya Shapiro, Joe Biden, Minimum Wage, Noah Carl, Racial Quotas, racism, Richard Hanania, Sexism, Virtuous Victimhood, Yale Halloween

Here are the gender conventions we’ve adopted in Western society on the rules of debate:

“We accept gender double standards, and tolerate more aggression towards men than we do towards women. We also tolerate more hyper-emotionalism from women than men.”

So says Richard Hanania in an essay called “Women’s Tears Win In the Marketplace of Ideas“. Hanania is the president of the Center for the Study of Partisanship and Ideology, and a research fellow at Defense Priorities. He offers some cogent examples of this disparate treatment, such as the Yale Halloween costume imbroglio and the “cancelling” of Ilya Shapiro at Georgetown Law School. To those we can add Eric Landers’ forced withdrawal as Joe Biden’s chief science advisor, and there are countless others. About this, Hanania says:

“What makes these cases difficult is that male versus male argumentation just has completely different rules, norms, and expectations than male versus female. … A man can’t just yell in another man’s face for 5 or 10 minutes about how he’s hurting his feelings. If a man does behave this way, bystanders are more likely to feel disgusted than join in or play the role of white knight. The man at the receiving end of the abuse is at some point going to have to escalate towards violence, or back down and say something about how this is beneath him. Depending on the situation, observers may assume violence is a distinct possibility, and get between the two sides.

None of these options are available when getting yelled at by a woman. You certainly can’t make an implicit threat of violence. Raising your voice will turn everyone against you, and even walking away can look heartless.”

I’ve witnessed a few pathetic crying jags in the workplace myself, as well as some volleys of verbal belligerence from females on social media that were pointedly anti-social. In my experience, most women can dish out barbs good-naturedly in jest and conduct themselves with dignity in debate. On the other hand, there are too many men who become hostile in debate, which most observers will find much less sympathetic if the counter-party is a woman. And there are a few men, here and there, who have trouble holding back tears in a fraught exchange, but we all know it’s not a good look.

To state the obvious, tears are a natural reaction to grief or real hurt. Anger is well-justified in response to criminal or personal wrongs. Nevertheless, it’s necessary to distinguish between these kinds of reactions and the ignoble tears or venom sometimes brought to controversial debates by neurotic partisans. As Hanania says of our disparate gender conventions, considerable censorship is instigated by an intransigent minority of women who manage to “… indulge their passions in ways that men cannot … .” Most men, anyway… and if they do, they’ve usually lost and know it.

These passionate displays are often tied to claims of individual or group victimhood. The objector could be anyone who feels an under-appreciated beef, but acting-out in order to signal “virtuous victimhood” in this way might indicate a deeper instability.

Again, as Hanania says, females have a definite advantage in the deployment of tears, confrontational rhetoric, and screams. Coincidentally, in a post to which Hanania links, Noah Carl marshals data on the extremely skewed representation of degrees awarded to women in Grievance Studies (e.g. Gender Studies and Critical Race Theory).

Too often, claims of victimhood are invoked in attempts to rebut any number of principled policy positions. For example, your views might be construed as offensive, racist, or sexist if you oppose such things as an increase in the minimum wage, racial quotas, disparate impact actions, equal pay rules, family leave mandates, and abortion. Expressing a strong and reasoned defense of many positions can foment imagined micro-aggressions or even harassment.

The real danger here is that honest debate is suppressed, and with it, very often, the truth. I acknowledge that people must be free to express or defend their views passionately, and with tears, screams, or otherwise, which the First Amendment guarantees. Our gender conventions in this matter should be revisited, however, if men and women are truly to be on equal footing.

Whether baring fangs or shedding tears, there are self-appointed arbiters of acceptable speech represented in almost all of our public and private institutions, ready to shut down debate on account of their feelings. They have more than a few sympathetic allies, male and female, at higher levels of their organizations. In the past, Hanania has discussed the over-representation of females in Human Resource departments. In these contexts, adjudication of disputes often relies on vague notions of what constitutes “hate speech” or “harassment” under Civil Rights Law. If you manage to provoke the tears of a colleague or underling, you’re probably behind the eight ball!

Hanania considers some alternative ground rules or “options” for debate:

Expect everyone who participates in the marketplace of ideas to abide by male standards, meaning you accept some level of abrasiveness and hurt feelings as the price of entry.
Expect everyone to abide by female standards, meaning we care less about truth and prioritize the emotional and mental well-being of participants in debates.”

Either of these options is better than the double standard we have now, and Hanania point to a number of egregious manifestations of our double standard. As he notes, #2 might be what’s meant by the “feminization of intellectual life”, but it fosters the arbitrary prohibition against discussion of any number of ideas that belong on the policy menu.

Option #1 would undoubtedly be condemned as “traditional male dominance” of public debate, but it would bar no one from participation, and obstacles perceived by females, or any sensitive soul, can be viewed as a matter of socialization. Both tearful and ferocious argumentation should be marginalized regardless of the antagonist’s gender.

Imperfect as they are, we have laws and/or social strictures against harassment, bullying, and other aggressive behavior thought to be largely associated with malcontented males. But as Hanania says:

“We haven’t even begun to think carefully about equivalent pathologies stemming from traits of the other sex.”

This problem obviously pales in comparison to the fascist tactics typical of the far Left. That includes the violent behavior of Antifa and BLM, unethical attempts blame conservatives for various, often fabricated deeds, and to threaten and punish them economically, even to the point of state-sponsored thievery and threats of harm to family members. Despite the more benign nature of the disparities discussed here, restoring gender equality to the terms of civil debate, without tears and hysterics, would be a great step forward.

Sacred Cow Chips

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