I read this morning that Nicholas Sarkozy, the president of France, has said that the age of “lassiez-faire” is over. This is becoming a clarion call of many who favor more government intervention in our economy. But the problems we are currently experiencing in our economy cannot be squarely blamed on a “lassiez-faire” approach. An abundance of regulation has not led to the demise of our economy, but neither has a lack of it been the root of the problem. Instead, the primary contributing factor has been misregulation. One or two bad regulations are enough to have far reaching consequences which eventually reverberate through the entire economy.
Our energy crisis has come about in large part due to an artificial reduction in supply springing from anti-production regulations in the energy sector. Politicians talk of “energy independence” but the trouble is that we have layer upon layer of rules and laws that prevent the extraction and production of oil and coal. It is simply cheaper to purchase our oil from nations that do not artificially diminish their supply of energy through such forms of regulation. Supply of fuel is also kept artificially low in our nation because he have come to a halt in terms of building new oil refineries. Simply speaking of “energy independence” solves nothing when we have laws on our books that prevent the market from deciding which form of energy is cheapest to extract, produce and distribute.
We have also stifled our supply of energy because misregulation has made it cost prohibitive to build any kind of new power plant. Politicians speak of clean energy solutions which the private sector should certainly be promoted and encouraged to develop and distribute. But in the mean time we are not taking proper advantage of proven methods of power generation such as clean-coal technology and, especially, nuclear power. Even if we ramped up production of these kinds of facilities, our power grid currently struggles to keep up with the growing demand of consumers. No matter the source of our power, if we do not have a working distribution network, even new clean energy technologies will not be able to provide power to the people who need it. Once again, misregulation has made it difficult to build out and maintain our power grid.
In the financial sector, our government has been forcing banks to take on subprime loans for years. The Community Reinvestment Act (CRA) needs greater exposure for the economic travesty it has wrought. We should not blame the institutions of Fannie and Freddie themselves, because it was our government that has continually misregulated these institutions by treating them as quasi-government agencies which have, in fact, been heavily regulated. The intention of providing housing to everyone is noble. But offering large amounts of credit to those who cannot afford it is simply unwise.
More regulations would not have solved this crisis, and simply having fewer regulations would not have done so either. But a few restrictive regulations in a couple of key industries have had disastrous consequences. And so here we are. The Left screams out for more government intervention, and the Right squeals that government needs to be more hands-off, but what we really need is more intelligent government that takes time to consider the consequences of a few misguided regulations.
Alex Tabarrok at Marginal Revolution explains the real reason gas prices are high:
My wonderful mother is upset, like pretty much everyone else, at the price of gas. “Well, the hurricane has knocked out a lot of production on the gulf coast,” I say. “Yes but there’s plenty of gas in the pipes that was produced before the hurricane - the suppliers are gouging.” she responds. Arrghhh….must resist, must resist, must be ….nice. “mmm,” I say. You and my Econ 101 students (103 actually), however, are not so lucky…
I didn’t think too much of the whole “lipstick on a pig” gaffe until I heard it put this way:
If McCain had made some offhand comment like, “Barack Obama is criticizing me for being more partisan than I want people to think I am. Well, that’s kinda like the pot calling the kettle black,” that would have sunk him immediately. Never mind that it’s a common phrase. The standard in politics (and governance) is that you don’t make comments that can very easily be taken the wrong way.
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Amy usually can’t stand “political stuff” but even she enjoyed this format. It was compelling, informative, and civil. Here’s hoping that this format becomes more typical of political discourse in the USA.
Not really anything I didn’t know already, but this test does give an interesting graphical perspective. Although I think Fascism isn’t as economically permissive as this chart states. Facism is a leftist ideology, not a rightist one. This is largely due to the fact that economically permissive societies cannot exist without some level of social permissiveness. The Nazis were fascist and were only “economically permissive” toward individuals and corporations that agreed with their ideology. But they were decidedly against economic permissiveness when it came to dissenters and Jews.
So fascism is not truly economically permissive. It really belongs down where Totalitarian, Socialist and Democrat meet (there’s a reason it’s called national socialism).
You are a Social Liberal(68% permissive)
and an… Economic Conservative(78% permissive)
Public Choice Theory: instead of imagining what a wise, omniscient, benevolent government might do, one should pay attention to how government operates in practice.
My wife and children participate in a home school co-op that meets every Friday. A couple of months ago, Amy wanted to teach the kids about wealth disparity and worldwide population distribution. I scoured the CIA and WHO websites for the necessary data on GDP and population size by country, and then consolidated this data by continent. Whew!
For those of us in North America, this is a good reminder of how thankful we ought to be.
“[T]he debate was between two candidates with policies which are open to genuine criticism by those who love liberty. The answer to every question was government and spending by both candidates. This was terrifying to me. More liberty is better than more government.”
Well, it’s not news anymore that Fred Thompson is out of the race for president. I ran across some commentary this afternoon that expresses my sentiments well:
It is strange that the qualities we are looking for in a sitting President - thoughtful, calm, and serious - are exactly the qualities which we penalize in those running for President.
It appears that Fred Thompson is finally going to officially enter the presidential race. Will he turn out to be a viable candidate? A good candidate? I’m hoping so. I’ve lost my faith in the political process in many ways, so I’m not expecting any individual candidate to have all the answers. But so far, Thompson appears to be the most promising. We’ll see.
Wow, Rolling Stone magazine gets it right on Ethanol.
In Brazil, ethanol made from sugar cane has an energy balance of 8-to-1 — that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That’s a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 - making it practically worthless as an energy source. “Corn ethanol is essentially a way of recycling natural gas,” says Robert Rapier, an oil-industry engineer who runs the R-Squared Energy Blog.
Finally, a cause on which right and left can agree.
