Obama Gets It

After my previous post commenting on rising oil prices and the logical result (decreasing oil usage), I am heartened to see that at least someone in this presidential election understands simple economics. At least, as they apply to oil usage.

Barack Obama said on Saturday Americans would start changing the kinds of cars they drive if gasoline prices continue to climb and said he owned a hybrid vehicle, though he doesn’t drive it much.

Without specifically telling Americans to stop buying gas-guzzling sport utility vehicles, the Illinois senator said higher fuel prices would lead to a shift (Reuters).

I’m not quite sure why we need to mention his personal hybrid vehicle, but it is good to hear that the Senator at least understands basic market forces as they apply to the consumer. Now if only he had a better grasp of macro economics…

Rant: Proper Perspective, Please!

The poor Washington Post can’t seem to make up its mind about market economics. Conservative think tanks have said for years that Americans would seek fuel-efficient cars when the cost of trucks and SUVs became too excessive for their taste, not when government told them to. The moment seems to have come, however, where market forces encourage consumers to buy smaller cars with better mileage. But the realization that this moment has finally come is a difficult pill to swallow for the poor Post editorial board it seems:

The dismal April car sales data out of Detroit illustrated an important lesson about what it will take to reduce U.S. consumption of foreign oil and to cut greenhouse gas emissions.

An important lesson that only some of us needed to learn. People tend to vote with their wallets, and no amount of fuel-efficiency standards or public service ads has had the same effect as higher gas prices. The Post desperately attempts t retain some moral high ground however, insisting that more government intervention could have brought this “moment of truth” sooner.

Had Congress the courage to impose a price on carbon, these positive changes could have been achieved years ago — and without the side effect of pouring fresh money into the government coffers of Iran, Venezuela and Russia. Instead, the financial squeeze at the pump finally brought about the change in behavior in the driving public that could not be achieved by appealing to citizens’ better natures.

Citizen’s better natures seem to be most easily reached through their pocket books. A sign of moral decline, perhaps, or rather the sad and traditional state of mankind. Money has always spoken in fresh ways to the human spirit. And although I wish more people would act out of the kindness and concern of their hearts, history suggests a different pattern of behaviour.

The next attitude adjustment should come in Detroit, where the free fall of bottom lines ought to prompt a shift away from the production of SUVs and other gas guzzlers.

Happily for the Post, automobile manufactures operate on the same cost paradigm as consumers, and will adapt as necessary to continue their sales. But once again the Post insists on looking a gift horse in the mouth, and tries to continue the work of the free market through government policy:

With a carbon tax, the price of gas might be even higher than it is now. But as we have seen, high prices encourage less driving and a demand for more efficient vehicles and energy alternatives, which result in reductions in carbon dioxide emissions.

Apparently anything but the free market will suffice to help reach the ends of lower carbon dioxide emissions.

Illegal but Justified

The European [Union] High Court has come to an interesting conclusion: breaking the law to stabilize the labor market is okay! From the AP:

In a judgment, the European Court of Justice said that even though discrimination based on age was illegal, the imposition of the 65-year threshold for workers can be justified to stabilize the labor market and if proper pension is provided.

The specific details of the case are not what concern me here, but the precedent. If stabilization of the labor markets is a justifiable reason for breaking the law, why shouldn’t stabilization of the grain market or furniture industry be an equally just reason? What about support of a various industry, or protecting a market? And can this expand to areas outside of economics: parenthood, education, family and medicine? What comes next?

This is, of course, a slippery slope argument, but I believe it is a valid one. We have seen cases both here in the United States and abroad where the ends have been said to justify the means. And sometimes they are right—extraordinary measures do need to taken in times of crisis. But when we consider an unstable labor market with high employment that has been in such a state for over a decade a “crisis” we may have passed the tipping point. Does the continual failure of American school children give the President the ability to fire all the teachers in the nation, even though they are local employees? No, because he has not the authority to do so under the laws of the United States.

This then is the key point: one may only do what one is allowed to by law. The E.U. court ruled in favor of a pension system that has been in place for over 20 years, saying it was a necessary instrument in the interest of the nation. But it was still illegal and contrary to the laws of the E.U., which are made by the people through there legislature and ought to be the supreme authority in the land. American Founding Father Alexander Hamilton talked about this in his Federalist Paper No. 78, discussing the role of the courts in deciding conflicts of law between constitutions and legislative acts:

Nor does this conclusion by any means suppose a superiority of the judicial to the legislative power. It only supposes that the power of the people is superior to both; and that where the will of the legislature declared in its statues, stands in opposition to that of the people declared in the constitution, the judges ought to be governed by the latter, rather then the former. They ought to regulate their decisions bty the fundamental laws, rather than by those which are not fundamental. [emphasis added]

Some will argue that the EU does not have a constitution, which is true, but neither does the Realm of Great Britain. All, however, are ruled by recognized fundamental rights and ideas, including, among these, lack of discrimination. Countless laws have been passed regarding discrimination of all sorts, including age, and these principles are regularly cited by all manner of businessmen, politicians and judges. But they are meaningless if a perceived crisis can cast them all aside. There is a reason the Roman Republic had the opinion of declaring a dictator, but only for six months, and it was never exercised because of an economic report. If such a thing is to be called a crisis we are beyond crisis.

On the Other Hand…

According to this report from AP, the US Economy is doing just fine, thank you very much. On the other hand, what about the rest of the country? How do things look from a Crunchy Con perspective?