On Energy Dependence and the Role of Government

An interesting observation from TaxProf Blog:

"Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period."

Also, I think I remember saying something during the discussion on energy dependence about "oil shale" in Colorado. You probably had no idea what I was talking about, so here's an article about it.

UPDATE: Here's more evidence: Checking SEC 10-Q filings, one can see that "oil companies make 10 cents per gallon on gasoline while Federal, State and Local Government make a combined total of 45 cents."

Why can't the U.S. economy get any respect from the mainstream press?

GDP has grown at more than 3% for ten straight quarters now. That hasn't happened in twenty years. BizzyBlog has more on this. Polls show that Americans still think our economy is in bad shape. Which is the illusion? Is it the economic numbers as reported by the Department of Labor, or is it the picture painted by the talking heads on our TV sets?

UPDATE (10/31/05): There is a timely article in today's WSJ on this very issue titled, Hurricane Strength. Here's a quote from the article:

"Figure in the blow from Katrina, and growth would have been in the neighborhood of 5%. Not bad for an economy that much of our financial media keep saying is mediocre, or subpar, or overburdened with debt, or can't compete with the Chinese, or all the other predictions of doom you've heard in recent years."

The Iranian cure for volatile stock markets

Iran's President Ahmadinejad has an interesting solution to the "rapidly deteriorating situation at the Tehran Stock Exchange:"

Frustrated with the inability of his economic advisers and experts to come up with any solution, Ahmadinejad told them that the only way out of the current stock exchange and financial market problems was to “frighten” speculators by hanging two or three of them.

I had to laugh when I read this article. I guess Ahmadinejad thinks taking risk is bad, but if he starts killing people for taking risk (i.e., taking speculative positions in the stock market), investment will dry up fast. Sounds like a sure-fire recipe for a market-crash to me. If I were a floor-trader at the Tehran Stock Exchange, I'd resign. Fast.

People might not revolt when their rights and freedoms are restricted, but they will revolt when they cannot feed their families due to self inflicted economic collapse.

On Poverty and World Hunger: About those farm subsidies

This UPI report seems to indicate that efforts to reduce or eliminate US and EU farm subsidies are producing results. This seemed to be a major sticking point in yesterday's discussion about starvation and poverty in the world - one cause of a lack of self-sufficiency in Africa and other third-world nations is these farm subsidies, but as Anaïs said Tuesday, "That's just the way things are," indicating that the farm subsidy situation is very unlikely to change. I am not as pessimistic however; I believe that there is hope for the (nonsubsidized) African farmer - things can change.

Corruption in developing (particularly African) nations also came up during Tuesday's discussion and it was suggested that this be pursued in future discussion. Let me further the debate:

Despite the fact that Africa has more natural resources than the rest of the world put together: Corruption.

"The failure of democracy and economic development in Africa are due to a large part to the scramble for wealth by predator elites who have dominated African politics..."

It seems to me that the question here is not how to provide more aid to poor nations, but rather how can we make it easier for poor people to climb out of poverty? Would any amount of financial aid actually eliminate poverty permanently? Haven't we learned yet that just throwing money at a problem doesn't make it go away? Aid can feed the starving for a period of time, but the problem will return unless people are able and willing to support themselves. Moreover, and as Valentino noted on Tuesday, providing aid to poor nations frequently causes dependencies to develop, causing increasing demand for handouts. Free trade agreements worked extremely well in reducing poverty by more than 50% in places like Chile, while fifty years and more than half a trillion dollars of aid has done nothing for Africa but add to their misery. They say that a sign of insanity is when people keep doing the same thing over and over again hoping for a different result. Well, we as a global community must be completely out of our collective gourd then.

What makes the whole poverty issue seem truly sick to me is the fact that we already know what works, yet the politicians insist on rejecting win-win deals like CAFTA and just keep on doing the same thing, fostering dependencies, killing off any hope for self-sufficiency for the African farmer by dumping food through their corrupt governments, and on top of that giving billions of dollars to corrupt thug-politicians like Mugabe thereby aiding and abetting genocide.

The United States is by far the world's largest source of humanitarian aid, yet I keep hearing people saying that Americans are not being generous enough. Before political pundits and ambassadors in the UN lecture us Americans about how we're not paying our fair share in aid, they should add in the donations from private citizens; It turns out that Americans give more than any European country per capita, and more than all of the EU nations put together.

In my opinion, aid is a good thing during a crisis situation BUT some countries are continuously in a state of crisis to the point where people in many places have become dependent on humanitarian aid from foreign countries and would not survive without it. Such dependencies need to be broken - most of the people in such countries would be better off if they didn't have to rely on handouts but could support themselves. One shouldn't have to rely on the government, foreign or domestic, for sustenance. (See the thread on the role of government.)

On a related issue, can anyone reasonably argue that the aid that goes to North Korea, where starvation is rampant, does anything to solve the problem? There's no way of knowing for sure since that country is so opaque, but many Americans, myself included, believe that that aid just goes to feed NK's army. Well, that's another can or worms, so let's just save North Korea for a future discussion.

Hey, I spent time on this. Make a comment, or email me. Satisfactory counterarguments will get posted in an update.

Regarding the role of government: A quote from Rand

This post is regarding the discussion earlier today about the role of government. This debate had been about the size of government and federal versus local government. (Here is a link to a .pdf file used by Navjot and Sandrine in their argument for smaller, more localized government. As I receive more references, I will update this post.) I lean more toward the smaller role for government side myself. To me, the issue is about a balance between the rights of individuals and the powers given to the government so that it can protect those rights. I don't believe it is the proper role of government to take care of everybody. I believe that I should have a right to be left alone, and I would rather become successful and prosperous due to my own effort and merit rather than have things handed to me based on a perceived need. I think it's dangerous to give a massive, bureaucratic government decision making authority and control over people's lives.

This article from Peggy Noonan of the WSJ (subscription required) relates to this topic and expresses my position well. Basically, she points out how large, bureaucratic governments (and I would add large corporations as well) often seem to have habit of separating authority from responsibility - politicians typically want more authority, but spend much of their time avoiding responsibility. In short, when it comes to separating actions from consequences, size does matter and smaller is better in terms of the accountability of a government to its citizens (or stockholders in the case of a corporation). Of course transparency matters a great deal too, but I would like to save that discussion (about transparency and how it is achieved) for a later date and deal with that separately.

This "role of government" issue is a social and cultural issue by the way, not just a political one.

I would like to redirect this discussion in the future to focus on the role of government in terms of what it should and should not be doing. Perhaps the following quote will be relevant when the debate is taken up again:

Remember that rights are moral principles which define and protect a man’s freedom of action, but impose no obligations on other men. Private citizens are not a threat to one another’s rights or freedom. A private citizen who resorts to physical force and violates the rights of others is a criminal – and men have legal protection [via government institutions] against him.

Criminals are a small minority in any age or country. And the harm they have done to mankind is infinitesimal when compared to the horrors – the bloodshed, the wars, the persecutions, the confiscations, the famines, the enslavements, the wholesale destructions – perpetrated by mankind’s governments. Potentially, a government is the most dangerous threat to man’s rights: it holds a legal monopoly on the use of physical force against legally disarmed victims. When unlimited and unrestricted by individual rights, a government is man’s deadliest enemy. It is not as protection against private actions, but against government actions that the Bill of Rights was written.

That quote is from Ayn Rand in "Man’s Rights."

And here's another relevant quote:

"Giving government money and power is like giving car keys and whiskey to a teenage boy"

-- P.J. O'Rourke

And another:

"Government is like fire -- at best an uncertain servant; at worst a fearful master."

-- George Washington