Economy: 2014 Archives

HOW LIBERALS' POLICIES HAVE DAMAGED THE ECONOMY AND HURT THE POOR

To end the year, we present some practical and compelling thinking about the need for conservatives to seize the initiative if the country is to be saved. Liberal fascism has restricted our freedoms and impaired our economy with unnecessary heavy handed intervention. Liberal policies have killed human initiative and worsened the condition of the poor, particularly that of black Americans.

Dr. Thomas Sowell grew up poor in Harlem, dropped out of high school, but graduated from Harvard and acquired a doctorate in economics from the University of Chicago. He attributes his success to perseverance.

Dr. Sowell's columns are read widely in newspapers all over the country and online. He is now a senior fellow at the Hoover Institution at Stanford. Peter Robinson interviews Dr. Sowell on the occasion of the publication of his Fifth Edition of his best-selling book "Basic Economics." You won't find a better or more enjoyable 50 minutes of education than this.

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SAUDIS ATTACKING U.S. OIL PRODUCTION, RISKING DISASTER AND CHAOS IN THE ISLAMIC WORLD.

Saudi Arabia, U.S. friend or enemy?

The royal family of Saudi Arabia has been "educating" Muslims worldwide for decades now that 7th Century Islam is the Islam for all times and more and more Muslims are becoming convinced this is so (witness the Islamic State). What the Saudis didn't bank on was the possibility that 7th Century true believers would one day be looking to attack and displace them.

Despite the U.S. being aware of the Islamic supremacism the Saudis were promoting to one and all, the U.S. needed Saudi and Gulf States oil, so the Islam originalists got a pass and the U.S. did not object to the Saudis' propaganda offensive.

Also, the Saudis didn't anticipate the resurgence of the U.S. as a world leader in oil production, meaning little or no reliance on Middle East oil. It might also mean a U.S. ready to blow the whistle on the Saudis stoking the flames of radical Islam.

Not good, the Saudis concluded. They needed a plan.

Producing oil by fracking is expensive, multiples more so than conventional drilling for Saudi oil. The plan: Drive world oil prices down and cripple the growth of American oil development and retain the U.S. as an oil-dependent and objection-free client.

So that is what is going on with falling oil prices. The cartel of oil producing countries led by Saudi Arabia (OPEC) have decided not to reduce production in the face of a world oil glut.

Though the Saudis deny it, it seems clear the Saudis are trying to bankrupt a large part of the American oil fracking industry. Their hope is that prices will drop so low the ability of the U.S. to produce its own oil will be substantially reduced and OPEC will be back in the driver's seat setting world oil prices. In other words, the Saudis hope to destroy this new competition by driving large segments of it out of business.

Not so fast, one British analyst says. The Saudis have misread the situation. It is the OPEC oil producing countries that need high prices more than the U.S. fracking industry does. And an even greater expansion of the Islamic State into oil-rich and unstable Libya and Algeria could be the result if those governments are deprived of the money they need to operate and subsidize their people's purchases of basics such as gasoline and bread.

Russia and Venezuela also need high oil prices to meet the revenue needs of their governments to fund the subsidies paid to their populations.

Just maybe the U.S. fracking industry can survive low oil prices and the Middle East, North Africa -- and Europe --will be the losers in the Saudis' high stake game.

Saudis risk playing with fire in shale-price showdown as crude crashes
A deep slump in prices might heighten geostrategic turmoil across the Middle East

London Telegraph
By Ambrose Evans-Pritchard

oil_1911611b.jpg


Saudi Arabia and the core Opec states are taking an immense political gamble by letting crude oil prices crash to $66 a barrel, if their aim is to shake out the weakest shale producers in the US. A deep slump in prices might equally heighten geostrategic turmoil across the broader Middle East and boomerang against the Gulf’s petro-sheikhdoms before it inflicts a knock-out blow on US rivals.

Caliphate leader Abu Bakr al-Baghdadi has already opened a “second front” in North Africa, targeting Algeria and Libya – two states that live off energy exports – as well as Egypt and the Sahel as far as northern Nigeria. “The resilience of US shale may prove greater than the resilience of Opec,” said Alistair Newton, head of political risk at Nomura.

Chris Skrebowski, former editor of Petroleum Review, said the Saudis want to cut the annual growth rate of US shale output from 1m barrels per day (bpd) to 500,000 bpd to bring the market closer to balance. “They want to unnerve the shale oil model and undermine financial confidence, but they won’t stop the growth altogether,” he said.
There is no question that the US has entirely changed the global energy landscape and poses an existential threat to Opec. America has cut its net oil imports by 8.7m bpd since 2006, equal to the combined oil exports of Saudi Arabia and Nigeria.

The country had a trade deficit of $354bn in oil and gas as recently as 2011. Citigroup said this will return to balance by 2018, one of the most extraordinary turnarounds in modern economic history.

“When it comes to crude and other hydrocarbons, the US is bursting at the seams,” said Edward Morse, Citigroup’s commodities chief. “This situation is unlikely to stop, even if prevailing prices for oil fall significantly. The US should become a net exporter of crude oil and petroleum products combined by 2019, if not 2018.”

Opec has misjudged the threat. As late as last year, it was dismissing US shale as a flash in the pan. Abdalla El-Badri, the group’s secretary-general, still insists that half of all US shale output is vulnerable below $85.

Continue reading....

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EVERY DEMOCRATIC SENATOR'S VOTE IN 2008 FOR OBAMA'S PROGRAM HAS RESULTED IN LOWER INCOMES FOR BLACKS, HISPANICS, WOMEN, WORKING FAMILIES AND THE MIDDLE CLASS.

Every Democratic senator seeking re-election who was in office in 2008 is responsible for the economic disaster that has befallen the families of America. Their 60 votes installed Obama's "transforming" agenda to the detriment of the middle class and poor of America. They did it all without a single Republican vote. If the voters know the truth, those Democrats will pay at the polls in November.

The Democratic Party's great political victory in 2008 led to the realization of a progressive agenda in the making for a century. But that agenda resulted in economic failure for working Americans. It failed as it has always failed: Progressive policies buy votes but destroy prosperity.


Senate Democrats vs. the Middle Class
Senators elected in 2008 made Obama's agenda possible, and its results have harmed most Americans.

By Phil Gramm and Michael Solon
WSJ Aug. 18, 2014

On Nov. 3, 2008, seven new Democratic senators were elected, giving Democrats 58 votes. Eight months later, with the Minnesota Senate race settled and Arlen Specter having switched parties, Democrats secured the 60th vote to overcome filibusters and impose absolute control over the Senate for the first time in 31 years. In 78 days, American voters will render judgment on the record of the Senate Democratic Class of 2008, and on all 35 Democratic candidates seeking to perpetuate their Senate majority.

The Senate's Democratic majority was united after the 2008 election in its commitment to President Obama's progressive vision to remake America. And with a financial crisis afoot, it was determined to not waste the opportunity.

ObamaCare, which gave government control of the health-care system, was vigorously supported, promoted and defended by every Senate Democrat. It became law in March 2010 without a single Republican vote in either house of Congress. Every Democratic senator cast the deciding vote for ObamaCare.

Since the Progressive Era a century ago, Democrats have dreamed of seizing the commanding heights of the financial system to expand government's ability to influence the allocation of credit. The passage of Dodd-Frank in July 2010, also supported by every Democrat in the Senate, made that dream a reality.

In 1993, President Clinton had been unable to pass a comparatively modest $16 billion stimulus program. Democrats in 2009 passed a massive $787 billion stimulus program with every Democratic senator voting for it. And with the tacit support of Democratic senators who have blocked every bill, resolution or amendment that impeded any aspect of his regulatory agenda, President Obama has implemented the most massive expansion of federal regulatory authority since the Great Depression.

It is impossible for any Democratic senator running for re-election this year to credibly argue that he or she did not support the president's program or provide a critical vote to enact it. No Democratic candidate can argue that by electing him or her and sustaining the Democratic majority in the Senate, voters can hope to alter the president's program.

With his party's Senate supermajority, President Obama achieved a series of historic political victories. But the question most voters will have to answer on Nov. 4 is whether this program has been good for working Americans. We think the answer is clear. As is well known, the Obama recovery is the weakest in postwar history. If the Obama recovery had been as strong as the average of the previous 10 postwar recoveries, 13.9 million more Americans would be working today and the average real per capita income of every man, woman and child in America would be $6,308 higher.

Continue reading . . .

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ENCOURAGING POLL FROM RASMUSSEN REPORTS: 83% THINK IT'S IMPORTANT FOR THE ECONOMIC SYSTEM TO PROVIDE EVERYONE AN OPPORTUNITY TO SUCCEED

Friday, February 14, 2014

Despite the efforts of the Obama administration to balloon the population of the idle government dependents through Obamacare and other job killing policies to build up the Democratic voter base, a new Rasmussen poll has some encouraging news.

Most voters continue to support an economic system that provides everyone a chance to succeed, and they generally believe it is fair and helpful for the economy to let those who are successful become very rich.

A new Rasmussen Reports national telephone survey finds that 83% of Likely U.S. Voters now think it is at least somewhat important for the economic system to provide everybody with an opportunity to succeed.

This is down three points from October’s all-time high.

Just 14% do not think that this is important, up from a record low of 10% in October.

This includes 59% who think it’s Very Important for everyone to have a chance to succeed, and just four percent (4%) who think it’s Not At All Important.


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WILL JOBS DISAPPEAR FASTER THAN THEY ARE CREATED?

There is a growing sense that technology may be destroying jobs faster than it is creating new ones. There will be increasing demand for people to fill intellectually demanding high paid jobs and low paid jobs demanding little talent or education, but fewer jobs in the middle.

Currently, 93 million Americans are without work. In large part this is due to the slow growth economy resulting from the anti-growth policies of the Obama administration. Too much regulation, demonization of the successful and government destruction of private sector jobs such as Obamacare is doing with its health care weapon. The consequence is that millions are being forced into government dependent poverty for Democratic votes.

But another trend is developing that may greatly effect the growth of jobs adversely even if the economy is booming.

The British publication Financial Times has published one of the better short surveys of the situation. This will be a great challenge of our times if in fact we have hundreds of millions of people who will have no satisfying work to do and who add nothing to the health of the economy.


The robots are coming and will terminate your jobs
By Tim Harford
Financial Times, December 27, 2013

In future, there may be people who – despite being fit to work – have no economic value

On August 29 1997, Skynet – a computer system controlling the US nuclear arsenal – became self-aware. Panicking operators tried to deactivate it. Skynet, perceiving the threat, launched its arsenal, killed most of humanity, and ushered in a world in which the robots ruled. So went the backstory of the 1984 movie The Terminator . But computers did not become self-aware in 1997 – the closest they managed was when Deep Blue, a B-list supercomputer, beat Garry Kasparov, the world chess champion. Despite decades of hand-wringing about robots taking over, the robots never quite seem to rise.

But perhaps 2014 will be different. Google certainly seems to think so: early in December it purchased Boston Dynamics, a producer of military prototype robots – with names such as “BigDog”, “WildCat” or “Petman” – that wouldn’t look out of place in the Terminator films. These nightmarish machines will now be brought to you by the folks who host all your email, know what your internet searches are and are tracking your phone’s location.

But while the Skynet-esque combination of Google and Boston Dynamics is unsettling, it is not in itself a reason to expect that robot technologies really will change the world. Yet the talk in the economics profession is increasingly taking that possibility seriously.

The primary cause has been with us a long time: the familiar Moore’s law, which in various guises describes growth in computing power as swift and exponential. We have got used to swift growth, but we can never quite get used to the implications of exponential growth – meaning that whatever has just happened will be eclipsed by whatever is just about to happen.
Moore’s law, loosely applied, is that computers today are twice as powerful as the computers of two years ago, perhaps just 18 months ago. Today’s mobile phone is a match for what was once a cutting-edge gaming console; that gaming console, in turn, outperforms the kind of old-timey supercomputer that the Terminator franchise once imagined taking over the world.

Software is also becoming more efficient. We tend to miss this because the bloated copies of Microsoft Word we use do not seem faster than 20 years ago. But a mobile phone running Pocket Fritz 4, a chess program, can now beat grandmasters, despite the phone running far more slowly than Deep Blue did. A chess-playing phone is not about to lead a robot uprising, so why should we care? A growing number of economists – including Massachusetts Institute of Technology’s Erik Brynjolfsson and Andrew McAfee in a new book The Second Machine Age – argue that robots and algorithms are poised to make inroads into labour markets.

Computing power is starting to solve everyday problems – which turn out to be the hardest ones. Computers were laughable drivers in 2004, when a computer-driving competition was “won” by a car that crashed after completing seven miles of a 150-mile course. Now computers drive cars safely.
In 2008, robots still struggled with a problem known as “Slam” – simultaneous localisation and mapping, the process of mentally building up a map of a new location, including hazards, as you move through it. In 2011, Slam was convincingly addressed by computer scientists using Microsoft’s “Kinect” gaming hub, an array of sensors and processors that until recently would have been impossibly costly but is suddenly compact and cheap.

Problems such as language recognition and Slam have so far prevented robots working alongside humans; or on tasks that are not precisely defined, such as taping up parcels of different sizes or cleaning a kitchen. Perhaps the robots really are now on the rise.

Consider “Baxter”. Traditional industrial robots are major capital investments: vast machines kept apart from human workers for safety reasons. Baxter, by contrast, claims to be able to do much of the same work, is cheaper, safely works with humans, and is – its manufacturers claim – intuitive to reprogramme. And if Baxter fails to live up to the hype, Moore’s law means that the robot’s successors – with a computer eight to 10 times more powerful for the price in five years’ time – will not.

What is sobering is that we have already seen convincing evidence of the impact of technology on the job market. Alan Manning of the London School of Economics coined the term “job polarisation” a decade ago, when he discovered that employment in the UK had been rising for people at the top and the bottom of the income scale. There was more demand for lawyers and burger flippers. It was middle-skill jobs that were disappearing. The same trend is true in the US, and is having the predictable effect on wages: strong gains at the top, some gains at the bottom, stagnation in the middle.

The leading explanation is that technological change has favoured certain skills and displaced others. Typists, clerks, travel agents and bank tellers find their skills less valued. Mechanisation now dominates agriculture, large-scale construction and manufacturing. We tend to imagine that manufacturing jobs have disappeared to China; in fact, manufacturing employment in China has been falling. Even the Chinese must fear the robots.

Of course cheap, ubiquitous computing power has brought many good things – and will bring more. The question is whether we are equipped to deal with the possibility that in future, there will be people who – despite being willing and fit to work – have no economic value as employees. By the time today’s 10-year-olds have their degrees, computers could be a hundred times cheaper and smarter than they are today. A future full of robot servants could be a bright future indeed, but only if we can adapt our institutions quickly enough.

Even termites might be undercutting jobs in the future. View this video on what Harvard researchers are working on.

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OBAMA'S DEMOCRATIC INTERVENTIONIST GOVERNMENT IS CHOKING THE ECONOMY

Don't let anybody, including Obama, kid you. We are still in a recession and it is the Democratic government's fault. There's lots of evidence this is true and here is a sensible observation about what Republicans should campaign about.

Republicans have a once-in-a-generation opportunity to roar back to power given the miserable performance of the economy on Obama’s watch. But they still could fall on their faces.

The problem is NOT government spending, contrary to the well-meaning obsession of the Tea Party. That will BECOME the problem a decade or two from now. The problem now is obstacles to investment: the highest corporate tax rate in the world, onerous regulation, the crazyquilt uncertainty of Obamacare. America needs aggressive tax cuts and regulatory rollback. It also needs to spend more on infrastructure, which is becoming a major obstacle to growth. It needs to spend more on R&D, particularly on cutting-edge military R&D. The way to do this, I’ve argued for years, is to emulate Roosevelt’s alphabet-soup federal agencies and put unemployed Americans to work repairing infrastructure at $20 an hour, rather than paying $50 an hour to the construction unions. That’s heresy from a free-marketeer like me, but it makes economic sense and will drive the Democrats crazy. Highlighting added

Read it all.

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WE ARE THE PARTY OF LINCOLN.
WE STAND FOR FREEDOM AND EQUAL OPPORTUNITY FOR ALL.



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