Sunday, 29 November 2015 03:20

Hendrickson's View

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Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are republished from V & V, a website of the Center for Vision & Values.

Obama's Two Achilles' Heels

In my recent article "Checkmate" I made the case that President Obama's grand strategy has outfoxed the opposition, dooming us all to a massive increase in the scope and power of Uncle Sam. Is the situation hopeless? Never! If Americans who believe in individual liberty and free markets rally to the cause, then we may some day look back on the current gloomy period as the Valley Forge winter of a new American revolution.

The Achillies' heel of Obama is most likely the hubris that is common to those who seek "nothing less than the total transformation" of a society ("of our economy," were Obama's exact words). In their consuming desire to be the Great Leader, such individuals shed restraint and grab impatiently for more power. In a society where people prize their individual rights and retain a residual distrust of Big Government, overreaching may prove to be Obama's fatal strategic miscalculation.

In recent decades, Americans have been like frogs in the chef's pot. Just as frogs don't realize they are being boiled alive when the heat is turned up gradually, we Americans have been lulled into passivity by the gradual, decades-long expansion of government power. If we don't wake up and jump out of the cauldron, we, like the frogs, will be doomed -- in our case, by losing our freedom and prosperity to socialistic Big Brother. Obama's bold power grabs are startling us, waking us out of our torpor, giving rise to tea parties, righteous indignation, and a renewed will to resist the encroachments of tyranny.

Let's get the "S" word out of the closet and into the open. I abhor name-calling, and have never labeled President Obama a socialist -- even after I heard through the grapevine that some Democrats were describing him as such at Washington cocktail parties. But since socialism is the specific term for government ownership of various commercial enterprises, it is impossible to not view Obama's agenda as overtly socialistic in tendency.

Consider: He clearly wants and is working for a government-run health-care system.

He has proposed guaranteed universal college educations for every young American.

He wants to create new "volunteer" service programs that sound suspiciously like a draft to compel young adults to work for government.

He has asserted greater government control over the auto industry by demanding (and securing) the ouster of General Motors CEO Rick Waggoner.

His Treasury Secretary is proposing new powers that would enable the government to nationalize banks, insurance companies, and other financial entities.

And now his Interior Secretary seeks increased taxation of American oil companies -- even though Big Oil has paid more in taxes to government in recent decades than they have retained in profits -- on the grounds that Uncle Sam receives a lower share of oil and gas revenue compared to governments in other countries. Well, of course other countries' governments derive a higher percentage of revenue from oil and gas production -- after all, the 15 or so oil companies that are larger than our largest, ExxonMobil, are all state-owned oil companies. The only possible way Uncle Sam could equal the share taken by those foreign governments would be to nationalize American oil companies. Obama won't go that far (yet), but he clearly intends to play central planner and radically restructure the domestic energy complex.

If Obama doesn't scale back his audacious power grab, the American people may turn on him. Where might such a tipping point be? I'll place my bet on cap-and-trade. Cap-and-trade is Obama's scheme to charge big bucks to companies for permission to use carbon dioxide-emitting coal, oil, and natural gas -- that will be passed on to the American consumer. If cap-and-trade becomes law, vast numbers of Americans of modest means will be angry if the costs of driving their cars, heating their homes, and paying their electric bills soar. They will feel conned when they realize that Obama's promise not to raise taxes on them referred only to direct, explicit taxes, and not to indirect taxes that raise their cost of living. Cap-and-trade is Obama's make-or-break issue. If he restrains himself from ramming a cap-and-trade program through Congress, then he may get most of the power he seeks; if not, he will be vulnerable.

Obama's other Achilles' heel will be his conduct of foreign affairs. He seems to believe that his personal charm is so forceful that he can talk enemies into beating their swords into plowshares. In doing so, he risks repeating the tragedy of Jimmy Carter whose Lennonist philosophy (that is, "Lennonist" -- not Leninist -- as in Beatle John Lennon's motto, "All you need is love") was rewarded with contemptuous aggression by the Soviets, the ayatollahs, and that ilk. If the response to Obama's apologetic America-debasing groveling is a lethal attack on American interests, especially a domestic incident, then the spell of the Obama personality cult will be broken, and support for his socialistic agenda will shrink drastically.

Either of Obama's Achillies' heels will hand the Republican Party a magnificent opportunity to present an alternative agenda that resonates with the American people. In my opinion, Republicans will win more support if they stop playing the party of Big Government to the Democrats' party of Bigger Government, and offer a clear contrast by making themselves the party of Smaller Government. We have to hope that they aspire to something more than simply being at the helm when the ship of state cracks up on the rocks of national bankruptcy.

Team Obama's Auto Coup

In assessing Team Obama's semi-nationalization of the auto industry, a slight alteration of the famous verse by Elizabeth Barrett Browning encapsulates my reaction: "How do I (not) love thee? Let me count the ways."

1) The government takeover is unconstitutional.

The Constitution authorizes Uncle Sam to "regulate commerce," not to own and manage it. Even before the formal coup, Obama had already fired GM's former CEO. Now Team Obama intends to dictate to GM what kinds of cars it must build. Of course, the federal government is already well on its way to nationalizing the financial industry, the home mortgage market, health care, education, retirement, etc., so -- ho-hum -- why not the car industry, too?

2) Parts of the government takeover are illegal.

Contract law was trampled underfoot when the government placed unsecured creditors (read: the United Auto Workers) ahead of secured creditors (bondholders) in the pecking order of who gets first dibs on the remnants of the old bankrupt GM and Chrysler.

That the president bestowed largesse on Big Labor was no surprise. What was jarring was the blatantly, literally Marxist-Leninist flavor of Obama's denunciation of the ripped-off bondholders as "speculators." These "speculators" range from retired blue-collar workers to investment firms managing the retirement accounts of state and municipal employees, school endowments, and other such suspicious characters. Yet Obama views and portrays them in class-warfare terms-as greedy capitalists whose property should be expropriated and redistributed to labor. This is textbook Marxism.

3) The takeover unwisely and unjustly keeps UAW intact.

UAW has been a disaster for the people of southeastern Michigan. For decades it has been strangling the Big Three. Its "triumphs" have been Pyrrhic victories. Yes, UAW members received fantastic compensation, if they have managed to keep their jobs. Unfortunately, UAW, more than any other organization, has been responsible for hundreds of thousands of union jobs being vaporized by pricing them out of the market. Now this parasitic outfit has killed the goose that laid their golden egg. If the bankruptcy had gone through the usual legal channels, UAW could have been buried alongside the companies that it killed. Instead, Obama made UAW its partner in these two companies by sharing ownership with them.

4) It leaves Corporate Average Fuel Economy (CAFE) standards intact, too.

Second to UAW, what most crippled the Big Three was Washington's mandate requiring the automakers to manufacture cheap, fuel-efficient cars domestically, using high-priced UAW labor, in order to meet CAFE standards. This move made these politically correct cars automatic money-losers and, hence, company killers. Yet, already this year, the Obama/Pelosi/Reid axis perpetuated this error by mandating even higher gas-mileage standards for domestically, produced autos.

5) It has been and will continue to be costly for taxpayers.

Not only did Uncle Sam sink far more billions into GM and Chrysler than the companies' market value, but now Washington expects the "new GM" to build many electric cars. These vehicles will not be cost-competitive on their own merits. Team Obama's solution? $7000 tax credits for those who buy the product of Washington's central planning. And where will all that money come from? From us taxpayers, of course. Clearly, Obama wasn't kidding when he told Joe the Plumber that he wanted to "spread the wealth" around more evenly.

Another potential cost of more fuel-efficient cars is that, to the extent that they reduce fuel consumption, government revenues from the excise tax that we pay at the gas pump will fall. Already in 2009, the decline in this source of revenue has meant that Uncle Sam has insufficient funds for road maintenance. Additional government revenues are now required, which implied a tax increase.

6) It turns economic decisions into political ones.

For example, will Uncle Sam protect the taxpayers' investment in GM by buying GM vehicles, even if Ford and other domestically made cars are cheaper and better? That presents a major conflict of interest.

Will political clout rather than economic rationality determine which automobile factories remain open? Already, the blogosphere is filled with charges that Team Obama closed a disproportionately high percentage of car dealerships with Republican Party ties. Does anyone really doubt that this most partisan of presidents and congresses will play politics with the businesses that it controls?

7) Uncle Sam as hero?

As Team Obama rides to the rescue of GM and Chrysler, we should realize that earlier government interventions doomed those companies. Labor laws and fuel-economy mandates weakened them for years. The current deep recession that polished them off was due to the boom/bust cycle generated by the central bank and exacerbated by government meddling in the housing market, incompetent regulation, and Uncle Sam's too-close relationship with Big Finance. Sadly, most Americans don't understand government's culpability in precipitating the demise of these two corporate icons; on the contrary, many entertain the dangerous fallacy that our economic well-being depends on government.

Until we understand the counter-productiveness of government intervention, our country will continue to suffer unnecessary economic pain.

Opening Pandora's Box: Classifying CO2 as a "Pollutant"

A few days before "Earth Day" (which happens to be the same day as Lenin's Birthday), Americans ideological greens and reds received a present they have been desiring for many moons: The Environmental Protection Agency -- egged on by the U.S. Supreme Court -- officially designated carbon dioxide (CO2) as a pollutant. That means that either Congress or the EPA is expected to produce a plan for regulating this common gas.

So opens a new chapter in regulatory absurdity, a veritable Pandora's Box of complications.

A generation ago, it was considered great progress against pollution when catalytic converters were added to automobile engines to change poisonous carbon monoxide to benign carbon dioxide. Now CO2 has been demonized.

The EPA's characterization of CO2 as a pollutant brings into question the natural order of things. By the EPA's logic, either God or Mother Nature (whichever creator you believe in) seriously goofed. After all CO2 is the base of our food chain. CO2 nourishes plants, plants nourish animals and humans, and plants and animals serve a variety of human needs. "Pollutants" are supposed to be harmful to life, not helpful to it, aren't they?

Of course, it is true (although greens often ignore it when trying to ban such useful chemicals as pesticides, insecticides, Alar, PCBs, etc.) that "the dose makes the poison." Too much oxygen, for example, poses danger to human life. So, what is the "right," concentration of CO2 in our atmosphere? There is no right answer to this question. The concentration of CO2 in earth's atmosphere fluctuated greatly long before humans appeared on earth, and that concentration has fluctuated since then, too.

The current concentration is approximately 385 parts per million. Some scientists maintain that 1,000 parts per million would provide an ideal atmosphere for plant life, accelerating plant growth and multiplying yields, thereby sustaining far more animal and human life than is currently possible. Whatever standard the EPA selects will be purely arbitrary.

"Forget about the plants, Hendrickson," say the greens. "What we're trying to control is how warm the earth's atmosphere gets." To which I reply, "With all due respect, are you kidding me?"

As with a "right" concentration of CO2, what is the "right" average global temperature? For 7,000 of the last 10,000 years, the earth was cooler than it is now; mankind prospers more in warm climates than cold climates; and the Antarctic icecap was significantly larger during the warmer mid-Holocene period than it is today. Are you sure warmer is bad or wrong?

And how do you propose to regulate the earth's temperature when as much as 3/4 of the variability is due to variations in solar activity, with the remaining 1/4 due to changes in the earth's orbit, axis, and albedo (reflectivity)? This truly is "mission impossible." Mankind can no more regulate earth's temperature than the tides.

Even if the "greenhouse effect'' were greater than it actually is, the EPA and Congress would be powerless to alter it for several reasons:

1. Human activity (according to NASA data) accounts for less than 4 percent of global CO2 emissions.

2. CO2 itself accounts for only 10 or 20 percent of the greenhouse effect. (This discloses the capricious nature of EPA's decision to classify CO2 as a pollutant, for if CO2 is a pollutant because it is a greenhouse gas, then the most common greenhouse gas of all -- water vapor, which accounts for almost 3/4 of the atmosphere's greenhouse effect -- should be regulated, too. The EPA isn't going after water vapor, of course, because then everyone would realize how absurd climate-control regulation really is.)

Even if Americans were to eliminate their CO2 emissions completely, total human emissions of CO2 would still increase as billions of people around the world continue to develop economically.

Clearly, it is beyond the ken of mortals to answer the meta-questions about the right concentration of CO2 or the optimal global average temperature, or to control CO2 levels in the atmosphere. I feel sorry for the professionals at EPA who are now expected to come up with answers for these unanswerable questions.

However, I do not feel sorry for the political appointees, like climate czar Carol Browner, and the whole Al Gore, left-wing political fraternity, because it looks like they are about to get what they want -- the power to increase their power over Americans' lives and pocketbooks via CO2 emission regulations.

The big questions facing us regular citizens is whether Congress or the unelected folks at EPA will decide questions like:

Who will be forced to drive and fly less often? (If we quit using every gasoline-powered vehicle in the country, we still wouldn't reduce CO2 emissions as much as Al Gore wants.)

How much economic pain should be imposed on Americans for heating and cooling their homes? (Your 75 percent higher electric bill will fund President Obama's "green jobs" machine.)

Which businesses will need to move offshore to power their operations at a competitive cost? (This is nothing new. EPA regulations started to off-shore oil-refinery jobs decades ago.)

The impact of CO2 regulations will hurt us far more than CO2 itself ever could. We need a miracle, folks. Let's hope that someone nails shut the lid on this Pandora's Box before it swings wide open and infests us with a multitude of plagues.

A Closer Look at the IPCC

The Intergovernmental Panel on Climate Change (IPCC) is widely regarded in the media as the ultimate authority on climate change. Created by two divisions of the United Nations, and recipient of the 2007 Nobel Peace Prize, its pronouncements are received as if they come down from Mount Olympus or Mount Sinai. The common presumption is that the IPCC has assembled the best scientific knowledge. Let's take a closer look at this organization to see whether it merits such uncritical deference.

The IPCC's February 2007 report stated: It is "very likely" that human activity is causing global warming. Why then, just two months later, did the Vice Chair of the IPCC, Yuri Izrael, write, "the panic over global warming is totally unjustified"; "there is no serious threat to the climate"; and humanity is "hypothetically . . . more threatened by cold than by global warming"?

IPCC press releases have warned about increased concentrations of greenhouse gases in Earth's atmosphere, yet Dr. Vincent Gray, a member of the IPCC's expert reviewers' panel, asserts, "There is no relationship between warming and [the] level of gases in the atmosphere."

A 2001 IPCC report presented 245 potential scenarios. The media publicity that followed focused on the most extreme scenario, prompting the report's lead author, atmospheric scientist Dr. John Christy, to rebuke media sensationalism and affirm:

The world is in much better shape than this doomsday scenario paints . . . the worst-case scenario [is] not going to happen.

Clearly, the IPCC does not speak as one voice when leading scientists on its panel contradict its official position. The solution to this apparent riddle lies in the structure of the IPCC itself. What the media report are the policymakers' summaries, not the far lengthier reports prepared by scientists. The policymakers' summaries are produced by a committee of 51 government appointees, many of whom are not scientists.

The policymakers' summaries are presented as the "consensus" of 2,500 scientists who have contributed input to the IPCC's scientific reports. "Consensus" does NOT mean that all of the scientists endorse the policymakers' summaries. In fact, some of the 2,500 scientists have resigned in protest against those summaries. Other contributing scientists, such as the individuals quoted above, publicly contradict the assertions of the policymakers' summaries.

To better understand the "consensus" presented in the policymakers' summaries, it is helpful to be aware of the structure of the IPCC. Those who compose the summaries are given considerable latitude to modify the scientific reports. Page four of Appendix A to the Principles Governing IPCC Work states:

Changes (other than grammatical or minor editorial changes) made after acceptance by the Working Group of the Panel shall be those necessary to ensure consistency with the Summary for Policymakers or the Overview Chapter.

In other words, when there is a discrepancy between what the scientists say and what the authors of the policymakers' summaries want to say, the latter prevails.

Here is a specific example. One policymakers' summary omitted several important unequivocal conclusions contained in the scientists' report, including, "No study to date has positively attributed all or part [of observed climate change] to anthropogenic [i.e., man-made] causes," and:

None of the studies cited above has shown clear evidence that we can attribute the observed changes to the specific cause of increases in greenhouse gases.

These significant revisions were made, according to IPCC officials quoted in Nature magazine, "to ensure that it [the report] conformed to a policymakers' summary."

Elsewhere, Rule 3 of IPCC procedures states: "Documents should involve both peer review by experts and review by governments." In practice IPCC sometimes bypasses scientific peer review, and the policymakers' summaries reflect only governmental (political) review. This shouldn't be surprising. After all, the IPCC is a political, not a scientific, entity. It is the "Inter-GOVERNMENTAL Panel on Climate Change," not a "global SCIENTISTS' panel."

Also, "consensus" is a political phenomenon, a compromise, whereas scientific truth is not subject to obtaining a political majority. (Actually, 31,000 scientists have signed a petition protesting the "consensus" that human activity is dangerously altering the Earth's climate. Consider that against the 2,500 scientists cited by IPCC -- many of whom publicly refute IPCC's press releases.)

To its credit, the IPCC debunks many of the alarmist exaggerations of radical greens. However, its scientific authority remains irreparably compromised by political tampering. When a U.S. State Department official writes to the co-chair of the IPCC that "it is essential that . . . chapter authors be prevailed upon to modify their text in an appropriate manner," the political character of IPCC is plain.

The sponsors of the IPCC, the United Nations, and liberal American politicians all share the goal of reducing Americans' wealth by capping our consumption of energy with a binding international climate change treaty. They are willing to resort to scientific fraud to further their goal. In the words of Al Gore's ally, former Under-Secretary of State Tim Wirth, "Even if the theory of global warming is wrong, we will be doing the right thing" by reducing Americans' consumption of fossil fuels. Keep that in mind whenever the IPCC is cited in support of a climate treaty.

Economic Strangulation: The Environmentalist/Democrat War Against Energy

The "greens" must be thrilled with the new Obama/Pelosi/Reid (OPR) troika in charge of the federal government. Three times already, the troika has blocked the development of domestic oil resources.

During his first week in office, President Obama rescinded his predecessor's executive order permitting drilling on the continental shelf and in the Green River Formation. Both areas contain abundant oil -- especially Green River (under Wyoming, Colorado, and Utah), which has recoverable shale-oil reserves three times the oil reserves of Saudi Arabia.

Several weeks later, Secretary of the Interior Ken Salazar unilaterally canceled 77 oil and gas leases in Utah, on the grounds that (I kid you not) someone might catch a glimpse of temporary drilling equipment from the national park that sits more than a mile away.

Next, on March 25, the House of Representatives passed the Omnibus Public Land Management Act of 2004 (S. 22) which, among many other things, adds two million more acres to the 107 million acres of protected wilderness already owned by the federal government. (In all, Uncle Sam owns 607 million acres of land.) The main purpose of this law is to prevent the exploration and extraction of oil and gas from these lands, which are estimated to have 300 million barrels of oil and 8.8 trillion cubic feet of natural gas under them.

In addition to increasing American dependence on foreign oil by thwarting such domestic development, the OPR/green alliance desires the imposition of expensive cap-and-trade rules to discourage utilities from using coal, which currently provides nearly half of America's electricity. As Obama candidly explained to the San Francisco Chronicle during his presidential campaign:

If somebody wants to build a coal-powered plant, they can [but cap-and-trade] will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted.

Of course, this anti-fossil fuel agenda is nothing new for green Democrats. This group has long resisted drilling in a tiny sliver of the remote, desolate Arctic National Wildlife Refuge. And even the relatively moderate Clinton administration, after designating natural gas as its environmentally responsible fossil fuel of choice, conferred wilderness designation on the western lands that contained some of the richest targets for natural-gas exploration.

The super-green Obama administration plans to replace fossil fuels with alternative fuels. The last time we went down this road, President Carter managed to blow several billion dollars on failed attempts to produce economically viable synthetic fuels (remember "Synfuels?") and foisted the ongoing ethanol boondoggle on us. Corn-based ethanol, even 30 years later, still requires massive government subsidies, and is useless for achieving energy independence. It consumes nearly as much, and perhaps more, energy to produce it than it yields in our fuel tanks. It is also the least environmentally friendly fuel we use, increasing emissions of volatile organic compounds (VOCs) that cause smog, using up precious water supplies, and requiring the tilling of millions of acres of wildlife habitat.

Ah, but the good news is that the current generation of green leaders will take us to the fabled land of wind and solar energy. Apart from the daunting economics, it is likely that these energy sources will still require government subsidies several decades hence, as ethanol does today. Think of the environmental impact of these allegedly superior energy sources:

Solar energy requires vast territories for solar cells -- as many as 46,000 square miles would have to be covered by solar panels. One logical place for a "solar energy farm" would be the wide-open, sunshine-rich, sparsely populated Mojave Desert. However, Senator Dianne Feinstein (D-CA) already has nixed that possibility in the name of wilderness protection. As a frustrated Gov. Schwarzenegger lamented, if you can't put solar panels in the Mojave Desert, then where can you put them?

Wind energy also runs into the NIMBY (Not In My Back Yard) syndrome. Besides the legitimate environmental concern about the way windmills slice up birds and create low-pressure zones that explode the lungs of bats, environmentalists have started to block transmission networks that would tie the energy generated by windmills to the power grid. This reminds me of the congressman who voted for funding of a ship-borne weapon because the weapon is manufactured in his district, but then voted against funding the construction of the only ships that use that particular weapon in order to appeal to antiwar voters.

This green agenda is more than absurd, it is sinister. The real goal of greens is not "clean energy" but less energy. Energy is essential to economic progress, and many greens want to halt and reverse economic progress. Some radical greens have praised Fidel Castro for de-developing Cuba. Al Gore wrote in his book, Earth in the Balance, that U.S. policy should aim for slower economic growth. President Obama's chief science advisor John Holdren's top two environmental goals are to shrink the human population and to slow economic growth.

So here we are, in the midst of a severe economic crisis, and the ruling party is pursuing an anti-energy agenda that would further cripple economic activity. They seem oblivious to the fact that poverty is the most lethal environment for human beings. (Life expectancy in the United States declined during the Great Depression.) What a grim price we will pay for the green agenda. *

"He had delusions of adequacy." --Walter Kerr

Some of the quotes following each article have been gathered by The Federalist Patriot at: http://FederalistPatriot.US/services.asp.

Read 4199 times Last modified on Sunday, 29 November 2015 09:20
Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

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