The Political-Economy of Politico Energy Policy -or- how to love higher prices funded by your own tax dollars!

Freedom is not simply the right of intellectuals to circulate their merchandise. It is, above all, the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their “betters.” - Thomas Sowell from Knowledge and Decisions.

　
The most common forms of competition discussed in the social studies are impersonal competition which is directed toward a goal and personal competition which is directed toward any one individual. One needs to note that personal competition can lead to rivalry and differing stages of conflict at the point of exchange during competition. A third form of competition is “cultural competition” which is competition between two or more cultural groups. (1)

Restricting one’s freedom to use pecuniary wealth to influence others, say by offering higher prices to win agreements to sell, results in greater emphasis on “personal characteristics competition.” - Harold Demsetz (2)

Demsetz is stating that at the point of exchange, during competition, impersonal competition changes to personal competition when pecuniary wealth is restricted. Likely if any competitor is restricted in some freedom at the point of exchange some level of personal competition is introduced. As mentioned above, personal competition can lead to rivalry and differing stages of conflict at the point of exchange during competition.

Note that in Demsetz’s example, implicitly assumed, is that some exogenous power restricted freedom to use, in this example, pecuniary wealth.

What if an exogenous power, such as politicos, used verbal virtuosity based on the way things ought to be and the same politicos through the mechanism of government used regulatory authorities and their inherent regulatory powers to simultaneously create conditions for personal competition and cultural competition to the exclusion of impersonal competition? What if such conditions then fostered an army of economic rent seekers aka crony capitalism rather than an army of competitors in a free market environment? Could such conditions ever be present?

Welcome to the wonderful world of politico directed Department of Energy (DOE) loans to green energy companies simultaneously accompanied by the regulatory edicts of the Environmental Protection Agency (EPA).

Lets first examine cultural competition. If certain politicos want to foster cultural competition they must frame a cultural competition debate which subdivides culture into competitors. The politico purposely draws some distinction and purposely promotes an item as being positive and another item as being negative [verbal virtuosity based on the way things ought to be]. For example, green energy is positive and fosil based fuel is negative.

Next we have personal competition. The same group of politicos through the mechanism of government purposely act as an exogenous power to purposely restrict the freedom of one cultural competition competitor in the now purposely politico made cultural competition environment. For example, raise taxes and regulation on fossil fuels while subsidizing green energy.

We now have culture competition simultaneous with personal competition. Hence the politico has created an environment in which politico-created competing cultures compete on a personal basis. Stated alternatively, rather than free enterprise competition occurring in the area of energy to create the most efficient allocation of resources with alternative uses, politicos through the mechanism of government have created a centrally planned misallocation of resources with alternative uses by introducing cultural and personal competition.

Who loses when a misallocation of resources occur? The consumer is the ultimate loser as prices rise for the item in question [energy] while the consumer is also taxed [subsidies for green energy]. Hence the consumer is not only harmed by higher prices, the consumer is paying tax dollars to in effect create the higher prices. You have been duped again? Well of course you have!

Who gains when a misallocation of resources occur? The producer that charges above market prices (when lower market-based prices are available) and simultaneously enjoys subsidies [taxpayer money]. The politico also benefits as he/she has exercised political constituency building through the use of taxpayer dollars (tax payer funded subsidies recalculate back to the politico in the form of political contributions of one type or another including monetary). You have been duped again? Well of course you have!

What has been created for you, the consumer, by politicos through the mechanism of government? Your tax dollars have been put to work! You have funded a price increase for yourself and simultaneously funded select firms and funded political contributions all achieved by politicos through the mechanism of government misallocating resources to their particular gain. Very nice!

“The government has nothing to give. The government is simply a mechanism which has the power to take from some to give to others. It is a way in which some people can spend other peoples' money for the benefit of a third party - and not so incidentally themselves.” -Milton Friedman



Notes:


H/T Cafe Hayek



(1) Nature and characteristics of Competition, http://www.sociologyguide.com/basic-concepts/Characteristics-of-Competition.php


(2) Harold Demsetz, 1988, Ownership, Control, and the Firm, page 17.

Beguiled: “putting wars on a credit card”.

Regarding the current debt limit debate between Republicans and Democrats occupying media headlines, an old taking point has been removed from the self and dusted off for an encore performance: putting two wars on a credit card along with the Bush Tax Cuts lead to the current $14 trillion national debt.


Concentrating on the assertion “putting wars on a credit card”, the implicit and explicit assumption is that war should be paid for as we go. The statement eludes to past wars somehow, someway having been paid for on an as-we-go-basis. That somehow the Iraq and Afghanistan wars [or war on terrorism] was an outlier in that it was a war(s) financed through debt whereas prior wars were not associated with debt.

Looking at the chart above, one notes the explosion in spending around 1915 and again around 1941. Those two episodes coincide with World War One and World War Two. The explosion in spending was done so in 1915 and 1941 on a pay-as-you-go basis? Wrong! Looking at the second chart [below] one can see an explosion in national debt beginning in 1915 and 1941.

Politicos like to frame an argument. The framing of a politico argument by no means requires fact. In many cases, the politico depends upon a notional and fact less based argument to make a political point. Hence “putting wars on a credit card” is somehow one of the prime movers of our particular national debt level at the current time, and that financing war through debt is something that never has happened except during the Iraq and Afghan wars, that this case of war is an outlier and should have been paid for on a pay-as-you-go basis like other past wars……is nothing more than fact less politico talking point.

There is no doubt that "war" in most cases is financed. The a financed war can certainly add to national debt. However, to single out a particular war as being the only war ever to add to national debt is sophistry.

Therefore, when one hears the talking point “putting wars on a credit card” in regards to the current national debt level one should disregard the argument as the implicit and explicit assumption that no prior war was financed through debt which is baseless and fact less. The attempt to make current wars some outlier of debt accumulation is to be beguiled.













Notes:

(1) http://www.usgovernmentspending.com/us_20th_century_chart.html

(2) http://www.usgovernmentdebt.us/?gov=total

Politico Kabuki Theater: Debate, Insight, and Political Civility

Debate: a discussion, as of a public question in an assembly, involving opposing viewpoints.

Insight: an instance of apprehending the true nature of a thing, especially through intuitive understanding; penetrating mental vision or discernment; faculty of seeing into inner character or underlying truth; an understanding of relationships that sheds light on or helps solve a problem.

“Civility” regarding political rhetoric and political discourse


In recent months a proposition put forth in the political arena has been “civility” regarding political rhetoric and political discourse. Some politicos point toward people supposedly acting in a violent manner due to heated political rhetoric. Other politicos say no connection exists between political rhetoric and exogenous violent events. Still other politicos point to the fact that US politics has never been “civil” and love to point toward the Jefferson -Adams uncivil statements/politics. Yet other politicos point toward continued uncivil rhetoric even after the issue of civility recently surfaced in the political arena e.g. Wisconsin protester rhetoric and Wisconsin democrats rants in the Wisconsin house.

Politicos and the debate environment


Don’t be fooled. One must remember the “civility” proposition is put forth by and for politicos. Politicos always want to shape the environment in which they debate. The current “call to civility” has nothing to do with civility and has everything to do with shaping a debate environment.

Debate vs. Insight

Regardless of civil debate or non-civil debate, politicos rarely have anything to offer remotely resembling insight. Debate and shaping debate environment has nothing to do with insight.

Hence politicos want to shape a debate environment, perform the political Kabuki dance of debate, point-counter point, and give us the normal politico results of zero insight and plenty of politico smoke laden hot air.

You see, since insight is not a politico strong suit, they merely act the part of politicos and focus attention on “civility”, a non-issue issue, direct media attention to “civility” and go about their merry way debating into infinity and beyond with exactly zero insight.

Politicos are Politicos

Politicos want James and Jane Goodfellow to focus on a non-issue issue, shape their own political debate environment, and continue with their 2,362,222 rendition of the Kabuki dance of debate providing their audience with a never ending sting of opposing view points all the while shedding no light on how to solve problems.

The Kabuki dance of debate is to divert your attention. Its frustrated actors, also known as politicos, providing you political entertainment while solving zero problems. Maybe the following quote puts the politico Kabuki dance of diversion-debate-entertainment into perspective:

Remember, every single second on television, no matter what the apparent content, is entertainment. - Don Luskin