Dash of Calabash

Federal Communications Commission Chairman Kevin Martin made an incredible statement while testifying before Congress regarding parents controlling the content of what their children see on cable television. While insisting that cable companies alter the way they offer their services, by offering channels “ala carte” or family friendly “tiers” Martin said:

You can always turn the television off and, of course, block the channels you don’t want, but why should you have to?

Heaven forbid that parents should actually have to do something! Then be ready for all hollering and bellyaching that will follow if his proposals are adopted because they will increase the costs of the cable companies and they will be forced to raise rates. Yet another example of government regulation and interference in the market that causes price increases. Article here.

Talk show radio host Neal Boortz found an amazing article about how a teacher was instructed to stop teaching the American Revolution in his high school history class and only teach from the Civil War forward. In addition this seems to becoming the norm in government schools around the country. If students never learn about the principles that this nation was founded upon how could the be expected to uphold them today? It’s starting to look more like Every Child Left Behind. Link to Neal’s take on this issue and his link to the article here.

The high price of oil is beginning to have predictable results. Oil wells that have been capped in California for decades are being uncapped and returned to production. This will increase the supply and help bring prices down. Even though the oil will only be sold in California, refiners in that state will buy less oil on the world market increasing supply there and putting downward pressure on prices. The free market works when it is allowed to.

Article here.

Here is a perfect example of what I was talking about in my article on HawaiiReporter this morning.

But something even bigger seems to be occurring. Wal-Mart has become the poster child for an era of unfettered globalized corporate operations - “a destabilizing business model, a dangerous detriment to America’s local and national economies and to the middle class,” in the words of critic Leo Hindery Jr., former CEO of the telecom carrier Global Crossing and an active figure in Democratic Party politics.

Hindery, at a recent Washington conference organized by the Center for American Progress, noted that as recently as 1992 (the year of Wal-Mart founder Sam Walton’s death), the Business Roundtable of top business leaders was asserting that corporations had a major responsibility not just to stockholders but to their employees, society at large and the nation’s economy. But now, Hindery asserts, the Business Roundtable - indeed, most of the corporate world - focuses almost exclusively on profits for stockholders.

The unabashed corporate and business bashing is clearly in evidence. Profits are bad! What’s more there is no reference to made to the fact that the “Center for American Progress” is an far leftwing, socialist oriented group, mostly a mouthpiece for union organizations. Yet such leeway would never be allowed for the other side. A further quote clarifies the bias.

The reply of economists friendly to Wal-Mart is based — like the company’s promotions - almost exclusively on low prices and efficiency. According to a Wal-Mart commissioned study by Global Insight, a respected economic- forecasting firm, low Wal-Mart prices saved consumers $263 billion last year. Wal-Mart defenders say that’s “progressive” because the benefits flow principally to low-income families who shop at discount stores.

But that isn’t the whole story, this is also what the Global Insight article said:

According to the study, Wal-Mart had a positive impact on employment nationwide, generating 210,000 jobs by 2004, a 0.15% increase relative to the number of jobs that would have existed without Wal-Mart. Labor market dynamics, embodied in Global Insight’s Model of the U.S. Economy, resulted in nominal wages across the whole economy declining 2.2% by 2004. This decline was more than offset by the fall in consumer prices, creating an increase in real disposable income of 0.9% by 2004. “Consumers earned less in nominal dollars, but their income bought them more in the economy with Wal-Mart because of real disposable income gains,” the study concluded.

The continual assertions of the left that it is always to the benefit of the general public when workers are paid more isn’t always the case. The overall savings of consumers due to lower prices can outweigh lower or slower income growth due to those savings. This is counter intuitive to the inflationary paradigm of the left of “higher wages at all costs.” The costs are to the lifestyle of the public, it is called inflation.

The article under scrutiny here.

This is beyond ironic.

THE drive for “green energy” in the developed world is having the perverse effect of encouraging the destruction of tropical rainforests. From the orang-utan reserves of Borneo to the Brazilian Amazon, virgin forest is being razed to grow palm oil and soybeans to fuel cars and power stations in Europe and North America. And surging prices are likely to accelerate the destruction.

An article worth reading.

Over at Tech Central Station Arnold Kling has a weighty explanation of why most people hate economics. It is a rather deep article on the subject but in the middle he has a very concise exposition on the function of gas price fluctuations after hurricane Katrina.

No one sets the price of gasoline. If they could, oil company executives would charge $10 a gallon or more. However, because of competition, they have to charge an amount that will allow them to sell the gasoline that they are able to produce. After Katrina, they were able to produce less gasoline, so that at $2 a gallon they would have run out. They raised their prices to the point where they could not raise them further without losing most of their business to competitors.

If an oil company had decided magnanimously to sell gasoline at low prices, it would have run out of gasoline. If enough companies had done so, there would have been so little gasoline left that by October the public would have been at the mercy of those few suppliers that held any inventories. If gasoline had cost $2 a gallon in September, the shortage in October might have pushed the price up to $5 a gallon.

Could the function of prices be made more clear? What is going to be the ultimate result of interference in the market by the gas cap law here in this state?

Economics is like gravity in a certain sense, whether you believe in it, understand it or ignore it, it inexorably works anyway. Thomas Sowell has a three part essay in Real Clear Politics exploring this very issue, ignoring economics.

The first essay examines the unintended consequences of economic policies that may not take place for decades, as in the case of the riots in France.

The second essay explains the function of prices and what happens when politicians try to artificially control prices as a means to practice political demagoguery.

The third essay is an exposition in how the laws of economics, like gravity, cannot be subverted by political means without causing damage to some portion of the economy. Yet this is precisely what politicians continually attempt to do in attempting to control everything from the price of medicine, housing rental costs, wages or oil company profits.

In the Honolulu Advertiser 11/18/05 Edward Conklin makes a good point in ” Metered on-ramps are one way to manage freeways” But he gives as a good example the Los Angeles area. Really? The Los Angeles area is a poster child for effective traffic management? We want to duplicate it here? Since when?
That does, however, bring up a salient point. What business can always be counted upon to have too many customers? The answer: almost any govrnment run operation. The schools are too crowded, the freeways too busy, the line at the vehicle registration is too long. I just got a letter from Rep. Neal Abercrombie. He has to handle, according to him, hundreds of subjects. Tut-tut. Wal-Mart in a little town like Russellville, Alabama has to handle thousands of subjects every day. Are they complaining? Not on your life. They want more problems[customers]. They say” bring them on!”
Think about this: If the highways were run by private enterprise, would out of control congestion disappear in fairly short order, at less cost? What are your thoughts?

Andrew Walden says yes. What is particularly interesting about his article is his observations on the Sierra club.

Their agenda is revealed in the “Earth Charter”, endorsed by the Sierra Club and many other so-called environmentalists, which reads: “the dominant patterns of production and consumption are causing environmental devastation.” They want to destroy the free enterprise system and replace it with a system that the Earth Charter says, “Promote(s) the equitable distribution of wealth within nations and among nations” - in other words, socialism.

Their real goal and its affect on the day-to-day life of millions of humans is contained in the preamble to the Earth Charter which reads: “when basic needs have been met, human development is primarily about being more, not having more.”

Whole article here.

John Stossel and Penny Fleming have an article on Wal-Mart listing its benefits to its customers and employees. While the standard line is that Wal-Mart exploits employees the truth is something else. Full story here.