Lars Larson on Farm Cap and Trade

Well, the farmers know all about the Governor’s ideas on Cap and Trade, and they don’t like them.

The newspapers reported last week that the Governor is planning to spend money on a regional Cap and Trade system. Cap and Trade means you cap the amount of energy used. If you’d like to use more energy than that you have to pay for carbon credits. That’s Cap and Trade.

The Governor wants to spend $1.9 million on a system like that and agriculture has already seen this for the scam that it is. Roger Beyer, who is with the Oregon Seed Council, says, “We see Cap and Trade as a hidden tax on energy and we are very much opposed to the idea.”

The Governor is also proposing spending more millions of dollars on energy efficiency in homes and business, on tax credits for electric and hybrid cars, and all the other scams and schemes he’s got going.

The fact is, we don’t need that. What we need is market based solutions for energy supply for Oregon and not messing around with Al Gore’s fantasies.

“For more Lars click here”

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  • Provo

    A regional cap and trade system would give this country a chance to see if it works. If it doesn’t then scrap it, if it does then what is wrong with that?

  • Jerry

    The only thing that can save mother earth right now is cap and trade. Full steam ahead.
    It will work, by the way, and we will all be saved from the heat bomb that is destroying us now.

  • Scottiebill

    Lars: You missed mentioning that if Teddy gets his way, the State of Oregon will be buying Chinese-built cars for the State’s motor pool. Oregonians can only hope that the legislature stops this action in its tracks. (Lotsa luck on that one). What happened to buying American, Teddy?

    I am no economist, but this “cap and trade” thing seems to be just another way for government to bilk us out of more taxes.

    Jerry, right now “global warming” is hitting here. Right now, the temperature is 32 deg. and will get to about 20 deg. tonight, according to the weather forecasters. In my home town in Northern Montana right now it is -20 deg. with the wind up, as it usually is there. Your “heat bomb” is not really functioning too well right now, is it?

  • dean

    “Agriculture” doesnt like it? I don’t think the Oregon Seed Council speaks for all of Oregon agriculture. They sure don’t speak for me, and I have a farm. On cap and trade, I say bring it on. Climate change is not good for most farmers.

    • Anonymous

      You are a busy man, Part time professor, landscaper, blogger, now farmer. I really think the farms they are talking about is more than a hobby as yours is. Having been a rancher/farmer (large) I can tell you if you really are a farmer, you don’t have the kind of time you are using to do all these thinks. Makes me think your not what you think you are.

      • dean

        Yes…and you are pretty amazing yourself. Assuming there is actually a self there.

    • Anonymous

      Another lie from Dean. Dean has a garden about twenty feet square.

  • Anonymous

    dean,

    http://www.uoguelph.ca/~rmckitri/research/ispm.html

    Full report here.

    http://www.uoguelph.ca/~rmckitri/research/ispm.html
    Independent Summary for Policymakers
    of the IPCC Fourth Assessment Report (Working Group I)

    Overall conclusions
    The following concluding statement is not in the Fourth Assessment Report, but was
    agreed upon by the ISPM writers based on their review of the current evidence.
    The Earth.s climate is an extremely complex system and we must not understate the
    difficulties involved in analyzing it. Despite the many data limitations and uncertainties,
    knowledge of the climate system continues to advance based on improved and expanding
    data sets and improved understanding of meteorological and oceanographic mechanisms.
    The climate in most places has undergone minor changes over the past 200 years, and
    the land-based surface temperature record of the past 100 years exhibits warming trends in
    many places. Measurement problems, including uneven sampling, missing data and local
    land-use changes, make interpretation of these trends difficult. Other, more stable data sets,
    such as satellite, radiosonde and ocean temperatures yield smaller warming trends. The
    actual climate change in many locations has been relatively small and within the range of
    known natural variability. There is no compelling evidence that dangerous or unprecedented
    changes are underway.

    http://www.uoguelph.ca/~rmckitri/research/ispm.html
    RUMOURS AND REALITY:
    Some false rumours have been spread on the Internet regarding the ISPM. For the record:
    There was NO funding for this project from Exxon or any other fossil fuel company, or from any other industry. No funding was sought by the Fraser Institute for this project. The Fraser Institute does not do contract research, nor does it accept money from governments. It has not received funding from Exxon for any purpose since 2004, when it received a small grant which was not directed to any specific project. The attempt to smear the ISPM project by a false insinuation that the writers and/or reviewers were in the pay of the fossil fuel sector is nothing more than an attempt to discredit the project in the mind of the public, in order to prevent people from reading it.
    The ISPM is not an attack on the IPCC or a critique of the Fourth Assessment Report. In fact several people involved in the ISPM were themselves contributors or reviewers of the IPCC Report as well. The purpose of the ISPM is to encourage readers to look closely at the IPCC text itself, not simply the Summary released in Paris on February 2, 2007.
    The Fraser Institute exerted no editorial control over the writing at any stage. The writing team had full discretion and control over the final product. By contrast, the IPCC takes a Summary draft produced by scientists and allows sponsoring governments to re-draft it before its release.
    (Download the Independent Summary for Policymakers)

  • Bob Clark

    The Oregon green jobs movement is seriously flawed. As it is coming together, it is to be financed through either higher taxes to fund targetted tax credits, higher state energy prices, or a combination of both. Meantime, China and other developing countries will go on using cheap coal generation energy. This will create a competitive advantage for china and others versus those states in the cap-&-trade program. China is already manufacturing polysilicon for the solar cells, and so as the state of Oregon’s cost of doing business escalates, manufacturing jobs including those in the green energy field are likely to be lost through international competition. (In fact, the governor is buying green cars from china instead of buying less expensive conventional cars from Detroit. What a patriot!)

    Oregon is following California in environmental policies like a lemming. California has already jumped off the proverbial bridge once and been clobbered. This happened in the 2000 to 2001 western electricity crisis when the California Air Resources Board refused to let the state’s gas-fired power plants operate at a variance to meet state electricity demand. Only after the state went into billions of dollars of new debt did California finally adjust environmental policy to allow the plants to operate. Democratic Governor Grey Davis was subsequently recalled.

    Leading economic research firms like Global Insights and others are indicating policies like Governor Kulongowski’s when applied nationally will wreak havoc on the economy, and they forecast eventually after much havoc, there will be policy adjustment. Unfortunately, Kulongowski will be gone by then and we won’t have a chance to recall him.

    Even the Office of Oregon Economic Analysis, a state agency, in their revenue discussions are less than certain about the successfulness of the state’s green job gains.

  • Anonymous

    There are medical marijuana farmers.

    That would explain much.

  • Catalyst Adminstrator

    Dear Anonymous,

    Your involvement is appreciated, but we ask you kindly to refrain from making personal attacks on your fellow comment colleagues (calling them liars, worthless, unemployed, etc.) Please focus on the debate over ideas, and less attacks on people’s intelligence, personality or status of employment. Oregon needs more issue-focus discussion, please help us keep providing it.

  • Anonymous

    Got it
    but also , FYI ,, These anons are more tha one person.

  • John in Oregon

    I originally posted this with another thread, however the comments seem appropriate here as well.

    In a recent post on another thread I commented about the similarities between 1920-29 and 1998-2008 which are quite striking. I noted the same general conditions apply for each era just with different Government players and the same results.

    The obvious question, will Government policy today follow that old path creating a devastating new and greater depression. Fifty years post the “Great Depression” records have become available with research that shows how the US Government turned a recession for the rest of the world into US national economic disaster from 1929 to the end of 1941.

    The period 1929-41 aptly demonstrates the dangers of Centralized Power. “There is an important lesson to be learned from this episode: When we centralize great responsibility and power in one institution, the FED or Federal and State Government, its failure will have far-reaching and terrible consequences.

    With the parallels between then and now, the obvious question is do the current conditions point to another, modern day Greater Depression. To test this I took a small list of the documented Government actions that caused the Great Depression. I then took that list and tallied todays Federal Government, State Government and proposed State Global Warming initiative, answering the question do these actions exist today?

    1] Tax increase.

    — Federal *YES*
    — State *YES*
    — — Income
    — — Property
    — State Global Warming *YES*
    — — Energy Fees
    — — Energy Production tax
    — — Energy Use tax

    2] Restraint of trade

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*
    — — Energy Exploration restrictions
    — — Energy Production restrictions
    — — Energy Import restrictions
    — — Energy Use restrictions
    — — Mandatory renewable content of electricity
    — — Adopt restrictive greenhouse gas Tailpipe Emission Standards
    — — Impose land use and transportation limitations

    3] All sorts of “public works” programs removed hundreds of thousands of people from the labor market and engaged them in economically wasteful activities.

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*

    4] Price and wage controls prevented market adjustments. This policy massively distorted relative market prices, impairing their ability to function as guides to entrepreneurs.

    — Federal *YES*
    — — Raising wages
    — State *YES*
    — — Raising wages
    — State Global Warming Not Yet

    5] Operating regulation of business and enterprise

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*
    — — Restrictive building codes
    — — Building codes to set maximum water, heating cooling
    — — Arbitrary equipment standards
    — — Electric rates modified to penalize peak demand.
    — — Impose land use and transportation limitations
    — — Mandatory renewable content of electricity
    — — Adopt restrictive greenhouse gas Tailpipe Emission Standards
    — — Impose land use and transportation limitations
    — — Onerous monitoring and reporting schemes
    — — The Cow Gas Tax

    6] Imposing other new costs on enterprise.

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*
    — — Restrictive building codes
    — — Electric rates modified to penalize peak demand.
    — — Mandatory renewable content of electricity
    — — Adopt restrictive greenhouse gas Tailpipe Emission Standards
    — — Impose land use and transportation limitations
    — — Onerous monitoring and reporting schemes

    7] Subsidy and relief schemes

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*
    — — Mandatory renewable content of electricity
    — — Mandatory Ethanol
    — — Mandatory Bio-Diesel

    8] Keeping commodity prices high

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*
    — — Mandatory renewable content of electricity
    — — Mandatory Ethanol
    — — Mandatory Bio-Diesel

    9] Government debt skyrocketed

    — Federal *YES*
    — State *YES*
    — State Global Warming Not Yet

    10] Government’s share of GNP increased

    — Federal *YES*
    — State *YES*
    — State Global Warming *YES*

    Obviously this is nothing like a detailed scholarly study. It does show Government moving in the direction of the same levers of power that created the Great Depression.

    A description of the Great Depression seems appropriate, “bureaucracy, controlling our every act, destroying what equality we have attained, reducing us eventually to the condition of impoverished slaves of the state.”

    *Dangers of Centralized Power*

    There is an important lesson to be learned from the Great Depression: When we centralize great responsibility and power in one institution, its failure will have far-reaching and terrible consequences.

    • dean

      John…you have a strange, alternative universe grasp on history.

      “All sorts of “public works” programs removed hundreds of thousands of people from the labor market and engaged them in economically wasteful activities.”

      These public works programs, that you seem to disparage by placing quotes around “public works,”built actual stuff people still use today like hydro dams, roads, trails, bridges and so forth. They also temporarily removed people, including my father, from a labor force that was 25% unemployed when Roosevelt took office in 1933 and gave them something useful to do while they were able to put food on the table for their families. This was after 4 years of Hoover sitting on his duff waiting for the free market to kick in and solve the problem.

      Beyond that…what federal tax increase are you referring to? The one Obama was elected on but has indicated he won’t implement until things pick up? What “wage and price controls” are you referring to? What are “subsidy and relief schemes?” Social Security? Unemployment insurance? You are proposing eliminating these during hard times? Good luck in your political career.

      Skyrocketing government debt is about the only tool left for keeping this economy from sliding into severe deflation. Government’s share of the GDP has to temporarily increase for the same reason, otherwise we will get to the 25% unemployment our grandparents experienced.

      The lesson I draw from the great depression is that if you leave the financial maangement of the nation in the hands of stock market gamblers you are setting yourself up for a big fall. Of course now it has taken 80 years to re-learn the lesson.

  • David Appell

    Lars Larson wrote:
    > Cap and Trade means you cap the amount of energy used.

    No it doesn’t. It caps the amount of carbon emitted. You can use all the energy you want, as long as it’s produced carbon-free.

    • John in Oregon

      > *No it doesn’t. It caps the amount of carbon emitted. You can use all the energy you want, as long as it’s produced carbon-free.*

      Lets de-construct this.

      All the “carbon-free” energy offered by Government demandates is unreliable and unavailable as base load.

      Therefor one is able to use as much of the energy that doesn’t exist as one might want. *Most excellent solution.*

      If the “carbon-free” energy were reliable nuclear than that would be a real solution.

      • dean

        John…government doesn’t offer power unless it is coming out of the federal hydro systems, which are base load. What goevernment is doing in this case is regulating a pollutant in a way that encourages the provider (utilities) and users of power (us) to switch gradually over to non-polluting sources, which can include nuclear if this is what utilities choose to build, and if Oregonians let them. Geothermal and wave or tidal energy, if these prove out, may also be effectively base load.

        To the extent financing is provided for weatherization, more power may not necessarily even be needed. We have gradually insulated our drafty old farmhouse room by room and have noticed a big difference in energy use.

        • jim karlock

          Hey Dean, CO2 is vital to life. It is not a pollutant.

          BTW we are still waiting for you to show evidence that CO2 can cause dangerous warming. And don’t feed us that crap about “dangerous” being subjective, so you can’t justify your claims that CO2 must be controlled.

          Thanks
          JK

  • David Appell

    John in Oregon wrote:
    > All the “carbon-free” energy offered by Government
    > demandates is unreliable and unavailable as base
    > load.

    Not true at all. When I lived in Portland I was able to buy 100% green power from Pacific Power. It cost less than 10% extra.

    Green transportation (not carbon-free, but carbon-reduced) is readily available via public transportation. Or you can bike. Or you can buy a hybrid car.

    Conservation measures are at hand with the Energy Star program, compact fluorescent light bulbs, etc.

    With more demand for green power, the market is supposed to rise up and supply it, right? Nuclear, wind, geothermal, solar, etc.

    The point is: if you’re going to damage the climate by burning carbon, then you should pay for that.

    • jim karlock

      *Hey David*, you just said : “if you’re going to damage the climate by burning carbon ”

      Please provide peer-reviewed proof that burning carbon can damage the climate.

      BTW we are still waiting for you to provide peer-reviewed proof that

      * 1. * “the science is that the world is warming and man is responsible for much of it. This is well-established in the scientific literature.”

      * 2.* CO2 can cause “far more than 0.5 C warming”

      Dave, show us the papers to prove it or quit trying to scare people in to making Al Gore rich and his Wall Street cronies rich.

      Thanks
      JK

  • Jerry

    Where is all the heat when we need it?

  • John in Oregon

    Dean commented > *John…you have a strange, alternative universe grasp on history. *

    Dean I am aware students today are taught a skewed account of the Great Depression, that freemarket capitalism is the cause of the depression and government intervention was the solution to the economic hardships. As you say *The lesson I draw from the great depression is that if you leave the financial maangement (sic) of the nation in the hands of stock market gamblers … Of course now it has taken 80 years to re-learn the lesson.*

    Like you that was what I was taught and believed until I looked at the facts. In the 50 years since WWII most economists have come to accept the facts.

    The facts raise this question. If Government is the solution then why when the Government intervened in 1930 did the recession of 29 turn into a depression that lasted until WWII at the end of 1041?

    See my post at the thread “Beware of Government Job Creation Schemes” for more detail.

    Dean you asked bout the “public works” that > *built actual stuff people still use today like hydro dams, roads, trails, bridges and so forth.*

    When the WPA built near a million projects at least a few of then by sheer chance ought to turn out later to be useful. The WPA built 77,000 bridges. Far more bridges to nowhere than the few by chance that were bridges to somewhere.

    > *what federal tax increase are you referring to?*

    Yesterday Obama announced his environmental team stating that Global Warming is the only thing more important than the economy. He thereby signaled his intent to carry through with his campaign promise to the San Francisco to tax the coal industry out of existence and cause electricity rates to skyrocket.

    Dean you said > *John…government doesn’t offer power…*

    Exactly. The Government cannot produce green power that anyone can use as much as they wish to escape punishing taxes.

    David you said > *Not true at all. When I lived in Portland I was able to buy 100% green power from Pacific Power. It cost less than 10% extra.*

    David when the contribution of “green power” is less than a few tenths of total load the grid and conventional generation can be used as though they are a giant battery.

    In terms of base load, The Government cannot produce green power that anyone can use as much as they wish to escape punishing taxes. The Government can mandate and demand all it wishes, it will not produce power or wealth.

    The result is a punishing tax on energy users. Rationing of artificially limited energy supplies.

    • John in Oregon

      The following;

      “campaign promise to the San Francisco to tax the coal industry out of existence ”

      Should read;

      “campaign promise to the San Francisco Chronicle to tax the coal industry out of existence “

      • dean

        John…what I learned of the Great Depression was partly from macro-economics class, but also from talking with my own family members and others who experienced it. And having read Studs Terkel’s fantastic book, “Hard Times.” My grandfather lost his life savings, $9000 when his bank closed under Hoover and there was no FDIC. He voted for Roosevelt and stayed a Democrat until the day he died. My father had a CCC job, and his family was “on the dole” through much of the depression. He became a Republican. Go figure.

        I’ve also read more recent analyses from economists including Krugman and Bernanke. What I take away is a couple of things. First, the market crash was a classic case of an investment bubble. People with few resources were buying up stocks by placing options…no cash down….and betting on a continued market rise. Sound familiar? Think housing circa 2001-2006.

        The Fed did “intervene” in both cases through its monetary policy. The big error they made in 1930 was raising interest rates, which as you suggest may have pushed the economy further down. They should have intervened in the opposite direction. So its not a question of intervention, its a question of the appropriate intervention at the right time. You can pretend a world with no Fed…no central banking at all…but that world does not exist.

        Hoover failed to use the spending power of the government to halt or reverse deflation, and he failed to support relief efforts. He assumed the market would self-correct soon enough. He assumed wrong. Bush, to his credit has gone reluctantly in the opposite direction, though his anti-regulation mentality has led to huge mistakes in allocation of bailout funds.

        Do you have ANY information that backs up your claim that of 77,000 bridges built under Roosevelt, that most were as you say, “bridges to nowhere?”

        So the Obama tax you are assuming is a carbon tax? Interesting. Everything I have read suggests he is going for cap and trade, not a carbon tax. You must have better inside information than I have.

        I would actually disagree with David about his buying 100% green power. He was getting the same power as everyone else, but for a higher price. He (and I) are simply paying more in order to provide extra funds to support what little green power PGE has found fit to provide within the mixed electrons that flow through the wires that connect us all to dams, wind turbines, and the filthy Boardman Coal plant.

  • John in Oregon

    The actual auto industry workers (Ford, GM, Chrysler) may well know how to fish. It seems however that the UAW does not. Otherwise why else would the union insist on the “Job Bank” which is a euphemism for paying the worker 90% of salary to sit in a room 8 hours a day year after year doing nothing when there is no work.

    Actually the big 3 are an excellent example of what I was discussing above. That energy policy may be a factor that tips the balance from a recession to a Great Depression.

    I know that many point to the UAW as the reason for the big 3 demise, and frankly an unreasonable wage structure is a big factor. But only one factor of three.

    Bad management decisions, such as building factories they contractually cant sell when closed, is another.

    The third is (surprise, surprise) Government. With energy policy that drives fuel prices up and down like a whipsaw, choking work rules, pollution rules that change at the drop of a whim, and CAFÉ standards that prohibit import of fuel efficient vehicles the big 3 build overseas.

    It all adds up to the straw that breaks the camels back.

    My point is that same kind of actions by Government that turned the 1929 recession into the 12 year Great Depression are present today and energy policy is a huge player.

    Dean you asked > * Do you have ANY information that backs up your claim that of 77,000 bridges built under Roosevelt, that most were as you say, “bridges to nowhere?”*

    See Lawrence W. Reed “Myths of the Great Depression”. The more modern metaphor of the bridge to nowhere is mine. The term that Reed used was boondoggle which is historically relevant. Boondoggle was first used by the New York Times in a 1935 article about the WPA and ever since has been the standard and indispensable epithet for purposeless and wasteful projects in government and business.

    > *I’ve also read more recent analyses from economists including Krugman and Bernanke.*

    One thing to keep in mind is that Krugman tends Keynesian and more than most Krugman is known for letting his bias creep in. Its must to read him for prospective, but he is know as a bad news bear.

    As to the claim that the Great Depression demonstrates that market economies are inherently unstable and must be managed by the government to avoid large disaster.

    Milton Friedman and Anna Jacobson Schwartz showed convincingly that the Federal Reserve’s 1921 to 1929 monetary policies were largely to blame for the 1929 stock market crash.

    In 2002 Ben Bernanke who was then a Federal Reserve Bank governor, said:

    *“I would like to say to Milton and Anna: Regarding the Great Depression, you’re right. We did it. We’re very sorry.”*

    Dean you say > *Hoover failed to use the spending power of the government to halt or reverse deflation, and he failed to support relief efforts. He assumed the market would self-correct soon enough.*

    This is factually incorrect. In response to 1929 Hoover instutited the largest peace time tax increase in history and the Smoot-Hawley tariffs which ignited an international trade war.

    During the 1932 campaign Franklin Delano Roosevelt called for a 25-percent reduction in federal spending, a balanced federal budget, a sound gold currency “to be preserved at all hazards,” the removal of government from areas that belonged more appropriately to private enterprise, and an end to the “extravagance” of Hoover’s farm programs.

    Dean you asked > *So the Obama tax you are assuming is a carbon tax? Interesting. Everything I have read suggests he is going for cap and trade, not a carbon tax. You must have better inside information than I have.*

    All I can report is Obamas answer to the San Francisco Chronicle editorial board that he would make the cost of electricity skyrocket and that people could use coal but he would make the cost bankrupt them. The editorial board didn’t ask any follow up but that is typical of the Legacy Media.

    Either way massive extractions from the economy are still extractions and Obamas recent comments indicate he is hell bent on doing so at the expense of the economy.

    Some of the references I used were;

    Ivan Pongracic Jr
    The Great Depression According to Milton Friedman

    Governor Ben S. Bernanke
    Remarks at the University of Chicago, Chicago, Illinois
    November 8, 2002

    Lawrence W. Reed
    Myths of the Great Depression

    Alan Reynolds,
    “What Do We Know About the Great Crash?”

    Hans F. Sennholz,
    “The Great Depression,”

    Murray Rothbard,
    America’s Great Depression

    Benjamin M. Anderson, Economics and the
    Public Welfare: A Financial and Economic
    History of the United States,

    Milton Friedman and Anna Jacobson Schwartz,
    A Monetary History of the United States

    Lindley H. Clark, Jr.,
    “After the Fall,”

    Lawrence H. White
    Why Krugman is wrong about Friedman

    • dean

      I don’t know their rationale for the job bank, but presume it has something to do with workers looking out for each other. Any of them can get laid off, so this is their way of blunting the pain and perhaps discouraging the companies from using layoffs as a first rather than last resort. And by the way, labor represents only about 10% of the cost of a GM or Ford car. Automation rules.

      Government energy policies affect the foreign car companies doing business here as much as it affects domestic companies. Somehow the former have dealt with it better, probably because they know how to make lighter, more fuel efficient cars better than the domestics, who made their profits on big heavy gas guzzlers for too long.

      Krugman is definitely less chained to the free market than the others, no question.

      Hoover’s response was the opposite of what Roosevelt did, and what is being done today…which is massive deficit spending. Pure Keynes. Now why would Bernanke be following Keynes if he himself believes Keynes was wrong?

      I think you are misreading Obama’s intentions based on a single interview. I’m willing to lay a bet he will design and implement a cap and trade that kicks in gradually, and that it will not “bankrupt” the coal industry. What it will do is make the building of new coal plants uneconomical until and unless they figure out how to sequester the CO2. In the meantime, existing coal plants will continue to use coal. Over the long term if they can’t solve the CO2 problem they will phase out. If I were an investor, I would put money on renewables, not on coal.

      You have a good reading list. I would add Hard Times by Studs Terkel to get the human side of the story.

  • John in Oregon

    Dean you asked > *Hoover’s response was the opposite of what Roosevelt did, and what is being done today…which is massive deficit spending. Pure Keynes. Now why would Bernanke be following Keynes if he himself believes Keynes was wrong?*

    I can’t get inside the mans mind, however my guess is that Bernanke is deluding him self that he is “targeting” the spending. That he is following Milton Friedman. Specifically Keynes idea is to give money to people to spend which is different than what Bernanke is doing. However it can be said that spending is spending.

    But the more direct question is this. Bloomberg now reports credit crisis spending at between 7.4 and 8,6 Trillion. Thus the obvious question. *Why isnt it working?*

    > *Government energy policies affect the foreign car companies doing business here as much as it affects domestic companies.*

    What explains why the CAFÉ standards prohibit only the big 3 from importing high mileage vehicles? Might it be an attack by Congress on big three profits from big heavy gas guzzlers? A double win attack on evil profit and evil big cars.

    Toyota has been building the Pris for ten years with a million units on the road. Despite large Government subsidies Toyota continues to offset Pris losses from sales of conventional vehicles. Which explains why Toyota canceled the Pris factory and doesn’t explain why this is the business model Congress wishes to impose on GM, Ford, and Chrysler.

    Well it does explain it when one recognizes that Congress wants to impose its power to instruct the American public that they really do want to drive golf carts.

    > *And by the way, labor represents only about 10% of the cost of a GM or Ford car. Automation rules.*

    The answer is an oversimplification. It considers only direct assembly-line labor costs. It excludes legacy labor costs which boost per worker floor costs to approximately $75 per hour. It excludes labor costs of R&D parts, advertising, and marketing. The real labor cost of any product is the total cost of labor

    > *I think you are misreading Obama’s intentions based on a single interview.*

    Steven Chu, who Obama appointed Secretary of Energy, has stated he intends to shut down all Coal plants immediately.

    Dean > *You believe the mortgage crisis leading to the financial crisis was brought about primarily by government policy. Based on the evidence I’ve seen, I don’t. That doesn’t make me a liar, unless I don’t believe I am saying.*

    Repeating a falsehood while believing its true does not make one a liar, neither does it make the falsehood true.

    There is one key pivotal moment in the path to the sub-prime credit crises. That moment was the HUD / Andrew Cuomo low income lawsuit and the HUD / Andrew Cuomo low income lending requirements for Fannie and Freddie. Prior to that moment all activist law suits failed. After that moment most succeeded making sub-prime lending a requirement.

    Dean you also said > *Hoover’s response was the opposite of what Roosevelt did, and what is being done today.*

    Lets look at the facts:

    1929 – 1933 *Hover took the following steps;*

    *O* Dramatic increase of government spending for subsidy and relief schemes.

    *O* Largest boost of the national debt in history to date.

    *O* Jawboning into keeping wages artificially high even as prices fell. Labor priced out of the market.

    *O* Reconstruction Finance Corporation ladled out billions more in business subsidies.

    *O* The federal government’s share of GNP soared from 16.4 percent to 21.5 percent.

    *O* Agricultural bureaucracy doled out hundreds of millions of dollars to wheat and cotton farmers

    *O* tariffs wiped out export markets.

    *O* The largest tax increase in peacetime history, it doubled the income tax.

    1933 – 1941 *FDR took the following steps;*

    *O* Dramatic increase of government spending for subsidy and relief schemes.

    *O* Government employment to keeping wages artificially high even as prices fell. Labor priced out of the market.

    *O* Even Larger boost of the national debt in history to date.

    *O* The NRA ladled out billions more in business subsidies and controlled business.

    *O* The federal government’s share of GNP soared further.

    *O* Agricultural Adjustment Act, which levied a new tax on agricultural processors and used the revenue to supervise the wholesale destruction of valuable crops and cattle.

    *O* tariffs wiped out export markets.

    *O* Another large tax increase.

    Commenting decades later Rexford Guy Tugwell, one of the architects of Franklin Roosevelt’s policies of the 1930s, explained, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.”

    Excuse me but I don’t see a difference.

    Since you mentioned a colonial book, I would add

    Grapes of Wrath
    John Steinbeck

    The Forgotten Man: A New History of the Great Depression
    Amity Shlaes

    Economic Facts and Fallacies
    Thomas Sowell

    The 5000 Year Leap: A Miracle That Changed the World (Paperback)
    W. Cleon Skousen

    • dean

      Yes…Hoover did initiate the Reconstruction Finance Corps and a public works program…but he waited until the election year…1932. Prior to then he advocated “voluntary” programs for relief and self-regulation of banks. They called homeless camps “Hoovervilles”…not “Rooseveltvilles” for a reason. I think Bush is praying we don’t end up with Bushvilles, which is why he is more than willing to bail out GM and Chrysler. At this point Bush would rather be forgotten than remembered, if you get my drift.

      Bernanke, Paulsen…and Greenspan for that matter are now born-again-Keynsians for one simple reason. Monetary policy is inadequate to deal with the type of credit implosion we are experiencing. They can’t reduce interest rates below zero. A temporary pump up of public works spending may interrupt what would otherwise be a very deep recession, maybe a decade long if Japan’s bursting real estate bubble is a guide. It’s not a long term solution…but as Keynes said, in the long run we are all dead.

  • John in Oregon

    Dean > *Yes…Hoover did initiate the Reconstruction Finance Corps and a public works program…but he waited until the election year.*

    So lets see.

    During the 1932 campaign Franklin Delano Roosevelt called for a 25-percent reduction in federal spending, a balanced federal budget, because Hoover wasn’t spending….

    During the 1932 campaign Franklin Delano Roosevelt called a sound gold currency “to be preserved at all hazards,” because Hoover wasn’t deficit spending….

    During the 1932 campaign Franklin Delano Roosevelt called for the removal of government from areas that belonged more appropriately to private enterprise, because Hoover advocated “voluntary” programs for relief and self-regulation….

    During the 1932 campaign Franklin Delano Roosevelt called for an end to the “extravagance” of Hoover’s farm programs, because Hoover was spending carefully….

    During the 1932 campaign Hoover started the Reconstruction Finance Corps to prove the FDR campaign was correct….

    And, finally. Rexford Guy Tugwell, one of the architects of Franklin Roosevelt’s policies of the 1930s, explained, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.”

    Yes Dean that all makes sense if your name is George Orwell and Newspeak is your native language.

    • dean

      OK…if government borrowing and spending has no positive impact, how did WW2 end the depression? That was government borrowing and spending on steroids.

    • John in Oregon

      Dean asked > *OK…if government borrowing and spending has no positive impact, how did WW2 end the depression? That was government borrowing and spending on steroids.*

      The data show that the World War II spending had virtually no effect on the growth rates. Other things did.

      During 1939, 40, and 41 the US found a new market for war materials.

      My father was the graveyard shift foremen with Douglas Aircraft building what was then the A7 attack bomber.

      When one crashed on takeoff the CAA found a French pilot at the controls. That days equivalent of Barney the Frank went ballistic. That got smoothed over but Congress was back 6 months later. We are not ##&!## gonna ##&!## attack nobody. Yes Sir said Douglas we won’t build no mo attack bombers.

      What Douglas did was move the super charger to the top of the engines so the flair wasn’t visible from the ground. Presto Chango. Introducing the DB7 defense bomber.

      After that Douglas had a contract to maintain a fixed number of aircraft stationed on a line. The problem was those damn thieving Canadians would throw a grappling hook from the other side of the line, snag the landing gear and steel the aircraft as fast as Douglas could build them. Back then people had lots of practice getting around FDRs stupid Government rules.

      The prewar up tick was real but small. And then the world changed on December 7th 1941. The United States was at WAR. Washington DC no longer commanded every business decision at the whim.

      That Sunday afternoon after church John Henry, my grandfather and a WWI wounded veteran, went out to the barn and began refurbishing the tack and sharpening the plow.

      John Henry would harness Babe and Blue that coming spring of 1942. John Henry and many like him knew that FDR could no longer prevent them putting plow to soil, seed to earth.

      In Los Angeles an 87 year old man began working for my Father building American aircraft. Across the country closed factories opened. Business turned on the lights. Americans were allowed to begin producing wealth. The wealth that won the war.

      After Japan attacked Pearl Harbor America put to arms over ten million men. This opened up a huge demand for workers to supply them and the Depression was over.

  • John in Oregon

    Dean you said > *born-again-Keynsians for one simple reason. Monetary policy is inadequate to deal with the type of credit implosion we are experiencing. They can’t reduce interest rates below zero. A temporary pump up of public works spending may interrupt what would otherwise be a very deep recession, maybe a decade long if Japan’s bursting real estate bubble is a guide. It’s not a long term solution…but as Keynes said, in the long run we are all dead.*

    Lets consult some experts.

    *Brian Riedl, fellow Heritage Foundation*

    “Government stimulus bills are based on the idea that feeding new money into the economy will increase demand, and thus production. But where does government get this money… Every dollar government injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It’s merely redistributed from one group of people to another.”

    “Of course, advocates of stimulus respond that redistributing money from “savers” to “spenders” will lead to additional spending. That assumes that savers store spare cash in their mattresses…”

    *Russell Roberts professor of economics at George Mason University*

    Speaking about Bernanke and Paulsen’s efforts Professor Roberts said “By acting without rhyme or reason, politicians have destroyed the rules of the game. There is no reason to invest, no reason to take risk, no reason to be prudent, no reason to look for buyers if your firm is failing. Everything is up in the air and as a result, the only prudent policy is to wait and see what the government will do next. The frenetic efforts of FDR had the same impact: Net investment was negative through much of the 1930s.”

    “The next administration is unlikely to do any better. Mr. Bernanke is perhaps the greatest living authority on the Great Depression, yet he has failed to stem the damage… But is there any evidence from the last seven months that they understand the underlying cause of the illness, or how to cure it?”

    *Dr Daniel J. Mitchell, Economics*

    “Whenever the economy stumbles, politicians and interest groups commonly argue that government spending should be increased. Based on a theory known as Keynesianism, this increase is supposed to boost economic performance. Yet the notion that bigger government leads to more growth is both theoretically unsound and empirically false.”

    “According to this Keynesian approach, this new spending would put money in people’s pockets, and the recipients of the funds would then spend the money. This would, according to the theory, “prime the pump” as the money began circulating through the economy… Keynesian theory sounds good, and it would be nice if it made sense, but it has a rather glaring logical fallacy. It overlooks the fact that, in the real world, government can’t inject money into the economy without first taking money out of the economy… The bottom line is that Keynesianism doesn’t boost national income, it merely redistributes it.”

    *Dr Mitchell must be wrong, politicians do it all the time. All we have to do is find one time it worked.*

    According to Bloomberg we just spend 7.4 to 8.5 Trillion. And it didn’t work. Well guess it hasn’t had time to kick in yet.

    The Democrats gave out rebate checks in early 2008. Guess it hasn’t had time to kick in yet. Try another example.

    George W. Bush gave out rebate checks in 2001, yet there was no positive effect. That didn’t work either. Hummmm

    Dean you mentioned Japan lets try that, “Throughout the 1990s, Japanese politicians tried to use .. stimulus packages to jump-start a stagnant economy. But the only thing that went up was Japan’s national debt.” Damn this doesn’t look good.

    Gerald Ford did a Keynesian stimulus focused on tax rebates in the mid-1970s. The economy did not improve. Double Damn

    “Roosevelt followed the same approach. Government spending, of course, skyrocketed — rising by 106 percent between 1933 and 1940.” It took WWII to end the depression.

    1929 to 1933? “Herbert Hoover was a poster-boy for big government…[F]rom a Keynesian perspective, he boosted government spending by 47 percent in just four years. And he certainly had no problem financing that spending with debt. He entered office in 1929 when there was a surplus and he left office in 1933 with a deficit equaling 4.5 percent of GDP. It didn’t work.

    *The definition of insanity. Doing the same thing and expecting a different result.*

    It does prove politicians do love to spend other peoples money.

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