Obamanomics Renders Economy Inefficient

Weekly Standard: The President's Policies on Energy, Unions, and Health Care Won't Help an Ailing Economy

(Weekly Standard)  Weekly Standard contributing editor Irwin M. Stelzer is a director of economic policy studies at the Hudson Institute.

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Death by a thousand cuts. Or in the case of the efficiency of the U.S. economy, by at least four: energy policy, health care policy, trade union resurgence, and fiscal madness.

Start with energy. The world is awash in it. The wind blows and the sun shines, at least some times and somewhere. Oil and gas wells gush, and substantial oil- and gas-rich areas have never even been explored. Coal abounds. Nuclear power can be had at a cost. So why has Barack Obama made energy policy one of his three top priorities -- education and health care are the other two -- in a country in which inexpensive energy has produced the world's most productive agriculture, a population capable of navigating America's huge spaces in air-conditioned comfort, and permitted the substitution of energy-plus-brain-power for back-breaking labor?

One problem is that oil is largely in the hands of very bad actors. Still another is that almost all sources of energy have significant impacts on the environment: solar panels consume acres of space; wind machines are considered eye sores by those who can spot them; oil, natural gas and coal emit CO2, responsible for claims that the globe is warming; nuclear power generates long-lived and dangerous waste.

Some of these problems are soluble, although not without cost. Domestic producers of natural gas tout their product as a substitute for petrol in trucks, busses and other vehicles. Progress is apparently being made in developing cars and trucks that run on at least partly on batteries. The efficiency of vehicles is being increased, albeit in response to inefficient government edicts rather than to more efficient price signals. Never mind that the infrastructure for these various gasoline substitutes has not been developed, and that the cost of these technologies exceeds that of the gasoline-fuelled internal combustion engine by a good margin. They must be listed in the possible column. That's the good news.

The bad news is that even if these technologies do develop, we will still need lots of oil and gasoline to fuel the existing capital stock, and that oil is in the hands of the bad guys. The Saudis and their OPEC allies control the bulk of the world's oil reserves, and use the proceeds of their cartel-based oil sales to fund the spread of radical Islam and jihadism. Hugo Chávez uses the (dwindling) receipts from his increasingly clapped-out oil industry to fund his takeover of Venezuela's private sector and his anti-American activities. Iran's mullahs survive their disastrous economic policies only because they have oil revenues with which to bribe the masses, pay for their nuclear-arms program, and fund international terrorism.

The problem of the unfortunate location of oil reserves can't be solved by research into alternatives to oil, or by conservation; as far ahead as we can see, we will need the bad guys' oil, and Europe will need natural gas from an increasingly bellicose Russia. Both problems can be ameliorated by diversifying sources of supply. Investment in the oil industries of Canada and Mexico certainly seems worthwhile for the United States, as does investment in natural gas pipelines that by-pass Russia for the EU. And maintenance of a military strong enough to guard supply routes and protect the Saudi fields from falling into even worse hands seems essential.

It is the environmental issues that seem intractable. At one time a united environmental movement was of one mind on important issues. No longer. President Obama and greens favor the development of solar and wind power, but other environmentalists oppose dedicating substantial swathes of desert land to solar panels, and Senator Ted Kennedy is leading the charge against building windmills in sight of his family compound on Cape Cod. Some environmentalists see pollution-free nuclear power as an important part of future energy supply, others oppose new plants because there is no political agreement on the disposal of nuclear waste. If environmentalists in America agree on anything it is that coal presents the greatest threat to the environment, and that the courts can be used to drag out the permitting process until most projects are abandoned.

All of this means that the electrical energy needed to power battery-driven vehicles won't come cheap, if indeed it is available. Industry sources fear that with coal and nuclear more or less off the table, at least for now, we will end up rationing electricity.

Energy is not the only sector that is likely to be less efficient than in the past. It is no coincidence that America's superior productivity performance has coincided with the decline of trade unions. We have seen how union compensation scales and work rules contributed to the bankruptcy of General Motors and Chrysler -- a fate the non-union car manufacturers have avoided. Yet Congress and the president are preparing to spur union growth by eliminating the secret ballot in union-recognition elections and, rumor has it, by writing advantages for union members into the tax laws, perhaps by exempting them from taxes on their employer-sponsored health-care benefits while imposing such taxes on non-union employees.

There is worse. The president is about to engineer the takeover of the health care sector. Unless Congress refuses to go along with the establishment of a government insurer -- voter enthusiasm for this "reform" is minimal -- competition from an entity that has no need to make a profit and can count on taxpayer funding if premiums prove inadequate will surely doom private insurers. Estimated cost over ten years: $1.3-$1.6 trillion, adding to the upward pressure on taxes, especially on wealth-creating entrepreneurs, created by the administration's runaway deficits.

The administration simply has no credible plan to reduce those deficits, and instead talks vaguely of cutting entitlements or the savings from universal health care coverage -- never mind that more coverage means higher costs, and the proclaimed goal of prolonging live, however admirable, will drive costs up, not down. Obama's huge deficits already have purchasers of Treasury IOUs worried that they will be repaid in devalued dollars, which will eventually force wary investors to price the risk of inflation into the price they are prepared to pay for government IOUs. Interest rates rise, economic growth slows.

Two thoughts pierce the gloom. The first is that the American economy might be large enough, and resilient enough, to remain competitive even bearing the weight of the new inefficiencies. The second is that voters will demand a change of course before Obamanomics is permanently embedded in our system. Voters worry that they are leaving their children a mountain of debt. Already Obama's approval rating among independent voters, whom Wall Street Journal analyst Gerald Seib calls "the canaries in the coal mine of American politics", has fallen from 60 percent to 45 percent. Even if the president doesn't get the message, Congress, faced with an election next year, just might.

[SJC1701]

"The bad news is that even if these technologies do develop, we will still need lots of oil and gasoline to fuel the existing capital stock, and that oil is in the hands of the bad guys. The Saudis and their OPEC allies control the bulk of the world's oil reserves,"

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so because we will need a transition period during which time we will still need oil we should not attempt to get off this addiction?
what logic?!

this is like saying to a cancer patient, "because chemo is so hard on the body you should just enjoy the time you have left and not undergo treatment."

What nonsense.

[SJC1701]

What I want to know is where was all this consternation about budget deficits when Bush was mortgaging our great great grand kids.

We do realize we were well in the hole long before Obama came along...right.

Now...now we have discovered fiscal discipline because a democrat is in the white house?

I cannot imagine how hard it must be for someone to be this intellectually dishonest.

[riteon]

When are we going to get the ruth from this administration. When it comes to smoke & mirrors, they're experts. Obama has got to go.

[noloyalisti]

The cause of this whole mess in Bushoccio nomics that put the failed privatization and deregulation of Ray Gun on steroids. Put big corporations in charge of everything and you get the current Fascist United States of America.

[smoknmirrors]

"Two thoughts pierce the gloom. The first is that the American economy might be large enough, and resilient enough, to remain competitive even bearing the weight of the new inefficiencies."
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Just what we need right now. Gloom piercers. The author's notion of "large enough" and "resiliency" and "weight bearing" are encapsulated by the following saga of American industry on the resurgence:

"AP) McDonald's will begin selling a new line of bigger burgers priced at about $4 each on Thursday to bring in customers looking for a beefy alternative to pricier burgers at sit-down restaurants.

The new Angus burgers are made with one-third pound of Angus beef and come in three varieties - a deluxe burger with pickles and tomatoes, a mushroom swiss burger and a bacon and cheese burger.

The burgers will be sold in all U.S. locations for the next few months.

McDonald's has been testing the burger for several years in Ohio, New York, Los Angeles and New Mexico but it held back from introducing it to all U.S. consumers to focus on its core menu and lower-priced offerings."

What we really need to worry about is not "leaving their children a mountain of debt" but leaving them in a mountain of fat, in their own skins.

[noloyalisti]

Remember the infantile source of this discussion is the Weakly. These are the bozos who supported the Bushoccio Crime Family until the bitter end. These guys are so right wing, they even support Republicans and their wars for the corporation profits.

These writers are anti-American, anti-patriotic aristocratic corporate order apologists. They hate American and everything it stands for (except for endless war to enrich the few).

[andouzy]

You americans how can you beleive that socialism can create jobs?
Did you forget the power of your was created by private sector.
i am from an old communist country and i can tell you be aware of obama policy because when you will wake up it will be late for your economy

[noloyalisti]

Well runaway capitalism does not seem to be doing too good at creating jobs. It has made American an aristocratic corporate order (aka fascist). All we have is bigger and bigger monopoly corporations outsourcing jobs and driving down wages. Maybe the right wing wackos want to have an easy choice: whether to work for military contractors or Wall Mart. By the way, BIG difference between socialism and communism.

[SJC1701]

Can you do me a favor and actually give us the economic definition of socialism?

[sjc_1]

It is the same old argument. They destroy the economy and then say we can't afford all of that! I am amazed at the gall of conservatives, they add trillions of dollars to the debt and then say they are fiscally responsible and actually expect people to believe them!

The health and energy policies are made to help the situations get better in the long term. The stimulus for roads, bridges and schools are made to make things better in the short and medium term. To bankrupt the country and then say, "see, we can't afford anything now", is the height of massive total irresponsibility.

[noloyalisti]

I totally agree with you on this. Where were these crybabies when Bushoccio was lying us into multi-trillion dollar wars?

We absolutely need jobs in green industries and infrastructure to restore strong unions, the middle class and trickle-up economics.

[wdh3007]

Perhaps it is time for people to demand and protest our fraud in chief like those who did the mullas in Iran. People are now convinced that Bo is a complete and utter failure on everything from Iran to North Korea and Honduras to swine flu to the goverment takeover of GM and fianlly last but not least our continued failed economy. Where are the jobs that were promised answer their are none as we now learn and unemployemt is now rising along with gas prices. One thing seems evidant now this guy who knows nothing about how goverment and business work was put into place to reward the gangsters of Wall Street and Goldman Sachs the rest is history.

[noloyalisti]

It was the disaster that was Reagan and his failed deregulation and pro-corporation government takeover that started the problem. Then there was the war criminal Bushoccio who put corporate crime on steroids, gave huge welfare payments to the failed banks and started illegal and costly invasions for oil.

[noloyalisti]

These right wingnuts are socialists through and through. They want to take our taxpayers money and give it to Wall Street and Exxon and Wal Mart. Damn corporate socialist pigs.

[YerSoWrong]

Yeah. Socialist Capitalist atheist religious fanatic gay heterosexuals. That's the problem. Your observations are precise as always.

[Joe_NY_15]

The President's Policies on Energy, Unions, and Health Care Won't Help an Ailing Economy

Of course it won't.....since when did going on a shopping spree and spend massively, help someone who was broke ? never

[noloyalisti]

It seemed to help get us out of the last Republican Depression. With unemployment over 20% (yes, it is at least twice what the corporate run government reports), we need to spend to create jobs for the poor and middle classes.

[YerSoWrong]

We need to take private funds that would help business recover and hire people and instead create the Amiri Baraka School of African Dance. Their Days of Protest about the lack of hiring will be a great show.

[Joe_NY_15]

by iam4honesty July 1, 2009 11:00 AM PDT
Oh, look... it's singing! That should keep it occupied for a while.
____________________

That isn't singing Lib....it's the stupid idiot suzyku who discovered a new bad word and needs to repeat it, over and over...wingnut !

[noloyalisti]

I think he means the clueless, frightened little right wingnuts. With their war criminal Bushoccio Crime Family joke. And their heroes the failed Reagan fiscal policies and corporate masters.

[YerSoWrong]

Speakee baybee talkee? Noloyaisti skippy funsy time.

[suzyku]

The Weekly Standard stands for nothing! Should never be taken seriously except for wingnuts who actually believe fox news is real news! Those people are hopeless and the weekly standard is just another wingnut joke!

[Joe_NY_15]

wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut wingnut

You are apparently Obsessed over the word, so I thought I'd say it again, for the 100th time....wingnut wingnut wingnut

[iam4honesty]

Oh, look... it's singing! That should keep it occupied for a while.

[limaurs]

It is one thing to believe in myths : it is a completely different thing to believe in myths that are proven fallacies. Stelzer and his ilk are either insane or mercenary.

[imnho]

I would rather have an economy with a few inefficiencies then what GWB left. Bush not only bankrupted the company; He started an unecessary war and basically wrecked almost everything he touched.

If you think that was efficient I havr a bridge I want to sell you.

[YerSoWrong]

As if those hallucinations of which you speak were in any way political.

[noloyalisti]

By the way, do the people in those countries worry about killing women and children in four countries based on lies for their corporations to control the world oil supply?

[YerSoWrong]

The people in those countries live on the government handout that was created when those governments took corporate investments by force. When the price of oil drops these countries suffer, because no more investments come into a country run by criminals and endorsed by fools.

[noloyalisti]

What do these guys suggest? More of the completely failed concept of Reaganomomics (again!). Privatization, trickle-down and deregulation has blown up the world economy. The countries that are suffering the least?: the "socialist" countries of Europe and Canada.

[Joe_NY_15]

That is not true, take a check at countries like France and Spain, 1 out of 4 are unemployed.....with Socialism, you eventually run out of 'other people's' money

[cdegolier]

Bush in 2004 tried to fix the banking regulation, Barney Frank was the most vocal in saying banks did not need regulation, it never made to the floor, every DEMOCRAT voted against the idea. Obama is for "trickle-up poverty"

[ubrew12]

If the Weakly Standard doesn't like Socialism, they should take better care of Capitalism. In the 2000s, we returned to the 'Robber Baron' Capitalism of the 1920s, and another Great Depression is the result. Obama didn't murder this economy, he's just the undertaker brought in to sweep up the mess and get tagged for it by the ever-traitorious Weakly.

[sjc_1]

I agree. It seems like the right wing touts free markets and when they run amok they say "we we did not tell them to do that". Maybe not, but when you set the stage for no other outcome then you are culpable just as much as the people that did it.

[ffoulkes-2009]

Believe it or not, I believe that Capitalism does need SOME guidelines...like the one Bill Clinton signed away as his last act in office...

Guys. You can't just assume one party is responsible. Right, Left, Lib, Con, Rep, Dem...All contributed to this mess. We all have different ideas and ideals toward fixing it too. I will believe what I think is right, and you go on an think what you believe is right. Just don't call me names for my belief.

[whitemale08]

Weekly Standard is just another worthless partisan outfit that first tells Obama to bailout Goldman Sucks and JP Morgan to get them to 'start-lending-again' and now says: 'You're doing it all wrong'.

This is how the British Empire works folks.

Wall Street/City of London bankrolls these partisan outfits on both sides to steer our government in the wrong direction so they can loot our pension funds and retirement savings.

This ?Global Warming? garbage is just another British-John Law-South Sea Company bubble like the Y-2K tech bubble of the 90s and the sub-prime derivatives bubble of 2000.

The danger in this bubble is that it reverses consumption and the banksters make money off our own suicide and genocide while living in a neo-fuedal society of serfs.

[YerSoWrong]

The Knights Templar is behind it all. Everyone knows that.

[ffoulkes-2009]

No no...it is the masonics!