Lobbyists

Sen. Elizabeth Warren’s recent rant about lobbyists in the Trump transition team (just before they were all sent packing) brings me once again to editor David Rotman’s MIT Technology Review article Capitalism Behaving Badly. Specifically this:

[W]e should admit that markets are created and shaped by government policies, including government support of innovation.

If we are to admit that markets are created and shaped by government, we also must admit that lobbying is created by government as a protective reaction to that regulatory manipulation ‘market’ creation and shaping.

Don Boudreaux puts it well at Cafe Hayek

Sen. Elizabeth Warren is upset that President-elect Trump’s transition team includes many corporate lobbyists (“Elizabeth Warren Criticizes Donald Trump Over Lobbyists in Transition Team,” Nov. 15). Well now. Sen. Warren is second-to-none at empowering Uncle Sam to exercise broad discretionary powers over corporate affairs – powers that, if exercised one way, yield that company hundreds of millions of dollars in additional profits or, if exercised another way, saddle that company with hundreds of millions of dollars of additional costs. It is hardly surprising, therefore, that corporations work diligently to have their voices heard among the din of everyone clamoring for the new emperor’s attention.

For Sen. Warren to be upset that Trump’s transition team is filled with hordes of corporate lobbyists panting for political favors is akin to a Madam being upset that her bawdyhouse is filled with hordes of men panting for female favors.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

Lobbying is protected by the First Amendment. Even absent Constitutional protection, lobbying would continue at a level commensurate with the degree to which government creates and shapes markets, only it would be more nefarious – say like the Clinton Foundation pay-to-play shenanigans.

Meanwhile, the House GOP beat back a plan by some of its own members* to restore internal super-lobbying by reinstating earmarks.

*Who should now be Primaried.

Update 1:15PM: In the interests of naming names, “Reps. John Culberson of Texas, Mike Rogers of Alabama, and Tom Rooney of Florida are listed as sponsors of the amendment.”

Cognitive Dissonance

Our Democrat leaders in Washington passed a bill last week that they didn’t much like. The passage of this bill increased government tax receipts by about $30 million a day, and ‘saved or created’ 70,000 construction jobs along with 4,000 federal jobs. Since the Dems claim to be about ‘revenue enhancement’ and government ‘job creation,’ you might wonder why they weren’t patting themselves on the back, rather than complaining that the GOP “put a gun to our heads.”

The bill in question was a temporary extension (the 21st such since 2007) of the Federal Aviation Administration’s operating authority. Since July 23 of this year the lack of this authority had caused the FAA to miss collecting taxes of $28.6 million a day. If the partial suspension of FAA operations continued until September, when all our Congresscritters will have completed reunions with their Pomegranate trees consultations with their constituents, that could have totaled a billion dollars. That’s billion with a “B”.

The partial shutdown was caused by the Democrat’s insistence on preserving $17 million in pork and changing a unionization process rule that has been in place for 75 years. So, for Senate Democrats, pork preservation and enabling public service unions to more easily organize are higher priorities than jobs and tax receipts. These preferences come together under the general heading of ‘bribing the base.’

The Democrats were getting a bit squirmy about it, though. Transportation Secretary Ray LaHood and the president pleaded with Congress to solve the problem; As if the problem was the whole Congress and not just Democrats in the Senate insisting on pork and a mini-version of card-check:

The GOP-led House passed a long-term FAA funding bill last month that included a controversial labor provision that would overturn a decision by the National Mediation Board allowing airline and railroad employees to form a union by simple-majority vote. Republicans, who have long been concerned about union intimidation in these votes, want to keep the former rule treating a non-vote as a “no” vote.

But once that bill stalled over Democratic objections, lawmakers turned to a short-term extension that has passed 20 times before to keep the FAA operating since 2007.

But that effort stalled, too, when Republicans added a separate provision stripping $16.5 million in subsidies for rural airline services.

The rural airport subsidies come from the well-worn pork barrel Congressman John Murtha made infamous with the John Murtha Johnstown-Cambria County Airport.

The labor provision may have been ‘controversial,’ but only because the Senate Democrats were insisting on letting a bunch of bureaucrats at the NMB change a rule that’s been in place for over 75 years.

So what did the Senate Democrats do after passing a temporary extension they could have passed 2 weeks earlier? They called a press conference to tell us the delay was all the fault of the Republicans. This charade proved too much even for ABC:

http://abcnews.go.com/assets/player/walt2.6/flash/SFP_Walt_2_69.swf

What is scary is that Senior Democrats were not feigning outrage and shock when there wasn’t universal acceptance of their ludicrous assertions – they truly believe what they said. When leaders’ foundational beliefs and tried and true methods suddenly don’t work – even are mocked – dangerous things can happen.

There is a final twist. The Transportation Secretary announced that he is not bound by the pork elimination provision, in any case. So, the Democrats cost the United States Treasury over $200 million in tax receipts, and then will go ahead and spend another $17 million on several examples of Murtha’s folly in violation of the law they just passed.

Update 2:05PM: Debra J. Saunders reports in the San Francisco Chronicle that Senator Barbara Boxer, blocked a vote on the legislation.

Sen. Barbara Boxer chided Karl for showing “a certain naivete” in not understanding that “this is about government threats.” She also challenged Karl by asking if he had reported on GOP opposition to a vote on a “clean” bill. “Clean” here means no pork cuts.

Boxer seemed to have forgotten that she blocked a vote on the House Bill.

Naive hubris

Greg Main, the retiring head of the MEDC looks back on his accomplishments. This is his second term (his first stint was in the 1980s) as Michigan’s chief economic planner, and it appears he has learned little from the experiences.

“When I came back (in 2009), it was apparent that there was a good plan in place (at the MEDC) already,” Main said. “It is just a matter of executing it.”

…”It became real clear to me that it was one thing to create plans, and another thing to get them implemented,” Main said.

Well, yes, it is. Unfortunately, the plan executed during his second term is not what rational people would describe as “good.” So it is just as well it was not easy to do. In any case, no government has ever successfully executed an activist economic plan, so Main is not to be faulted for that failure. Only for the attempt, and continuing faith in it. (Note: the LSJ seems to have disappeared this next part in the online version. It was there this morning, online and in print.)

The strategies are paying off, Main said. Since he came to the MEDC, the state has captured six new manufacturing plants for advanced battery technologies.

“We are going to be the epicenter of that industry, and it didn’t even exist in the U.S. two years ago,” Main said.

Manufacturers of products needed by the solar and wind energy industries also have invested in Michigan.

Other campaigns and incentives – such as a tax credit for filmmakers who hire state residents and film in Michigan, and the state’s Pure Michigan travel ads – have elevated the state’s profile.

Windmill manufacture, battery plants that will be obsolete before they are fully operational, solar panel subsidies for India, and movie subsides(!)? Since he didn’t mention it, I guess ethanol was before his time.

This all makes me even more nervous about Rick Snyder, first head of MEDC, and his “public/private partnership” “plans.” If the “plan” requires public funding because private capital sees it as too risky, then it probably is too risky. Maybe a good test would be whether Union pension plans would provide the venture capital – with a no bailout clause.

This fascination with mini-Manhattan Projects needs to cease.

Taxation in spite of representation

FERC YOU!
From the Wall Street Journal (requires registration):
The Midwest Wind Surtax

You’d think poor Michigan has enough economic troubles without the Federal Energy Regulatory Commission placing a $300 million to $500 million annual surtax on the state’s electric utility bills. But on December 16 FERC Chairman Jon Wellinghoff announced new rules that would essentially socialize the cost of transmission lines across 13 states in the Midwest…

Let’s be very clear on what’s happening here: Mr. Wellinghoff and FERC are trying to establish by regulatory fiat a national energy policy that Congress has refused to endorse. Last summer Congress rejected the Obama Administration’s renewable energy standard law because it would have inflated power costs. So the fiefdom at FERC is unilaterally moving ahead to require that industries and homeowners pay a surtax on their utility bills for a nonexistent renewable energy policy. This is similar to the EPA’s initiatives to regulate carbon even after Congress rejected cap and trade.

Because Iowa and the Dakotas want to build windmills, you (and taxpayers in Illinois, Indiana, Minnesota and Wisconsin) are going to pay to build new power lines to distribute the intermittent windmill electricity. This should become known as the “Dumb Grid.”

Without billions of dollars in new power line infrastructure, the windmills are uneconomic. However, like the health care individual mandate, I’m sure we will hear a defense of this based on the Commerce Clause: Michiganders must pay for windmill transmission lines they neither need nor want, because not to do so is a restraint of interstate commerce.

Imminently-former-Governor Granholm’s desire to manufacture windmills now moves from merely stupid to surreal. You are subsidizing the manufacture of windmills so they may be sold to people who have just arranged to tax you in order to enable distribution of electricity from the windmills. That electricity will charge the batteries Ms Granholm has also subsidized, in cars the Feds have forced you to pay for, built by a company whose union you were made to bail-out. All with no law being passed.

FERC may, justifiably, have assumed Michigan would be happy to cough up half a billion annually to subsidize other States’ crackpot energy schemes. “Green” – the hue of Frankenstein’s monster – “jobs.”

Fred Upton, call your office. And don’t return to this state unless you spike this taxation by the unelected of people they do not represent.

Batteries not included

So, the battery technology bet our governor made looks premature. Neither recipient of Michigan’s largesse, LG Chem nor A123, are mentioned re: this potential breakthrough.

Printable batteries at 400 Watt hours per kilogram and other ARPA-E funded battery projects

The Road to Lithiumdumb

Once again Michigan Capitol Confidential nails it. “It” being the foolishness of our present governor, and what I fear to be the fatal conceit of the former MEDC czar who is about to become governor: Picking economic winners. Given his history, it may be even harder for Rick Snyder to resist the Sirens of Corporatism than it was for Jenny. Statism is very much a characteristic of “moderates.” Just look at George Bush.

Projections vs. Reality

An article in the July 24 Detroit Free Press reported, “Companies are searching for a billion-dollar breakthrough in battery design. General Dynamics is working on a zinc-air cell battery. Ford is actively interested in a sodium-sulfur cell. Gulton Industries and General Motors are tinkering with lithium…All the activity is bound to pay off probably within the next five years…”

The promise sounds so bright that readers might imagine that the Michigan Legislature’s recent authorization of $500 million worth of subsidies and tax breaks for car battery makers is a good investment. Unfortunately, that article appeared on July 24, 1967.

Read the whole thing.

I will note that 1967 was contemporaneous with envirostatist predictions of a new ice age. From “Ice Age” we went to “Global Warming” and have arrived, temporarily, at “Climate Change.” Credit where it is due, while the labels have been contradictory, scientifically corrupt and consequently increasingly ephemeral, the economic instincts have been unwavering.

Paul Ehrlich, call your office.

Find the porker

A list of Senators in descending order of earmark requests in the $trillon omnibus spending bill: The Omnibus Arrives

If your Senator appears, make a note of the name and then look up when they next stand for election. Start campaigning against them now, whenever that may be.

Only Congressional Republicans contemplate compromise

Why?

Regarding the potential temporary failure to prevent a tax increase: Tax deal: purists vs. dealmakers

Me, I’m a purist until they can demonstrate they aren’t making corrupt, sleazy deals. Which means never. Isn’t that the point of the recent election?

So. No pork because of The Dems’ Crackup The Democrats don’t want any compromise, so let’s not give it to them.

Taxes? Up or the same? If the GOP doesn’t say “You pick Nancy. On the merits,” then they should be replaced in 2012 along with Obama.