If Corporations are People Why Isn’t Merck Going to Jail?

Why Isn’t Anyone Going to Jail?

Several months ago Mitt Romney became agitated when someone in the audience questioned him on business and he said that corporations are people.  Of course, he was probably following what a conservative block of the Supreme Court has indicated, as it has given corporations the rights that are enumerated in the Bill of Rights and other parts of the Constitution.

Merck is a pharmaceutical company that has just agreed to pay $950 million in total, including criminal penalties and plead guilty to a misdemeanor in connection with the drug Vioxx.

Merck agreed to pay a $321 million criminal fine and plead guilty to one misdemeanor count of illegally introducing a drug into interstate commerce, the Justice Department said in a news release. The charge arose from Merck’s promotion of Vioxx to treat rheumatoid arthritis before the Food and Drug Administration approved it for that purpose in 2002.

Merck also is paying $426 million to the federal government and $202 million to state Medicaid agencies. Those payments will settle civil claims that its illegal marketing caused doctors to prescribe and bill the government for Vioxx they otherwise would not have prescribed.

But wait a minute, how does a Corporation plead guilty to a crime and not go to jail if it is a person.  People who commit crimes go to jail.  Ergo, the corporation is not a person.

In fact, no one is going to jail.

No person was held liable for Merck’s conduct. “It’s just a cost of doing business until a pharmaceutical executive does a perp walk,” said Erik Gordon, a pharmaceutical analyst and clinical assistant professor at the Ross School of Business at the University of Michigan.

Yep, Merck the corporation committed its crime all by itself, no humans involved. 

Non Partisan Independent Congressional Budget Office (CBO) Confirms Positive Impact on Jobs and Economic Growth of Stimulus

Note:  This Will Not Prevent Republicans From Calling Stimulus a Failure – Nothing Would

When the Congress passed the President’s Stimulus package in 2009 it wanted someone to check and see if the program was successful.  So they required the Congressional Budget Office to report to Congress on just how much or how little economic benefit came from the program.  Here is the latest report.http://www.cbo.gov/ftpdocs/125xx/doc12564/11-22-ARRA.pdf

On that basis, CBO estimates that ARRA’s

policies had the following effects in the third quarter

of calendar year 2011 compared with what would have

occurred otherwise:

 They raised real (inflation-adjusted) gross domestic

product (GDP) by between 0.3 percent and

1.9 percent (see Table 1),

 They lowered the unemployment rate by between

0.2 percentage points and 1.3 percentage points,

 They increased the number of people employed by

between 0.4 million and 2.4 million, and

 They increased the number of full-time-equivalent

jobs by 0.5 million to 3.3 million. (Increases in FTE

jobs include shifts from part-time to full-time work or

overtime and are thus generally larger than increases in

the number of employed workers.)

Wow, pretty powerful stuff.  Now if you are a Republican and faced with this data you could do one of two things.  You could accept the fact that the Stimulus worked, or you could lie about the facts and data and say the Stimulus completely failed and did not create a single job.  Hm, which choice do we think the Republicans will make?

Further Evidence that Glen Beck is Not a Well Person

As if Further Evidence were Needed

Glen Beck has weighed in on the Republican Presidential race and has this to say about Michele Bachmann

“There is somebody I think that is exceptional and truly comes the closest to embodying the spirit of Lincoln or Washington in this field. And I believe that it is Michele Bachmann,” Beck said. “If I had to vote for someone in the primary – I’m not a Republican so I can’t vote – but if I do vote for one, if I had to trust one person, it would be Michele Bachmann.”

See, there are people out there who are more delusional than Newt Gingrich.

This may well be the only time in history that someone will compare Ms. Bachmann favorably to Lincoln and Washington, unless they are talking about Lincoln Logs and the Washington Generals (they are the team that used to habitually lose to the Harlem Globetrotters in case you needed to know).  Lincoln and Washington are deceased, of course, which is just as well because hearing Ms. Bachmann compared favorably to them would probably would have killed them anyway.  The Dismal Political Economist knows he could not survive the thought of having Ms. Bachmann compared favorably to him. (Ms. Bachmann would probably not make it either).

University of Chicago Booth School – Smart College Has World’s Dumbest Economics Idea

Another Example of Why Academics Should Not Be in Responsible Positions

The University of Chicago is known for its economics department, and some of its faculty have won Nobel Prizes in the field.  It is not known for contributing anything of value to the solutions of real world problems, in fact that is not what an Economics Department at a University does.  What do they do?  When we find out we will let you know.

Now in an attempt to be relevant, or for some reason

the University of Chicago Booth School of Business, plans to pose one question a week and post answers from 40 senior professors at elite U.S. universities. The site went live Sunday, though the panel has been responding to questions for the past few weeks

Note that these answers will not be supported by analysis and research, they will be the opinion of these 40 supposedly wise men and women.  The opinion of economics professors on public policy is not where you want to go for good answers.  In fact, if the science of economics could contribute anything to public policy then your brother in law would not be unemployed and living in your spare bedroom, and that $200,000 you paid to have your oldest kid educated at an exclusive school would have resulted in the child being at least semi-employable.

 

What you are going to get is the political biases of the persons giving the opinions.  Those who support a policy will support it, those who don’t, won’t. The chart on the left is just an example of the value, or lack thereof of the results of this project.  Not much good, is it.

See the answer to question is not possible.  Some students will receive a better education, many other will receive a worse one.  but then everybody already knew that.  So what is the value here.  Well maybe it will keep some economists occupied, and thus they will not do nearly as much damage to the economy as they otherwise might.

Conservative’s Highest Priority – Preserving American’s Right to Buy Light Bulbs

Just Another Freedom Lost on the Road to Serfdom

Americans can be thankful this holiday season that Conservatives are ever vigilant against the erosion of basic freedoms from American society.  For example, without Conservative intervention convicted felons would lose their rights to carry firearms, and billionaires would lose their rights to dump unlimited amounts of money into elections and police would lose the right to stop suspicious looking citizens and demand their “papers”.



Don't Let It Die, Please!!



But the reason all of us can really be thankful is that Conservatives are leading the battle to allow citizens to buy the light bulb of their choice.  That’s right, without a successful intervention by Conservatives, America will lose the precious freedom of being able to purchase an incandescent light bulb.

The incandescent light bulb has been around for more than 130 years. But starting in January 2012, it will become a piece of history, pulled off the shelves in all 50 states—unless a group of fired-up conservatives manage to spark a mini-revolution over states’ rights.

Why is this happening, what has led to the loss of the most basic freedom of all, the freedom to screw in a light bulb of your choice into the socket of your choice?

In 2007, George W. Bush signed the Energy Independence and Security Act, requiring light bulbs to be at least 28 percent more efficient by 2014. Three-way bulbs and some specialty versions are exempt, but otherwise the law virtually guarantees that LEDs and compact fluorescents will gradually replace incandescents, starting with 100-watt bulbs in January. According to the U.S. Environmental Protection Agency, the result will be lower energy bills and less pollution

That’s right, that anti-freedom, pro government control President, George W. Bush enacted legislation to force innocent, God fearing people to use energy savings light bulbs.  This assault on basic freedom however will be challenged, and as usual freedom loving Texans are leading the way.

One state is giving bulb activists hope. In May the Texas legislature adopted a measure . . .Governor Rick Perry signed it into law in June. Unless a court overturns it, Texas light bulb factories—which currently number zero—will be free to light the way, the old-fashioned way.

So before anyone eats the turkey, (or the Tofurkey if you are a vegetarian) let’s all have a moment of thanksgiving for stalwart Conservatives who may yet save all of us from the scourge of protecting the environment and greater eneergy efficiency.  

Don’t Tell Republicans, But Illegal Immigration is Down, Way Down

If They Knew It Would Just Crush Them

One of the stalwart positions of Republicans at all levels is that illegal immigration is a huge and growing problem in the United States.  In Alabama Republicans passed a draconian set of laws designed to drive legal and illegal immigrants out of the state and children out of the public schools.

ASK any Republican presidential candidate, and they will tell you without hesitation: America’s border with Mexico is as leaky as a sieve. Mitt Romney thinks all 1,969 miles (3,169km) of it must be fenced. Michele Bachmann wants a double fence. Rick Perry was pilloried for suggesting that in some rugged areas, more “aviation assets in the ground” might be better than fencing. Bemused by such talk, Barack Obama joked earlier this year that Republicans would not be happy until there was a moat full of alligators to keep illegal immigrants at bay. A few months later Herman Cain said there should be an electrified fence, with a charge strong enough to kill. He later explained that he too was joking, but would never apologise for standing up for America

The only problem with this great Republican talking point is that illegal immigration is declining at an alarming rate, in fact at a rate so significant that it may cease to be a campaign issue for Republicans, a tragic outcome indeed if Mitt Romney cannot exploit a human tragedy like illegal immigration for crass political purposes. 

 The Economist magazine reports on the success of U. S. policy to control its border.

It’s quiet most days in the El Paso sector, as the Border Patrol dubs this 268-mile slice of the border. Back in 1993, agents arrested 285,781 people trying to enter America illegally. In those days, the holding cells in the processing centre, explains Scott Hayes, a Border Patrol agent, were full to bursting. In 2010, however, agents picked up only 12,251 illegal immigrants in the area—a 96% decline. Much the same is true of the border as a whole: last year’s tally, of 447,731 arrests, is barely a quarter that of the peak year, 2000, when 1,643,679 people were intercepted. This year’s figure will be under 350,000; a fifth of the peak.

And what has been the cause of this success.  Well contrary to popular opinion, the administration of George W. Bush added substantially to the Border Patrol, and this policy was continued by the Obama administration.

The drop in arrests reflects not laxer enforcement, but stronger. There are over 17,000 Border Patrol agents on the border with Mexico, a fivefold increase over 1993. They patrol in cars and all-terrain vehicles, on bicycles and horses, in boats, planes and helicopters. When there are no agents around, cameras, reconnaissance drones and three different types of sensors—seismic, magnetic and infra-red—keep tabs on things. A third of the border is fenced, and most of the rest is in areas so remote or rugged as to make fences pointless or impractical. Some parts of the fence are 17 feet high, with metal plates extending ten feet below ground to prevent tunnelling.

So sorry Republicans, unless the U. S. Press can be convinced to ignore this story and still present the Republican side of the immigration issue and the Republican spin then you are out one big election issue.  Oh wait, the Press is on your side, only foreign press like The Economist would present the facts, unlike the U. S. Press they don’t care if the facts don’t support Republicans.

South Korea is an Economic Miracle – It Grew From Poverty to Prosperity and Recovered Faster from the Recession than Others

So What Does That Tell Us?

The country of South Korea came into existence after World War II and was firmly established as a legal country following the Korean War, which permanently (?) divided the peninsula of Korea into North and South.  Here is what happened in the last 50 years.

In 1960, in the aftermath of a devastating war, the exhausted south was one of the poorest countries in the world, with an income per head on a par with the poorest parts of Africa. By the end of 2011 it will be richer than the European Union average, with a gross domestic product per person of $31,750, calculated on a basis of purchasing-power parity (PPP), compared with $31,550 for the EU. South Korea is the only country that has so far managed to go from being the recipient of a lot of development aid to being rich within a working life.

How did this happen?  Well for one thing South Korea is a triumphant result of American foreign and military policy.  The U. S. fought to keep South Korea as South Korea, and massive U. S. economic and military aid has kept the country safe and has contributed to its prosperity.  History may record the Korean war as a stalemate, but history should record the Korea War as a mighty success for the United States and for the South Korean people. 

Furthermore the fact that the U.S. provides much of Korean national defense frees government resources to invest in the domestic economy.  Defense spending doesn't do all that much to help economic growth so it is really good if someone else is doing the spending for you. 

There are of course some lessons for the Unites States from South Korean economic prosperity.  For example



South Korea Has Learned Lessons from the
U. S.; Lessons the U. S. has Forgotten



Korea has combined growth with equity. Between 1980 and 1997, its Gini coefficient, a measure of income inequality, fell from 0.33 to an exceptionally low 0.28, before rising back up during the 1997-98 Asian crisis. In 2010, the level was 0.31, a bit worse than Scandinavian countries, a bit better than Canada.

Yes, when you have economic gains going largely to the middle and lower income groups prosperity takes place for all, including the higher income groups. 

And there is also this

The government also initiated a public-works scheme that is mopping up over 2% of the labour force. It introduced an old-age pension and began, then expanded, an earned-income tax credit. All this from President Lee Myung-bak, who was once chief executive officer of Hyundai Construction and is widely assumed to be excessively friendly to big business.

So South Korea is growing and prospering by implementing policy that would be considered unacceptably liberal in the United States and heavily denounced by Conservatives.  Well at the rate income is growing in South Korea they will soon have a level equal to or above the United States.

If the Korean economy goes on growing at 4.5% a year and America’s at 2.5%, Korea would overtake America (in PPP terms) only a few years later.

Maybe then the Conservatives will look around and see that someone doing policy they oppose is doing better than the U. S.  Or maybe not, after being a Conservative means never ever having to say you were wrong.

Watching Fox News Makes People Ignorant – Confirming What We All Knew

But Finally An Explanation of Views of Conservative Voters

Thanks to the wonderful political site of Taegan Goddard we now know the results of a study by Farleigh Dickinson University on whether or not watching TV talk shows and news makes one better informed.

According to the latest results from Fairleigh Dickinson University’s PublicMind Poll,some news sources make us less likely to know what’s going on in the world. In the most recent study, the poll asked New Jerseyans about current events at home and abroad, and from what sources – if any – they get their information.

How do you measure whether or not watching a news show makes you less informed.  FDU compared the knowledge of persons who watched those shows with the knowledge of persons who did not watch any news shows?  Here is what that told them.

Sunday morning news shows do the most to help people learn about current events,  while some outlets, especially Fox News, lead people to be even less informed than those who they don’t watch any news at all.

Need some specifics?  Here they are

people who watch Fox News, the most popular of the 24-hour

cable news networks, are 18-points less likely to know that Egyptians overthrew their government than those who watch no news at all (after controlling for other news sources, partisanship, education and other demographic factors). Fox News watchers are also 6-points less likely to know that Syrians have not yet overthrown their

government than those who watch no news.

And the study looks like it was well done and professional

"Because of the controls for partisanship, we know these results are not just driven by Republicans or other groups being more likely to watch Fox News," said Dan Cassino, a professor of political science at Fairleigh Dickinson and an analyst for the PublicMind Poll. "Rather, the results show us that there is something about watching Fox News that leads people to do worse on these questions than those who don’t watch any news at

all."

So now we know the answer to one question plaguing many rational thinkers, which is why are Conservatives so irrational.  It is the answer we all thought was correct, if you get your news from a biased and unprincipled and generally false news network you are likely to be uninformed.   There, that’s not so hard, is it?

Groupon Founders and New Shareholders Are Learning Lessons in Business and Markets

Expensive Lessons, But Then Most Market Lessons are Expensive

Groupon is a company that invented a new business, the business of e-mail direct Internet coupons.  The business model is very simple.  Groupon signs up merchants in various locations, offers a coupon for sale via e-mail to consumers in those locations and splits the proceeds with the merchant.  Groupon gets a lot of money, the merchant gets customers who are still paying a good buck for the goods and services and the new customer base.  The customer gets a good deal.  Everybody wins, right!

Well that was conventional wisdom,  and Groupon’s early investors and founders thought so, so much that they turned down a $6 billion offer from Google and decided they would go public because they thought the business was worth $20 billion.  So what has happened since they did go public?

Groupon shares now have the dubious distinction of having fallen below their IPO price.

They’re down 14% at last check — for the day, that is — at $17.34 a share, below their IPO price of $20.

And somewhere out there is a poor sucker who bought that stock around its opening-day peak on Nov. 4 of $31.14. That’s only a loss of about 43%.

So what happened?  Well first of all Groupon is not making any money.  And companies that don’t make money usually are not worth $20 billion, or $12 billion or even $1 billion.  But the big problem is this.  There is no protection for the Groupon business model.  Anyone who can hire a sales force, some programmers and rent some time on servers can get into this business.  There is no advantage to being a national company, the markets are local. 

The only advantage Groupon has is if their name becomes synonymous with the business, much the way Google has become a generic name for an Internet search.  But even so, is that going to be worth very much?  If Groupon ultimately tanks, and the company ends up being valued at a couple of millions, or even a couple of hundred million, and investors lose big time, well, at least they have the lessons they will have learned from all of this.  That should mean something.  And if a Time Machine is ever invented the Groupon founders are going to be first in line to go back to the day before that Google offer expired.

Mr. Romney Blames Mr. Obama for Failure of Congressional Debt Panel

Note to Mitt:  Mr. Obama is the President, Not a Member of Congress

Mitt Romney was the first out of the box to use the failure of the Congressional debt reduction panel as a political tool to blame the President.

“It is another example of failed leadership. He has not taken personal responsibility to get the supercommittee to find ways to balance the budget and cut spending.”

See Mr. Romney, in our form of government here in the United States we have a legislature that is independent of the executive branch, and the President of the United States has absolutely no ability whatsoever to make any one of the six Republicans on the panel agree to tax increases that are necessary to make a meaningful impact on the deficit.  We thought you knew that, but maybe not. 

Mr. Romney may still be living in the corporate world, where the CEO has a high degree of power in making decisions.  He is certainly not living in the real world, but then for the purpose of making political points he doesn’t have to, does he.  Mr. Romney has also blamed Mr. Obama for the following.

1. The failure of the New England Patriots to go undefeated and win the Super Bowl several years ago.  “The President could have gotten out there on the playing field and made a difference” Mr. Romney said, “but instead he chose to sit on the sidelines and let a perfect New England Patriot season be lost.”

2. The collapse of Lehman Brothers.  “The President did nothing to prevent Lehman Brothers from failing, even though he was not President at that time”  Mr. Romney complained.

3. Failing to allow General Motors and Chrysler to go out of business.  “A President devoted to the private sector would have let those companies fail”  Mr. Romney argued, “and the loss of hundreds of thousands of jobs would have taught us all a lesson.  But Mr. Obama intervened and now there is a resurgence of the auto industry in the U. S., something that would not have happened if I had been President.”

4. Noting that the President believes governments should do something about climate change, Mr. Romney stated emphatically that “Mr. Obama did nothing, absolutely nothing to prevent Katrina from devastating New Orleans.”

As for what Mr. Romney has done, Politico reported that

Romney himself has avoided the supercommittee debate, speaking in generalities and declining to weigh in on Sen. Pat Toomey’s (R-Pa.) proposal, which includes a mix of spending cuts and new tax revenue.

A spokesperson for Mr. Romney said that the candidate would have a position as soon as it was clear which position would be most politically advantageous for him.

Deficit Reduction Panel Fails to Reduce the Deficit

This is Not News; It Would Be News if They Did Reduce the Deficit

As a face saving gesture last summer the Congress and the Obama Administration agreed to form a “super” committee composed equally of Republican and Democratic legislators.  That committee would come up with a deficit reduction package that would be voted up or down by the Congress.  If they did not develop a plan or the plan was defeated automatic cuts in defense and social programs would take place beginning in 2013.

That this plan failed is no surprise.  The Republican position was that any deficit reduction plan had to gain savings from spending cuts on social programs and entitlements only, with no tax increases although they were willing to count minor changes in tax revenues as tax increases.  Democrats were willing to engage in massive cuts to social programs, but only if there were tax increases on the wealthiest of Americans.  Here are the two positions.

 Democrats offered a proposal to reduce deficits by $3 trillion over 10 years through a combination of spending cuts and $1.3 trillion of revenue, largely from tax increases.

The Democratic proposal included as much as $500 billion of savings in health care programs, higher Medicare premiums for high-income beneficiaries and use of a less generous measure of inflation that would reduce annual cost-of-living adjustments in Social Security benefits. . . .

Republicans on the committee rejected the Democratic offer and came back with a proposal that would reduce deficits by $2.2 trillion and that included $640 billion of nontax revenue that Democrats said was too modest.

Note that the above contradicts the lie that Democrats were not willing to compromise on key Democratic programs like Social Security and Medicare, but also note that this will not stop Conservatives from continuing to spread that lie.

The sticking point was always going to be taxes.  Republicans are simply not willing to have meaningful increases in taxes for high income individuals to accompany cuts in social programs and entitlements. The supposed reduction in defense spending and social programs that are scheduled to take place in 2013 of course will not happen. 

The fate of deficit reduction and tax rates will now go to the 2012 elections, which is probably where it should go.  The American public has unrealistic expectations, it wants low taxes, government support for social programs, education, Medicare and Social Security, increases in Defense spending and a balanced budget.  This cannot happen, but politicians continue to promise that it can. 

If a Republican (Mr. Romney, New Gingrich?  C'mon Man)  is elected President in 2012 then the American people will have decided on low taxes, huge cuts in federal spending and a society that is increasingly divided into a small group of rich people and a large and growing group of poor and near poor.  If this happens the large group of poor and near poor and the shrinking middle class will have only themselves to blame.  They don’t have more money than the rich, but they do have more votes.

Arrogance of Congress on Display in Testimony of Douglas Brinkley and Rep. Don Young (R, Al)

Just Who Elects These People Anyway

Lest anyone believe that elected officials are in Washington to do the people’s business we have an exchange between Professor Douglas Brinkley who was invited to testify before a House committee and Rep. Don Young from Alaska who did not like Professor Brinkley’s testimony, or even remember his name correctly.

Backdrop: Brinkley, a Rice University professor, wants President Obama to grant the Arctic National Wildlife Refuge national monument status, which would block efforts to drill for oil and gas there. Young supports drilling.

Here’s a brief snippet of how things went.

After Brinkley’s testimony, Young was given his time to comment, calling the debate an “exercise in futility” where both sides have mad up their minds, “and the, I call it garbage, Dr. Rice, that comes from the mouth —”

Brinkley broke in to correct: “Dr. Brinkley. Rice is a university.”

It’s highly unusual for a witness to interrupt a congressman. Young roared: “I’ll say anything I want to say! You just be quiet!”

Now a normal person would have stoped and apologized for confusing the witness’s name with the University he works for, but of course Members of Congress are not normal people (exhibit number 1, Michele Bachmann).  In Congress’s world they are royalty and the rest of us merely on the planet to do their bidding.  Here’s some more.

Rep. Doc Hastings (R-Wash.), the committee chairman tried to gavel things back to order, gently warning Brinkley that he’d get his time.

Brinkley, seething: “He called me Mr. Rice. I needed to correct the record.”

Hastings defended his colleague’s error: “From time to time, we make faux pas. Nobody is perfect here. But to interrupt breaks the comity of what we’re trying. . . We’re going to have disagreements here, you’ve already seen that.”

Brinkley: “He called me Mr. Rice, and garbage. . .You would do that if someone did that to your name.”

“Breaks the comity?”  Anybody hear in comity in Mr. Young’s rant?  (Comity:  Def - n. pl. com·i·ties. 1. An atmosphere of social harmony. 2. See comity of nations.)

But then to expect a member of Congress to know the definition of “comity” is asking a lot, they are not elected for their intelligence you know.

Because All the Good Economic Blogs Will Take Thanksgiving Day Off,

The Dismal Political Economist Will Post on Turkey Day.

 That's Right, there will be sarcasm, cynicism and criticism to make your holiday feast even more enjoyable. 

Bagehot in The Economist – Politicians in Britain Have the Same “Entitlement” Culture as U. S. Politicians

Conservative British Politicians Demand Entitlement to Public Jobs While at the Same Time Eliminating 500,000 of Them

One of the universal traits of politicians regardless of affiliation, country, philosophy or political party is that they are in the government because the people serve them.  The idea of elected officials serving the populace is foreign to most of them.  The Dismal Political Economist would like to claim that this is a trait only of Conservatives, but alas the idea that the people serve the politicians crosses ideological grounds and includes independents and progressives.

The columnist for The Economist who writes under the name of Bagehot documents this feature currently on display in Britain.

Britain is going to reduce the size of its Parliament (way too big) and in doing so draw up district boundaries in a process similar to that of the U. S. which does this every ten years.  Unlike the U. S. which in most states has politicians drawing boundaries to protect incumbents, Britain has non-partisan commission to the do the job. 

LISTEN to the opposition Labour Party, and a shake-up of Britain’s electoral map now under way—with 50 parliamentary seats for the chop, and hundreds facing redrawn borders—is an act of partisan “gerrymandering”. Believe some disgruntled MPs, and the review threatens the very fabric of democracy, creating new seats that will cross county lines and other time-hallowed boundaries. Oddly, given that the review is a Conservative initiative, some of the loudest complaints come from Tory MPs.

The big loser in all of this is expected to be the center-left Labour party, which could lose 20 seats.  The Conservatives could lose only 13 seats, but this apparently has still created an uproar.  Since the Conservatives are in power the holders of those seats expect to be taken care of at public expense.

many Tory MPs distrust their leadership. David Cameron, the Conservative leader, has vowed that boundary casualties will be looked after. But the mood is so toxic that some right-wingers want him to put his pledge in writing, or to ditch the review altogether. Some MPs want ambassadorial appointments to be opened to seat-less Tories. With others hoping to be sent to the House of Lords, there is pressure to ditch a coalition pledge to Lib Dems to create a mostly elected upper house.

The main reason for criticism here is that the Conservatives are the ones who talk loudest about personal responsibility, about how great the private sector is and how corrupt the public sector is.  And Yet here is another example of where Conservatives want the government to take care of them with government jobs.

Britain is going through an austerity process in which upwards of 500,000 public employees will be fired by the Conservative government.  Hopefully the 50 MP’s of all three parties who loses their jobs will join them.

Reversing an Oil Pipeline Pushes Up Oil Prices and the U. S. is Exporting Gasoline

How Does Any of This Make Sense?

The Dismal Political Economist prides himself on his knowledge of economics and finance, hence the name, but the current forces in the oil market have left him puzzled.  It starts with this story about the sale of an oil pipeline and the decision to reverse the direction of oil flowing in that pipeline.

The sale of an oil pipeline running from Oklahoma to Texas upended U.S. energy markets . . . sending the price of crude surging above $100 a barrel as America copes with the promise and pitfalls of its new energy boom.

How can this be.  Well it turns out the new owners of the pipeline plan to reverse the flow of oil in the pipeline.  The oil currently flows from south to north.  Soon it will flow north to south, taking oil from the big new finds in the midwest to the south where it will be refined into gasoline and exported.  Exported?

 

Over the past two years, the U.S. has started producing so much oil that existing pipelines have been unable to move it to refineries. That has led to a glut of oil in the center of the country, keeping the price of American crude far below that of petroleum traded overseas.

That will change once the pipeline is reversed, a process expected early next year, the pipeline's operator said. Though in the short term the change is unlikely to affect gasoline prices paid by U.S. drivers, it will increase gasoline exports and create jobs, according to industry analysts.

What!!  The United States is exporting gasoline?  How can this be?  Doesn’t the United States buy huge amounts of oil from overseas to support our driving habits.  Don’t Republicans want to drill for oil in some of the most environmentally sensitive lands because the country does not have enough oil?  Why is the U. S. exporting gasoline.

The U.S. requires companies hold a special permit to export oil from the Gulf Coast, but the restriction doesn't apply to gasoline. With a new supply of oil headed to Gulf Coast refineries, exports of gasoline are expected to rise.

Okay that explains why the U.S. oil companies want to export gasoline, but what about the problem that the U. S. does not have enough for our own use.  And just how much gasoline is the U. S. exporting anyway?

U.S. exports of petroleum products have reached 2.6 million barrels a day, double the level of three years ago. Roughly 15% of the gasoline and diesel refined in the U.S. is now exported, according to U.S. Energy Department data.

"The middle of the U.S. should start considering applying for membership in OPEC," said Phil Verleger, an oil economist who runs PK Verleger LLC

So one can see North Dakota joining OPEC, and maybe even voting to shut off the U. S. if the government does things they don’t like. 

It turns out the change may help the U. S. by moving crude oil to where the refining capacity exists.  If so, why is that pushing up the price of oil?  And why is the U. S. exporting any gasoline, much less planning to increase its exports?  Like so many other things he is asked about, The Dismal Political Economist can only answer “We don’t know”.  

Criticizing Republican Candidates Frank and Emotional Disclosures is Difficult – but It Has to be Done

The U. S. is Electing a CEO (Chief Executive Officer) for the Country, Not a CEO (Chief Evangelical Officer) of a Particular Religion

When the Founding Fathers produced the great nation of freedom known as the United States of America, they did so knowing that centuries of religious strife had produced nations that engaged in horrific practices with regard to religion.  They founded a secular nation, where freedom of religion was guaranteed and religion and government were separate.

A recent conclave of some of the Republican candidates for President illustrates how fragile this freedom is.  In Iowa something called  

the Family Leader, an influential Iowa-based evangelical Christian advocacy group, wanted the unconventional event to elicit personal answers that revealed each candidate's character - with none of the timers and buzzers of typical presidential debates.

And it is their right to do so, and to invite candidates to participate.  It is also the right of candidates to refuse to participate in an event described like this

The two-hour Family Leader event felt at times more like a Christian prayer meeting . . . Some 2,500 conservatives, including Iowa Gov. Terry Branstad, U.S. Sen. Chuck Grassley and U.S. Rep. Steve King, listened from pews at First Federated Church in Des Moines.

With the presidential hopefuls gathered around a Thanksgiving-themed table facing the audience, the imagery was one of the Last Supper setup

as Mitt Romney and Jon Huntsman, to their credit, did exercise their right to refuse to attend.. 

Even with a session like this the hypocrisy of men and women who profess deeply religious values yet campaign on a platform of denying many Americans the help they need from government to lead normal and decent lives stands out.  Here is Rick Santorum exploiting the health of his youngest child for political purposes.

Santorum's youngest daughter is 3 years old today, but still struggles.

One reason he is running for president, he said, is a desire to overturn the health care reforms known as "Obamacare" and assure sick children have access to necessary care.

And of course he does not explain how Obamacare, which for all its faults, brings more health care to sick children is harming health care or how eliminating it will not reduce health care for those children.  Mr. Santorum fails to mention that the health care he and his family receive is government funded, coming from his years as a public employee.  And Mr. Santorum's main focus in his political life is to use government power to deny basic civil rights and liberties to a group of people whose private lives are lead in ways that Mr. Santorum disagrees with.  Why anyone who calls himself or herself a "values" voter would support Mr. Santorum is a mystery that must be left for future generations to unravel.

Not to be outdone Newt Gingrich also falsely puts forth cause of children’s health for his agenda

Gingrich, too, wiped away tears talking about a boy born with a rare heart condition and brain tumors.

His conclusion: "Do I want some bureaucracy deciding that on a percentage basis this is not worth the investment or do I want a country that cares about every life? THAT is what next year's all about," he said to whoops and applause.

No Mr. Gingrich, under the Republican program some private insurance company, concerned only with the bottom line will be the decider.

Michele Bachmann exploited her parent’s divorce for political points

Bachmann, a congresswoman from Minnesota, shared the story about the financial hardship her family suffered when her parents divorced when she was 12.

"My dad left and I didn't see him again for six years. And when that happened, we lost virtually everything overnight. We lost our home, and I remember my mom took all … the pretty dishes out of the dining room and the wedding gifts and everything, and she put them on card tables out in the garage, and we just watched everything sold and sent away."

Her mother told Bachmann and her three brothers that even though it was hard, they would get through it.

And that is terribly unfortunate, but what it has to do with public policy or being President of the United States was apparently unsaid.  Millions of people today are the products of a broken family; that does not qualify them to be President.

A rare bit of truth though came from Texas Gov. Rick Perry

"Being the president of the United States has got to be the hardest job in the world and the idea that one of us sitting round this table could do it with our own human intellect, our capability, is beyond any of us," Perry said

Yes, the idea that any those people have the intellect and capability to be President is indeed beyond any of us.

As noted, Mitt Romney rose to the occasion by his absence

After the event, Family Leader President Bob Vander Plaats, who has said Mitt Romney "dissed" Iowa by skipping this event, said he thought the six candidates who did come "did America a very real service today."

But Mr. Vander Plaats is correct when he said that the six candidates who did participate did America a service.  They did, they showed once again why none of them is qualified for the Presidency.

And as for Mr. Vander Plaats himself, there is this about the group he heads that sponsored the Revival that passed for political dialogue.  The group

called on presidential candidates to sign a petition against gay marriage. But the document also claimed that black children born under slavery were more likely to have two-parent families than those born under the nation's first black president — a statement widely interpreted as saying that black children were better off under slavery. It was sharply criticized by mainstream conservatives and was removed after the flare-up.

In response to the petition, Republican Jeff Kaufmann, speaker pro tem of the Iowa House of Representatives, emailed Vander Plaats and others who lead the organization: "Guys your integrity is in question and your political credibility is waning to the point of no impact."

And Mr. Vander Plaats has done quite well for himself despite being a political loser.

he never sought a city council, school board or legislative seat. Instead, he went straight for governor, failing in 2002, 2006 and 2010. After the last primary loss, against Gov. Terry Branstad, he became the president of the Family Leader, a coalition of antiabortion and anti-gay-marriage groups in Iowa aimed at increasing their influence in the 2012 caucuses. He reportedly makes a six-figure income.

Well it’s nice that not only does he have his convictions, but he makes a nice buck off of them also.

Congress Considering Allowing On Line Sales and Solicitation of Equity Funding for Start Up Companies

Some are Worried About Fraud – They Shouldn’t Be

In the aftermath of the Great Depression of the 1930’s Congress passed stringent laws that regulate how companies can go about the business of selling stock.  In order to sell stock to the public the companies must engage in full and complete disclosure (no this doesn’t mean they actually do this, just that they are required to do so.)  Also if the sale is being conducted by a third party that party must be a registered broker/dealer and be licensed and subject to the rules and regulations involving broker/dealers.

Now some want to allow an exception that will allow start up companies to raise money over the Internet.



Associated Press

Fargo Beer raised $41,000. Above, founders

John Anderson, Jared Hardy, Aaron Hill

and Chris Anderson.

And Let's Hope They Don't Drink the Profits.



At least 100 supporters of a so-called "start-up exemption" to allow equity crowd-funding by sites such as ProFounder are planning to rally on the sidewalks near SEC headquarters in Washington on Thursday.

Two weeks ago, the House approved a bill that would let companies sell up to $2 million in equity online, with investors buying stakes of up to $10,000 year, or 10% of their annual income, whichever is less.

The concern of course is that this will open the door to major fraud by shell companies whose only purpose is to take money raised from the Internet and pocket it. 

Because the proposals call for an overhaul of federal securities laws, and pre-emption of state laws as well, some critics believe they may increase the chance that unsophisticated investors will get scammed by people who aren't really starting new businesses. Some also point out that the impersonal nature of the Internet should call for more investor protections, rather than less.

"The potential for fraud in this area is real and potentially enormous," Jack Herstein, president of the North American Securities Administrators Association, a trade group of state regulators, warned in a letter to members of Congress last month.

These fears should not stop Congress from approving limited Internet funding of business without being subject to regulatory control for the simple reason that anyone investing in a business solely on the basis of its pitch on the Internet deserves to lose his or her money. 

The Dismal Political Economist is a strong believer in financial regulation, but knows the limits of such.  In some cases the level of stupidity is so great that even regulation cannot prevent the greedy and the stupid from losing their money in an investment, and people who invest over the Internet have shown they have reached that level of stupidity.  Our message to them, "Good luck folks, you're on your own."