The View from Right Field

Economic Illiteracy At the Top (Still)

It looks like the Biden administration has found a way to cut oil prices: Come up with a new Covid-19 variant.  More seriously, President Biden said, in addition to just about begging OPEC+ for more production (it’s not a good look for a U.S. president to be publicly asking Saudi Arabia and Russia for, in effect, political help¹), and this gets to the point of this post, that the problem of high oil prices was “because oil supply has not kept up with demand as the global economy emerges from the pandemic.”² 

Except that is wrong.  It’s not that supply is lower than demand.  Supply and demand will always meet³; it’s just that some people may not like where they meet.  Supply might not be high enough for supply and demand to meet at a price people want to pay, but that doesn’t mean they won’t meet.

An Alternate Covid History

Here’s a thought experiment or maybe, more accurately, a possible alternate history of Covid in the United States:

• Donald Trump wins re-election in November of 2020.  (It was possible.  As I noted here, Joe Biden’s margin of victory was only 66,000 votes.¹)

Helping the Rich, Democratic-Style

House Democrats finally passed, 220 to 213, President Biden’s $1.8 trillion¹ “Build Back Better” plan.  You have to be a political geek to know what’s in it, though it doesn’t really matter yet because the Senate hasn’t passed it.  They’re going to make changes in it, and then it will have to go back to the House for another vote.  So, trying to figure out what is in it at this point doesn’t make all that much sense.  The only things we know for sure are that (i) the price tag is totally made up, (ii) the revenue it raises is calculated on bases that won’t actually happen, and (iii) there won’t be any unexpected consequences because if you don’t know what is in the bill, you can’t know what is expected, and if you don’t know what is expected, there can’t be anything unexpected.

Still, one thing we do know about what the Democrats are doing is who is going to benefit.  And that is the upper middle class.  The Biden/Pelosi bill increases the limit on the amount of state and local taxes you can deduct from $10,000 per year to $80,000.  With a standard deduction of about $25,000, this won’t help average people – or even somewhat above average people.  It’s just a tax break for the upper middle class, especially those in states that have high local taxes (i.e., states with Democratic governors and legislatures).

China Does Care (A Little) About World Opinion

In a November 2 post on social media, Chinese tennis star Peng Shuai accused former vice-premier Zhang Gaoli of sexually assaulting her on at least one occasion.  The post was promptly taken down, all mention of Ms. Shuai was taken off Chinese social media, and she went incommunicado.  Pro tennis players around the world started wondering where she was and how she was doing.  And unlike the NBA, which folded like a cheap tent when a Houston Rockets general manager supported Hong Kong in a tweet, they didn’t back down.

China normally doesn’t respond to these kinds of complaints.  Ask the Uighurs.  For that matter, ask the Dali Lama.  But with the Winter Olympics coming up in February and tennis stars continuing to ask where Ms. Shuai was (before China tried to ban tennis players, the Women’s Tennis Association said it would pull out of China), China gave in – at least partially.

“Shoppers Increase Spending, Despite Inflation”. Huh?

“Shoppers Increase Spending, Despite Inflation” was the headline of a lead article in Wednesday’s print edition of The Wall Street Journal.¹  Except, shoppers aren’t “increasing spending despite inflation”; they are increasing spending because of inflation.  Things cost more, so people have to spend more to get them.  They may be buying the same amount of stuff, but, because of inflation, they have to pay more, i.e., they have to increase their spending, to get them.

The article also said: “J.P. Morgan said it was upgrading its growth expectations, raising its forecast for fourth-quarter U.S. gross domestic product to 5% from 4%.”  That makes sense, too; it just doesn’t necessarily mean what it seems to imply.  If the prices for goods and services are higher, i.e., if we have inflation, and the amount of goods and services is the same, then the total amount paid for those goods and services will be more, because their prices are higher.  That may make it look like the economy is growing, when really we are just paying more for the same amount of stuff.

To Successfully Address Climate Change, Elites Need to Convince Real People

With COP-26 continuing in Glasgow, the commenters and others are pitching in with their idea.  Martin Sandhu, a columnist in the Financial Times, made this suggestion on Monday: He noted that, while Europe’s “intention to decarbonize is genuine … the continent remains highly dependent on natural gas, and would become more so by weaning itself off coal.”¹   Mr. Sandhu suggested one solution is to use natural gas as feeder stock for hydrogen.  The only problem, he noted, is that all that “is missing is infrastructure and a market.”  Which is the problem with so many of the ideas proposed by climate experts and elites.

It is easy for experts and elites to come up with plans to solve the carbon problem.  The problem they have is convincing people.  As Mr. Sandhu noted in his column, “even a population as climate-conscious as Norway’s has nowhere near a majority for phasing out fossil extraction.”¹ 

Other Countries Can Get Competent Leaders. Why Can’t We?

You would think that a country as big as the United States, with as many people as we have, could have really good people at the top of its government.  But look at our current president and his predecessor.  They are both embarrassing.

Compare them, either of them, with Sir John Key, former Prime Minister of New Zealand (from 2008-2016), who spoke on “Walking the path to the next global financial crisis” in this panel discussion hosted by The New Zealand Initiative:

Irresponsible Governance – Chicago and Washington

A couple of weeks ago, I wrote about how the Democrats in Congress were trying to pass a package of new social programs.  Obviously, they have been having a bit of a problem getting the bill passed.  Some Democrats only want to set up programs they can pay for.  A lot of others want to set up as many programs as possible, even if it is just for a year or two.  They are willing to spend all the money required to set up lots of new programs, even if the programs have to shut down after a couple of years because there’s no future money to continue them.  In other words, irresponsible governance.

But it’s not only Washington where you see this kind of irresponsible governance.  It’s happening in Chicago, too. For example, for a moment last week, I thought that Chicago had not only solved its huge pension liability¹ but also figured out a way to replace its hundreds of thousands of lead water pipes.²