Archive for June, 2012

Europeans are Painting over Their Problems.

Thursday, June 28th, 2012

Dear Friends,

It seems to me, when your roof is leaking, painting the ceiling is worse then doing nothing. That is exactly what they are doing in Europe, covering up the stain, and not addressing the underlying problem. In the case of Europe the basic problem is the welfare state. While bailouts may make the picture look better… until the next bailout, they only make matters worse. The structural rot gets worse and worse, while the European leaders pretend that all the house needs, is a new coat of paint. The people of Europe are in for a very rude awakening, when the house collapses, due to the leaking roof rotting the structure of their economy. Unfortunately, their collapse will lead to dire consequences for the whole World.

In micro economics, the spendthrift’s profligacy must lead inexorably to bankruptcy, but in macro economics, mistakes can be covered up… for awhile. The State has many options for disguising their extravagance, while the individual must suffer the consequences… immediately. This results in States piling errors upon mistakes and kicking the can down the road. It is only possible to cover the frivolous spending of the state for so long however. Once the errors are piled high enough no amount of shoring can hold it up.

One option that the “leaders” of Europe have been talking about, to shore up their heap, is a European wide bond system. This is no different than giving someone with a FICA score of ten, an unlimited credit card, and cosigning on it! I propose an experiment… If the “economists” that believe in this solution, really trust in it, then why don’t they get a gold card and give it to a heroin addict. Then they can see how well their “solution” will work in the real world.

The other option, the one that has been called innovative, is to have European wide banking deposit insurance. This is merely wall paper to cover the discoloration. It solves nothing! The banks will still be forced to make more bad loans, to the insolvent drunks who run Europe today, until the entire system is riddled with ship worms! The only possible result, is the prodigal European states will continue borrowing money, and going out to eat with it. Every adult knows that if you borrow money, it is foolish to spend it on consumables, you spend your own money on consumables. When you borrow money, it must be used for investing, in something that will add value or result in an income stream. To go out to eat with borrowed money is a sure path to insolvency… for the individual as well as the State.

The only real way to fix it, is the one no one is talking about, stop the out of control spending! There will be pain but it must be done. It will be forced on them sometime in the rapidly approaching future. The only real question is, manage the pain… or let it run out of control? If they control the slide, they can avoid the most dire outcomes but an uncontrolled fall will leave everyone to the vagaries of a chaotic collapse.

Those that espouse spending cuts are vilified by “economists” and the unbiased press. The siren call is that Europe can grow out of the mess if they only spend a little more. Fiscal responsibility is confused with what they call austerity. The European economists seem to think that spending cuts can’t get spending under control. They must also include tax increases! This is just as stupid as those that think spending more is the solution! European taxes are far too high today and more taxes will only serve to lubricate the slide to economic oblivion. How they cannot see this escapes me… unless they do see it, and are so corrupt they want a European economic collapse, with all the negative consequences that go along with it. This seems like conspiracy theory to the nth degree… or is it?

The macro solution is to cut spending, lower regulation, cut taxes and let the market work the debt out. There is no other way. But this solution is seen as too politically dangerous. The poltroons in Europe have made their bed, now they must sleep in it, but they quiver in terror at the thought. There will be pain with the real solution, but there will be far worse suffering and negative consequences for Europe, and the World… if someone doesn’t go up on the roof and fix the leak. Too bad they are so afraid of heights.


John Pepin

Obama Care, Fast and Furious, National Security vs Liberty and Freedom

Monday, June 25th, 2012

Dear Friends,

It seems to me, the more you stir a stench the more it stinks, and the stench coming from Washington stinks to high heaven. The pending Obama care decision from the Supreme Court will in large part decide the future role of government in the lives of citizens. The looming contempt of Congress vote in the House of Representatives, will show if the republicans there have any real chutzpa, or if they are the poltroons we think they are. The continuing leaks of highly classified national security secrets to the unbiased press, historically, would have justified a special prosecutor, but today we are told, a supporter of Obama is sufficient to investigate this damming case. Despite the fact, there have been measurable diminishments in our national security, while all the evidence points to a high ranking official in the White House. These are momentous times we live in. We will either be called the most stupid generation or the most enlightened by posterity. They are the ones who will suffer the calamities our lack of wisdom will visit on them or the rewards of our virtuous action.

The role and nature of the US government going forward depends on the ruling of the Supreme Court. If the Court goes the way it did in Wickard vs Filburn then we are in dire shape. The role of government will forever be enlarged, to the point we as citizens have no control of our government, while our government has total control over us. We will live in fear of our government while they will have absolute antipathy for us. There is a term in the dictionary for this state of affairs… it is called tyranny. Benign tyranny is still tyranny.

The case of Holder’s contempt vote is less obvious yet carries just as much moment. The democrats are calling the vote a nakedly partisan attempt to paint Holder in a bad light. Nancy Pelosi has claimed it is only because Holder is suing several States to protect the “right” of dead people and non citizens to vote in our elections. The merit of dead people and non citizens “voting” is not even debatable, by allowing people not legally allowed to vote, to cast ballots, undermines the very nature of a representative republic. To claim that to scrub illegal votes from the roles is a partisan position, shows the pernicious sophistry of Nancy Pelosi’s rhetoric, and does nothing but misdirect the debate.

The claim it is merely a partisan attempt to vilify Holder is hypocrisy writ large. Even a cursory examination of recent history shows the underhandedness of this argument. Scooter Libby was sentenced to jail, for lying to a grand jury in a blatantly partisan attempt to vilify President Bush, over the outing of Valerie Plame, (which had no effect on national security unlike the recent leaks). The Special prosecutor already knew who had told the unbiased media, which should have put the matter to rest, but the democrats pushed until they got the conviction of a Bush appointee to jail. Regardless of the fact, known at the time, he had nothing to do with the original charge, and was simply confused about the specific wording of a conversation with a reporter, several years earlier. To have gone to such great lengths then, and to act offended today, is hypocrisy at best and outright criminal at worse.

These are truly important issues. The nature and role of the US government is at stake. Shall we remain a Constitutional Republic, with limited government, or shall we become command and control like North Korea, where the Constitution means whatever the Elite tell us it does. Like the side of Orwell’s barn… where some are more equal than others. Can the government send guns into a friendly country, to assist drug lords who are fighting an existential war with the legitimate government, resulting in the verified deaths of over 300 Mexicans and at least 1 US Federal Agent, with no investigation and no consequences. Can the government escape all oversight even when they put our national security at risk for political gain?

These questions will decide the fate of our own children, but moreover, they will decide the fate of the World at large. The US has been a force for good in the World despite the spurious rhetoric by those engaged in the slaughter of their own citizens. So, it is not only the children of the US Citizen that are at risk, it is the fate of children around the World, that hang in the balance. Will our elected officials and appointed judges, make the right decisions and protect the traditional US value of limited government, or will they change the course of history, rendering the US Constitution impotent and thrust the World into oppression? The cowardly politicians might back down, allowing corrupt politicians to win, destroying the Constitution and undermining the concept of free and fair elections, eliminating all oversight of elected officials, and empowering those that want a World despot. But, in the end, as Saint Agustin said, “People get the government they deserve.” Who is really to blame for this reek, them… or us?


John Pepin

Bureaucracy vs Complexity

Thursday, June 21st, 2012

Dear Friends,

It seems to me, the main difference between bureaucratic and complex systems, is that bureaucracies are inefficient and primarily benefit those in charge, while complex systems are extremely efficient and the benefits are more widely distributed. This is a well known truth yet is overlooked by most people. This fact can be applied to many areas of life but is most appropriate in the sphere of economics. Overlooking or disregarding this reality leads to all sorts of negative outcomes, like huge trade deficits, lowered economic outcomes, low or even negative GDP growth, and even outright tyranny.

Bureaucracies are hierarchical in structure. This type of system is characterized by a top down decision making structure. The commanders in such a system can be a single person or a group of people. All governmental structures are built this way. The decisions are made at the top, the middle men enforce them and the people dutifully carry them out. Unfortunately, the natural evolution of this type of system, is for those in charge to become more and more selfish. Feeding both their greed and egos until all the efficiency is wrung out of the system and only the people at the top get any benefits.

This is only one avenue of inefficiency in the bureaucratic system. Perhaps the primary source of inefficiency in a bureaucracy, is that so many decisions need to be made every second of every day in a modern economy, it becomes impossible for any group of people, no matter how smart or benevolent, to keep up. The task is simply too herculean. Just think about how many decisions need to be made when you build a house. The floor plan must be thought out, the type of heating system must be determined, the electrical feed must be decided, the exterior siding and trim must be considered, the color of the home is important to it’s blending into its surroundings, the interior color scheme and trim must also be considered, the roof system and treatment must be thought out, the list goes on and on. This doesn’t even take into account the millions of smaller decisions that need to be made, like figuring the rise and run of the cellar stairs, how long to cut each stud, the rafters must be measured and bird’s mouths cut… etc. Now, magnify this a hundred million times, and we have the decisions that are made in a simple economy in a single second.

Command and control economies, like socialist and communist, are forms of bureaucracies. If we look at the historical examples, of governments that have been socialistic or communistic, we see that this paradigm holds true. Those at the top get the goods while the people get the orders.

Complex systems are distributive in their structure. Decisions are made at the lowest level possible by the people who have the most information regarding them. This distributed decision making structure of the complex system, is the fundamental reason complex systems are so much more efficient… than bureaucratic ones. As the decisions themselves, are made by those most able to amass the necessary information to make them, in the most efficient way possible, the benefits are also distributed to the people… not the bureaucrat. Another reason complex systems are more efficient is that they build in competition. Competition forces efficiency, because those that are less efficient, are surpassed by those who are more efficient. This makes the limited money available more wisely spent and thus achieves the most bang for the buck.

Demand side economics is a form of bureaucratic decision making process, while supply side economics is a form of complex system. Demand side, as expressed by John Maynard Keynes, empowers the bureaucrat to take money from the earners and spend it to drive up demand. Supply side encourages those people who earn money to make their own decisions what to do with it. The one presupposes the individual will make the most of their own money while the other presupposes the government will make the most of someone else’s money.

The upshot is that demand side’s inefficiency’s create incentives to corruption, huge government deficits, general poverty and outright oppression, the other, supply side, leads to economic growth, personal freedom and general prosperity. But demand side has one thing going for it, it empowers those in charge, to misspend money earned by others, to massage their egos, enhance economic outcomes for the rulers and create a perpetual ruling class. As Thrasymachus said, most people just want to be left alone but those great men want power…

So I ask, is it more important that “great” men have power, or that there be general prosperity?


John Pepin

Obama’s Spurious Logic

Sunday, June 17th, 2012

Dear Friends,

It seems to me that when Obama and the minions in his administration and the unbiased press, claim that Romney will return us to the failed policies that got us into the “great recession,” he is engaging in the most pernicious form of sophistry. What the World needs today is less spurious logic and more thoughtful action. When Obama engages in sophistry he essentially admits his ignorance of economics or he is maliciously trying to avoid blame for his own failed policies. This has profound negative consequences for us, our children, and the people of the World.

Obama seems to have the notion that it is growth in government that creates growth in the economy. This is ignorance writ large. Growth of government does nothing to grow the economy of any country or nation. Government growth necessarially lowers economic outcomes. Every dollar that government takes from the private sector is misspent, due to the fact that no one is as careful spending the money of others, as they are spending their own. Therefore, government spending is less efficient than money spent, by those that worked to earn it.

His spurious logic bypasses the fact that the housing implosion was a result of government’s meddling in the free market by a democrat controlled congress. The democrats in congress claimed that certain neighborhoods were being red lined. This was rectified by congress, during the Clinton administration, by forcing banks, credit unions and other lending institutions, to lend money to people who were not good for the loans! This meddling in the free market led to an explosion of people buying houses that they couldn’t afford. As long as the price of housing went up the bubble got bigger. But, as we all know, (except Obama), bubbles must eventually pop. When it did, the collapse of so many loans resulted in what Obama’s “great recession.” Like FDR’s great depression.

It ignores the fact that it was supply side economics that brought us out of Carter’s stagflation. Ron Reagan instituted Hayak’s supply side economics and the results speak for themselves. The American economy was in far worse shape when Reagan took office. Reagan instituted regulation reform and lowered taxes. He made it easier to start a business. This led to a huge jump in growth of the US GDP. His policies made more people rich and savaged the ranks of the poor raising many into the middle class. This was a bad thing to Obama and his ilk because it is the poor who are their main political supporters. It is in their interests to have a large and growing impoverished class.

When Obama claims that republicans only want to give the rich tax breaks he doubles down on his spurious logic. This is patently sophist because, supply side gives tax breaks to those who are trying to get rich, not those who are rich. The already rich are the primary beneficiaries of Obama’s policies. Those that are trying to get rich are the very people who create jobs! The already rich have a negligible effect on the job market because they have their money in trusts. They had their wealth given to them by their parents, who engaged in the market system and got rich by it. Their children, the already rich, want to close the door to people who seek to join their ranks. This is the embodiment of Joesph Schumpeter’s theory.

When our politicians engage in spurious logic, to hide their own shortcomings, the American people are poorly served. The results of growing government, are visible for all to see, in Europe. The fast approaching economic collapse of the European welfare state model, will create a whole new level of poverty in Europe. A level of want and need that Europe has not seen since Charles Dickens wrote his books about poverty. Obama will visit this future on the American people by his policies. As a result, we will not be in a position to help the people of Europe, climb out of the economic catastrophe their politicians have given them and their children. We as people of the World have to open our eyes and think for ourselves. We must look through this sophistry. If we don’t, our children and their children, will inherit poverty, want and war, as our legacy. Is that what we want or are we willing to call evil evil and sophistry sophistry? The decision is ours to make, but we had better hurry, time is running out.


John Pepin

Our Upside Down World

Thursday, June 14th, 2012

Dear Friends,

It seems to me that we are living in an upside down World. The Elite hold us to the highest standards while committing far worse crimes themselves. The unbiased media is complicit and the people of the World are groping for answers in the dark. This state of affairs cannot last long, and I am afraid, will lower the lot of every human being on the planet, eventually leading to another World war, if it is not rectified.

Jamie Dimon is questioned by Congress for loosing two billion dollars of shareholder money, while Obama faces no questions, from Congress or the unbiased media, concerning his loosing tens of billions of dollars of taxpayer money. When a CEO makes a bad decision it is the investors in that company who take the loss, when the President makes foolish bets on companies owned by political contributors, it is the American people who loose the money. As Milton Friedman said, “There is no free lunch.” When government takes a dollar from the private sector and wastes it or gives it to some political hack, that dollar is not available to be spent on a more productive undertaking… everyone suffers. When a company makes a bad business decision, that company suffers and the market opens up new opportunities for smarter companies and ideas, unless regulation prevents it.

The Pentagon is using US taxpayer money to buy Russian helicopters for the Afghanistan military, and the the unbiased media are upset, because that same company has sold helicopters to the murderous Syrian regime. The real question the unbiased media should be asking is, why not use American taxpayer funds… to buy American made helicopters? It would seem to me, that is the burning question, but the unbiased media avoid the real questions and only ask misleading ones.

Obama believes the US private economy is doing “just fine” it is the government who is starved for money. This shows one of two things, a total disconnect from the real economy and a total lack of understanding of how economies work, or, he doesn’t care how well you and I am doing, because he is the only thing he focuses on. Neither option is good for the country he has been elected to husband. If he is that ignorant of the economic system of the World, he is patently unqualified to be a anything but a laborer, certainly not President of the United States. If the latter is true, and he is that self absorbed, he is unqualified to do any job, period, and we should support him on welfare.

The convulsions in Europe are coming closer and closer together but we are being told that a solution is still possible. Spain was just given a hundred billion Euros to bail out their banks and stem the run on them. This follows Greece getting another tranche of money from the EFSF to stabilize it’s economy after going belly up on it’s debt in February! Italy and Greece are experiencing runs on their banks and France is swirling in the economic toilet. Greece is about to elect a communist government on Sunday, that will ensure the Greek people will suffer economic catastrophe, while the political leaders in Europe are intent on rearranging the deck chairs on the doomed ship. Is there any country in the Euro zone that has less than twenty percent unemployment? Yet Obama says, with a straight face, the US needs to adopt European style socialism! Is he really that stupid, or are the unbiased media that stupid, not to point out the absurdity of it?

In a sane world this would be the stuff of comedy. In the World we live in it is the norm. Our leaders hold us to the highest standards but are loathe to hold themselves to any standard what so ever. This economic crisis will cause a World wide depression, that will lead to another World War, just like the last time our leaders collectively lost their minds. History will again record it was the villains who started the shooting, instead of the villains who started the ball rolling… that were to blame. It is truly unfortunate that so much blood, wealth and industry, will be squandered by such foolish people. But since our leaders steadfastly refuse to learn from history… I guess we are doomed to repeat it.


John Pepin

Government as Gatekeeper

Monday, June 11th, 2012

Dear Friends,

It seems to me, when government is the gatekeeper of all the goods in society, politics filters those goods. By gatekeeper, I mean that everything and every action by the individual and organizations, must be recognized and allowed by government. As we know intuitively, government is nothing but politics, so, when the gatekeeper is government, it is actually politics that decides what good can be rightfully visited on mankind. Under this scenario, only that which benefits those in charge or the politicians who run the show, is allowed. That which is contrary to the interests of politicians, will not be allowed, regardless if it is a great benefit to the people. This is the traditional paradigm that the human race has labored under for millenia, and is the font of all that is bad in society, economics, civilization and government, that rises from the sea of humanity.

The role of government as gatekeeper is long established as the Right of Kings. This was the way it was, and still is, everywhere government is overly powerful. The government is the sovereign not the people. When this is the case we always see that those in power get the goods of society distributed to them, and the people only get those goods which the politicians or kings, believe benefits the government… (themselves).

We see the most pernicious examples in third world countries. What is normally considered corruption is fed by this mode of thinking and acting. When people need a license to establish even the most basic business we find the licensing process to be rife with bribe taking, political interference, certain people “shut out” from the process, and the politically connected have the road cleared for them… crony capitalism. This has huge negative consequences for the economy, of the World in general, and for individual countries in particular.

The economic and governing problems we see in Europe and around the World are directly tied to this. In Greece and Europe the people are like teenagers, they want all the prerogatives of adults with none of the responsibilities. They want to live in their parents, or in this case big brother’s house, while they live it up. This is the way people think when government becomes the gatekeeper. Government must necessarily grow, spending grows, control grows while the economy and liberty shrivels, all to serve the interests of politicians. But, as long as the politicians who run the thing benefit, all is considered good.

Undoing this dominant way of thinking was one of the ingenious ideas of the American revolution. The idea that people could make their own decisions, without needing to go to a government official to get permission, was evolutionary. This opened up business to those not politically connected people who were and are virtuous. This in turn introduced a whole new level of competition and entrepreneurship to the marketplace. Anyone with a good idea could start a business, succeeding on the merits of his or her business plan, without political interference.

Today, around the World we see this concept attacked, for the retrenchment of the old ways of doing business. In many US cities it is illegal to feed the poor. That is the role government has carved out for itself just like in North Korea. Unimaginably self serving, this is barely even questioned, in an age where government is the gatekeeper of all that is good. Even religion is now coming under the purview of government oversight, as we see in the Catholic Church’s bristling, under Obama’s regulating what the church must pay for and do, to be in compliance with politician’s self interest.

The deeper government goes in regulating the people and the economy… the more politics inserts itself into the corpus society. This is one of the reasons politics is so nasty today, government is the arbiter of what can be done, and what cannot be done, in the economy and society… ala Bastiat’s Law. As this gets more and more common, it is questioned less and less, and oozes insidiously into the minds of the people, until it is taken as the unvarnished truth. The answer is to open our minds to the fact that government is nothing more than the operation of politics on society and civilization… therefore the people. Political tampering in the economy is justified as a necessary evil because people are “bad at heart” ie. Self interested. But I ask you… if people are bad at heart… why do we trust politicians, (unregulated self interested people), to be the gatekeepers? Isn’t that counter intuitive? Or do politicians say it’s okay?


John Pepin

Wisconsin Recall Victory of Scott Walker

Thursday, June 7th, 2012

Dear Friends,

It seems to me, the decisive win in Wisconsin of Scott Walker in his recall election, is the elephant in the room no one is talking about. While the unbiased media are downplaying the victory, (it was on the last page in my local paper), the most conspicuous thing is, the lack of any real information or the ramifications of the election. This is par for the course for our unbiased media but in this case the silence is deafening. The reaction of the unbiased media, is far more telling than the actual election victory of a conservative, against a recall that was totally based on his policies and politics, instead of a mismanaging the State’s affairs or some criminal conduct. This bodes evil for those that seek to restore Constitutional rule in the USA. It is the criminalizing of politics.

There is a total denial of the national implications. The unbiased media have gone out of their way to deny any possible connection with the Presidential election coming up in November. They claim the results were local and the issues were local so the election has no effect on the likelihood of Romney ousting Obama. This is despite their own reporting that Republicans and Democrats sent money from every corner of the US to Wisconsin. This should be at least an indication that the election had national implications but has been totally missed by the unbiased media. Would they have reported the same thing had Walker lost?

There is very real indications of voter fraud. In Madison the voter turnout was 119% of the electorate. This is impossible without some form of fraud. There is no possible way that more votes can be cast than there are voters to cast them… unless some fraud took place. The radical left, Daily Kos, claims that same day registration was implicit in the impossible turnout. To believe that… one must have a total suspension of logic and critical thinking. People who are that passionate about an election will register before an election of this magnitude to ensure their votes count. To claim that over 100% of the electorate voted should raise some eyebrows but the unbiased media are silent. Why do you suppose they are silent in the face of obvious voter fraud? Could it possibly be that they don’t want this fact to effect purges of the dead and ineligible from Florida, Texas and California’s voter rolls?

This assertion is born out when we examine the names of people who signed the recall notice. Micky Mouse and Donald Duck are apparently eligible voters in Wisconsin. This in itself is absurd but to hide the fact is at least malicious if not criminal. As we stated in a previous blog, “The [democrats] would rather have 100 fraudulent votes cast than 1 person be disenfranchised.” This is of course ironic in that if there are 100 fraudulent votes cast then there are 100 people disenfranchised. To state the obvious… if not so obvious…

The economic news like Bloomberg Radio, seem to be blind to the fact that today’s stock market rally, could have anything to do with the Wisconsin election, even though the timing is at least coincidental. Today there was a huge rally in the US stock market. The question was asked over and over… why, but there was dumbfounded bemusement. Some claimed the FED will print more money, some claimed the lack of bad news from Europe was the cause, but no one observed that the election in Wisconsin, being a harbinger of the coming national election, gave investors hope that a Romney win is more likely and the anti business policies of the Obama administration would be overturned, for more market friendly ones.

This incongruity would be interesting if the job of the unbiased media in the US was to report news accurately and without bias. Unfortunately, we know by anecdotal as well as empirical evidence, their real job is to reelect Obama while claiming to be unbiased. They even admitted it on NPR several times after Obama’s victory over the impoverished McCain campaign. The American people, our Democratic Republic and our children, are poorly served by this perniciously biased media. Fortunately, the American people are fast waking up to this fact… as is shown by the poor ratings of the unbiased media. Maybe they too, will get a bailout from Obama, if he wins in November.


John Pepin

Limiting Supply Makes Prices High

Monday, June 4th, 2012

Dear Friends,

It seems to me, when government limits supply, prices are always high. This axiom holds true, no matter what country’s government does it, or what form of government it is. In the dynamic world of economics, supply reacts and is interdependent with, demand. Both sides of the demand vs supply graph effect prices. This is basic economics yet our leaders act and argue like this fact is irrelevant. When they do… they do so at our risk.

The supply demand graph is a well known theory in economics. It explains how prices are set in an economy. One line on the graph is the supply line, the other is the demand line. They chart the amount of supply of a good or service at various price levels against the relative demand for that good or service at those same price levels. Where they intersect is the equilibrium price. As demand goes up prices necessarially rise, giving producers an incentive to raise supply, to make more profit. As the producers raise supply, the price intersection on the graph comes back down, back to the equilibrium price.

When government, through regulation, taxation or political favoritism, limits the ability of the producers to raise supply in the face of a demand increase, the supply line moves and the equilibrium price is raised. The more supply is constrained the higher prices will climb. This not only effects prices but more importantly… jobs as well.

When a government constrains the ability of it’s markets to react to a rise or drop in demand, the producers of that product or service, have incentive to move to another country, that doesn’t put the constraint on the ability of the market to meet demand. This siphons jobs from the country that limits it’s markets and sends them to other countries that do not. This is why Singapore is so wealthy.

Milton Friedman said, When a firm faces competition from a better competitor, there are two possible actions it can take, the first is to go to government to get anti competitive regulation passed, the other is to adapt. Of the two, the first is the easiest most taken path, and leads to general poverty, the second leads to a vibrant economy. Anti competitive regulation is a form of constraint on the market’s ability to flex with market demands. Another example is, unrealistic or poorly planned environmental regulation. If environmental regulation gets too expensive then firms have incentive to move their operation to other more lax countries. This doesn’t help the environment, (the product good or service is still produced but with no standardization leading to a worse environment), but does create tensions in the market.

Energy is an example of an industry that has been constrained in it’s ability to meet market demands. The American government has an obvious anti energy bent, in it’s regulation, rhetoric and actions. From the Keystone pipeline through the moratorium on offshore drilling to the crippling anti coal regulations, the US government led by Mr Obama, has openly stated it’s intention to make energy more expensive. The huge amount of natural gas that has been discovered in the continental US, despite the government, has caused a plummet in the price of gas based energy. Supply has outstripped demand. Today we see States and the Federal government seeking to put an and to this cheap energy, by placing moratoriums on hydro fracturing, the means to access the inexpensive gas.

Energy is by no means the only example, food production has been intentionally lowered under the FDR administration, lumber prices were raised when the government outlawed logging in Washington and Oregon, to protect the Spotted Owl, (which, as it turns out, wasn’t being effected by logging at all, but by the encroachment of the native Barred Owls)., the list goes on in every country and throughout history. When government engages in this type of action we are poorly served. Not only in our pocketbooks, from the higher prices, but in our job prospects as well.

The price of labor is also set by the demand vs supply of jobs. So when government limits supply prices are high and wages are low because jobs are few.


John Pepin