Tuesday, June 10, 2008

Please, Mr Obama No Half-Assed Measures

Dear Mr Obama,

I mocked Mr Icahn, and defended you because like many Americans, I believe we share a visceral feeling that the nation's recent path has been wayward - not only from the optimal, but even from the tolerably wrong. As such, I am of the opinion that it is incumbent upon the opposition - all opposition - to do whatever it takes to place the levers of power in the hands of those more watchful of the Public Interest, and of an integrity that does not call itself into question as a result of each new contract, policy change or executive order. I realize the Executive Branch is only part of the problem, but nonetheless am hopeful that with strong leadership, the worst of shameful parochial pork-barrel politics will recede in favor of the greater good. In this regard, despite my stated distaste for dishonesty, I would (so to say) turn a blind eye to the little white lies and truth benders emanating from the opposition, provided it insures a transfer of the stewardship of the state to those who treat it with the respect and fiduciary reverence it deserves, which, in its absence may realize the worst of the criticisms and vitriol of the anti-statists. I am aware of philosophical paradox of this view, but can stomach the inconsistency in favor of goodness of the outcome, though I say again, I am not proud of stooping this low, but at least am honest with myself about it.

With this preamble out of the way, I must express my concern to you over your rant yesterday regarding the rhetoric of windfall profits tax, which to an economist, and even one who is rooting for your success, sounded, well, just lame, and fell outside the box of "necessary little white lie" I am willing to sanction into the cauldron of demagoguery. And let it be said, it is not the fact of a windfall profits tax, but rather the cynical ad-hoc pandering of seizing from A and giving to B, that will likely result in (and I never thought I'd be parroting an API talking point) BOTH a reduction of supply, and a prolonging of the adjustment of The American consumer to the realities of constrained supply in a neo-Malthusian century, which ultimately is counter-productive to the objective.

You see, I have high expectations of the next government, despite the historically-based probability that it will remain unrequited. Long before you start with energy-sector Robin Hood-ism for short-term electoral boost, you need to define a forward-looking energy policy, and more importantly sell it to the people. That means it has to be seen to be fair - in the long-term and short term, and achieve objectives that are truly in the public's interest. Sacrifice must be universal, and create discomfiture across the spectrum. Indeed, IF you're going to dip into supply-side with the windfall profits tax, (which by the way, I have doubts since the slope is slippery to coal, fertilizer, and all manner of resource whose price has risen through no fault or action of said resource- "owners") then it must be seen as part of a generalized sacrifice that would likely include regressive carbon taxes, as well as a gluttony surcharge upon large boats, private aircraft and their fuel, and home energy use above a reasonably allocated household threshold. Now, the shame is that you are squandering this opportunity by suggesting you'll simply do the absurd - i.e. subsidize consumption by the poor. No. No. No. This is precisely what is hammering India and China presently, and is the antithesis of the longer-term public interest. Proceeds from levies that essentially discourage fossil fuel use should be used to accelerate the US move away from imported carbon towards sustainable, renewable sources - the market decide which be they CCS. wind, solar, geothermal, tidal, or all the aforementioned as well as investment in transit infrastructure that will likely be MORE viable and attractive in the future, rather than less.

Some think this is unsalable. I beg to differ and think it is eminently salable and attractive - to blue and red-staters alike, for its logical cornerstone embraces the market and the freedoms, liberties and energy of the people. You see, it needs to be explained as a crisis - and a shared-one at that. And crises require sacrifice, which can be sold provided there is a feeling that the burden is shared. Of course, no one needs the government to tell one precisely which sacrifice to make, or how to contribute positively to our collective future betterment. Everyone's sacrifice will be different according to each individuals values, and the market is undoubtedly powerful in its wisdom to select, fund and develop the best and most efficient technologies. Energy policy in America, contrary to other developed nations, has been skewed towards promoting consumption. This is simply daft in the present day, given America's poor and unbalanced international financial position, and the trends in global resource supply and demand. And each day we persist upon this course, we become poorer, and children even poorer then. No, the time has come for an energy policy promotes conservation, and wise use of resources. That is not only because it is in our interests in the long-run, but because even in the short-term, we simply cannot afford to do anything else, and continuing an ostrich approach by denying the inevitable only conspires to detract from the future public interest for short-term parochial gain of a few.

It will not be pleasant. But it could and should be just, and fair, and in everyone's heart, they will know it (if explained with sufficient passion and empathy) to be the right thing to do. Yet while all change is initially difficult, there is no reason to be pessimistic. America is at presently vastly wasteful in its use of energy and water. The savings from anyone and everyone from barely noticeable changes are immense and will immeasurably alter the balance. This will give time for the market and our ingenuity when applied to an objective, to come to fruition that will decidedly improve the financial and economic prospects of future generations.

So please, Mr Obama, take a pause from thinking with your mouth open, and stop with the short-term demagoguery which in any event will be unmasked before November, and instead think with the Big Picture Systemic Vision of policy that enlists every American to overcome the challenges wrought by two decades of rudderless administration and eight years of bassackwardness and corrupt plundering that at once is patriotic, economically sensible, and finally, for a change, in the interests of our children, not to their detriment.

Good luck, and good night.



Donlast said...

Cass... One presumes you have posted this to the Obama entourage with a CV and a note to say when you will be available as a speechwriter. If you haven't, you should.

Anonymous said...

Nice of you to suggest, but I must admit that I am terribly unpersuasive on my own behalf. And I doubt I've persuaded anyone that isn't already of like mind.

I always thought that The Community lost huge when they in tandem with UK Europhiles failed to market The Single Currency to UK voters as it should have been. Energy policy is no different. The Jimmy Carter approach of "earnest cardiganism" didn't (and still won't) do it. Firebrand preaching of the unarguable logic is what is necessary.


Anonymous said...

Value investors as ghostwriters; I love it. I can imagine Cass dueling Chris Leithner, him ghostwriting for Ron Paul and Cass ghostwriting for Obama. I think they'd agree that the debt of the republic and the arrogance of the politicans must be reduced. But imagine them mixing it up over global warming.

Anonymous said...

The O Man is one-for-two. He dumped on the temporary gas tax "relief", at least.

When the base price of crude jumps but the costs of processing, transporting, and selling gasoline don't rise in tandem - the rest is "rent." N'est-ce pas? Charge rent and plunk it into alternatives, instead of bloated pocketbooks.

Anonymous said...


Maybe, as you suggest in your comment, this only sounds good to the converted, or in the case perhaps to the hopeful, but as one who is in those camps, I still say Huzzah. Great essay.

Anonymous said...

Between the here and now present, and the there and then future, lies a great divide. A post WW2 infrastructure of houses, workplaces, shopping venues and the roads that connect them, all based on $2 oil,
is in the process of being rendered obsolete. A whole generation, raised on the old certainties, may need to die before a new consciousness can take hold. In the mean time, and while embracing the concept of shared pain, should not a distinction be drawn between subsidizing consumption, and subsidizing subsistence?

Anonymous said...

I was aghast at the same stupidity emanating from the mouth of Sen. Dodd on CNBC this morning. It seems that the entire Democratic party is behind getting the working class white folks who voted for Hillary to be energized for voting for Obama and democrats. Infantile politics; I promise you candy if you give me your vote.

"Cassandra" said...

Tnx Scott.

Anon 1:59 - I am not violently opposed to windfall profits tax. But, it IS a slippery slope, so philosophically why stop there? Metallurgical coal has done a runner and so must ripe. And mineral phosphates is low-hanging. Oh, and don;t forget Taconite, which in case one might justify with "essentialness" is literally about as base [metal] as one gets. But it gets better. What about a windfall salary tax on football players? The onset of the media and globalization hasn't raised their marginal costs one bit. And more than two-thirds of Americans watched the Super-bowl, so it would seem rather essential. And the beach has become popular. All those lucky sods who've owned waterfront since the price tag was five-digits - going along for the ride fer doin' nothing. One might just not be able to find where to stop.

My social-democratic predisposition and practical seer-training leads me to forecast that at levels not that far from here in percentage terms in relation to where we were several years ago, property rights in the energy sector may not be as secure as investors (and speculators) believe them. Now some folk will say "Whoooah there bossy" at the thought, but considering that The State has used arguments of eminent domain for far more fatuous endeavors, and that many other advanced nation-states view such ownership rights as collective endowments rather than etched in parochial stone, a discount will/should eventually emerge to reflect the fact that "god-given rights" in the absence of the deity's presence to defend the rights in court may end up yielding to a populist-inspired sense of national interest. OH it'll be bloody, alright, but it will get philosophical debate stoked in ways that will make gay marriage shrink to insignificance.

thegianttom - oh yes change is uypon us, but there remains a large continuum of possibility. There is so much waste and room to cut, the US could - will - halve its oil use, once they/we put out minds to it. But it won't happen with $2gal or $4gal. oil. Heck, its barely happening in UK with $10gal. But they of course have trains and buses and national health care and grim - but cheap - public housing to to the edge off the "sub" in subsistence. Oh if you think the dollar is a short, lets see what sterling does when north sea starts yielding but a trickle.

Anon 6:32 - the pandering certainly is not helpful. It is time for sober chat. Crises chat. AA-style confrontation with the fact that there are problems of such gravity, that ordinary huckstering and bogus promises are bordering on what one might genuinely term as classically evil. I would love to see Obama pull out that line in a debate vs. McCain. Oh sure, the market'll sort it out in the end. Like in Argentina. Or what have you. But if you KNOW it's going there...why let it go there? There are simple basic things that foresight gives human beings that might give us a chance to avert a catastrophe and not have to build anew from the embers.

David Merkel said...

Cassandra -- much as I liked some of your rhetoric, it was on the whole too intelligent for the average American voter to grasp. I don't have a high opinion of the American Electorate. It does not vote on the basis of what is intelligent policy, but more on the basis of which candidate is more likable, which praises them the best, and which seems to offer the most to their immediate needs.

The election is Obama's to lose, and he could lose it. He speaks his mind too often, a trait that he shares with McCain. American voters like being happily deceived, so long as the politician is not too obvious about it.

"Cassandra" said...

David, I find little fault in your comment. Yet, I think the moment is ripe for a candidate to speak the compelling logic through firebrand prophecy because this is NOT a typical time in history where the herd is waiting to be moved. The herd has been already been rode roughshod, and its members are now , at once, fragmented fearful and disenchanted. Their instincts tell them to look for the herd to be led to safety but confusion and panic reigns. This is a vacuum like we've not seen since 1980. This is why HC lost. This is why McCain probably will lose. Imagine when someone is in a dangerous situation (you know, a 3rd story window, flames lapping at the window behind them), firemen imploring them "to jump" to safety below, but their confusion and fear makes them hesitate. They need someone to say "Jump Dammit, or you will Die..." and the deeper and more reassuring and yes, more biblical, that voice, the greater the likelihood they will do as they should. Obama's voice is not black, nor liberal. It is simply the voice that will motivate more voters in Nov to action and that is good. Closer you eyes and listen, and McCain is tinny and whiney. It will prevail only if Obama self-destructs.

For this is a time when faggotry, flag-burning, whether you smoked dope in college, didn't pay a parking ticket, and all other manner of pettiness can be pushed aside given the gravity of important changes in the world, and the financial realities confronting us. Such pettines becomes irrelevant to who will be able to round up the disassembled herd and lead them.

One has right to be more sanguine about the prospects for change vs. the immovable congressional beast, and one might keep an eye the possible cheney coup d'etat scenario via emergency war powers in the event we get ugly with Iran. But lets take one step at a time...

Anonymous said...

I like that about taking from football players! There are some happy property-rights violations that are fun to contemplate, without wanting to tumble all the way down into full throated utopian collectivism. But maybe the pain of getting royally screwed by Exxon will generate a more creative and enduring response in alt-energy markets. I hope.

BTW, McCain is sending Fat Bastard in rull Scottish regalia to Iraq to eat the insurgents and then "inhale" the Iranian leadership - outside the box thinking. And he's going to get James Earl Jones to speak while he lip-syncs his speeches. How's O-Man going to counter stuff like that?? :)

Anonymous said...

The US is screwed when they fire up the printing press to start paying for the unfunded money has already been squandered boomer's SS and Medicare. Obama or not it's coming along with an Argentina moment for the empire.

Charles Butler said...


the resurrection of the fireside chat might trump James Earl.

"Cassandra" said...

Though I may be insane for still believing in sobriety, I think that the reality of the future will dictate austerity, and that in this new environment of reality confrontation (think Alberta during the last Oil bust) we will see benefits and entitlements cut rather than other-people's money piously issued to make good on past obligations. I realize that boookies would still make long odds on this, but once embarked upon, sobriety is self-reinforcing and one can barely wonder what was thinking before the moment of revelation.

Anonymous said...

Maybe insanity equals nobility.

Anonymous said...


I agree that you're dead on regarding benefit cuts to entitlements. If you look backward in history (the Reagan - Tip O'Neal deal to explicitly cut benefits, the Clinton decision to implicitly cut entitlements by adopting Boskin adjustments to CPI), the politicians have cut entitlements, but don't do it until there's a crisis.

I also think the pols will cut 401(k) benefits by flipping roth 401(k)'s into regular 401(k)'s and giving beneficiaries basis in them to the FMV of the 401(k) at the time of the flip.