Thursday, July 10, 2014
Floponomics--How Supposedly Well Meaning Socialist Economic Policy Causes Major Long Tern Harm to the Economy
Floponomics--How Supposedly Well Meaning Socialist Economic Policy Causes Major Long Tern Harm to the Economy President Jimmy Carter's Forgotten Legacy of Destructive Economic Policy Has Cost the USA Trillions and Trillions of Dollars and Continues to Compound Nagative Effects Lex Loeb Contributor Network . Floponomics is the study of Government using it's full power and influence to make very bad decisions that cost too much money and/ or completely backfire. The power of government, even in our American democracy is awesome. It can do amazing things that no individual no mater how wealthy or well placed can do. It might seem to work very well doing something extraordinary like putting men on the moon but those same powers misdirected can cause trillions of dollars in long term damage when things do not go according to plan. President Jimmy Cater, the 39th persident of the United States of America had a real knack for misguiding the full force and power of the United States Governement. Prior to President Obama, he may is often rated as the worst president in American history. One of the biggest bungled policies of the Carter Administration was Cater's national energy policy. It was not all Carter's Fault. President Nixon was an economics moron who enacted soviet style wage and price controls to attempt to freeze war time price inflation. After Nixon came Gerald Ford who appointed a cabinet level Energy Czar in a new cabinet level department of Energy, yes a Czar long before Obama started naming 1001 Czars. President Ford appointed his energy Czar after OPEC raised prices. That was way back in 1973. What did President Ford do? He and his energy czar decided that American homebase oil companies should be punished with what were called "windfall energy taxes." The results were close to catastrophic. Instead of producing more oil to meet market demand, domestic oil company production fell as an immediate result of the the taxes imposed on them. OPEC producers had to be overjoyed at the insanely stupid reaction of the Ford Administration. What happened was capital that would have gone to increasing US oil production immediately shut off and flowed overseas to foreign oil companies that would not have the imposition of the windfall profits tax imposed on them. US oil companies also sought to move oil exploration and production overseas because they too could sell to overseas consumers without the imposition of the windfall tax as foreign profits did not immediately have to be repatriated to the US. The conditions imposed by OPEC were bad enough to begin with but only got worse. Ford seemed to Morph into Jimmy Carter in 1977 and things only got worse. Oil prices are not what they seem to be when corrected for inflation. Back in the 19th century a barrel of oil was closer to the inflation corrected value of an once of gold. Modern production methods actually lowered the cost of oil per barrel but still could make oil companies rich because of an almost geometric progression on the demand side. When you don't correct for inflation it seems that nominal oil prices are higher than they actually are. In terms of wages oil has tended to decline in real terms when it seems to rise at the nominal level. OPEC has in some ways been fighting a loosing battle. Their power to be able to export oil at lower prices made them competitive on a natural basis such that over 50% should be imported by the US just on the basis of it being at bargain prices. Going back to Ford and then Carter, a catastrophic mistake was made that cemented OPEC in power by causing the severe reduction of US capital investment in oil production when the energy policy should have been the exact opposite. The shift of us production overseas opened the doors for sovereign ownership of oil production overseas that ammounted to a substantial tax on us consumers passed on by the US oil companies. It also caused less domestic production with higher energy costs for transporting it overseas and putting the seas at risk from oil spills. One might not have expected President Jimmy Carter to actually make things worse than President Ford did but Carter had a knack for turning political sermons into destructive powers of big government unleashed to cause the most maximum long term harm possible. The US Stock Markets were in a slow motion crash durring the Ford and Carter years that did not end until Ronald Reagan spent a few years in office. It was one of the worst market crashes in percentage terms since the great depression and in american history . It happened in sympathy with the post vietnam war recession which is a normal market occurance after industry adjusts for a war having ended. Carter was seemingly powerless to stop surging inflation but he had great ideas to make the economy even worse with gas rationing, alternative energy tax scams and of course big new wasteful spending programs. Worst of what Carter did that harmed the US for decades to come was continnuing the Departemnt of energy facade in the cabinet and helping to shut off the incentives to develop domestic sources of natural gas and oil to domestic oil companies. By the next century we came full circle with cries for an energy policy again . This time peak oil was being popularized . A theory that the world would run out of oil if we did not act to conserve it and for some reason stop more of domestic production as a result of these fears. Deja vu Ford ? Hello Jimmy Carter? .