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Jun 26, 2010

DIY Stimulus Policy

Fred:  What is your analysis of stimulus spending?
Economist:  "4=2+2" so stimulus will increase GDP and jobs.
Fred:  Are you nuts?

Economist:  Oh, I meant to say "GDP = All production in the U.S.", so stimulus will increase GDP and jobs.
Fred:  I don't get it. That's just a definition.

Economist:  Oh, I meant to say "GDP = C + I + G + (X - M)", so stimulus G will increase GDP and jobs.
Fred:  That's better.

This is one of our most impressive installments of DIY. Government economists support giant "stimulus" spending to end our recession. We explain the tricks of the professionals, so that you can create fiscal (spending) policy at home.

Don't panic. This is a "high concept" idea that would be less impressive if it were complicated by details. Just appreciate the grandeur of analyzing the entire production of 300 million people, simply by giving it a name.

Don't be afraid of the few formulas you will see. They are only a fancy way to add things up, and they look great on a cocktail napkin. Any formula will amaze your friends and show your deep insights into finance. This is exactly the same effect enjoyed by graduates of Harvard Business School.

The GDP Formula For the Economy

The detailed interactions that describe the U.S. economy are many, complicated, and mostly not understood.

In the meantime, many macro-economists use a short formula which is easy to remember. They use it to promote deficits, spend $789 billion on stimulus, impress the non-PHD's, and win arguments on blogs. You can use this formula as an amateur. It is merely addition, but it does require memorizing the letters (the variables or quantity names) to show that you are unusually intelligent.

 Y (same as GDP) = C + I + G + (X - M)

You can casually say at a party "Stimulus increases G, which increases Y and creates more jobs throughout the economy".  The effect is electric. Politicians will applaud.

The quantity "Y" or "GDP" is Gross Domestic Product. That is all of the goods and services produced in the country.

Just like "DIY - Garden Shed", we will build from the bottom, giving you hints along the way. Here is the foundation:

GDP  =  Total U.S. production. All goods and
        services produced during the year

That is merely a definition. We can make it less boring by slicing GDP into philosophical pieces. Really, schools award degrees in this stuff. Here is our first slice:

GDP  =  Consumption C  +  Investment I

This says that everything we produce can be assigned to two categories. "Consumption" is what we use personally, like food, clothing, and automobiles. "Investment" supports businesses to produce those goods and services, like supermarkets and automobile factories. There are some gray areas, but why worry? The macro-economists don't.

How does government fit in? We slice again:

GDP = Consumption C + Investment I + Govt Spending G

Consumption is spending for individual use, also called consumer spending. Investment is spending to support businesses, like buying machinery. Government Spending is everything purchased by government.

Notice that there is no "Government Investment". We know that government builds a few useful things like bridges, but government doesn't try to make a profit (more is the pity) so it is all called Government Spending.

We have left out "Exports X - Imports M" for now. You can look below for that explanation, so that people don't accuse you of reading "only that stupid DIY post".  "X - M"  is "Exports minus Imports". It is there mostly to show that you understand the complexities of the economy, after completely ignoring all of those complexities by relying on this stupid formula.

That is the GDP Formula. I know you were looking forward to more complexity and hours of study. You may even be angry, thinking now that this whole post is a big joke. You think it can't be this simple. Our leading government economists and Keynesian pundits just can't be using this simple formula as justification for their economic policy. I share your anger. Don't blame me. That is just how it is.

About GDP

Here is the GDP Formula again. You will find out how our government uses this formula. Sadly, this is not a joke.

GDP = Consumption + Investment + Government Spending

This formula is simple and absolutely true. People are dazzled by its truth, but are not aware of how useless it is. It is only a broad mental exercise for thinking about the money spent in our economy.

GDP is everything produced in our country. An economist notices that your income results from selling what you produce. You sell your effort each day to earn your salary in money. You spend your salary to buy the food, clothing, and services which support your life. Your income in cash comes from your share of the goods and services you help to produce. So, production and income are two sides of the same coin. All production represents someone's income.

In general, more GDP is good because more production means more income to the people of the country. Government economists look for ways to increase GDP, especially during recessions. They most often find their answer in the GDP Formula above. They see that GDP would be larger if one or more of its parts were larger.

Consumer Spending

Economists note that consumer spending is 70% of the economy. This means that about 70% of all purchases are by people for their personal benefit. Looked at another way, 70% of what is produced (GDP) is made for people to use personally.

During recessions, people spend less on consumption because some are out of work and others want to save more, in fear of losing their jobs.  GDP is produced by people, so higher GDP is associated with more people working. Government economists look at the GDP Formula and conclude that if people would spend more on consumption, there would be higher GDP and more jobs, ending the recession. This extra consumption would be economic "stimulus".

It is difficult to encourage people to consume more. A few tries have been made with Cash for Clunkers for buying autos, and cash subsidies for buying homes. But, people can't consume much more if they are out of work.

Both presidents Bush and Obama gave one-time tax refunds or payments to people. These didn't do much for the economy. Government economists complained that people saved most of it instead of spending it all, reducing the "stimulating" effect.

I don't understand why saving (investment) is supposed to be worse than spending. According to the GDP Formula, they add equally to GDP. I suppose that is just inconvenient to what politicians want to do. They want to spend.


Nope. The government doesn't know how to invest, and it hates making a profit. Investment is done by the prosperous business people that the government takes taxes from. Government isn't about to give back that money for investment, followed by "trickle down" prosperity.

Government Spending

Now we are on to something. Government economists interpret the GDP Formula as showing that government spending increases GDP. That is something that government can do with a few votes, and spending is something that all politicians like to do. Any recession creates calls for much more government spending, and they do it.

The Personal Spending Formula

I said above that the GDP Formula is true but useless. Let's get a feel for that by looking at a smaller, friendlier, more understandable relative  The Personal Spending Formula:

My Spending
   =  Restaurant Meals + Savings + Other Spending

In general, more of My Spending is good because I enjoy most of the things I buy. I often daydream about buying more things to be happier. The Personal Formula seems to give me guidance: I should buy more restaurant meals to increase My Spending. In fact, I might think it tells me that I should eat out all the time, and take friends and family with me. More spending on restaurant meals is good, and the more the better.

I hear some shouting in the audience, that I can't just increase what I spend on restaurants. I would have to decrease what I save or decrease what I spend on other things. I might enjoy more restaurant meals, but I would have to cut elsewhere. In fact, I can't really change My Spending at all (!) because I have properly included Savings in the formula.

By definition, my entire income is equal to My Spending, and I can only allocate my income to different purposes. I can't raise or lower My Spending by spending more or less in one category, because I must adjust the other categories. The formula is correct, but it can mislead me about how the quantities affect each other.

To increase My Spending, I would have to work more hours, or find a better-paying job, or save/invest in a growing company. None of that is represented in the Personal Spending Formula.

I could buy more restaurant meals if I cut Other Spending. I might spend less on maintaining my car and use the difference for more restaurant meals. But, my car might break down, and that strategy could work out as a bad choice. Whatever happens, the Personal Spending Formula will reliably add up the results, but it does not say what I should do or what will happen.

An increase in my income would allow me to spend more in one or more categories. The Personal Spending Formula doesn't tell me that I can increase my income by purchasing more restaurant meals or anything else. That would be a crazy interpretation of a formula that merely adds up my spending choices.

The Personal Spending Formula is absolutely true, which impresses people at first glance. But, it is worthless for guiding me to earn more income. It only says that I must spend less in one category if I spend more in another category.

Borrowing Savings For a Price

If I want to buy a new television for $1,000, and I don't have enough in savings, possibly I can borrow the money. This works if I can reliably save enough to pay for the TV plus interest, and I don't want to delay the purchase until I have saved the money.

I could buy the TV for $1,000, and pay $80 per month for the next 15 months to pay off a $1,000 loan. My total cost to buy the TV this way would be $1,200. So, I could pay an extra $200 to the lender to buy the TV now, rather than save $80/month for 12.5 months to buy the TV later.

It seems that I have increased My Spending by $1,000 by getting that loan. Actually, I increase Other Spending by $1,000 when I buy the TV, and I decrease Savings $1,000 by getting the loan. Savings has become negative.

Negative savings means that I owe money. I put less into savings over time than I have now taken out. I will pay about $67/month into savings as I pay off the loan, and I will pay the loan company about $13/month interest for the use of the money. Savings will become $0 after 15 months (assuming it was $0 to start), the loan will be paid off, I will own the TV, and I will have paid about $200 to borrow enough savings to buy the TV sooner rather than later.

This is interesting. "My Spending" did not change because of the loan. Other Spending went up by $1,000, and Savings went down by $1,000, offsetting each other. This contrasts with the usual assumption that taking out a loan increases "spending". In fact, loans are a transfer of savings for a price.

This personal accounting agrees with what the society sees. I bought $1,000 more of something, but the lender bought $1,000 less of something. These cancel out for the society, and they cancel out in a proper personal accounting.


I confess that I introduced some confusion, but only the same confusion that government economists use. The Personal Spending Formula should have looked like this:

My Production or Income
   =  Restaurant Meals + Savings + Other Spending

It is entirely true that Production = Income = Spending. We can account for Production by either valuing everything that is produced as GDP, or adding up all Income, or adding up all Spending (when Savings are properly accounted as a category of spending).

Here is the confusion. When I say   "My Spending = . . .",   that choice of word gives the impression that I can change what I spend in total. "Spending" seems to be something that I can do more or less of. In fact, when we properly account for transfering money into Savings/Investment, I can't change the total of My Spending, I can only allocate it between Restaurants, Savings/Investment, and Other Spending.

If I had said   "My Income = . . .",   then it would have suggested the correct conclusion from the start. "My Income" depends on what I earn, and I can only allocate it between different types of purchases, including Savings/Investment. It becomes much clearer that what I earn doesn't change because I spend more or less on consumer goods rather than on Savings/Investment.


Here is the GDP Formula again:

GDP = Consumption + Investment + Government Spending

It should look different to you now, after reading the section above.

There, we saw that the Personal Spending Formula is a true representation of how I might allocate my income among different categories of goods. It is useless for deciding what I should do to increase my income. It doesn't express or relate any of the complexity in my life that determines what my income is or what it could be.

The GDP Formula has the same qualities. It is definitely true. But, it is merely a true statement about how all GDP (production) can be allocated to various categories, in principle, philosophically.

It is crazy to use the GDP Formula to claim that increasing Government Spending will increase GDP. The GDP Formula only says Government Spending buys some part of what is produced. It says nothing about how we could produce more or increase employment. The GDP Formula says nothing about the immense complexity within our society. If anything, the GDP Formula tells us that there is a tradeoff, that more government spending requires less personal consumption and/or less investment.

Government economists say that the government is in a special position to create "stimulus", to borrow money and increase spending now to create jobs now. Although spending will go down in the future when the loans are repaid, they say the economy will have time to recover.

There is a problem in this reasoning. Borrowing does not increase "spending" overall. The government spends more, but the lender spends (invests) less to support business. It is mostly a wash. If anything, resources lent to the government are applied with a lower productivity than they would be by individual investors in our society, reducing employment.

Your car has a speedometer that reports how fast you are going. You would be crazy to think that you could increase your speed by grabbing the needle and pulling it toward 50 mph.

The GDP Formula reports (only in principle) how production is allocated among uses. You would be crazy to think that you could increase production merely by allocating more of it to the use of government. That is what increased government spending does.

The GDP Formula is a magic trick. Observers see that the formula is true by definition. Then the magician economist interprets the formula in a crazy way to support the taxing and spending desires of the politicians who employ him. Assuming that government economists are smart and college educated, I think that they are lying, not merely mistaken about this crazy interpretation of the GDP Formula.

The Complete Keynes Formula

Total Production Y = 
  Consumption C + Investment I + Govt Spending G 
  + Exports X - Imports M

The Keynes Formula divides all production within a country into categories. Consumption + Investment + Government Spending seems to include everything, so what is (Exports - Imports) doing there?

The Keynes Formula accounts in principle for every spending transaction within a country and assigns each transaction to Consumption, Investment, or Government Spending. But, usually that is not quite equal to the goods and services produced within the country.

If a French company buys from the U.S., the spending is done in France for goods manaufactured in the U.S. This foreign spending on U.S. exports should be added to U.S. GDP.

If a U.S. company buys from France, the spending is done in the U.S. for goods manufactured in France. This local spending on French imports does not represent U.S. GDP, so it should be subtracted from the spending figures.

So, if we start with "All spending transactions within the U.S.", we can add exports and subtract imports to get the true dollar value of U.S. GDP (Total Production Y above).

Showy Complexity

The Keynes Formula is contrived.

First.  The division of GDP into Consumption, Investment, and Government Spending is arbitrary. It seems to me that Government Spending is in the formula merely to refer to it as a component of political strategy.

I could as easily write this formula:

GDP = Consumption + Investment 
      + Video Games + Cat Food

Then I could argue for increasing GDP by subsidizing the purchase of video games and cat food.

The categories of spending seem analytical, but they aren't used for any further analysis. There is no discussion about which is better, and there couldn't be; these terms are too vague to provide an analytical insight.

Keynes did not make a distinction. He famously recommended distributing cash to the public, or paying them to dig holes and fill them up. Any means of increasing consumption, investment, or government spending was supposed to increase overall production. Of course, politicians have always preferred government spending.

Second.  The inclusion of "Exports - Imports" adds unneeded complexity. Our government certainly buys some foreign goods, and sells government services to foreign countries. So, part of "Exports - Imports" is Government Spending. Who cares? The Keynes Formula is only used to incorrectly claim that increased Government Spending must increase GDP. That fallacy is the central point of this post.

The value of including "Exports - Imports" is to present another absolutely true and complex fact about GDP accounting which is irrelevent to the discussion. It puts another gloss of legitimacy on the incorrect interpretation of the Keynes Formula.

Third.  Keynesian economists have analyzed the failure of one-time tax rebates or subsidies to "stimulate". They conclude that the public didn't spend enough of their new money. They saved much of it or paid down debt, which is another way of saving.

But, the interpretation of the Keynes Formula by Keynesian economists would make consumer spending, saving, and investment equally "stimulative" and equally powerful in raising GDP. This bias toward spending and against saving is not part of the Keynes Formula, but they illogically use the Keynes Formula as a quick justification for their political preferences.

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Keynes, Digger of Holes
12/2008 - EasyOpinions

No one should trust a theory that predicts greater prosperity from digging holes. Yet, this is the theory by Keynes that Obama is following, and that many past presidents have followed to forcibly change our society. We will supposedly create even more wealth in the future by wasting our current wealth today.

I know. I must be wrong. No one could believe such a thing. Certainly no president of a great country would listen to a dead crank who spouted such nonsense. But, there it is.

There is a story at the link about Keynes dirtying some towels in a washroom and claiming that he had just helped the economy by creating work.

How many obviously false statements must a person make before the quality of his entire thought is in question? The limit has not yet been set for Keynesian economists and politicians.

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The Keynesian Accounting Trap
06/17/10 - 12/21/09 - Mises.org by Robert P. Murphy

[edited]  I think Krugman [a Keynesian economist and pundit] is committing a very basic error. He is confusing the Keynesian accounting identity [the GDP Formula above] with a causal theory of how changes in one of the variables lead to changes in the other variables.

This formula very often misleads people that the way to increase output [GDP] is to try to increase one of the variables on the right side. But this is a fallacy. The accounting identity must always be true, but it can remain in balance if other variables on the right side fall.

Krugman is wrong even within the Keynesian framework. For example, Keynesians often use this formula to argue that increases in government spending are necessary to "fill the gap" when private consumption and investment are below "potential GDP." They naively assume that boosting Government Spending on the right side of the formula will lead to an increase in GDP on the left side. But, that relies on the Keynesian theory of how the macroeconomy works; it doesn't follow from the formula itself.

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Bigger Government Is Not Stimulus
12/15/08 - Cato Institute by Dan Mitchel   (YouTube video 7:29)
A video by the Center for Freedom and Prosperity Foundation.

Both theory and evidence show that allowing politicians to spend more money does not produce better economic performance. Keynesian theory doesn't make sense. Government can only put money into the economy by first taking it out as borrowing. Transferring the economy’s money from its left pocket to its right pocket is not a recipe for growth.

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Macroeconomics is Astrology, Not Science
01/30/09 - EO -> RealClearMarkets

Frank J. Tipler is Professor of Mathematical Physics at Tulane University:

[edited]  The inability of macroeconomic theories to make accurate predictions about an entire economy means that those economists do not know what they are talking about. Our leaders are being advised by macroeconomists who haven’t got a clue where they are leading us. Their actions may lead us out of the current recession, or they may lead us into a depression as bad as the Great Depression.

Jun 25, 2010


A Doctor Describes Government Management of Medical Care
07/03/10 - Big Government by Bret Jacobson  (YouTube video 3:37)

This doctor treated Medicare Patients, and was routinely denied payment. Medicare said: "We can't pay you right now, the computer is down". The computer was down for 18 months when she gave up.

This is an update to Government Management of Doctors.

= = = = = =

Fred:  We'll build wind turbines everywhere and store the excess energy in hydro facilities.
Mike:  That will work for places that are flat and windy, next to mountains that will support a hydro dam. What about the other places?
The Myth of Alternative Power and Hydro- Electric Storage
06/17/10 - ChicagoBoyz by Shannon Love
[edited]  "Alternative energy" can’t be used for baseline power because it is not reliable, and we can’t make it reliable by storing the electricity that it episodically generates.

What about energy storage in a hydro-electric dam? Pumps would use alternative power to lift water behind the dam. When wind or solar power is not available, we could drain the water through turbines to create electricity.

Suppose alternative power should produce 30% of our current baseline power needs. If alternative power (optimistically) operates 75% of the time, we would need a 25% stored reserve. 25% x 30% is 7.5% of our total electric power needs.

Coincidentally, hydro-electric power today produces 8% of U.S electricity. If we want to use hydro-electric storage to make alternative power reliable, we will have to recreate 93% of the generating capacity of every current hydro-electric facility. That includes Hoover Dam, the entire TVA, and all of the dams in the Rocky Mountains.

All the places with the geography and water to produce hydro-electric power are already in use. Worse, the places that produce significant amounts of solar and wind power, the desert and the plains, are very far from that geography, requiring expensive power-line connections.

The full post has more information and many interesting comments.

This is an update to Problems With Green Energy

= = = = = =
Increases in the Minimum Wage Kill Job Creation
06/15/10 - HotAir by Ed Morrissey

[edited]  The Center for Freedom and Prosperity offers this 4:25 video about the destructive results of the minimum wage.

Democrats increased the minimum wage in steps from $5.15 to $7.25 per hour. They claimed to be helping the young and poor.

The minimum wage did no direct harm when it was less than the usual wage for entry-level jobs. When the minimum wage rose above that wage, employers stopped offering those entry-level jobs.

This is an update to Minimum Wage Prosperity

= = = = = =
ObamaCare Will Increase Premiums, Change Coverage, and Reduce Wages
06/14/10 - Cato @ Liberty by Michael F. Cannon

Fred:  I took this job because of the great healthcare plan, even though it paid less.
Mike:  So, be happy. Now you will get Obamacare, and you will be paid even less.

ObamaCare increases health insurance premiums and requires the employer to pay that increase. But, the employer pays this cost out of the production of the employee. So, the employer must offer a lower wage or fire the employee. The employee will likely blame the employer, not ObamaCare.

[edited]  ObamaCare will raise health insurance premiums even higher than they would have risen. If employers or consumers try to reduce their coverage and costs, they will lose their “grandfather” protections, and be forced to purchase even more coverage under ObamaCare mandates.

Employers are required to sustain "their" contribution to the cost of health benefits. This hides ObamaCare’s effect on health insurance premiums.

Health economists almost all agree that the “employer contribution” is a fiction. Employers merely deduct what they pay for health benefits from the overall compensation offered to employees. In other words, the employee pays for his own health benefits. [The employer only writes the check for him.]

ObamaCare’s increasing costs will appear as lower wages offered. Workers would likely blame ObamaCare for rising insurance premiums, but are less likely to blame ObamaCare for stagnant take-home pay.

This is an update to Company Paid Health Insurance is Part of Your Salary

Jun 21, 2010

EPA Purity of Essence

Fred:  (crawling in from the desert) Water, water.
EPA:  My poor man. Yes, we have water. Do you have a Desert Waste Disposal Permit?
Fred:  (more weakly) Water.
EPA:  It seems not. If I give you water, you are likely to create more waste. The regulations require a permit.
Fred:  (raises questioning eyes) You ... your waste?
EPA:  Oh, right. I use the trailer behind me. Sorry, EPA personnel only.

Our government is supposed to be a giant organization for The Good. Government collects information and regulations that are supposedly vital to a safe, productive economy. Government supposedly collects resources and action plans to react quickly to mistakes and disasters.

But, when put to the test, we find that government employees and agencies do not want to act, for fear of making a mistake. And they won't bend any rule, regardless of reason or consequence. They know that government runs on rules. You can't break a rule just because it is reasonable or required. Sorry people. Better luck next time.

Tell me again, why should we empower and trust the type of organization called "government"?

EPA and Dutch Skimmers
06/20/10 - ClimateAudit by Steve McIntyre
Article:  Dutch response team on standby

[edited]  Dutch skimmer ships process an oil spill to extract the maximum oil in the minimum time. They use huge booms to sweep and suck the oil from the surface of the sea. They extract and store most of the oil, and discharge slightly oily water that is not at drinking water standard.

The U.S. Environmental Protecion Agency (EPA) refused the Dutch skimmers because regulations prohibit discharging oily water, even if processing extracts almost all of the oil. Americans don’t have any spill response vessels with skimmers because their environmental regulations do not allow it.

Wierd Koops is chairman of the Dutch Spill Response Group. He thinks the US approach is nonsense, because you would have to store the skimmed seawater in the tanks as well. We have to get as much oil as possible into the storage tanks, along with as little water as possible. So we pump the separated water overboard, containing drops of oil.

US regulations are contradictory. Releasing oily water is not allowed, but spreading chemicals to dissolve the oil in the seawater is allowed. The oil is naturally broken down quite quickly in both cases. But, experiments showed that dissolving the oil with chemicals caused more damage than the oil itself.

You have to clear up the oil at sea, before the oil reaches the mud flats and salt marshes. All you can do then is dig the oil up [with the sand]. That response is worse than the problem.

The EPA restriction on operating the Dutch skimmer ships has been known for years. Why is there still a prohibition on taking dirty water from the sea and returning much cleaner water? It seems that our government is incapable of making a practical rule. The requirement to "never discharge dirty water" seems like a religious requirement, rather than a general goal which has practical exceptions.

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Watchdog says EPA is covering up the toxicity of Gulf oil dispersants
07/20/10 - Digital Journal by Stephanie Dearing

[edited]  Hugh Kaufman is senior policy analyst at the Office of Solid Waste and Emergency Response at the US Environmental Protection Agency. He says the EPA is covering up the toxic effects of the dispersant Corexit used on the oil spill.

Kaufman [edited]:  "People and wildlife having contact with Corexit are hemorrhaging internally. That’s what dispersants are supposed to do. EPA now says that they really don’t know how dangerous it is, even though the label tells you. It is being used to protect BP's economics, not the environment."

Both types of Corexit products being used in the gulf were banned in the United Kingdom for such use years ago. This information had been in a New York Times article, Wang said, but had been pulled later. Nearly two million gallons have been sprayed on the oil spill to date. Kaufman said the dispersant was only causing the oil to sink below the surface.

Dispersants Are Breaking Up in the Gulf
06/30/10 - CNN U.S. by Wire Staff

[edited]  The EPA in May ordered BP to cut back its use of Corexit due to concerns about its safety. It wanted BP to use a different dispersant, but BP said no safer products were available in large enough quantities.

The EPA considers two million gallons of dispersant to be safe enough, although dispersants are not completely safe. Up close, dispersants are dangerous. It seems that dispersants make the oil less visible, dispersing it throughout the seawater below. So, why the rule against using Dutch technology skimmer ships, which add nothing dangerous to the seawater and collect useful oil in addition?

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Coast Guard Shuts Down Oil-Skimming Barges
06/17/10 - HotAir   Via ABC News

[edited]  Eight days ago, Louisiana Gov. Bobby Jindal ordered barges to begin vacuuming crude oil out of his state’s oil-soaked waters. Today those barges sat idle, even as more oil flowed toward the Louisiana shore.

Jindal: “It’s the most frustrating thing. Yesterday morning we found out that the Coast Guard halted all of these barges."

The Coast Guard needed to confirm that there were fire extinguishers and life vests on board. It had trouble contacting the people who built the barges.

The Coast Guard spends much effort checking pleasure boats to verify that people have the proper safety equipment. This valuable mission must be high on their list of things to do when they see a boat, even a 100 foot barge engaged in a vital mission to protect the LA coast. Well, the rules are the rules.

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Obama Orders Louisiana To Stop Building Berms
06/23/10 - Quando.net by MichaelW

[edited]  Louisiana has been building berms [rows of sand] about a mile out from the coast to halt infiltration of oil into its wetlands and fishing areas. This process was first delayed by federal red tape. The state has permits in hand, but the US Dept. of Fish and Wildlife is now ordering this to stop at midnight Wednesday.
The Feds Latest Attempt to Kill Louisiana
06/23/10 - SoItGoesInShreveport by Pat Austin
[edited]  I’m trying to understand the “coastal scientists” who say that the berms will “change tidal patterns” and lead to more long term erosion. If the islands are killed off by the oil, what difference does it make?

It seems that the feds want to cripple Louisiana’s response to this crisis. Gov. Bobby Jindal said long ago (paraphrase): If you’re not going to fix it, get out of the way and let us do it ourselves!

We could get the idea that Team Obama is trying to neutralize Jindal’s response, as if Obama were threatened by Bobby Jindal.

Porter Clark presents another possibility: "Any sufficiently advanced incompetence is indistinguishable from malice".

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The Government's Catastrophic Response to the Oil Disaster
07/09/10 - Reason by Jon Basil Utley

[edited]  Washington is almost criminally inept, compounded by the negligence of BP. Washington’s reactions are causing greater damage than the spill itself.

Extreme environmentalists in the Obama Administration have the declared agenda to shut down all offshore oil drilling, in Alaska as well as the Gulf. The Sierra Club has bragged that it helped to shut down all new coal power plants. Other environmentalists remain pleased that the Three Mile Island crisis ended building new nuclear power plants.

CNN reports that almost all new drilling has been suspended for at least two months. This includes shallow-water wells in less than 500 feet of water, despite Obama's prior statement that drilling such wells would continue.

Interior Secretary Ken Salazar has delayed permits for current drilling operations, despite that thousands of deep-water wells have been drilled successfully. Obama and Salazar falsely claimed that their desired six month shutdown had been supported by a panel of experts.

Salazar and his gang may be ignorant of business. They may shut down the sophisticated flow of supplies and men, believing they can later restart that flow like flipping a switch. This may bring financial ruin to smaller companies.

My sources estimate needing at least two years to restore Gulf production to its pre-suspension levels. Deep-water drilling rigs cost at least $500,000 per day. They are immediately being sent to work in Africa and Asia where they are wanted. It will take months or years to bring them back. Some 100,000 high-paying jobs are at risk. Already, the number of deep-water rigs has dropped by 23 from 42 to 19, a 55% decline.

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BP Relied on Faulty U.S. Regulatory Data
06/24/10 - Wall Street Journal

[edited]  BP PLC and other big oil companies have plans for responding to oil spills in the Gulf of Mexico. They are required by federal regulators to base these plans on models prepared by the Mineral Management Service within the Interior Department. These models were last updated in 2004, and never tested for deep water spills.

Regulatory models gave very low odds of oil hitting shore. These models projected that most of the oil would rapidly evaporate or be broken up by waves or weather. Oil would not reach shore even for a catastrophic offshore spill much larger than the current one.

Congressmen last week accused BP and other companies of using "cookie cutter" contingency plans that contained many errors and omissions. Exxon CEO Rex Tillerson noted that much of the company's response plan "is prescribed by regulation, including the models that are used to project different scenarios for oil spills."

Congress constructs laws that apply after crimes and errors have occurred. Then, Congress imagines that government "regulation" is even better, because it will require safe practices ahead of time and prevent cutting corners and bad mistakes.

In reality, government regulation is heavy handed, slow to change, and applied in suffocating detail. Regulation can crowd out good practices. I can imagine that oil companies are hassled enough by regulations that offer little benefit. Then, they are reluctant to go beyond requlations in areas that are speculative, such as where oil will float after a spill.

The government plan was to have "fire boom" available to soak up oil and burn it off while it was far at sea. In reality, the government did not have this boom available, and the EPA also said they couldn't burn off the oil this way.

I don't see intelligent regulation based on logical planning and trade-offs. I see a regulatory mess, with many agencies having conflicting requirements.

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EPA Prevents Dairy Spills
06/25/10 - Cato@Liberty by Walter Olson
Referring to   HollandSentinel

In this emergency of spilled oil, the EPA tightens handling of all oils. Will olive oil be next? This will put some small dairies out of business.

[edited]  New EPA regulations treat spilled milk like oil, requiring farmers to build extra storage tanks and form emergency spill plans.

EPA regulations say “milk typically contains a percentage of animal fat, which is a non-petroleum oil. Containers storing milk are subject to the Oil Spill Prevention, Control and Countermeasure Program rule when they meet the applicability criteria.”

EPA regulations, along with all government enforced regulations, resemble a computer program that has not been tested. When unintended situations come up, the regulations eliminate jobs, and are difficult to correct using reason.

This illustrates a typical regulatory response. Government regulation and preparation failed in the very important case of the Gulf oil spill. This has produced a strong reaction in other, simpler, unnecessary cases as a demonstration that the regulators are really vigilant and powerful. Take that, you dairy farmers!

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Dr. Strangelove - Precious Bodily Fluids
The 1964 movie "Dr. Strangelove" is a must see. It made the phrases "Purity of Essence" and "Precious bodily fluids" immortal. This video clip (2:52) is the scene where Col. Ripper describes the necessity of keeping the Communists from polluting our nation's precious bodily fluids. Satire becomes reality as enforced by our EPA.

More at The Internet Movie Database