Saturday, June 14, 2008

Bill O'Reilly: Fascist

When it comes to gas prices, Fox News icon Bill O'Reilly is a fascist.

I can agree with maybe a majority of things O'Reilly says, and that doesn't make me a fascist, and when Adolph Hitler was painting a still life, he was not in that act a fascist. But Bill O'Reilly is a fascist when it comes to gas prices, and this is seen in his latest column for Human Events entitled "Oil and Trouble." He begins,

This week, Republican senators blocked a Democrat-sponsored bill that would have imposed a "windfall profits" tax on the five major oil companies. Since these companies made about $36 billion in profits in the first quarter alone, "windfall" may be understating it.

"Windfall" is defined by InvestorWords.com as:

Money received which was not expected and not a direct result of something the recipient did.

It's ridiculous to ignore all the human labor involved in exploration, drilling, shipping and refining billions of barrels of oil a day, humans whose paychecks have to be cut before a single dollar in profit is received from a gas pump, and the cost of billions of dollars invested out of profits into drilling, shipping, and refining infrastructure to provide oil products in the future.

Calling oil profits "windfall" profits is immoral.

O'Reilly continues:

The GOP says the bill would not have lowered gas prices as any tax punishment would be passed along to gasoline consumers. But let me break this to the Republicans gently: Folks are angry with the oil companies. Unless you guys can help bring some relief to beleaguered American working people, the Democrats will wipe you out.

"Folks are angry with the oil companies." And Bill O'Reilly is whipping up this anger. Read my paragraph above about why oil company profits are not "windfall" profits. Why is it folks are not grateful to the oil companies for all they do? This question of character, virtue and morality is possibly one of the most important issues facing our nation. The politics of both Democrats and Republicans, fed by demagogues like O'Reilly, is rooted in envy rather than Godly character.

And O'Reilly panders to and feeds this ignorant anger.

Oil Prices, when adjusted for inflation, are not much higher today than they were 20 years ago. Most price spikes have been caused by U.S. military actions in the middle east.

Americans have been trained to blame corporations for "higher prices," when the real culprit in the long run is the declining value of "federal reserve notes." If Washington bureaucrats were following the Constitution (like they took an oath to do), then only gold and silver would be legal tender in this country, and gas prices would not be much higher than they were decades ago. The U.S. Constitution prohibits paper money, or the emitting of "bills of credit." (Art. 1, § 10, ¶ 1) That provision of the Constitution reads:

No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver a legal tender in payment of debts; pass any bill of attainder, ex-post-facto law, or law impairing the obligation of contracts; or grant any title of nobility." ...

In Federalist Paper No. 44, possibly the most authoritative source for constitutional interpretation, Madison explained the provision:

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. ... No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.

Paper money is immoral. Washington D.C. is the greatest source of immorality and ignorance in our country, if not the world. As a result, the average American citizen today lacks a "love of justice and [a] knowledge of the true springs of public prosperity."

Here's what passes for economic analysis from the mainstream media:

The oil apologists say it's a "supply and demand" thing. Sure. Here's a bulletin: When you limit the supply, as OPEC is doing, the demand will skyrocket. Yeah, China and India are using more oil. Yeah, the U.S. dollar is weak. But in most competitive businesses, if your customers want more product -- you put out more product. Not in oil. OPEC keeps production down to maximize profits.

Economics bores readers, but ignorance costs more at the pump. Even the most basic law of economics -- the law of supply and demand -- isn't understood by the leaders of America (Bill O'Reilly, Sean Hannity, et al). O'Reilly says if you limit supply, demand will skyrocket. Suppose my business annually produces one thousand Drivers Test Manuals in braille, and (surprisingly) one hundred are actually purchased. If I limit the supply to one hundred produced each year, will the demand for braille driving manuals "skyrocket" as a result?

What O'Reilly presumably meant was that if you reduce the supply produced while consumer demand stays the same, the price will skyrocket.

O'Reilly ignores all this: "Yeah, yeah," he says.

Then O'Reilly compounds the confusion by bringing in the issue of profit, claiming that OPEC keeps production down to maximize profits. This is a fallacy.

When automobiles were first manufactured, only a few were produced, and only the rich could afford them because the price of the first few cars was very high. Henry Ford changed all that with his process of mass production, which increased the supply of cars, lowered the price (making cars available to the middle class), and made Ford a billionaire. On O'Reilly's theory, Ford would have made more profit and become richer by only making few cars for the rich instead of millions of cars for a million times more people. Who was right, Ford or O'Reilly?

Now, based on this middle-school level understanding of economics, O'Reilly goes on to make public policy proposals that would have made Hitler proud:

Congress must mandate by law that American car and truck manufacturers begin to produce a high percentage of flex-fuel vehicles. Once that law is passed, gas stations will begin installing alcohol-based fuel pumps. Congress must also drop import tariffs on alcohol-based fuel so countries like Brazil can sell them to us.

I'm all for dropping tariffs. Let consumers decide what kind of gas they want to buy, not Congress. But it's precisely because I believe in choice that I'm astounded at the pure fascism proposed by O'Reilly. Congress should tell Americans like Henry Ford what kind of cars they can make? The schoolboy dream that begins, "I want to grow up to be . . ." is interrupted by "whatever Congress tells you to be"?? This is utterly astounding. Fascism is actually a form of slavery -- indentured servitude.


O'Reilly wants every car to be a Volkswagen, which literally means, "The People's Car." The government will tell your business what kind of car to make, and the government will tell you what kind of car you can buy. Welcome to the land of the "free" and the home of the envious.

Ultimately, liberty depends on morality. Liberty depends on gratitude. Covetousness and envy cloud out gratitude, and send us howling to Washington for "the government" to be our Savior.

7 comments:

BillM said...

Supply and Demand Sets Oil Prices – If You Believe That, I have a Bridge in Brooklyn I Want to Sell You!

Next time you have to buy diesel fuel, home heating oil or $4 plus gasoline. Ask yourself this question: Are crude oil, heating oil and gasoline necessities, or just ordinary speculative commodities? If they're the former, how can they be the latter? How can anyone buy into supply and demand setting oil prices when the markets are overwhelmed by everyone from small speculators, to institutional investors, to commodity index funds and large hedge funds and to Wall Street banks buying massive amounts of oil contracts? We also have the b.s. of “geo-political” concerns and government disseminated bogus “inventory” numbers. More on these factors at www.useconomycrisis.com

Kevin Craig said...

Thanks for the comment, Bill.

I believe good speculators are good for America. A good speculator correctly speculates that the price of a commodity will be higher in the future, so he buys at today's low prices.

In this way he raises the price of the commodity, preventing wasteful consumption, conserving resources, and making them available in the future at a lower price. See the article "Conservation and Speculation" from The Foundation for Economic Education.

Thomas Woods puts it this way:

"The speculator helps society adjust to changing circumstances by buying in anticipation of resale in the future when scarcity is expected to be greater and prices higher. In that way, he ensures additional supplies will be available in the future, diverting them from present use to their more urgently demanded uses in the future, and thus helps to smooth out disruptions caused by decreases in supply."

Bad speculators are bad for the economy, since their poor economic forecasting only contributes to the problem. They erroneously forecast that there will be a surplus in the future, and that prices will be lower, so they seek to sell in the short-term, adding to future shortages. Fortunately, in a Free Market, bad speculators cannot compete with good speculators, and are driven out of the speculation business, and must either undergo job training to get new skills, or get a job at the airport looking through people's luggage.

For further study:

The Benefits of Speculation The Foundation for Economic Education

Stockpiles and Speculators - Robert P. Murphy - Mises Institute

The Social Function of Stock Speculators - Robert P. Murphy - Mises Institute

Land Speculators The Foundation for Economic Education

Sweet Speculation The Foundation for Economic Education

I'm grateful for speculators!

BillM said...

The problem is not so much with speculators. The problem is very basic instead. Are crude oil, heating oil, diesel fuel and gasoline necessities or commodities. That simple.

Kevin Craig said...

I don't think "necessity" is a strictly economic term. Whale oil might have been considered a "necessity" 150 years ago. It was replaced by kerosene, another commodity which is also no longer a "necessity." In 2108 it should be as unusual to have a petroleum-burning automobile as it would be to have a whale-oil burning automobile today.

Government should take absolutely no action whatsoever to keep petroleum cheap. The real cost of oil should be known and felt by consumers (including the cost of hiring armed security guards to protect supplies and refineries in Iraq) so that consumers and investors can make informed decisions as to whether they would like to use an alternative energy source. Capitalists will then fall all over themselves to supply consumer demand for a low-cost alternative to oil.

But if oil is not a necessity, it is unquestionably a commodity. InvestorWords.com defines commodity as

"Definition 1
A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The price of the commodity is subject to supply and demand. Risk is actually the reason exchange trading of the basic agricultural products began. For example, a farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be."

Similarly, an oil company risks the costs of exploring, drilling, refining, and shipping oil products without knowing in advance what the selling price will be by the time they get the product to the market.

"Definition 2
More generally, a product which trades on a commodity exchange; this would also include foreign currencies and financial instruments and indexes."

BillM said...

“Whale oil a necessity?” First of all, it was ONLY used for lighting and it peaked sometime in the 1840’s at around 15-20 million GALLONS – not barrels and most Americans didn’t need it – they got along quite well with candles and other illumination fuels!

Secondly, because whale oil was limited (only so many whales could be caught) there were other fuels available for lighting such as camphene, coal oil and, yes, eventually kerosene around 1860 +/- a couple of years.

You state: “I don't think "necessity" is a strictly economic term.” No kidding! Comparing “necessities” to “commodities” is like comparing “life to death”. The definition of “commodity as you quote from InvestorWords.com is right on, but it is irrelevant to the question of whether or not crude oil and its refined products are necessities.

The definition of “necessity” according to “YourDictionary.com” is a lot more to the point.
1. the power of natural law that cannot be other than it is; natural causation; physical compulsion placed on man by nature; fate
2. anything that is inevitable, unavoidable, etc. as a result of natural law; that which is necessary in natural sequence
3.
a. the compulsion or constraint of man-made circumstances, habit, custom, law, etc.; logical or moral conditions making certain actions inevitable or obligatory faced by the necessity to earn a living
b. what is required by this social or legal compulsion
4. great or imperative need
5. something that cannot be done without; necessary thing: often used in pl.
6. the state or quality of being necessary
7. want; poverty
Please note #5 above

Let me ask you a couple of questions and I would hope that as a candidate from a party that is not bought and paid for, like the Democrats and Republicans you have the courage to answer directly and honestly.

Could you survive without speculators, commodity index funds, large hedge funds, and Wall Street investment banks? Could the economy survive?

Could you and our country, in today’s world, survive without gasoline, heating oil, diesel fuel and petroleum based lubricants?

And, let’s end with a little humor. Figure out how to develop a “whale-oil burning automobile” as part of an alternative energy plan and we’ll hunt the bastards to extinction!!

Finally, thanks for allowing me to post on your forum. Good luck in your quest for office.

Kevin Craig said...

Thanks for the good wishes, Bill.

You wrote:

“Whale oil a necessity?” most Americans didn’t need it – they got along quite well with candles and other illumination fuels!

In 1908, petroleum and automobiles were not considered a "necessity." Americans got along quite well with horses. In 2108, petroleum will not be considered a "necessity" -- unless the petroleum industry controls the use of force ("the government") and coercively prohibits the development of better energy sources -- like nuclear -- in a free market.

In fact, this may have started happening 40 years ago. George Reisman has described how government intervention during the Arab Oil Embargo in the 1970's caused shortages and economic chaos. Had the market been allowed to adjust freely, there would have been no shortages, and no lines at the pump. Reisman's book has been incorporated into his newer book, Capitalism. Reisman's books are among the most readable economics books I've ever read.

What Reisman shows is that speculators are more of a necessity than petroleum. By this I mean a Free Market -- in which everyone, including speculators, can buy and sell -- permits the development of new energy sources to replace old ones. Without a free market which permits speculators, we would still be stuck in a whale oil economy.

Looking at the big picture over the centuries, we must conclude that petroleum is not a human "necessity." Right now, today, we can say it's better than whale oil. But the worst thing we can do is ask the government to lock in today's alternatives and protect them from future alternatives about which we may speculate.

Speculation is the door that leads to the future.

Freedom is the only human necessity, because it is the genie that grants our wished-for commodities.

Thanks again for commenting on my blog.

Kevin Craig said...

Former Clinton advisor and Fox News commentator Dick Morris is also on the warpath against "speculators." He suggests that McCain promote legislation which puts Congress in charge of regulating all commodity speculators.

Right. Congress does such a great job keeping government out of debt and the price of government services low, I'm sure D.C politicians can do a better job of creating an efficient oil industry than those greedy capitalists.

Someone has suggested that since government calls its own spending an "investment" in our future (or some such rhetoric), every spending bill to come out of Congress should contain this provision, signed by those who supported the bill:

By voting for this legislation I hereby affirm my belief that the information and knowledge possessed by me and 434 other Congressman-"investors" is greater than the collective knowledge and information possessed by a Free Market of 150 million individual investors, pension fund managers, insurance company executives, mutual fund administrators, and brokers, all of whom do not have the luxury of obtaining investment funds by passing a law, but must earn their investment dollars.