Oil price mythology keeps Louisiana behind

Economic illiteracy seems to be the theme of this week, from elected officials to guest columnists, although, I repeat one more time, given our state’s fiscal situation it seems in Louisiana to be the theme of the month, year, decade, century …. And it all seems to revolve around the price of gasoline.

This column provides yet another example. Simplistic thinkers who do not understand human behavior in markets, economics, often fall prey to the notion of some kind of conspiracy theory girded by the mistaken notion that some force can control markets and that, ultimately, the consumer is not sovereign. We saw it yesterday, and I’m afraid we’ll see it for some time to come.

This hapless writer seems to promulgate that a conspiracy of oil companies supported by Republicans, especially Pres. George W. Bush, keeps gasoline prices rising over time to hurt the pocketbooks of most Americans (I think; he’s a bit tortured in his presentation but I think that’s where he’s going). To make such an argument requires the establishment of certain assumptions and a peculiar logical train that cannot be sustained.

For one, the assertion that a cycle occurs where gas “prices rise but never fall back down to where they began” happens more intensely and/or frequently during Republican White Houses is highly debatable. If you look at the average prices from 1949-2003 of first leaded regular and then starting in 1976 unleaded regular gas, the average price (in 2000 dollars) under Republicans was $1.50, and under Democrats $1.45 – statistically no different. Further, if you assume it takes two years for a president’s energy policy to work its way into gas prices, by lagging the results by two steps shows that average Democrat price exceeds the Republican average $1.50 to $1.44 (still not a significant difference).

But for the sake of argument, let’s assume there is a significant difference and policies unfold immediately and are immediately factored into price. The reason for that is not some grand conspiracy but because Republican regimes have been marked with more economic prosperity than those of Democrats (especially when lagging equations two years out). Better economic performance means more demand for energy and this demand rises faster than does supply. Hence, to make something clear the writer does not seem to know, price is a function of both supply and demand and will go up under this scenario of economic expansion, typical of Republican administrations.

The most ludicrous part of his argument comes with “Big Oil” making contributions to the GOP, particularly Bush, and the tired, disproven diatribes against Halliburton, showing it controls the White House and thereby Bush pursues an agenda for oil companies against the people. (Never mind that Bush has done much for the “middle class” – tax cuts for most Americans, easing regulatory burdens, and the like).

Let’s see how many oil companies or their organizations were big contributors in the past election cycle. OK, a few business groups, lots of unions, some professions – but no oil companies or their representatives. As far as just Republicans? No, not a single one in the Top 20. As a matter of fact, oil and gas interests gave only $6,690,045 total in the cycle to all Republicans. And this buys commanding influence when Bush alone spent $360 million in his quest for reelection? How idiotic do you have to be to actually believe this drivel?

The writer even is wrong when he asserts “Americans will get used to higher prices for oil and gas for one simple reason: Because we have to.” We don’t – as gas prices have risen, this has created economic incentives to open up new production which promises, as technology advances, to reduce prices to Americans.

One could laugh at this ignorance except it has had a real impact on the misfortunes in Louisiana. Until we educate enough people in the way the world really works, we are going to keep electing enough people who don’t know it themselves and we’re going to keep getting policies that leave this state behind others in economic development.

Teacher unions stall needed reforms; House props up gas prices

(UPDATE: HB 763 went to the floor Wednesday. Rep. William Daniel tried to amend out the most objectionable language to create a floor price. Daniel said he even went to the lowest-cost price in the state and told everybody there they were paying too little. Several others argued this bill and the bad Unfair Sales Act of 1940 would prevent, in the word’s of one, “Wal-Mart from becoming the next Standard Oil.” [I’ll say it again, it’s no wonder we have the fiscal problems in this state with such idiotic thinking.]

The bill author’s, Rep. Taylor Townsend, kept making the asinine remark that to increase competition, government had to involve itself. He seems totally ignorant of the fact that government intervention itself, especially in this issue, is what decreases competition.

This amendment failed, but one of Daniel’s which would have eased the regulatory burden imposed by the bill, succeeded. This made the whole thing slightly more palatable, the only other good thing being it removed authority to enforce it from the Secretary of Agriculture.

The House passed the bill 99-4. It’s better than doing nothing, but hopefully the Senate will do the right thing and amend it to gut the entire 1940 Act.)

House Commerce GOP members vote to limit competition

Confusion reigned at the end of the Louisiana House Commerce Committee’s meeting yesterday, and it just wasn’t in how two bills got dealt with.

Rep. Taylor Townsend’s HB 763 was up first and eventually got approved unanimously, if with minor amendments, by the committee. This bill sets strict and complicated standards by which a price offered by a retail gas seller to which it would have to adhere. Not only would this boost the price of gas by fiat, it would also increase costs by the regulatory burden imposed.

Rep. William Daniel’s HB 183 presented much less of a regulatory burden on sellers and also did not stipulate a minimum price computed through any formula. However, it did forbid selling gasoline below its definition of “cost,” at least for more than two consecutive days if an entity genuinely was not going out of business.

Even though this version amended the Unfair Sales Law of 1940 into a less virulent form than did HB 763, oddly the committee rejected HB 183 on a tie vote while obviously accepted HB 763 which weakens little the old law. Believe it or not, in terms of non-ex-oficio members Republicans actually hold a 10-8 majority on this committee, yet all voted for the bill which would raise prices higher and stifles competition more (although if any of them had a clue they would repeal the law entirely instead of tinkering with it).

If this was a political move to send a more-objectionable bill to the House floor to increase its chances of getting killed, the logic escapes me. Why not rid the chamber of it in committee? And if you had to send a bill that limits the free market to the floor, why not the one that limits the marketplace less? Can somebody explain to me why Republicans who are supposed to be against this kind of thing are for it?

The fact is, the retail gasoline market is simply too competitive for monopoly to form. Further, almost every study of laws like this shows they artificially raise prices by stifling competition. Are our legislators that dense that they can’t understand this and this makes either HB 763 or HB 183 bad law?

Loyola of New Orleans: more "Social Justice" U., less Catholic

Catholics are Catholics because they honor the doctrines of their faith. When they do not, the Church is obligated to point out the inconsistency. Rightly so did the Most Rev. Archbishop Alfred Hughes when he refused to grace Loyola University with his presence at its commencement next week because of the Catholic university's decision to award the Landrieu family an honorary degree in part for their “exemplary” public Catholicism.

Of course, neither Mary nor Mitch Landrieu is an “exemplary” Catholic because they support the infanticide that is abortion of convenience. Loyola, which has run afoul of honoring personages and ideas whose actions and messages are inconsistent with Catholicism, thus takes another step away from being a truly Catholic university.

It would be one thing to bring in a Landrieu for a public policy debate, or another of their award-winners Kim Gandy, president of the National Organization for Women, as a way of stimulating discussion as part of the pedagogical mission. It is another entirely to honor them for work which in part contradicts the very faith the university claims on which its education is based. Why can’t it honor faithful Catholic politicians like U.S. Rep. Bobby Jindal, or cultural warriors who have battled against huge resistance and plenty of name-calling in promoting a Catholic agenda like Phyllis Schafly?

Small step for Wooley; giant leap for Louisiana

At least he did the right thing, only after about two months of unfavorable media coverage, and he doubled the fun. Insurance Commissioner Robert “Pimp(le) My Ride” Wooley gave back to the state the luxury truck he had requisitioned and his year-old luxury truck he also had gotten the taxpayers to buy him. The latter re-gift was interesting in that he could far better justify having that one, so we may conclude Wooley felt he needed to make a large penance for his arrogance.

Perhaps that’s because another high-profile incident occurred not long after his purchase was revealed, where it appeared that Wooley had managed to promote his brother in violation of anti-nepotism laws but again had to back off when word leaked out and the media came calling (thanks in part to the work of one of my former students – take a bow, Michelle). That now has been rescinded and any expanded job description for Rick Wooley has been labeled “temporary.”

It’s an arrogant attitude from this office the state has all too often had to continue to endure, considering the last three commissioners have gone to jail. Wooley’s mentor Jim Brown displays this haughtiness in spades by his continued insistence that, despite numerous trials all establishing reaffirming the decision that sent him to jail, that it was all some big conspiracy and that judges, prosecutors, the federal government etc. all are to blame for his going to prison, not Brown himself. Wooley seems to have learned well from Brown, and maybe even will top him in time if not in jail time (we hope not), certainly in arrogance.

Odom wins; Louisiana loses

Well, Agriculture Secretary Bob Odom wins the first round. The Senate Senate and Governmental Affairs Committee shot down state Sen. James David Cain’s SB 43 which would have forced the Louisiana Agriculture Finance Administration to follow the same law that every other government agency in Louisiana must, in terms of bids to perform public services.

This has allowed Odom to use public professional employees, some with advanced degrees and holding upper-level managerial slots, to perform unskilled construction work. In addition, this lets Odom award contracts to whomever the panel likes (read: him) without any oversight.

This arrangement has been criticized because of the injuries on the job that state employees not hired for construction work have sustained, costing the state millions in claims, as well as the fact that if such employees have time to perform such work in addition to their state-specified jobs, it raises the question whether the Department of Agriculture is overstaffed.

PAR errs on the side of government, not the people on taxes

The Public Affairs Research Council is of the opinion that almost all of the property tax-related bills in front of the Legislature should be rejected. The bills, almost all of which either create or raise exemptions or make it more difficult to raise such taxes, it argues would hamper local governments’ flexibilities in funding their own activities.

In 2000, local governments in Louisiana raised a little over $2.5 billion from their own resources and forgoes approximately 30 percent of that because of property tax exemptions on individuals. Of that total, roughly 80 percent is from property taxes, which are even more valuable to local governments in that real property is one thing the state itself does not use as a revenue source. Thus, PAR’s concern is real.

But also it is misplaced. A good case can be made that most of the requests to increase categories of exempt persons are not really necessary, but two definite changes that must be made are those proposed by SB 25 and HB 68.

The former removes the income cap, now $56,744, on homesteaders of 65 or above, at which they could claim to have their property continued to be valued at the assessment when they turned that age. This is a good example of the class warfare often visited upon the state’s citizens. Expenses can be high for the elderly, particularly health care, regardless of their income and this break will help those against whom high costs do not discriminate but who are now are discriminated against on the basis of income. The latter would exempt disabled individuals under the same standard.

Yet even more necessary are measures to curtail local governing bodies’ abilities to allow increases in property values as a result of quadrennial reassessments. This protection against automatic roll-forwards is essential because, unlike something like a sales tax which is precisely measured and based on active economic transactions, property taxes are measured infrequently, not terribly precisely, and are valued on the basis of passive, even no (if the property doesn’t change hands or gets improved), activity.

PAR’s reasoning here is that:

Taxpayers are already protected from unreasonable property tax increases in two ways. First, most tax increases or renewals require voter approval. Second, after each reassessment, millages are automatically rolled back to prevent increased collections due to the higher property assessments. The taxing body may roll the millages back up to their former level only after a public hearing and by a two-thirds vote. Thus, higher assessments will not always translate into higher taxes.

Thus, since protections already are in place, PAR argues that things such as limiting increases or making it harder for authorities to roll forward are too restrictive. But whoever wrote this report missed their own internal contradiction: the citizenry itself can choose to override anything the authorities do by permitting tax increases itself!

In other words, it does not matter how stringent such requirements may be on the authorities, public votes always can raise property taxes. For some reason, PAR would rather err on the side of government, even though it has a coercive, unlimited power to tax, by not making it harder for it to raise taxes, than on the side of the people, helpless to resist this onslaught other than by periodic elections and recall power. The goal then should be to make the exercise of this power by authorities as difficult as possible, while still allowing the people to retain it.

By this logic, the best of these bills, being the most restrictive on government, is HB 335 which removes roll-forward power completely from local authorities. If additional property taxes are needed, then government can make a case to the people by asking them to pass a new tax with more mills. If it’s a reasonable one, the people will pass it.

In its analyses on this issue, PAR needs to realize it is the power of the people, not government that should be enhanced.

Where's there's smoke, there's Hightower

The questioning became quite noticeable when Shreveport Mayor Keith Hightower began a maniacal pursuit of funding to build a public hotel. Despite legislative, popular, and researched rebuffs, Hightower’s persistence continues to drive the project forward, even as it is shown the legislative delegation is mostly against it, the public doesn’t support it, and the numbers show it can’t support itself. Why?

The noise level grew further when it came out that associates of Hightower were receiving some fairly favorable treatment when it came to paying back loans guaranteed by the city for community development purposes. Hightower said he’d shut the program down, but it had been going like that for years. Why?

The buzz got louder when, most recently, Councilman Thomas Carmody questioned the curious timing and series of transactions regarding operation of the city landfill, its operator BFI, renewal of its contract, a middleman company called River Cities Disposal who counts as officers and directors Hightower’s associates, and the company’s connection with a real estate deal involving a partnership of Hightower’s and some associates, all in the context of pointing out that the deal was costing the city money.

Benedict's accession to bring good things to Louisiana

So we’ve got a new Holy Father; what does that mean for Louisiana? Perhaps no place in America will be affected more than here, given its higher proportion of Catholics and the fact it has by far the most black Catholics of any state.

Because of his role heading up the Congregation for the Doctrine of the Faith, the German cardinal earned a reputation as a strict traditionalist, sometimes aggressively defending the church. It was a reputation that has those who call themselves Catholics, as well as those outside of the Church, who disagree with those views, nervous that their modernist agendas will suffer setbacks. As a result, comments from these people include things along the lines of “being a pope is different from being a cardinal” or “he’s a transitional pope because of his age” or “he may well surprise people.”

All true. Then again, many thought John XXIII would be transitional yet he lived long enough to launch the reforms of Vatican II. And Benedict XVI leaves a long track record of scholarly publications and actions demonstrating the unlikelihood of his wavering from defending the Church against the excesses of the modernist spirit.

Bernhard moves to makes Democrat dinosaurs DINOs

Is the Louisiana Democratic Party edging closer to reality? Party Chairman Jim Bernhard looks to be getting his footing after a rocky start not only by endorsing state Rep. Yvonne Dorsey’s HB 694, but putting his money where his mouth is by calling Democrat households to stump for the measure, favored by Gov. Kathleen Blanco. The bill creates requirements similar to those concerning the governor, some legislators already covered by other laws, and those required to be followed by Congress.

Yet just because many others do something positive doesn’t mean Louisiana legislators have to, according to Democrat state Rep. Charlie DeWitt, who took offense to the campaign. He said such meddling would drive people out of the party and into the GOP column or into dealigned independence.

I see, so to the likes of the dinosaur DeWitt, the Democrats are the party of as little disclosure as possible and thus weak ethics? He’s probably right, but that’s a version of the party Blanco and Bernhard seem to want to see go to the way of the dinosaur. And at this point, this action seems to show that Blanco has gained considerable control over the party apparatus (in all likelihood much to the chagrin of its erstwhile puppeteer and dinosaur Agriculture Secretary Bob Odom).