Freedom Line Blog

I have a working theory to explain the existence of pundits like the New York Times’ Gail Collins, self-parodists who find themselves incapable of escaping the intellectual shallows of liberalism: they must all be secretly financed by a group of wealthy conservatives who regard providing endless fodder for bloggers on the right to be a form of public service.

In Collins’ newest dispatch from the outskirts of sentience, she travels to Williston, North Dakota, a sort of 21st century boomtown where unemployment hovers around one percent thanks to the huge oil reserves now accessible from the Bakken formation.

The reality of the economic dynamism in Williston is so painfully clear that Collins is forced to present it in a fairly positive light, though that doesn’t keep her from some of the reflexive sneering of a Manhattan imperialist (she sniffs that there’s a Wal-Mart instead of an adequate mall and that “The most ambitious restaurants would be classified under the heading of ‘casual dining.’).

Because Williston’s success is fueled by conventional (read: useable) energy, however, the gravitational pull of Collins’ liberalism kicks in when, in the second half of the article, she sets out to expose the unseemly side of Williston’s growth. The results are pathetic.

First, Collins takes a swing at fracking so half-hearted that she doesn’t even seem to have bothered indulging her reflexive impulse to crib some talking points from a Huffington Post op-ed by Alec Baldwin (lest you think I’m joking, it’s here).  Her devastating critique includes the fact that the process “uses a lot of water” and makes the town dustier. Well.

Where she really goes off the rails, however, is in her attempt to portray the local economy as a thing of horror:

… Right now … there’s no place to live. Honestly, no place. To house its teachers, the school district has already purchased two apartment buildings, which have long since been filled even though the residents are all required to share their homes with another teacher. Superintendent Viola LaFontaine has taken to the radio airwaves, urging citizens to come up with places for the new faculty to stay.

“We’ve been getting good applicants,” LaFontaine said. “But they’ll make $31,500. When they find out an apartment is $2-3,000 a month, they say they can’t pay that.”

Yes! Housing costs in Williston, N.D., are approaching those in New York City. Many of the oil workers stash their families back wherever they came from, and live in “man camps,” some of which resemble giant stretches of storage units.

…

If the place you love can’t quite climb out of the recession, think of this as consolation. At least you’re not living in a man camp and waiting half an hour in line for a Big Mac.

Ms. Collins, meet supply and demand. Supply and demand, meet Ms. Collins.

What our fearless columnist is describing is the typical trajectory of boomtowns. The sudden surge of demand sends prices skyrocketing. But if her view extended beyond the tip of her nose, Collins might realize that this is the predicate for a second round of employment growth and a general lowering of prices. When demand is so high that a remote region of North Dakota can charge rents rivaling those of the beating heart of New York City, it’s an open invitation for developers to make their way to Williston, relieve the housing shortfall, and get rich in the process. Ditto the overcrowded restaurants. That means new jobs created. And the increased supply means lowered prices.

One final note: it’s telling that teachers are Collins’ go-to example. Reading her column, one could reasonably wonder how Williston’s housing stock could be both (a) so expensive that it’s prohibitive for many potential tenants and (b) filled to the gills. The answer: private-sector workers are making more than enough to meet the demands of the city’s rent. Only in the public sector, where wages are set by government diktat instead of the market, are crucial employees priced out of a place to live. That’s a real shame for the teachers of North Dakota. If the school system was privatized, they’d all be getting rich now too.

An instructive study in the contrast between the president’s rhetoric and results.

Rhetoric:

“We can’t have an energy strategy for the last century that traps us in the past. We need an energy strategy for the future – an all-of-the-above strategy for the 21st century that develops every source of American-made energy.” — President Obama, March 15, 2012

Results:

Pennsylvania’s PBS Coals Inc. and the affiliated RoxCoal Inc. announced that they would idle some of their deep and surface mines, laying off 225 employees in the process.

…  According to the Pittsburgh Post-Gazette, which first reported the layoff, the company employs 795 workers.

In Alledonia, Ohio, Murray Energy Corp. announced Friday it would lay off 29 union coal mining jobs at The Ohio Valley Coal Co.’s Powhatan No. 6 Mine.

“The failed energy policies of the Obama administration and the ‘war on coal’ that the president and his Democrat supporters have unleashed are the direct causes of this layoff,” said Powhatan mine general manager Ronald Koontz, according to The Wheeling Intelligencer. “Unfortunately, for us, this is just the beginning [of] the work force reductions.” — The Daily Caller, July 23, 2012

This Friday, the 2012 Summer Olympics kick off in London (with an opening ceremony that shows Britain will respond to Beijing’s 2008 triumphalism with cultural self-loathing). Will it be a triumph for national pride, sheer athleticism, and the indomitable human spirit? We can certainly hope so. For the city of London itself? Not so much. Matthew Stevenson gets it right over at New Geography:

Why does anyone persist with the Greek mythology that the Olympics are an engine of economic development, sportsmanship, or peace on earth? London is spending $15 billion on the hope that it can sell enough tickets to synchronized swimming, and earn enough from television ads, to cover the costs of the 30,000 rent-a-cops and military personnel being deployed in the spirit of Olympic harmony.

Even though the Games break few economic records, except those for non-performing sovereign debts, governments around the world scramble madly every four years for the right to act as host, as if influence peddling were an Olympic sport.

The original cost estimate, sold to the British public to convince them to get behind the bid for the 2012 Games, was about $4 billion. Those budget forecasts imagined that, after the event, Olympic sites would be recycled for use as schools, homes for the aged, and handicapped parking, even though earlier Olympic cities have found little use for their table tennis stadiums and aquatic centers…

… At the end of three weeks of the London Games, even if the British army has had to shoot off a few of its surface-to-air missiles, TV commentators will pronounce the Games an immortal success, a triumph of Spartan proportions, and an epic not seen since Jason came back with the golden fleece.

Then, in three years, if not sooner, London will get the $15 billion invoice for its fun summer, and all it will have to show for it will be a few used diving boards and, with luck, some new light-rail. In the words of George Best, the great Northern Irish footballer: “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”

The record of Olympic Games failing to deliver on grandiose economic promises is simply too consistent to be ignored. Much like stateside subsidies of facilities for professional sports teams, the inevitable outcome is a massive redistribution of resources rather than a surge of economic growth.

We wish the London Olympics well. But we also wish the people of London weren’t footing the bill for the rest of the world’s party.

The newest item available in the gift shop at Mitt Romney’s campaign website:

As my colleague Mollie Hemingway notes at Ricochet, indignation at the president’s remarks seems to be taking root with a swath of the American people much broader than the conservative base. One can only hope that trend will lead to this t-shirt someday being featured in the wing of the Obama Presidential Library describing what went wrong in 2012.

In my column last week, I outlined how ObamaCare’s Medicaid expansion is a way to sneak in socialized medicine by making it cheaper to accept government health insurance instead of paying for it (directly) oneself.

But the Medicaid expansion is only half of ObamaCare’s formula for moving most of America onto a federally-run health system.

The other half is made up of the so-called state-based health insurance exchanges that are subsidized (and regulated) by the federal government.  With the individual mandate in place, people that fail to qualify for Medicaid will most likely be forced into the exchanges.  (ObamaCare purposefully makes it cheaper for employers to pay a fine rather than cover employees.)

Writing in the New York Times on Saturday, Tyler Cowen, an economics professor at George Mason University, explains how to make the best of the very bad possibility that President Barack Obama is reelected and ObamaCare continues to be implemented, albeit with the inevitable cost overruns.

There is one way this might work: by limiting the subsidies for insurance. Note that the law itself mandates cuts if those subsidies exceed a certain percentage of gross domestic product by 2018. Most likely, the reform could not stop there, because the insurance cost burden for many Americans would feel intolerably high without the subsidies.

The next step, therefore, would lower costs by limiting the mandate to covering catastrophic conditions. Yet a further step would remove the mandate for noncatastrophic coverage, thus giving people more control over how much they want to spend on health care versus other priorities.

We would then have government-subsidized and mandated catastrophic insurance, and a freer market for other health care expenditures. We might even return to a health savings account approach on the noncatastrophic side.

That’s far from a perfect outcome, but it’s probably the most positive path that can be achieved.

Let’s hope it doesn’t come to that.

With President Obama making a public pitch yesterday to raise taxes on millions of Americans (the boldest election-year tax increase pledge since Walter Mondale in 1984), the White House is facing a bit of a cognitive dissonance. After all, Obama signed legislation keeping all of the Bush tax cuts in place only 18 months ago. Good for that ailing economy but not this one? White House Press Secretary Jay Carney (whose podium may as well be mounted above a dunk tank these days) is having a hard time sorting it out. Here’s how Charlie Spiering reports it at the Washington Examiner‘s “Beltway Confidential” blog:

White House Press Secretary Jay Carney admitted [yesterday] that the extension of the Bush Tax cuts signed by President Obama in 2010 helped the United States economy at a critical time.

“At the time that you question there was a package of proposals that passed that helped the economy at a time it was very vulnerable, and that the president signed into law.” Carney admitted.

… When pressed by [CBS News’ Norah] O’Donnell to explain what had changed between now and 2010, Carney accused her of buying into a faulty argument.

“You’re buying into a red herring argument that just isn’t true,” he insisted.

Translation: “I don’t have a rejoinder ready that won’t get me laughed out of this room.” So the economy was vulnerable in December 2010, when Obama renewed the cuts and unemployment was at 9.8 percent, but we’re in the sunlit uplands of recovery now that unemployment is at 8.2 percent?

An increase in taxes leads to a decrease in economic activity. Period. Full stop.

There’s never really a good time for a tax increase. But there are few times that are this bad.

Read between the lines and you’ll see that that’s the message democratic strategists are pushing on President Obama’s reelection team. Here’s how The Daily Caller‘s Stephen Elliot reports the advice being given by Democracy Corps’ James Carville and Stan Greenberg:

The current campaign is focused on success in the economic recovery, but Carville’s group says the strategy is “wrong” and “will fail.” The only reason Obama is keeping up in the campaign is because voters perceive Romney as “out of touch with ordinary people.”

The authors recommend that Obama show more empathy for the struggles of the middle class. “These voters want to know that he understands the struggle of working families and has plans to make things better,” according to the report.

… “These voters are not convinced that we are headed in the right direction…and the current narrative about progress just misses the opportunity to connect and point forward,” continues the report.

In tests done as part of the focus groups, Obama campaign ads that highlight job growth and economic recovery during the last four years did not even win over voters who already supported Obama.

That last line is telling: if even Obama’s most fervent admirers aren’t buying his pitch on the economy, just imagine how turned off all-important swing voters will be in the fall. Are we really to believe that they’ll be brought back to the fold just because Obama all of a sudden becomes “empathetic,”acting as if he stays up nights worried about people who’ve been forced to start buying generic brand breakfast cereals?

Let me register a radical sentiment: I give no more of a damn about whether the president sympathizes with my economic plight than I do whether my plumber is moved by the hardship I have to endure when there’s not enough hot water. In both cases, the sentiment is the same: fix the problem and then leave me well enough alone. My suspicion is that the rest of the country is increasingly feeling the same way. We’ll see in November.

Following on to Tim’s excellent post earlier this week about the cost of higher education, this observation by the American Enterprise Institute’s Norman Ornstein bears noting:

Colleges have become a bit like car dealers, where the sticker price does not reflect the actual cost to most buyers. Some can afford to pay the full boat, helping the colleges maintain their budgets, while others can get deep discounts.

And colleges, under this theory, keep their prices up to match their competitors because a lower tuition would be seen by many prospective students and parents as a reflection of lower quality compared to their peers.

Many economists also point out that federal subsidies for higher education are themselves a contributing factor in increasing college costs.

The economic prescription for reforming higher ed is the same that could be applied to health care, k-12 education, or any other sector of the economy that is co-mingled with the government: greater price transparency, fewer subsidies, lower barriers to entry, and more competition. This isn’t terribly complex stuff. In fact, it should be intuitive to anyone who’s ever studied basic economics. Alas, the dismal science is about the only component of a college education that’s not getting a fair shake these days.

Last weekend, liberal MSNBC talk show host Rachel Maddow and Republican political consultant Alex Castellanos got into a dustup on MSNBC’s “Meet the Press” over pay disparities between men and women in the workplace.

Maddow, working from the first principle of modern American liberalism, assumed that the absence of pure equality is de facto proof of systemic oppression. Here’s part of the exchange (note the utter failure of NBC host David Gregory to moderate impartially):

Since Castellanos didn’t get much a chance to get a word in, allow me to augment his remarks with the observations of Thomas Sowell, writing in his book, “Economic Facts and Fallacies”:

The empirical fact that most male-female economic differences are accounted for by factors other than employer discrimination does not mean that there have been no instances of discrimination, including egregious instances. But anecdotes about those egregious instances cannot explain the general pattern of male-female economic differences and their changes over time. Those changes are continuing. While in the period from 2000 to 2005 most women were still holding jobs making less than the weekly median wages, women were also 1.7 million out of 1.9 million new workers earning above the median wages.

…

Given the numerous factors that impact the incomes and employment of women differently from the way they impact the incomes and employment of men, it can hardly be surprising that there have been substantial income differences between the sexes. Nor can all these differences be assumed to be negative on net balance for women — that is, taking other factors into account besides income. For example, the wives of affluent and wealthy men tend to work less and therefore to earn less. But the wife of a rich man is not poor, no matter how low her income might be.

Had Ms. Maddow hoped to have a real conversation about the causation of pay disparities, there was a rich body of research available to her. She didn’t of course. That wouldn’t make for nearly as good television.

In recent days, Wal-Mart has been rocked by the New York Times‘ reporting on a bribery scandal in Mexico, where the firm reportedly paid over $24 million to government officials to fast-track the permitting process for stores built south of the border.

The left, of course, is all over this because Wal-Mart is their corporate bete noir of choice. Personally, however, I think the party that bears the most guilt is the Mexican government, which has created an atmosphere in which graft is the easiest way to do business. Absent those conditions, the need for bribes would have been minimal and the issue would’ve been moot. Regardless, however, there’s an important angle here that gets fleshed out by the American Enterprise Institute’s Nick Schulz, writing for Forbes:

… While we’re on the topic of companies having to pay the politically powerful for access to markets, can we stop for a moment to examine how things sometimes get done right here in the United States? It’s not uncommon for big box retailers to pony up cash and other unearned benefits in order to break new ground on stores.; what’s different here, however, is that members of our political class often force them to do it. And it’s all perfectly legal.

Consider a recent bill in Maryland, where I live, aimed at big box retailers. Firms like Wal-Mart, Costco, and others hoping to expand operations in wealthy Montgomery County, just outside Washington DC, would be forced to negotiate legally-binding “community benefits agreements” as a condition for building and operating new stores. These sorts of bills are not uncommon when big retailers want to expand or enter into new markets.

The upshot is that politically well-connected local stakeholders – unions, community organizers, and other interest groups – get cash, hiring promises, and other benefits from the retailer in exchange for dropping any opposition to a new store.

Among the possible benefits are “assistance to community organizations and programs.” These organizations can, in turn, use this “assistance” to support the political candidates who push this kind of legislation in the first place.

What Schulz is describing is no more representative of free-market capitalism than the bribery going on in Mexico. As long as business owners have to compensate others who have contributed absolutely nothing to their efforts as the predicate for setting up shop, political power over business is still excessive. At least the folks in Mexico have the decency to call this what it is.

Free Market America, a new group operating in partnership with Americans for Limited Government, has a powerful new video out that makes an important point: if one was setting out to intentionally inflict harm on the American economy via energy policy, the resulting strategy would look a lot like what the Obama Administration is proposing.

The point here is not that Obama’s agenda is a covert plot to damage the nation — it’s not — but rather that its effects will be just as calamitous as if it was. Take a look for yourself:

The entire continent of Europe may seem most useful these days as an object lesson in how not to conduct public finance, but as a fascinating new piece in the UK’s The Spectator makes clear, Sweden provides at least one unlikely exception. While the rest of the world was clamoring for Keynesian stimulus measures in the immediate aftermath of the global financial crisis, Sweden was following the lead of Anders Borg, its libertarian-leaning Finance Minister. As a result, the country took a drastically different path — one that’s now paying dividends:

While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.

The good news: Sweden provides a success story that drives one more nail into Keynesianism’s coffin. The bad news: We’re living in an age where Scandinavia can muster more enthusiasm for free market economics than the U.S.

Writing in the Washington Times, Richard Rahn — Senior Fellow at the Cato Institute and Chairman of the Institute for Global Economic Growth — puts the current state of federal spending in rather horrid relief:

The federal government is spending about 24 percent of gross domestic product (GDP). Most of it goes for Social Security, Medicare, Medicaid and other entitlement programs. The “discretionary” portion of the budget equals about 9 percent of GDP, with about half going for defense. Until 1930, the federal government normally spent less than 4 percent of GDP, except for the periods during World War I and the Civil War. The Constitution gives the federal government very few tasks for which it is required to spend money — the big item being the “common defense.” Again, up until 1930, the courts forced the federal government to live largely within the confines of the Constitution. Deducting defense spending from the federal budgets before 1930 shows that the federal government lived perfectly well on 2 percent to 3 percent of GDP for the first 140 years of the republic.

What all of this means is that approximately three-quarters of all federal government spending is not required by — and often is contrary to — the Constitution.

Conventional wisdom in Washington increasingly holds that those who wish to see the federal government pare back its expenditures rather than increase the tax burden on the American people are delusional, if not antediluvian. Yet for the majority of American history, the federal government was only a fraction of what it is today — and the Republic did quite well for itself.

Are we really to believe today that spending cuts that would still leave the federal government’s share of GDP several multiples higher than it was less than a century ago mark some civilizational rot? Because by all indicators (Europe comes to mind), the failure to prune seems to be the more perilous course.

California, as has become universally known in recent years, has become a fiscal and political basket case. Take a look at the state as it stands in the spring of 2012: it has a $9.2 billion budget deficit, approximately half a trillion dollars in unfunded public pension liabilities, and a business environment ranked worst in the nation by Chief Executive magazine (in 2010, the periodical referred to the state as “the Venezuela of North America”).

Part of the problem, of course, is the liberal-labor union coalition that dominates Golden State politics, in which the most nefarious force is the California Teachers Association, the hulking union that overwhelmingly outspends any other special interest in the state. Now, in the midst of this economic crisis, the CTA is getting behind Governor Jerry Brown’s proposal to increase state sales and income taxes, a move that would only hasten the state’s decline.

I tackle the issue in my new column for City Journal California. From the coda:

CTA officials contend that Brown’s proposal—an extra quarter of a cent added to the sales tax and up to three extra percentage points on the state income tax, depending on income levels—represents only a modest increase, a cost that the Golden State’s economy can easily absorb. But the margin of the increases is less significant than the final rates they will produce. If Brown’s package passes, California would have both the highest state sales tax in the nation and the highest top income-tax rate. That will only continue to drive economic activity out of the state, a trend that recent IRS data shows cost California $27 billion in tax revenue from 1999 to 2009.

The lesson should be clear: the kind of punitive taxation that Brown’s initiative promotes is precisely what depletes the tax base necessary to finance California’s public schools and pay the salaries of CTA members. Raise rates and you only dim the prospects for public education further.

In a 2009 piece for National Affairs, I noted that, “from 2004 to 2007 more people left California for Texas and Oklahoma than came west from those states to escape the Dust Bowl in the 1930s.” Yet in the intervening years California’s political class has done nothing to improve conditions for those who might be tempted to leave the beauty and cultural dynamism of the Golden State behind for more economically palatable environs. One wonders exactly what natural disaster they’ll have to approximate before the lesson sinks in.

Over at the Wall Street Journal, James Grant, editor of Grant’s Interest Rate Observer has a perceptive review of the new book, “White House Burning: The Founding Fathers, our National Debt, and Why it Matters to You,” by former IMF Chief Economist Simon Johnson and University of Connecticut law professor James Kwak. Two passages deserve special attention.

On the banking system, Grant writes:

Here’s an idea: Let’s try capitalism for a change.

Rather than the bureaucratic monstrosity called the Dodd-Frank Act, for instance, why not hold the bankers personally accountable for the solvency of the institutions that employ them? Until 1935, bank stockholders would get a capital call if the company in which they had invested became impaired or insolvent. It was their problem, not the government’s. In the same spirit, suggests the New York investor Paul J. Isaac, let the bankers forfeit a portion of their past compensation—say, that in excess of 10 times the average manufacturing wage—if they steer their employer on the rocks. And let them surrender not just one year’s worth but rather seven year’s worth—after all, big banks don’t go broke all at once. Proceeds would be distributed to the creditors, as in days of yore. Bankers should not only take risks. They should also bear them.

And on the endless invocation of the Great Depression as the sole object lesson in how to respond to a severe economic downturn:

Messrs. Johnson and Kwak, who draw the usual conclusions from 1929-33, fail to mention the depression of 1920-21. Yet this cyclical downturn was as instructively brief as it was ugly. Peak to trough, nominal GDP plunged by 23.9%, wholesale prices by 40.8% and the CPI by 8.3%. Unemployment, as it was then inexactly measured, soared to 14% from a boomtime low of 2%. And how did the successive administrations of Woodrow Wilson and Warren G. Harding, along with the Federal Reserve, meet this national disaster? Why, they balanced the budget and raised interest rates. Yet for reasons never examined in the pages of this book, that depression promptly ended and the 1920s roared.

Grant’s theme? Responsibility, both personal and collective. That has the great virtue of being the right thing to do. It also has one even greater virtue: it works.

Last week, President Obama made the surprising announcement that Dartmouth University President Jim Yong Kim — a relatively obscure figure — was his nominee to become the next President of the World Bank, the international organization that works to spur economic development throughout the world. Thanks to some careful digging by the NYU Development Research Institute, we’re now learning a bit more about Jim’s views — and the details are a little startling. The Ivy League executive seems to think of economic growth as a zero-sum game — and one in which the developed world has been consistently sticking it to the little guys. A few excerpts from his writing:

… the quest for growth in GDP and corporate profits has in fact worsened the lives of millions of women and men.

…

Using Cuba as an example, Chapter Thirteen makes the case that when leaders prioritize social equity and the fundamental right of all citizens to health care, even economically strapped governments can achieve improved and more equitable health outcomes.

…

… [G]rowth – the market-led economic growth sought by governments, the growth in profits celebrated by businesses, and the growth in power and influence of transnational financial and corporate interests – often comes at the expense of the disenfranchised and vulnerable…  As the imperatives of growth at any cost increasingly determine economic and social policy and the behavior of global corporations, more people join the ranks of the poor and greater numbers suffer and die.

And if this isn’t bad enough, the final passage cited by the NYU group finds Jim quoting Noam Chomsky.

Dinesh D’Souza caught a lot of flak for positing in his book, “The Roots of Obama’s Rage,” that the president’s ideology could be traced largely to the Kenyan anti-colonialism of his father. While I think that D’Souza overstated the case rather severely, instances like this one remind us of the germ of truth to his argument.

Whether Obama is decrying a world where international negotiations were “just Roosevelt and Churchill sitting in a room with a brandy” or picking a new World Bank President who seems to find the very practice of capitalism predatory, there seems to be a consistent suspicion that someone somewhere is being victimized. Should Jim Yong Kim become the head of the World Bank, it will be the people of the developing world — caught in the downward economic spiral that always accompanies attempts at implementing “social justice” — who will be the victims.

Over the weekend, the Wall Street Journal‘s Stephen Moore had an instructive and inspiring piece on the economic boom occurring in North Dakota as a result of the Peace Garden State’s (yes, that’s their actual nickname) aggressive development of oil resources.  More depressing, however (especially for this Golden State resident), was the contrast Moore drew with California:

In 1995, the U.S. Geological Survey estimated 150 million “technically recoverable barrels of oil” from the Bakken Shale [in North Dakota]. In April 2008 that number was up to about four billion barrels, and in 2010 geologists at Continental Resources (the major drilling operation in North Dakota) put it at eight billion. This week, given the discovery of a lower shelf of oil, they announced 24 billion barrels. Current technology allows for the extraction of only about 6% of the oil trapped one to two miles beneath the earth’s surface, so as the technology advances recoverable oil could eventually exceed 500 billion barrels.

Now contrast this bonanza with what’s going on in another energy-rich state: California. While North Dakota’s oil production has tripled since 2007 (to more than 150 million barrels in 2011), the Golden State’s oil production has fallen by a third in the past 20 years, to 201 million barrels last year from 320 million in 1990. The problem isn’t that California is running out of oil: In 2008, when the USGS estimated four billion barrels of recoverable oil from the Bakken, it estimated closer to 15 billion barrels in California’s vast Monterey Shale.

As Moore elaborates later (and as I’ve written at length both here and elsewhere), California’s failures are the byproduct of a governing class that regards traditional (read: viable) energy sources with suspicion at best and contempt at worst, prohibiting many efforts at energy exploration, setting renewable energy mandates, and enacting a statewide version of cap and trade.

One statistical contrast tells the whole story. The resources in California’s Monterey Shale are nearly four times as great as those in North Dakota’s Bakken. Meanwhile, California’s 10.9 percent unemployment rate is more than three times as high as North Dakota’s 3.3 percent rate. This is not fate. This is the result of choices made by California’s policymakers. The state’s voters should judge them accordingly.

A nefarious trend coming out of Washington, as reported by Politico:

Democrats on K Street are warning their corporate clients: Give to Republican challengers in the 2012 election, and you’ll regret it come tax reform time.

Lobbyists are getting that message from allies of powerful Democrats such as Senate Finance Chairman Max Baucus (D-Mont.), who is closely watching support for Rep. Denny Rehberg, a Republican challenging Sen. Jon Tester (D-Mont.). Baucus supporters fear that if Rehberg ousts Tester, Baucus could be next to face a serious Republican challenge in the state.

One K-Streeter close to the Baucus operation said the senator considers a gift to Rehberg a contribution against him. Another Democratic lobbyist told a client to take his name off a Rehberg fundraising event because it would be hurtful to his company, according to sources.

The case K-Streeters are making to their clients: It will be a hard sell next year to get Baucus’s support on business-friendly tax perks set to expire or the Bush-era tax cuts that must get through his committee.

Old D.C. hands that they are, the folks at Politico are quick to note that this is routine procedure on Capitol Hill, where the nexus between campaign contributions and favorable policy outcomes is an implicit rule of the game. That’s all true, of course, and Republicans have committed precisely these kinds of sins in the past. It doesn’t follow, however, that we have to accept it.

One of the most heartening aspects of the rise of the Tea Party has been the fact that there is now a powerful political coalition organized around a philosophy rather than a pecuniary interest. That philosophy is stripping power from Washington. And it’s precisely what’s needed here.

These kind of abuses are a powerful argument for the sagacity of a flat tax. Conservatives generally tend to focus on the economic benefits of a single income tax rate (which, because it eliminates so many distortions, are legion), but they may not pay enough attention to its virtues as a matter of political science. Having a single, across-the-board rate would keep politicians from turning the tax code into a byzantine apparatus meant to subsidize their friends and persecute their enemies. At that point, our elected officials might actually have to find an alternative to scaring their constituents into submission.

Wherein Valerie Jarrett, perhaps the most consistently insipid of the White House courtiers, declares unemployment a form of stimulus:

Believe it or not, that’s the remarkable reality we’ll be facing when Barack Obama takes to the podium to deliver his State of the Union address tomorrow night: nearly three years wherein the federal government — the largest distributor of funds on the planet — has operated without a budget. That’s a failure that deserves widespread public attention. Happily, the GOP — which usually can be counted on to bobble these kinds of communications opportunities — is doing a serviceable job of highlighting this ignominious milestone: