Econ-Recon: May 2008: Archives
The passage of Senator Jim Webb's expansion of the GI Bill to provide expanded educational benefits highlights a topic most don't want to discuss. Since abolishing the draft and making service in the military voluntary, critics have argued that an inordinate number of the ranks are filled by those who lack other opportunities...including the ability to afford a college education. In other words, they contend that the election to join the military can often be a de facto economic decision.
When critics, like New York Representative Charlie Rangel, raise concerns that an inordinate number of new enlistments come from lower income families, those opposed to reinstating the draft accuse them of insulting our service people. Essentially, they contend the criticism impugns the patriotism of those who have volunteered to serve their country. If that deflection fails, they have also argued that the criticism insults the intelligence of military personnel by suggesting that those who serve in the military are uneducated.
That brings us back to the Senate's passage of the Webb bill. One of the redeeming benefits of the passage of time is that is frequently shines a bright light on hyperbole and hypocrisy. In what can only be seen as a reversal of logic, some of those who rejected the assertions of men like Charlie Rangel are now opposed to expanding the benefits provided by the GI Bill. Yes, they are now arguing that those expanded benefits might entice some service members to exit the military in order to take advantage of the educational benefits. In other words, given other and better opportunities, some members of the military might not want to continue serving.
Let me be clear. The patriotism of those who enlist has never been the issue and it wasn't for those who criticized the all volunteer army. Those who contended that it attracted individuals who lacked other opportunities always believed in the patriotism of those who enlisted...just as they will continue to believe in it should some service members elect to leave the military in order to utilize their expanded educational benefits.
Those who aligned with George Bush and John McCain in opposing this bill have simply exposed their inclination to make military service a matter of necessity. Voting to deny service members the same level of educational benefits that existed when the GI Bill was first passed is evidence that they recognize the differences between conscripted service and volunteer service. Why else would they not support a bill that would give volunteer service members the same benefits that were afforded to conscripted ones?
Truth be told, those opposed to this bill don't want to provide a plausible alternative to military service because they know that the decision to enlist is, in fact, often a decision of economic necessity because there is a lack of other opportunities for those whose families lack the means to send them to college.
Look, I don't object to the government using carrots to entice enlistment. The military can be the means to advance one's education that might not otherwise be possible. Regardless, choosing to deny former service members access to benefits that will reward their patriotism and service is a far more egregious act than to question the inequity of an all volunteer military.
So what is the message given by those who would deny these benefits? Well it clearly states that they favor a system that facilitates the enlistment of the economically disadvantaged and they certainly don't want to do anything that might take away the leverage that it provides. In other words, it tells our enlisted persons that we're happy to have them defend their country's commitment to freedom but we're opposed to providing them the opportunities that would grant them the opportunity to exercise that freedom.
While I'm not in favor of a draft, I am in favor of an honest discussion on the shortcomings of the existing all volunteer system. It seems entirely hypocritical for those who have attempted to ignore the contention that economic motivations may lead to the population of our military to now be speaking out against providing the very opportunities and alternatives that their adversaries have long suggested were lacking.
When Charlie Rangel suggests that a draft would make members of Congress think twice about sending American soldiers into harms way if they knew their own sons and daughters might have to serve, he's simply pointing out the same hypocrisy. In the end, if our volunteer military results from the fact that some individual's lack or are denied reasonable alternatives, then it is, in essence, a form of conscription.
If I didn't know better, I might conclude that those opposed to the expansion of the GI Bill are not only in favor of stealth conscription; they may actually be endorsing de facto enslavement...with pay...of course.
Tagged as: Barack Obama, Charlie Rangel, Conscription, Economics, Education, George Bush, GI Bill, Iraq, James Webb, John McCain, Military Draft, Patriotism, Socioeconomic, Underprivileged, Veto, Volunteer Military, War
Daniel DiRito | May 23, 2008 | 10:35 AM |
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No doubt the current energy crunch is a complex equation. A number of factors likely contribute to the rising price of gasoline in the United States. As I understand it, they include the rapidly expanding consumer demand (including China and India), the fact that the U.S. hasn't built a new refinery in three decades and couldn't process more oil even if it were made available, regulation on emissions and an awareness of environmental concerns that have made it more difficult to maintain existing refineries (let alone construct new ones), and the prohibition on exploration in oil rich areas in the interest of preserving pristine national treasures.
While these and other factors contribute to the rising prices at the pump and expand our dependency upon foreign oil, understanding the more obscure factors and motivations may be an equally essential component in achieving a comprehensive awareness of where we're at and what we can do to move closer to energy independence.
I want to focus on the motivations and manipulations that contribute to the crisis. Capitalism is premised upon the willingness of free market participants to exhibit ingenuity in the hopes that it will result in prosperity (profits). Hence the risk reward construct is a fundamental aspect of our economic system. At the same time, supply and demand can impact the price one is able to charge for a product as well as the profit margin one can make on the sale of that product. As such, businesses can be motivated to limit production if it enhances demand and therefore improves profitability. The less competition that exists, the more likely a company is able to manipulate supply and demand without concerns for a loss of market shares.
So how does this apply to the oil industry in the United States? Let me count the ways. First, it is far easier to manipulate supply and demand of a limited resource than the provision of a service. There is no doubt that oil is a limited resource that cannot keep apace with the demand and that means it is a finite product. Those who trade in oil realize that profitability can be manipulated by controlling the supply. Granted, there are provisions that penalize or criminalize some of the manipulations that could take place. At the same time, there are environmental restrictions that afford the cover needed to effect the manipulation of supply.
So how is this achieved? One obvious excuse is OPEC and the willingness of those nations with the lion's share of oil production to keep supply low enough to insure sufficient demand and therefore maximum profit. Since the United States is limited in the action it can take against OPEC, U.S. oil producers can cruise along in OPEC's cash rich wake without reproach.
Another method involves the high costs of exploration and extraction as well as the subsequent cost of refinement. Hence, the oil companies can cite the billions of dollars they sink into finding and removing more oil and it would be very difficult for the government to quantify the levels that would equate with intentional and measurable manipulation. The fact that all of the elements associated with the industry trigger environmental oversight provides additional cover for companies to limit supply.
That brings us to the limited refining capacity. Time and again we hear that the complications and the costs of building and bringing a new refinery on board have been prohibitive...or at the very least...difficult to overcome and a clear disincentive to attempt. Therefore, the expansion of refining capacity has been primarily limited to the expansion of existing facilities.
Oil companies can cite the environmental restrictions, the resistance of communities to allow a refinery in their back yards, and the ever changing environmental requirements that require them to spend huge sums of money updating existing facilities as reasons for failing to expand refining capacities commensurate with demand. Clearly, this provides them with the argument to defend the reduced supply and the rising costs that accompany the growing demand.
Lastly, oil companies can also argue that without the ability to tap into known sources of additional oil as a result of limitations on exploration, it doesn't make economic sense for them to sink billions into refining capacity. They simply have to assert that expanding refining capacity to eclipse exploration potential is a self-defeating endeavor. In so arguing, they hamstring the government's ability to prod them into further refining capacity or to assert malicious manipulation.
Where does this leave us? Well, to a large degree it leaves the consumer between a rock and a hard place. To a lesser degree, it leaves the government with little recourse, under the existing laws, to force oil companies to expand supply. Lastly, it leaves the oil companies in the enviable position of watching OPEC limit supply and therefore elevate the price of oil and the profit that can be made on each barrel. It also enables them to limit their own refining capacities and to contend that it is not only harder and harder to find new sources of oil - they are often off limits.
Looking at the possible motivations and manipulations in chronological context, I think it is reasonable to speculate the following. The oil industry has sought the ability to retrieve huge quantities of oil from protected regions for decades. To date, they have been relatively unsuccessful in achieving that objective. Realizing as much, they elected the fallback position to limit their production capacity, wait until such time as world demand eclipsed supply, rake in the profits that result from the constrained supply in the meantime, and then watch as the American public is squeezed so badly that they will call for the government to ease environmental restrictions and allow oil companies to remove huge quantities of oil from previously restricted areas. I can't prove it but I think it's certainly a plausible explanation.
To a large extent, all of the above requires some level of government complicity. While where we've ended up may not have been strictly the result of informed consent, it is a testament to all that is wrong with naively supporting "free market" capitalism...especially when the players are actually engaged in nothing more than an attempt to corner the market so they can insure that they are free to hose the American consumer without recourse or recompense. Anyone seeking a better understand of the degree to which the political process may have allowed corporate interests to overtake the public's welfare need look no further.
Then again, speaking of naivete, so much for believing that we're moving beyond the use of the "gas chamber" in the United States. I could be wrong, but I'm sure that the subliminal suggestion we're hearing from off in the distance is telling us, "Don't forget folks...the next time you fill up...deep breaths, deep breaths."
Tagged as: Capitalism, China, Corporate Profits, Energy Shortage, Environment, Environmental Regulation, Free Market, Gas Chamber, Gas Prices, Global Warming, India, Lobbying, Oil Exploration, OPEC, Refineries
Daniel DiRito | May 18, 2008 | 1:55 PM |
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When I traveled around the world, one of the most notable differences was the character and content of television news. The primary distinction seems to be a matter of depth...meaning the news in other regions isn't just presented in short sound bites. Granted, we have programs in the U.S. that provide detailed reports on topics of interest, however, they are in short supply when compared to many other countries and they aren't typically included as part and parcel of the traditional news cycle.
The following segment, from al Jazeera, on the growing global food crisis is an example of the kind of reporting we see less of in the United States. The report is a lengthy discussion intended to provide some understanding of the factors that are contributing to the food crisis as well as to explore the changes or solutions that might help alleviate it.
It is also notable in the format in which it is presented. When watching U.S. news...primarily on cable networks...the format usually includes participants with two diametrically opposing views offering the talking points of their political constituents and attempting to talk over each other...in segments that might last at most ten minutes...and frequently far shorter.
To understand the distinction, I would offer that the U.S. equivalent wouldn't be found in television broadcasting - rather it is in fact National Public Radio (NPR). If you've listened to NPR, they frequently explore topics that are receiving sparse coverage on the television networks. One can also find more in-depth stories on Public Broadcasting Service (PBS) though many of these programs follow the network format that includes a point - counterpoint approach.
Granted, my observations are more anecdotal than scientific but I suspect there is merit none the less. It appears that we Americans have become content with receiving our news in abbreviated form...delivered by partisans sharing talking points that have first been vetted by focus groups. I think it would make more sense if the American voter functioned like the focus group...taking the time to explore the ins and outs of a topic before making any conclusions while skipping the partisan spoon feeding we've come to accept. Don't hold your breath on that happening any time soon.
If you'll take the time to watch the following report, I suspect you may concur with my speculation. Regardless, you will certainly learn that the food crisis is far more complex than can be explained in thirty seconds. It might also demonstrate that our efforts to reduce every issue to a two-sided topic fully ignores that our world needs to be understood as a complicated multi-dimensional construct whereby every action has the potential for unintended consequences. Finally, it might begin to explain why much of the rest of the world has begun to suspect that Americans are increasingly tone deaf.
Tagged as: al Jazeera, Cable News, China, Corn, Ethanol, Food Crisis, Food Prices, Food Shortage, Globalization, India, Inflation, Media, Middle Class, Multi-National Corporations, Poverty, Rice, Trade Agreements
Daniel DiRito | May 16, 2008 | 8:55 AM |
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Focus on the Family, the empire of demagogue James Dobson, has launched a new video feature that gives outsiders an insight into the values they embrace...and they undoubtedly place a lot of value on the acquisition of cash...especially if it can be used to further their fundamentalist agenda.
The Colorado Springs based organization now produces two video segments - one is called Stoplight and the other Turn Signal...catchy metaphors for their desire to put a "stop" to anything they deem in conflict with their Bible based bloviations and to direct people to "turn" away from secular sensibility and accept the dogma they deem to have been sent to them from the divine director.
In the following segment of Stoplight, Stuart Shepard muses on the government's economic stimulus checks and how the money, unjustly taken from voters to fund a flawed government, could be put to better purposes. Of course those purposes include items like banning same-sex marriage and appointing more right leaning judges as well as eliminating a woman's right to choose.
And don't forget the most important purpose...donating more money to Focus on the Family so that Dobson and his disciples can lead lavish lives that support the contention that God rewards good people...with material wealth (prosperity theology). Yes, God thinks the best way to nurture the soul is to stuff a load of cash into the checking account.
You see, the folks at Focus on the Family are strong proponents of marriage...especially the one that unites them with money and the intoxicating power it brings. Apparently they have an updated understanding of the expression, "Charity begins at home". Yes, Jesus was a nice guy...but he could have been far more effective if he had been a well-heeled snappy dresser with a stable of lawyers and lobbyists. After all, apostles and the downtrodden are so passe.
Tagged as: Abortion, Bible, Economic Stimulus Checks, Evangelicals, Focus On The Family, God, Government, James Dobson, Jesus, LGBT, Marriage, Religion, Religious Right, Same-Sex Marriage, Stuart Shepard, Taxes
Daniel DiRito | May 14, 2008 | 11:50 AM |
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In this episode of The Onion News, the network takes a look at the Gap's new clothing line...the one that is made by kids for kids. Nothing like American children being able to wear the right tags...even if those tags are sewn on by children in sweat shops.
After all, isn't that why we Americans are the envy of the world...what with giving our children generous allowances to buy the products they need instead of having to sell them into virtual slavery to make those products.
Yes, without capitalism, what would parents in third world countries do with their children? Thank goodness we provide the demand that allows them to be productive individuals. Otherwise, they might spend their time playing video games, participating in club sports, and trying to one up the neighbor's children by wearing the latest fashions.
Now if we can only get these same foreign children trained in providing first rate customer support for American companies that have been "forced" to hire adults in third world countries. Thank goodness these folks are willing to do the jobs that Americans won't do.
It certainly makes one feel good to know that we're continuing our efforts to prove our unyielding commitment to assisting the underprivileged people of the world...at a significant profit to U.S. corporations, of course!
Tagged as: Baby Gap, Child Labor, Child Rearing, Corporate Profits, Fashion, Gap, Globalization, Humor, Outsourcing, Sarcasm, Satire, Sweat Shops, The Onion
Daniel DiRito | May 12, 2008 | 11:09 AM |
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In the following video clip from The Daily Show, Lewis Black shares his skepticism regarding the recently authorized stimulus checks that are intended to jump start our stalled economy. Needless to say, Black has some choice words for a program that he views as a waste of taxpayer money that he can endorse...as opposed to the endless war in Iraq.
Black laments that the government has skimped on the allowance for children...stating that he can get easily get more than $300 dollars for them on the black market. He's also of the opinion that consumers will spend their windfall on the same junk that has led us into this mess. Black closes by telling us he's spending his $600 dollars on lottery tickets.
Tagged as: Economic Stimulus Package, George W. Bush, Lewis Black, Miley Cyrus, Recession, The Daily Show
Daniel DiRito | May 9, 2008 | 10:00 PM |
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I don't generally watch Glenn Beck nor do I usually find his observations to be palatable. The following video is a notable exception. In this clip, Beck discusses the impact of $200 a barrel oil with Byron King, an oil industry analyst. Should oil reach this price...and there are some who believe it will happen by the end of this year...we can expect major changes that we can't even fathom at this moment.
It amazes me that our president continues to tell us the economy is just experiencing a rough patch while the escalating oil prices suggest the clouds of calamity may be on the horizon. In a worst case scenario, the word recession would likely be inadequate to describe the financial crisis we would experience should we fail to address this looming energy nightmare.
What scares me the most about this situation is my recollections of the handling of other emergencies by this administration. I keep thinking about Katrina and the clear indications that the storm would likely devastate New Orleans...and yet the president was nowhere to be found for four days and we were totally unprepared for the storm's aftermath.
Now that Bush is nearing the end of his presidency, just how interested is he in averting an energy meltdown? I'm afraid our best hope is that this energy crisis abates on its own. Having to rely on the critical thinking skills of George W. Bush hasn't proven to be in our best interest.
Tagged as: Byron King, Economy, Food Prices, Fuel Efficiency, Gas Prices, George Bush, Glenn Beck, Katrina, New Orleans, Oil Prices, Recession
Daniel DiRito | May 8, 2008 | 9:43 PM |
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