Oil's Obvious Solution: Why Isn't it More Noticed?

First, an administrative note: I was so busy with homework that I couldn't do any more of the planned series on the nominees, and now that McCain has wrapped up the Republican nomination further comment on the Republican race is pretty pointless. Later posts will probably tell readers (if there are any at this point) what I think of Hillary, Obama, and McCain, so I'm calling off the series.

Anyway, this post came together for me while I was strolling through Captain Ed's comment section. Having corrected the misconception that Clinton performed an economic miracle (for those who are interested in that discussion, here is the relevant post), I moved on and noticed a post complaining that Exxon pays taxes for a lot of the poor population. This piqued my interest, and while replying my thoughts coalesced into something worthy of a blog post. Here we go:

Oil, as much as food, is a necessity; our nation runs on the stuff. But high gasoline prices have inspired widespread complaints about the evil oil companies who make ungodly profits at the taxpayer's expense. Furthermore, oil's role in carbon dioxide emissions, its limited nature, and its disreputable provider nations (particularly in the Middle East) combine to make it that much more objectionable. Whether or not you believe that oil companies make too much money or that CO2-created AGW exists, oil is not an ideal energy source by any stretch of the imagination, certainly not as THE resource of the United States.

So, what to do about Texas tea? Motivated by dislike verging on hatred for oil companies as well as global warming, the left offers various solutions, which for the sake of simplicity I will divide into two categories: carbon taxes and cap-and-trade systems. As the name indicates, carbon taxes generally tax the hell out of everything that emits a greenhouse gas, including (and probably especially) products that use oil as well as oil companies. The rationale is that creating an economic disincentive will encourage companies to search for other energy sources, plus Congress gets more money (which is a good thing for Congressmen, if not for the rest of the country). Cap-and-trade systems set a limit on the amount that the country can emit, divide up that amount into small units, and hand those units out to companies to sell back and forth until everything balances out. Proponents of this system argue that it sets a clear limit on emissions (as opposed to the gas tax); that it is something of a "free-market" solution that allows companies flexibility in determining their emission rates; that it has been tested successfully on sulfur dioxide emissions, reducing acid rain without a lot of hullabaloo; and that Congress gets money from it (of course). Meanwhile, the Republicans offer the tried-and-true solution of leaving it to Smith's invisible handmobile. Some Republicans simply don't see this as an issue - they don't think AGW is real and don't fault oil companies for making a profit. Others trust that the free market will sort things out - if the oil companies are so eeevil and oil kills babies, surely someone will notice after a while.

However, none of these stock solutions mix well with oil because of the nature of the industry. Carbon taxes are essentially gasoline taxes applied on a broader scale - but the net result would simply be higher prices. Since oil is a necessity, oil companies have a lot more leeway in their pricing than most - they can adjust prices to meet their desired profit margin, and the only real loser in this situation is the consumer. More specifically, the loser is the poor consumer - since taxes on oil companies translate into higher prices at the pump, a carbon tax is essentially the same as the regressive sales tax for oil companies. We can see this in a smaller frame by looking at gasoline taxes, which don't put people off buying gasoline and don't stop companies from making large profits. So that solution doesn't hold up.

Cap-and-trade is more complicated, but still ultimately fails when it comes to controlling oil companies. First, the initial handout of permits is a process seemingly ripe for corruption and havoc, unless there's already a good way to control that process. Assuming the acid rain politicians figured that out, we then move to the effect on oil companies, which is essentially nil as they can purchase permits willy-nilly unless and until the market freezes up as companies attempt to hold on to their remaining credits, which basically destroys the system. And the cost for those permits will once again go straight to the taxpayer.

Finally, the free-market solution will fail (or at least be EXTREMELY slow) because of the dominance of oil. Until a development like the one that allowed us to exploit oil comes along, oil is the best natural resource available. There's technology that allows us to use other resources for the same process, but those are very slow to come together because there's little short-term incentive at the moment to develop it; furthermore, any resource that requires a surrounding infrastructure (like gasoline) will have trouble competing against the well-developed infrastructure that supports oil.

To reuse the chemistry metaphor, the unifying quality of these solutions is that they are polar; they're each developed by one side of the political continuum. Oil, being a nonpolar substance, can only dissolve nonpolar substances; let's try a nonpolar solution. Promote government R&D that develops an incentive for alternative energy sources. The X-Prize worked well for private spacecraft development; something similar can be (and probably is being) done for alternatives to oil in various industries. Using the X-prize model, the left is happy because it helps the environment and hurts the eeeevil oil companies, while the right is happy because it preserves free-market incentives and removes ties with OPEC. Why don't more people talk about this? Is it because it's already done to the degree where more won't help?

Another simple solution, which I was reminded of by a friend: nuclear energy. Apart from the stigma of Chernobyl and the problem of getting rid of nuclear waste (both solvable), is there any reason why we aren't putting more effort into this area?

Election 2008: The Candidates

I thought it would be a good idea to say where I stand regarding each of the candidates now, given what I know about them, so that later comments by me regarding the candidates can be taken into context. This will be a series of posts, each dealing with one or perhaps two candidates.

The Republicans: Ron Paul

I'm going to spend the most time discussing the candidates I absolutely reject and those I absolutely accept; Ron Paul falls firmly into the former category. Dr. Paul, to me, is an idealist who lacks an understanding of the complexity of the real world, and as such I cannot support him.

There are certain anecdotes that have stuck in my brain regarding him that exemplify this. First, there's his stance on evolution: he dismissed it as a "theological issue", and said he didn't accept it. Paul supporters will tell me that he only said that there are no absolute answers on either side, but that he spent so much time expounding on that subject only indicates that he doesn't know/care that theories CAN'T be proven. Also, to me he staked out an absolute position the second he said "It's a theory, the theory of evolution, and I don't accept it." His discussion of science left me seeing only his ignorance on the subject, hardly an encouraging trait.

Though Paul's rejection of evolution is tolerable, as science is at best a minor issue for the presidency, his thoughts on the Civil War, as expressed on Meet the Press with Tim Russert, left me more worried. Here's the relevant excerpt:

MR. RUSSERT: I was intrigued by your comments about Abe Lincoln. "According to Paul, Abe Lincoln should never have gone to war; there were better ways of getting rid of slavery."

REP. PAUL: Absolutely. Six hundred thousand Americans died in a senseless civil war. No, he shouldn't have gone, gone to war. He did this just to enhance and get rid of the original intent of the republic. I mean, it was the--that iron, iron fist..

MR. RUSSERT: We'd still have slavery.

REP. PAUL: Oh, come on, Tim. Slavery was phased out in every other country of the world. And the way I'm advising that it should have been done is do like the British empire did. You, you buy the slaves and release them. How much would that cost compared to killing 600,000 Americans and where it lingered for 100 years? I mean, the hatred and all that existed. So every other major country in the world got rid of slavery without a civil war. I mean, that doesn't sound too radical to me. That sounds like a pretty reasonable approach.

So much misunderstanding, so little time. My primary beef is with two points. First, does Ron Paul honestly think Lincoln could have avoided the war and kept the Union together, when the South seceded even before his inauguration? Or perhaps Paul thinks that we'd have been better off split up and not resolving the slavery issue at all? He pins the whole war on Lincoln, not understanding that the Civil War has at least 85 years of history behind it. And this leads right to the second point: Ron Paul trivializes the war by making it just about slavery. The war was the result of a deep schism between South and North, of which slavery vs. abolition was merely a symptom. At least two other major causes were present: the conflict between industry and agriculture, and the conflict between Federalism and Nationalism. At the same time, Paul thinks Lincoln did this to enhance the federal government's power, to "get rid of the original intent of the republic." So the war shouldn't have been fought because "there were better ways of getting rid of slavery", but Lincoln only fought it because he wanted to enhance his own power. Get your story straight, Paul. When I heard this on top of the science issue, I started to think maybe Dr. Paul slept through high school; to get such a crucial period of our history so completely wrong...

But the most annoying anecdote of the lot is the most relevant to the debate. Ron Paul, running as the Consitutional Candidate who will Elevate that Sacred Document to the Level it Deserves, doesn't seem to think the Sixteenth Amendment exists at all. He has denounced the income tax as unconstitutional numerous times, the most recent of which was just a week ago:

BECK: We`re with presidential candidate Ron Paul.

And, boy, there`s something that nobody else says. Nobody on Wall Street will say that. And it only makes common sense that we are destroying our own currency.

One of the things that I think attracts me to libertarians is the idea of getting back to the gold standard and abolishing the IRS. Is it true -- I believe I have read that you say if you don`t pay your taxes, you are in the category of civil disobedience akin with Gandhi and Martin Luther King.

PAUL: Well, I -- I think it`s practicing the same principle, yes, because the income tax, the way it`s collected is unconstitutional. And if you believe that, and you practice civil disobedience, you to suffer the consequences.

I chose to try to change the law. I haven`t chosen that method.

But people who sincerely believe that it`s unconstitutional to be guilty until you prove yourself innocent and you be your own -- you have to testify against yourself, I think they have a legitimate cause. And I think it`s a libertarian principle to practice civil disobedience. It`s non-violent.

Now, the only possible justification I've found for this position is that there were wording errors in most of the ratification documents for the Sixteenth Amendment - but that argument has been cut off at the knees by the Supreme Court several times. So either Ron Paul doesn't know that the Sixteenth Amendment exists (unlikely since he's referenced it often); he's clinging to an age-old argument refuted by the Court; or he doesn't have any respect for the process of amending the Constitution. None of these are palatable to me, especially not coming from The Only Honest Candidate In Politics (TM).

This much convinces me that Ron Paul is ignorant; his noninterventionist foreign policy and "the perfect is the enemy of the good" economic policy shows me that his naivete leads him to dangerously simplistic idealism. The real world is more complicated than Dr. Paul seems to believe, and I would not want such a man holding the highest office in the land.

EDIT: Ah, yes, one more nail in the coffin for Ron Paul: the crazy newsletters of his past. It seems there are only a few possibilities: first, he actually wrote those diatribes (or knew about them), which makes him a racist homophobic bigot; or second, he had no knowledge of what was being printed under his name, which makes him criminally careless. Neither of these are presidential qualities. Myself, I suspect a bit of both; there's substantiation of my point about Lincoln in one of the articles as well as personal information in some others, but the overall position doesn't sound like Paul. Anyway, if Ron Paul's candidacy isn't already dead, this drives a stake through its heart, burns the corpse, and scatters the ashes to the wind.

Some Iowa Statistics, or Why Huckabee Isn't Winning

There have been numerous comments on the incongruity of having Iowa as the first primary state, given how non-representative it is of the nation as a whole. The primary factor is the disproportionate number of evangelical voters in Iowa (though to the largely religion-blind Democratic party this is negligible); the SF Chronicle reported that around 60% of Republican caucus-goers were self-described evangelical Christians according to exit polls, which is an obvious aid to Mike Huckabee. Michael Medved has a post up at Townhall.com analyzing the strength of Huckabee's evangelical boost in Iowa. Unfortunately, in the process of concluding the bias isn't strong at all, he completely screws up the statistical analysis. I'll critique his post first and then offer my own conclusions about the data he presents.

Michael Medved's conclusions are unorthodox if nothing else. He compares Mike Huckabee's support among Evangelicals (46%) to his support among women, the poor, and the young (40, 41, and 40% respectively) as well as the total of 34% of caucus attendees. This leads him to the conclusion that Evangelicals did not differ significantly from Iowa Republicans as a whole. Well, I have news for Mr. Medved: this is because Iowa as a whole is evangelical. The vote counts from women, the poor, the young, and everyone are skewed by the huge proportion of evangelicals present. Thus no real conclusion can be drawn from the data Mr. Medved offers. He does basically the same analysis with Mitt Romney's numbers, making the argument that the difference between 19% of evangelical voters and 24% of overall voters isn't large, and again missing the skew in the overall numbers from the evangelical numbers. He uses this to argue that Romney's "phoniness" alienated voters in Iowa, without any evidence to support the phoniness (I know it's there, but it's sloppy to not show any since he's giving it as THE reason why Huckabee beat Romney); this conclusion might be valid if the statistics pointed that way, but they don't. There goes half his post right there.

Medved also points out here that Huckabee didn't really win the evangelical vote because he didn't get a majority; he got only 46%. But in the same article he points out that the next most popular candidate among evangelicals was Romney with 19% of the vote; the other 4 major vote-getters split 35% of the evangelical vote. In head-to-head contests among evangelicals, Huckabee beat each other candidate by at least a 70-30 split, and it's highly unlikely that Huckabee is the last choice of the 54% of evangelicals who voted for someone else. Medved fails to recognize how dominating 46% of the vote is in a 6-way race, though it doesn't take a rocket scientist to realize the difference between 46% and the average of 16.66...% if votes were divided evenly.

But Medved really gets in over his head with the latter part of his post, where he attempts to blame Huckabee's low numbers among non-evangelicals on anti-religious bias. His justification? The large difference between the non-evangelical number (13%) and the overall vote. That's right, Huckabee's unpopularity among non-Christian conservatives is due to anti-religious bias, and we know this because Huckabee's just so darn unpopular among the non-Christian conservatives compared to everyone else. Of course, I know what he's actually trying to say, which is that Huckabee's unpopularity among non-Christian conservatives is so far out of line with Iowa Republicans generally that there must be some underlying reason, and anti-religious bias is the most likely (though again he provides no evidence for this claim). But the real reason, again, is the huge number of evangelicals. Because evangelicals make up such a huge percentage of Iowa caucus-goers, and because there's such a huge difference between the evangelical and non-evangelical votes (46% to 13%, for reference), the result will obviously be a large difference between the total vote and the evangelical vote. All one can conclude using Mr. Medved's methods is that evangelicals like Huckabee more than non-evangelicals; the rest of his post is a patchwork of unsupported conclusions and poor analysis of statistics.

This is not to say, however, that no conclusions can be drawn from the data Michael Medved provides. First, a trivial calculation: Huckabee's support among evangelicals was 10% greater than total support in Iowa, while the difference between the non-evangelical and total votes was 21%. Since this data would imply that 70% of the caucus-goers were evangelicals, which differs from the 60% estimate by a significant amount, one can conclude that there was a "decline to state" option; furthermore, voters that took that option liked Huckabee about as much as evangelicals. One can guess that the majority of the "decline-to-state" voters were actually evangelicals.

Second, a more significant calculation: What happens if we make Iowa more representative of the nation as a whole? Iowa's evangelical vote represented 60% of the total, but the percentage of evangelicals nationwide is only about 15%. Since the percentage of Iowa evangelicals is about 40%, and evangelicals turned out in greater numbers to vote for the Huckster (a ratio of 3 to 2), let's be generous and guess that the evangelical vote in a more representative state would make up 25% of the total (a 5 to 3 ratio - I AM being generous here). Then we can extrapolate the voting percentages Mr. Medved provided, with 75% of the hypothetical representative state giving Huckabee 13% of their support (non-evangelicals) and 25% of the state giving Huckabee 46% of their support (evangelicals) for a total of 19.8% of the primary vote in a representative state. By contrast, Mitt Romney would get 75% of this state to give him 33% of the vote and 25% of the state to give him 19% of the vote, for a total of 29%. Though Mr. Medved does not link to the source for the numbers he cites, he does say that the other candidates all had far less support from evangelicals (less than 10% each), so their numbers would be even further boosted by this conversion. So the conclusion one can draw from this set of numbers is that the disproportionate number of evangelicals in Iowa actually played a HUGE role in propelling Mike Huckabee to the top. Of course, we knew that already - even if Michael Medved still has no clue.

Anyway, this is why I still think Huckabee has no realistic chance at the Republican nomination. Without the evangelical base, he has nothing that would appeal to conservative voters. My justification of this position another time.