The Free Market Strikes Back

We have talked a lot about the economic damage that may potentially be brought be the overzealousness to implement new eco-friendly standards and laws. Well over in England, the party is over and the free market is reasserting itself:

Julie Burchill can't stand them. According to her new book, Not in my Name: A Compendium of Modern Hypocrisy, she thinks all environmentalists are po-faced, unsexy, public school alumni who drivel on about the end of the world because they don't want the working classes to have any fun, go on foreign holidays or buy cheap clothes.

Michael O'Leary, the chief executive of Ryanair, agrees. In an interview with Rachel Sylvester and me, he told us that the "nutbag ecologists" are the overindulged rich who have nothing better to do with their lives than talk about hot air and beans.

So the salad days are over; it's the end of the greens. Where only a year ago the smart new eco-warriors were revered, wormeries and unbleached cashmere jeans are now seen as a middle-class indulgence.

But the problem for the green lobby isn't that it has been overrun by "toffs": it's the chilly economic climate that has frozen the shoots of environmentalism. Espousing the green life, with its misshapen vegetables and non-disposable nappies, is increasingly being seen as a luxury by everyone.

Read the whole thing.

It's nice to see that we have clearly reached a tipping point when it comes to the environmental movement. Sure, it's easy to be somebody like Al Gore and (claim to) live a life in balance with the Earth, and with carbon offsets, and all that rot. But while this rich environmentalists can afford to take major steps in order to (claim to) be more environmentally friendly, clearly not everybody can live that way.

The reactions that we see in stories like this, and the reaction to yesterday's issue in Germany gives me more hope that economic factors will continue to keep radical environmentalism at bay, and allow the public and private sectors to assume more reasonable stances in regards to conservation and environmental protection.

Unions, Government Websites, Labor, GM, and O'Malleynomics

And you're probably thinking "What in the hell is he talking about?"

Let's start with a recent kerfluffle in Maryland's liberal blogosphere, which FSP's has been all over. Basically, the left was in a tiff because the state had an "anti-union website" that highlighted that Maryland has a "very favorable labor climate" and goes into detail about why Maryland is (allegedly) a good state for labor relations for businesses in Maryland. The left got in a lather, emails got sent, the Secretary of DBED responded and the O'Malley Administration folded like an accordion basically in less than one business day.

Now, I'm not going to really give the Administration or FSP a hard time about that. The Administration responded to its base, they had something which was contrary to administration policy, and they fixed it. And it also shows the influence that bloggers can have on government and policy. But that's not the story here.

The real question is this: who in the world thought Maryland had a climate that encourages businesses to create jobs here in Maryland? Income taxes are up. Property assessments are up. As we saw with Walmart, if you're too successful, they'll try to pass punitive legislation so unconstitutional it couldn't stand judicial muster. The General Assembly passes bills increasing the minimum wage and requiring high "living wages" in order to compete for government contracts. And with spending still out of control, more taxes and fees could be on the horizon. Clearly, the problem with Maryland is the fact that government here remains what it has always been: Anti-Business, Anti-Worker, and Anti-Consumer. The state website, while clearly over the top in being anti-union, just goes to show how much selling Maryland needs to do in order to attract business to this state. It was quite an exaggeration of Maryland's labor environment.

Now, let's tie this all together by talking about General Motors. GM is poised to announce a massive restructuring tomorrow:

General Motors Corp. is expected to cut several thousand salaried jobs and further slash truck production in response to falling U.S. sales and Wall Street's demands for more action to stem its losses, according to two people briefed on the plan.

GM Chairman and CEO Rick Wagoner was scheduled to discuss the changes at a news conference Tuesday morning. GM released no further details, but salaried job cuts and reductions in benefits and executive compensation are likely.

What does this have to do with Maryland, other than the obvious fact that Broening Highway closed three years ago and that a large Allison transmission plant is still in White Marsh? Everything.

One of the reasons General Motors is in such deep trouble financially is the amount of control the United Auto Workers has over their bottom line. The UAW continues has negotiated to the point where salaries are higher than the demand truly is for the positions that are being filled in GM plants. Furthermore, the UAW negotiated from GM an overly generous health insurance plan for its workers and retirees, a plan that really eats into the bottom line. Now I'm not saying that these workers should not have health care, but the fact is that the UAW continued to negotiate from such a strength of power than they were required to concede virtually nothing to GM at the time. But instead of negotiating in a manner that allowed union workers to be handsomely compensated and allowed GM to continue to be profitable, the UAW continued to take, take, and take.

The problem is that a lot of people saw the GM collapse coming from a mile away. An editorial by Allen Sloan in the Washington Post from April 2005 stated:

These problems began to surface about 15 years ago because regulators changed the accounting rules. In 1992, GM says, it took a $20 billion non-cash charge to recognize pension obligations. Evolving rules then put OPEB on the balance sheet. Now, these obligations -- call it a combined $170 billion for U.S. operations -- are fully visible. And out-of-pocket costs for health care are eating GM alive.

GM spokesman Jerry Dubrowski says the company expects to pay $5.6 billion in health care costs this year for 1.1 million people covered by its plans. That's up from the $3.9 billion it shelled out in 2001 to cover 1.2 million people.

"At the time GM began offering these benefits, no one had any idea that the costs for prescription drugs and medical services would explode the way they have," Dubrowski said. True. But the UAW was astute (or lucky) enough to push the risk of covering these costs onto GM....

...If GM were making lots of money selling vehicles, this would all be manageable, sort of. GM could buy enough time for demographics to bail it out, as more retirees begin getting Social Security and Medicare, reducing GM's costs, and other retirees die off. Its ratio of retirees to workers, currently 2.5 to 1, would shrink. Alas, GM's vehicle business is in the tank. Unless GM starts making money on vehicles or gets a break from the UAW or the federal government, things are going to get really ugly. I hope that doesn't happen, but it easily could.

The bottom line: Whenever you offer someone a free lunch, make sure that you'll be able to pay the bill when it comes in.

Yes, GM suits share a significant portion of the burden here. But why has the union refused to help GM in an effort to keep the doors open? A victory to maintain 100% coverage is pyrrhic if the doors to the plant are shuttered and people are out of a job. But unions often

And this right here is why Maryland was advertising what they referred to as a "very favorable labor climate." Companies cannot afford to go where union leadership is going to force the issue and make costs prohibitively high. There is a reason that foreign car companies that build plants in America build plants in right-to-work states. There is a reason that India's Tata motors (which I wrote about in January) purchased Jaguar and Land Rover from Ford and obtained their foreign and domestic dealership and distribution network. In both cases, these foreign automakers are not forced to deal with union issues in the way that General Motors has.

Maryland, of course, is not a right to work state. In fact, we live in a state where unions have a disproportionate amount of power when compared to the actual number of citizens who are union members. And usually of course, it is the union leadership that is in the back pocket of Maryland's Democratic Leadership. Hell, in Maryland teachers are not even allowed to skimp on union dues even if they do not join the union. Freedom of choice in paying union dues, that's not something teachers in Anne Arundel County have here. Despite the rhetoric on the now defunct state website, Maryland is a state where unions (particularly union leaders) thriver financially by doing what is best for the union, not what is best for the workers or the local economy.

Think I'm joking? Do you think it is the best interest of Verizon workers to vote to strike when their contract expires in 30 days, as they are expected to do? In this economy? Does anybody really think that it's in the best interest of Verizon workers to do that at this time?

The left's uprising about this "anti-union" website shows interesting problems with Maryland's economy. While it was against the policies of the current administration, it really highlights to problems that Maryland has in selling itself to companies looking to create job growth. Maryland has positioned itself to be a very expensive place to do business, and has forced itself into a corner, much like General Motors did with their union policies.

Instead of worrying in the grand scheme of things about websites, let's think about what we can do to stop the mismanagement of Maryland's economy and actually provide real incentives for businesses to come here and create jobs. And continued tax hikes, anti-business legislation, and unchecked spending is just the way to ensure no such job creation happens.

Seeing Red

Now that their main man Martin is in the Governor's Mansion, apparently the state budget running in the red is no problem for the Sun Editorial Board. Their editorial this morning is one of the more bizarre editorials I have read in quite some time.

Maryland tax revenues are proving to be less than expected, particularly from the distressed housing and retail sectors, a clear indicator that the local economy is not immune from the national downturn. According to the latest estimate, tax collections for the fiscal year that began July 1 are likely to fall about $200 million short of projections.

It's true that the housing and retail sectors being down are going to lead to lower tax revenues. But what the writers do not take into account, naturally, is the decrease in tax revenues due to the increases in taxes. I have noted before that when tax rates are increased, revenues decrease. This is particularly true when you make it a point to pass taxes targeted at those with the means to leave.

Not only have Maryland's economic troubles proved relatively mild compared with other states, at least so far, but the budgetary outlook has been helped substantially by last year's tax package.

By adding a penny to the sales tax, raising the income tax for the state's wealthiest and taking a few other steps, Mr. O'Malley and the General Assembly not only averted a potential $1.7 billion budget shortfall but also had enough to spend more on transportation projects and health care for the uninsured.

Of course, it is morally reprehensible to increase taxes to cover a shortfall, but increase them just enough to spend billions more in increasing the size of government. Not only is that detrimental to the economy and to the wallet of the taxpayer, it also sends a dangerous message that such profligate and irresponsible spending will not only be acceptable, but encouraged. The Sun seems to think that indiscriminate wasteful spending and hiking taxes to obscene levels is a more acceptable way to manage the state than it would be to spend responsibly and reduce the size of government in order to spend what we can afford.

Decisions that seemed painful last fall are now paying off. A $200 million drop in revenues is manageable because lawmakers set aside more than that in the state budget's cash balance account.

You want painful? Talk to the parents who have less money to save for college. Tell that to the high school student who can't get a summer job to help pay for their own education. Tell that to the mother who lost her job and can't put food on the table for her children. Isn't that more painful than having enough money to cover a bloated budget?

Even for families who aren't in dire straits, they can just go hit up their neighbors for more money in order to pay their bills. They realize that they need to cut back on spending and only spend what they can afford. That's how they make their fiscal situation "manageable." The only way that the Sun editorial writers are going to find a solution to the current fiscal situation that is manageable is through higher taxes.

And speaking of tax hikes...

But that is the short-term view. In fiscal 2010 (the budget year that begins nearly one year from now), the gap could widen to $500 million. And after that, the state's budget health may depend on whether voters approve this fall's slots referendum - or find an alternative source of new revenue.

Which, of course, is ridiculous. It is fiscally irresponsible to depend on slots revenue to cover future spending. It is fiscally irresponsible to not cut spending now in order to cover expected shortfalls. And I said before, it would be morally bankrupt to raise taxes again.

The Sun wraps up their editorial with a rather weak-kneed endorsement of spending cuts, but the earlier paragraphs make it clear that their preferred method of dealing with the issue is not through cutbacks in spending, but further increasing the burden on their readers....maybe explaining why so few people are buying the Sun these days.

But of course our friends on the left still think taxes are the way to go. FSP poster Nate W posts this about the shortfalls in the last two budgets in a larger post about the recession:

Yea, I'd say that wouldn't be such a bad idea Mr. Descheneaux. Even though this shortfall isn't nearly as bad as the $1.5 billion gap that required a special session last year, its still around $200 million more than you'd like to see. Especially when there are no signs that this dragging economy is going to tick upwards anytime soon.

The bolding is mine because I want to draw attention to the very same mindset that the Sun is endorsing. The $1.5 billion gap did only required a Special Session because Governor O'Malley refused to act like an adult and cut the budget in a responsible way. Instead, Democrats in Annapolis raised taxes and raised the cost of living for every man, woman, and child in this state. They did so with no care whatsoever to the devastating impact these taxes had on the local economy. Terms like O'Malleynomics and the O'Malley Recession aren't cute buzzwords to piss off the left, but real descriptors of the damage O'Malley and the General Assembly has done to the economy and done to the Maryland taxpayer. What we see in Maryland's economy and the impact that it is having on the working and middle class taxpayer is not entirely their fault, but O'Malley and the General Assembly share a pretty good chunk of blame for it.

The cure for Maryland's economic woes are what I have argued for from day one; lower taxes, and reduced spending. It's that simple and until Democratic leaders understand that, we have no way out.

Flying the Merging Skies

There seems to be a lot of consternation regarding the merge of Delta Airlines and Northwest Airlines. Frankly, I'm not exactly sure why.

Would it not make more sense for all parties involved to support this merger? Is Consumer Choice going to be severely degraded? Not really. Are jobs going to be lost? Probably none that weren't already in danger. Will prices go up? Highly unlikely, at least in terms that are directly related to the merger. And those seem to be the biggest concerns when it comes to this proposed merger.

But I ask this question: if Delta and Northwest did not merge, wouldn't it be more likely that one of the two would go out of business? Would that no guarantee greater job losses? Would that not guarantee even fewer consumer choice? Would that not lead to higher prices as the demand shifts to the remaining carriers?

The Delta-Northwest Merger is going to be a long and arduous process for all who are concerned. But to say that this the merger should be rejected are completely wrong in their assertions. The merged airline will provide American consumers with a stronger, more financial stable airline that will have a larger fleet with reduced operating costs due to the new economy of scale. Sure it may be a headache for passengers and employees for the time being, but more than likely consumers get a stronger airline over the long-term. And given the state of the economy, this cannot be anything but a good for passengers, employees and consumers.

The Liberal Kool-Aid Acid Test

Whatever Isaac Smith is drinking don't follow suit, because this is the kind of thinking that is destroying Maryland:

One more thing I should add is that I think we can explain the right-ward lurch, as Paul puts it, in the General Assembly this session as a reaction to the economy taking a nosedive and the aftermath of the special session.

There are a number of just completely ridiculous things in that brief sentence. First is the accusation that the General Assembly took a "right-ward lurch." Only somebody to the left of Mao could think that this General Assembly lurched in any direction but towards a Maryland that taxes its citizens to the hilt, spends more than it can afford, and looks to find ways to interfere with the lives and the civil liberties of its citizenry. This is the Maryland that Isaac Smith claims he wants, but this is a Maryland that isn't far to the left enough for Smith and the fringe left.

Of course, Smith fails to acknowledge that part of the reason for "the economy taking a nosedive" here in Maryland is precisely due to the Special Session and the O'Malley Recession that was born from it.

Then, as if Maryland didn't have enough spending problems:

I know I harp on this, but the inability of states to do deficit spending like the federal government severly constricts what states can do during a recession.

Yes. Smith came out and endorsed deficit spending as the solution to our problems. Fortunately, the State Constitution in Maryland requires us to have a balanced budget, or lord knows how much Martin O'Malley and his crew could have begged, borrowed, and stolen from this General Assembly and, ultimately, the taxpayers. The reason that we are not allowed in Maryland to have deficit spending is for the precise reason that Smith wants us to spend into deficit: so that irresponsible, financially dimwitted elected officials can't try and spend our way out of economic problems. We are already taxed to death and concerned with our bond rating: how does Smith think that deficit spending is going to magically solve those problems?

Finally, we get this:

Given that environment, it's easy to see how O'Malley and the General Assembly adopted a tempermentally, if not ideologically, conservative stance on fiscal matters.

I am stunned that somebody as financially to the left as O'Malley can be called a conservative on any financial issues when he continues to spend beyond the state's means and continues to try to tax Maryland's middle class and working families into poverty and brokering deals that will require families to spend more on electric rates.

Folks, Smith is part of the fringe element that we have to deal with. People of this kind of fringe mindset are the ones shaping policy in Annapolis. I talk a lot about how important the 2010 elections are, and this is why: we cannot let absurd, irresponsible, and reckless ideas such as this ever enter the mainstream or else Maryland will be doomed to financial devastation and widespread poverty for generations to come.

This is why we continue the fight....

House of Delegates does the wrong thing....again

The House of Delegates has killed the bill that would allow consumers to purchase wine over the internet.

Why in the world does the General Assembly make it a point to stand in the way of common sense and of commerce at every chance it gets?

Stimulus Silliness

It is amazing the level of silliness government will go to in order to get good press:

Congressional leaders announced a deal with the White House Thursday on an economic stimulus package that would give most tax filers refunds of $600 to $1,200, and more if they have children.

House Speaker Nancy Pelosi said Congress would act on the agreement — hammered out in a week of intense negotiations with Republican Leader John A. Boehner and Treasury Secretary Henry Paulson — "at the earliest date, so that those rebate checks will be in the mail."

The rebates would go to 117 million families, according to a Democratic summary. That includes $28 billion in checks to 35 million working families who wouldn't have been helped by Bush's original proposal, the analysis estimated.

Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to ananalysis by Congress' Joint Tax Committee — would go to individuals who pay taxes.

Now, you may think that I would like the concept of get some money back from my taxes. But this sort of "stimulus" package is the kind of Inside the Beltway silliness only Washington lifers could find useful or prudent.

First off, what economic impact is this truly going to have? As my RedMaryland colleague Michael Swartz notes:

All right, so I get an $800 check. The feds want me to buy something in the hopes of goosing the economy. But a lot of people who are behind on their mortgage bills and credit cards will simply send that cash along to whomever they owe, which will help bail the banks and creditors out. It's a similar argument to the one over the subprime mortgage bailout, which helps the creditors but doesn't teach those who weren't of enough sense to borrow within their means that they should consider their options more carefully.

And he's right. If we are currently in a "credit crunch" as we seem to be, the majority of those Americans who are going to receive this cash an immediately put it towards their credit card or other debt. Even though I do not carry any credit card debt from month to month, I am still likely going to do one of two things with the rebate: bank it, or put it towards my mortgage, my car loan or my student loans. I'm certainly not going to go buy a 70-inch TV or any sort of thing like that just because the government.

At least that's what should happen. As Michelle Malkin notes:

The stimulus will stimulate more of the same bad behavior that got people into trouble in the first place.

Because if the Government gets its way, people will spend their money instead of being responsible like they should be and either saving it or paying down their debt. Except in Maryland, where that money will be wasted on higher taxes (the fruits of O'Malleynomics).

And that brings us to the second point, that both Malkin...:

I'm all for the government giving me back my money. But why not drop the economic stimulus pretense? Just give me back my money. If the government can spare these "rebates" and send them back now, why did they take the money in the first place? Forget this temporary candy. Why not make this "rebate" permanent?

....and Moe Gates note:

Guys, it's nice to get the money back and all; and I like roads and the best military on the planet and a judicial system and a space program and, heck, I can even live with a National Endowment for the Arts*. But if you didn't need the money, why in the nine billion Names of God did you take it from me in the first place?

Obviously, Government realized that there was $9 billion that could be better spent in the economy than by Government. Is anybody going to take that lesson from this? Does anybody stop to think what such a thing means in the argument between Keynesian and free-market economics? Is this a tacit acknowledgment that the free market does better things for the economy than government spend-and-tax programs? (And somebody should make sure Governor O'Malley gets a copy of that memo).

The solution to fixing the economy is simple, and something I have stated many times before:

• Lower taxes
• Reduce spending
• Reduce the size of Government
  

How hard is that? And so far, only Governor Romney has proposed an economic package that even comes close to doing the things necessary to bolster our economy, for both the present and the future.

This talk of immediate economic stimulus is plain silly talk that does little to improve the economy. It merely shows that government knows only how to meddle it affairs it does not understand, and shows that government collects too much money in taxes from its citizenry. Government needs to get out of the business of undertaking initiatives that either stimulate or limit the American economy.

It's just a car....

Mira Kamdar writes in the Post that the new $2,500 Tata Nano is the end of Western Civilization as we know it:

Still, by putting distribution in the hands of its dealers, taking advantage of cheap Indian labor and using lower-cost materials, Tata Motors has driven the price of a car down to levels never seen before.

This is good news for the millions of people in the developing world who never imagined that they could own their own car. But it's a problem for the rest of us.

It's a problem for Detroit, which is racing to enter India's booming small-car market but will now have to completely revolutionize its production and distribution to compete. It's a problem for America's beleaguered auto workers, who will become even more expendable as Detroit moves its manufacturing efforts to India and other Asian countries. And it's a potentially gigantic problem for the environment. India's urban roadways are already choked with traffic, and the air quality of its major cities is ghastly. If millions of Indians and Chinese get to have their own cars, the planet is doomed. Suddenly, the cute little Nano starts to look a lot less winning.

Read the whole thing...

Kadmar's view of the Tata Nano is.....myopic at best. We have here an Indian company using Indian capital and Indian workers to build a car mainly for consumers in India. Ratan Tata is making good use of the resources and the economic environment available to him and his company, in order to make a product that is affordable to the consumers of India. It's good for India and good for his business. I'm not exactly sure how anybody could spin this as a bad thing for India and its economy.

Kadmar's other arguments are seemingly superfluous. Environmental issues will probably be improved, not degraded, as Indians buy new Nano's to replace aging inefficient western imports. And Kadmar's arguments about the impact on Detroit really have no impact on what Tata and his company are doing. Let's face it, the Detroit model for producing cars has been outdated for decades as the Big Three have been saddled by the higher costs of doing business, their inability to break free of their current corporate model, and being saddled with burdensome union contracts and costs.

Kadmar writes:

In one of globalization's supreme ironies, cash-rich Indian companies are snapping up the brands and companies left behind by the mad rush to profit from Asia's billions. The two top contenders to buy Range Rover and Jaguar from Ford? India's Mahindra & Mahindra and Tata Motors. Surely we are at a turning point when an Indian company -- in just one week -- unveils a car so cheap that U.S. manufacturers simply can't compete, for a market they've never tried to tap, and emerges as the likely buyer of two of the world's most expensive luxury brands owned by that most iconic of U.S. companies, Ford. And surely the glow of the American century is beginning to dim.

Or is it the beginning of a new American century? Is this going to be something that reinvigorates the American car market? Will the emergence of Indian companies as players on the global auto market finally force Ford, GM, and Chrysler to change their business model? And if all of those things do happen, their business model changes, and the companies expand their market share, does that not make the emergency of the Nano a net positive thing for America?

Kandar seems to think that economies should never change and that markets are a zero-sum game; that the success of car companies in India automatically means doom and gloom for Detroit. One merely needs to look around at all of the redundant businesses here in the U.S. to see that many times competition, even on the micro scale, is a tide that will lift all boats. The most important things to glean from the story of the Tata Nano is that the Indian economy is doing good things to produce good products for their home consumers, and that Detroit really needs to take a look at itself in order to compete in the 21st century. And that's really all you need to know about the Tata.

Besides....it's just a car.

We always come back to economics, don't we?

The left still doesn't get it. Eric Luedtke (who as you know, refuses to debate me on the issue of which party is better for working families and the middle class) still doesn't comprehend that the unhappiness with the sales tax on computer services is part of a larger problem:

Momentum seems to be building for the Assembly to revisit the haphazard expansion of the sales tax to computer services and no other services during the special session. No one seems to be particularly happy with that outcome. Put simply, there was no fair standard applied, and computer services was picked largely because it fit a hole in the package.

So what are the options? 1. Eliminate the computer services sales tax and add nothing else, which leaves another hole in the budget. 2. Drop computer services but apply the sales tax to other industries (there are dozens of services not currently taxed, even beyond those discussed during the special session). But then you have the same problem of explaining why one or more industries are taxed while others aren't. Or 3. Apply a smaller (1-2%) sales tax to a broad range of service industries.

And for the billionth time, Luedtke again misses the most obvious answer; eliminate the entire sales tax hike, and cut state spending. Luedtke seems to think that the most important thing to fix in regards to the computer services tax is to just fix that particular portion of tax.

What he fails to realize is that the thing that is most important to the economy, and most important to Marylanders is trying to take proactive steps to make Maryland more livable and more affordable to working families. The only way to do that is to cut state spending and eliminate the draconian tax increases that Maryland Democrats subjected to the middle and working classes. Only then can Maryland's economy be allowed to less encumbered in this difficult economy, and only than can Maryland's families be able to better reap the fruits of their labor. Only then can the chains constraining our economic growth be removed.

The General Assembly needs to go back to Annapolis and put Maryland's working families first, and the only way they can do that is to roll back the unfair taxes that Maryland's taxpayers will soon be subjected to....

Foxes, Henhouses, and Boondoggles

The same crew of Democrats who forced a half-assed electric deregulation policy down Maryland's throat now want to....force a half-assed re-regulation policy down Maryland's throat:

The soaring costs of electricity will not decrease soon unless the government takes action, according to the state's power regulators.

That is because deregulation - a process that allowed power plants to sell electricity according to market rates in order to lower costs - has failed Maryland, according to a report from the Public Service Commission.

Now, it is up to Gov. Martin O'Malley, the General Assembly, the Maryland Energy Administration, the PSC, and Maryland's power regulators to craft a workable power future without creating another disaster for consumers.

"After almost seven full years, Maryland ratepayers face among the highest capacity and locational marginal prices in all of (the region), and the prospect of draconian brown-outs in the next five years," said the recently released report, which maps out future courses of action. "By these measures, Maryland is not better off than it was before deregulation."

Mr. O'Malley and the energy administration will prepare a plan in time for the legislative session that begins in January and include "some similarities" to the PSC recommendations, said Rick Abbruzzese, the governor's press secretary.

Now as somebody who believes in the free markets, the problem with the concept that Maryland's markets were ever deregulated in the first place is a fallacy. The General Assembly kept caps in place on prices and never allowed the market to be fully regulated.

The problem is that through re-regulation, the O'Malley crowd may in fact be creating the type of end of the world disaster that they allegedly are trying to avoid. Let's face it, the kind of reregulation that the Democrats would wish to force through the General Assembly would probably severely inhibit the ability of power generating companies to cover their cost of doing business in Maryland. That would leave Maryland electric customers with fewer choices and in all likelihood electric rates that go beyond even the current cost of electricity in the rate of the 72% rate hikes.

Except one of the proposed regulations tries to go where California went:

Rather, the PSC proposed flexing its long-dormant muscles by forcing utilities such as BGE to sign long-term power purchase contracts from newly constructed power plants, locking in prices for customers for several years.

Which sounds very neat and panglossian, except that while the power price for customers may be locked in, the price for power on the wholesale electric market may not be. Which means that when BGE's power consumption exceeds their generating capacity, they will be potentially forced to buy power at ridiculously high rates without the capability of recouping their costs. The puts us on a path to a California style energy crisis, energy shortages, and rolling blackouts.

There is no easy solution to this, as the General Assembly really botched things up in the first place when they "deregulated" electricity in 1999. But the O'Malley/PSC plan that is currently in the works seems to be designed to put Marylanders in the same place California electric customers were in 2000 and 2001. As usual, O'Malley and company are backing plans that put the consumer and the working classes at the highest risk of absorbing higher costs and in this case, a potentially third-world situation as it relates to the availability of electric power.

FSP crowd winces at truth

The Sun published an editorial saying a lot of things that I have been saying and what has been said at Red Maryland for a long time: Democrats don't care about the working class anymore:

Today's ascendant liberalism isn't driven by the lunch-pail concerns of those workers struggling to make it in an increasingly high-tech, information-based, outsourcing U.S. economy - though it does pay lip service to them.

Rather, such "gentry liberalism" reflects the interests and values of the affluent winners in the era of globalization and the beneficiaries of the "financialization" of the economy. Just as the number of industrial workers and traditional middle-class households has declined, the ranks of the affluent class have grown. And although many of the newly affluent are - as is traditional - politically conservative, a rising number of them are turning left. Surveys by the Pew Research Center indicate that an increasing number of households with annual incomes greater than $135,000 are moving toward the Democrats.

Of course, this is all 100% accurate. Today's liberals are too concerned with protecting special interests, the interests of big business, and playing to pet issues special to urban liberals than they are with the plight of the working and middle classes. All one has to do is to look at the recent special session, with massive tax hikes aimed at the middle class, to see the damaging effects of this new breed liberalism.

Eric Luedtke of Free State Politics responds the way that urban liberals always respond; he whines:

The idea that the Democratic Party has moved away from working class and middle class concerns is an equally ridiculous argument. Maryland's a great example of that. Any list of Democratic success in Maryland over the last few years will mention the living wage, the increase in the minimum wage, work on making college more affordable, support for public education, and expansion of health care support. In fact, the only specific example the authors mention is climate change, arguing that climate change legislation hurts the working class despite the massive number of new jobs that are already being created by the green economy.

This is straight out of the Karl Rove playbook: spread lies and hope to confuse the voters enough to get elected. The Republican Party knows that any chance they have of ever reclaiming the working and middle class 'Reagan Democrats' is quickly slipping away, so these two conservatives desperately try to tie the Democrats to an anti-worker label. To bad all the real world evidence is contrary to everything they say.

And all of which Luedtke wrote above is, of course, total crap. The living wage bill drives up the cost of government, thus creating the need for higher and higher taxes or (if a realistic view of the budget was employed, for once) reduced government services. The living wage, combined with the minimum wage hike, creates localized inflation that inflates the cost of all low-wage jobs in the area, artificially inflating the prices of goods and services in that area. That of course negates those rises in wages, and also diminishes the purchasing power of the middle class.

The expansion of health care supports necessitated, what else, more regressive taxes that disproportionately impact the working classes, those who are most likely to purchase cigarettes.

The only support for public education the Democrats show in Maryland is support for higher wages of teachers. Nobody is too concerned with actually improving education in Maryland, because it is far more important for Democrats to kowtow to the MSTA than it is to worry about educating students.

And it is hard to argue that Maryland Democrats are for lowering the costs of higher education when salaries and benefits for professors and administrators at these schools continue to skyrocket.

And this says nothing of Congressional Democrats who want to (what else) raise taxes, bankrupt government with more unnecessary social programs, and ignore our national security.

Luedtke's knee-jerk reaction to the column in the Sun probably has less to do with a repulsion to Republicanism and more a reaction to a slow realization that is probably very disturbing to him. Luedtke, his party, and this ideas he and the party believe in, are anti-worker, anti-consumer, and anti-Middle Class, and that he and his ilk are clearly working behalf of the rich who think they know how to run the lives of individual Americans better than the individuals do.

The modern Democratic Party, and these modern-day urban liberals don't support democracy as we know it. These Democrats support a modern-day Plutocracy, and they would prefer that you didn't point it out to them...

I'm not going to reinvent the wheel

I have already waxed poetic about Black Friday and political correctness two years ago, and nothing has really changed. So please feel free to read those linked articles in lieu of any new content on the subject. Because they really haven't changed all that much...

This Hypocritical State

Radley Balko nails it:

The workers who clean Baltimore's Camden Yards baseball stadium are planning a hunger strike to protest their $7 per hour wages. The stadium is the largest employer of the city's homeless day laborers. The kicker, though, is that the Maryland legislature recently passed a "living wage" bill, setting the minimum at $11.30 per hour. But while the bill covers any business with state contracts in the Baltimore area, the state government is exempt, and Camden is owned by the state of Maryland.

Such double standards aren't new to the living wage debate. The labor activist group ACORN is largely credited with jump-starting the national living wage movement. But ACORN itself has a notoriously shabby record when it comes to paying its own workers. In fact, not only did the group once sue the state of California to exempt itself from the very living wage it helped the state to pass, ACORN actually used free market critiques of the minimum wage in its brief (ACORN argued that if it had to pay existing workers more, it wouldn't be able to hire more workers).

Which of course makes the ridiculous defense of living wages and the artificial inflation created from them completely off base...

Playing Chicken

After being lectured by the left on how much it sucks to work at the stadiums and not try to find higher paying work, I find this humorous:

The stadium workers who were planning to launch a hunger strike today for higher pay instead postponed the protest until Saturday – citing positive remarks from state officials.

A written statement issued by the United Workers Association said that "due to positive signs coming from both the governor and the chairman of the Maryland Stadium Authority" the hunger strike was being postponed.

In a story in Saturday's Sun, Gov. Martin O'Malley expressed support for a living wage for cleaners at Orioles and Ravens stadiums. O'Malley made his remarks at a news conference to discuss the state's new living-wage law that goes into effective Oct. 1.

So I ask this question: which side caved? Is it the workers, who jumped at the chance to cancel the strike at the first sign of seemingly positive news? Or is it the State, who waited until the last possible second the continue to artificially inflate wages for unskilled workers?

Doesn't matter who jumped first. The taxpayers are the ones who are going to get burned...

The Unseen Side of Government Overregulation

There has been a lot of discussion in recent days about economic fairness and wages when it comes to workers at the stadiums. Classical Values has a fascinating piece on the government getting involved in places where it had no business in the first place (in this case, selling beer in Pennsylvania). And how, once government gets involved, real people are going to get screwed one way or the other....

Meeting Expectations

As I expected, Kujan misses my point completely:

Yes, yes they do. I never claimed they didn't. I claimed that they only like seeing the already well off making more money. Griffiths doesn't dispute this fact, because he cannot.

Which of course is hogwash. If I only liked seeing the already well off making more money, I wouldn't have what I have, now would I?

Incidentally, Kujan continues to miss several other points here that I am trying to make, and frankly it isn't even worth my time to try to explain it anymore because I'd have better luck explaining astrophysics to a platypus, except the platypus might keep up better....

Let me say this slowly: if the workers are concerned about being better paid at their job, find a better paying job. Just like Kujan decides not to go to a high-dollar Democratic shindig people have the freedom of choice; perhaps they should, you know, use it.

A not particularly insightful comment on economics

Andrew Kujan:

There really is nothing scarier to a conservative that someone who is not already rich making more money.

Which is patently absurd. Conservatives like seeing people make money. What conservatives don't like to see is for government to muck everything up by artificially inflating wages to the point that it creates inflation, thus bringing the value of everybody's dollar down.

Then again Kujan proves why liberals can't run government; a basic lack of understanding of economic environments:

First, those companies would in no way be affected by raising the salaries of a particular group of workers at Camden Yards. An apparently every restaurant, zoo, and "firm" would go out of business in Maryland if 11 people get a $3 raise.

Of course what Kujan fails to realize is that the artificial inflation by government of the salaries of the stadium workers creates an unequal environment for other businesses. That means if government mandates the inflation of salaries by $3 an hour, those businesses either will hire less skilled workers or will need to inflate their wages by $3. And that price gets passed onto the consumer. That creates inflation. That diminishes purchasing power. And that means nothing really changes in the end other than creating more, not less, poverty.

Urban liberals need to realize that you just can't mandate poverty away by having government muscle its way into situations it does not belong...