Conventional wisdom wrongly blames Biden for inflation

Gordon L. Weil

Here’s some “conventional wisdom.”

It goes like this. High gasoline prices are the main cause of inflation. Inflation is President Biden’s fault, making him really unpopular. So the Democrats will lose control of Congress in this year’s elections.

That thinking is more wrong than right, but it may well produce the predicted political outcome. A lot of people believe it.

Anything right about it? The price of gasoline is much higher than usual, and it has increased at dizzying speed. In a country where SUVs have displaced sedans, that can hit your wallet hard. Somebody has to be held responsible for allowing the price run-up.

Because presidents tend to take credit for the economy when times are good, it’s natural they will get the blame when good times stop rolling. That leads to a demand for new leadership, which would mean turning the control of Congress over to the Republicans.

What Biden did wrong, according to his opponents, was to promote displacing oil with green resources. The oil companies cut back on production as they saw the rise of electric cars.

The world market price increased when the Middle East tried to keep up its income as demand fell. The U.S. oil industry saw a chance to boost its profits by riding that wave rather than displacing competitors by selling more oil at a lower price. As one industry analyst put it: “Returns have taken priority over growth.”

The economy grew as Covid-19’s impact began to be controlled, requiring more fuel. But oil production lagged, yielding higher prices and oil company windfall profits.

Then came the Ukraine war and the West’s effort to punish Russia’s aggression by buying much less of its oil and gas. That drove up oil prices. Biden seemed to acknowledge the critics of his pro-renewables policy by asking the oil companies to step up production and drilling.

But he also took steps to reduce costs. He ordered oil drawn from the Strategic Petroleum Reserve. He has now proposed that Congress should temporarily suspend the gasoline and diesel tax.

Did Biden create inflation by pushing huge federal spending and increasing the national debt?

Two-thirds of the massive Covid-19 impact and stimulus spending was adopted before he came to office and was backed by both parties. It may have been more than needed and badly controlled. It gave people more money to spend, boosting inflation and savings, and now supports increased state government outlays. Much of it remains to be spent.

As Congress and the president poured funds into the economy, the Federal Reserve seemed not to take notice. It kept interest rates at historically low levels, almost zero, instead of recognizing the economy was recovering.

Now, with inflation taking off, the Fed is raising interest rates to make purchasing more expensive. That process works, but painfully. Meanwhile the rate increases appear to push inflation before slowing it. If the Fed’s effort to catch up works too well, the economy may not only cool off but go into reverse – a recession.

Nobody likes economic uncertainty, but that’s what is happening at an extreme level. After more than two years of fighting Covid-19, the virus does not seem to be running out of variants that produce waves of cases. Activities from international trade to travel to office work are affected.

China is battling Covid-19 with measures that can shut down parts of its economy. That drives up the cost of its exports to the U.S. Supply chains have been disrupted, which also results in higher retail prices. Plus a federal law blocking imports of low-cost goods produced in China by Uyghur forced labor just went into effect.

Add to this economic turmoil the proxy war between NATO and Russia on the battlefields of Ukraine. With much at stake in the world’s balance of power, this war might continue for months or even years. Like any major war, it impacts national economies.

Covid-19 plus a tougher attitude toward China and Russia are transforming the world’s economy and having a far greater effect than short-term inflation. There’s no chance that inflation will be tamed and all will return to normal. In the U.S., pay levels and prices have changed for good.

Biden bears some responsibility, of course, and he may pay politically if the prices of gasoline, diesel and heating oil remain high. But inflation’s origins pre-date his administration and the causes are more complex than those he can influence. He is not the main force behind inflation.

Conventional wisdom suffers from such short-sighted tunnel vision. As a result, we cannot readily see the light at the end of the tunnel.

This “wisdom” may prevail when people vote, but inflation and other economic challenges cannot be brought under control simply by the outcome of the November elections.

Do we want strong leaders more than popular control?

 

Gordon L. Weil

What does a loose-lipped congressional candidate in Buffalo have in common with some witnesses in the January 6, 2021 insurrection hearings?

They believe people want to follow strong political leaders.

Carl Paladino, who is seeking the Republican nomination for a seat in the U.S. House of Representatives, recently said that Adolf Hitler was “the kind of leader we need today.” He continued, “We need somebody inspirational. We need somebody that is a doer.”

While Paladino did not mention just what that particular “doer” did, he liked to way the Nazi Fuhrer “aroused the crowd.” The despicable substance of his arousing speeches meant nothing compared the way he got people to follow him. (Forget the Gestapo.)

During the House January 6 hearings one participant said that he was at the Capitol because former President Trump asked him to be there. Why he would readily do Trump’s bidding?

It is easy for some in the media to assume that Trump simply brought the racists out of the closet. That may be true but it’s far from the whole answer.

Paladino implied that people respond to bold, assertive, self-confident leadership for its own sake. It may not matter where the speakers want to lead people, just that they appear to take charge. Maybe that explains why the man went to Washington to attack the Capitol.

That may also explain why President Biden has become less popular than Trump was at the same point in his presidency. Biden is affable, but not a crowd-pleasing orator who can express his policies in simple slogans.

One of the marks of leadership is the ability to directly motivate others. Leadership is a learned skill, so it’s not surprising that 12 of our 46 presidents had previously served as generals. Among the most historic were professionals like Washington, Jackson, Grant and Eisenhower. Others in lower ranks, like Truman and Kennedy, had led in combat.

The U.S. was created as a republic, a representative democracy where leadership matters rather than a direct democracy where the people rule. It’s the difference between the representative town council and the direct democratic decision making of the town meeting.

In either case, the people are the sovereign, not a monarch or a dictator. As the U.S. evolved, its original republican institutions became more democratic. That is evidenced by adopting the popular election of the Senate, referendums, people’s vetoes and recall elections.

American presidents, including those with military experience, have supported democracy, even if the system blocked some of their policies. Undoubtedly one-person government might be more efficient than the intentionally more complicated and slower moving democratic system.

Autocratic leaders often argue that the democratic system is ineffective and seek authoritarian rule. Hitler took power through a democratic vote and then promptly replaced popular control with his brutally efficient regime.

If a person values efficiency above democracy, the strong, unchecked leader is popular. That’s especially true if you agree with their policies. The risk is that they will later adopt policies you dislike and you will be helpless to oppose them. What’s tempting today may be terrifying tomorrow.

Today American politics are carried out through the Republican and Democratic Parties. Though their names might imply a difference in how the country should be governed, the two major parties have historically shared a common view of how this democratic republic would operate.

But a divide has begun to emerge between them with some Republicans believing that their party should reverse the trend toward greater democracy. Voter suppression and misusing Senate voting practices have become part of the GOP agenda.

Republicans have easily slid into calling the other party the “Democrat Party” and not by its legal name – the Democratic Party. Originally, this ploy was meant only to annoy, but increasingly it has become a slur, conveying something sinister about the party.

Republicans may imply that its competitor is no longer democratic but has fallen into the hands of its extreme left wing. The Democratic Party has traditionally had a bigger tent than the GOP and that produces enough of a variety that there’s always an office holder whose patriotism can be questioned by a Republican.

Does that kind of politics go so far as to question whether representative democracy has outlived its usefulness or proven unable to meet modern needs? Elitist republic yes, popular democracy no?

This is more than a political word game played by some in the GOP. Favoring “inspirational” leaders tends to undermine our innovative system of democratic government and pave the way to more authoritarian rule. Perhaps that’s what’s intended.

We need to understand that political division is now more than a disagreement on issues. It’s about the system itself. Paladino’s views and fostering the follow-the-leader mentality of the January 6 Capitol invaders are dangerous to the American democratic republic.

Maine reflects national economic change; results in population growth

 

Gordon L. Weil

KPOOM.

In the 1970s, that was a popular Maine bumper sticker. It meant “Keep People Out Of Maine.”

A drastic slowdown in the state’s population growth took place in following decades. In 2020, the trend reversed. This could be part of an historic national economic transformation.

The population grew in the 70s by an annual average of 1.27 percent, more than most states in the Northeast. Some Mainers worried about changes that might come with the influx of people “from away.”

Without any formal action to discourage growth, the rate dropped. By the 2010-2019 decade it had fallen to a 0.12 percent annual increase, not even one-tenth of the earlier period. The share of the state’s population born in Maine was also declining.

The recent turnaround has been abrupt and sharp. It could change Maine and its economy.

While there is no formal analysis of the shift, it is worth considering four factors: climate warming, Covid-19, mass electronics and evolving values. Maine may provide clues to demographic change across the country.

Judging from the results on search engines, people are increasingly interested in finding the best places to live as the climate changes. They are seeking places where the impact of warming will be limited and perhaps where it will produce benefits.

Unless you really liked winter decades ago, Maine was not where you would move. Mid-winter temperatures were often below zero. But now, in many places, that’s a rarity.

Let’s take January 31, usually a day in the coldest week of the year, in 1970 and the same date in 2020, a half-century later. The average 2020 temperatures in Bangor and Portland were each about 10 degrees warmer than in 1970. Forget about zero; in Portland it was 30, just two degrees below freezing.

Studies forecast that among the best places to live in the U.S. as the planet warms is going to be the Northeast. That produces a favorable rating for Maine, making it less challenging for people who dislike seriously cold weather.

Covid-19 made working remotely a necessity for some who found it yielded a surprisingly attractive lifestyle. If you don’t have to be in the office, the common workplace in a service economy, it may not matter where you live. As the lockdowns extended, for some people working at home became a desirable part of the “new normal.”

The increased speed and capacity of electronic communications and data transfers are key to the ability to work remotely. Government has increasingly focused on assisting the rapid increase of broadband for the broad population.

Not only does that encourage people to think about moving to places offering lifestyle advantages especially for families, but it opens new locations for employers. They don’t have to set up where the workers are located; the workers may come to them electronically.

Finally, Mainers themselves may be changing. A newly published novel, “The Midcoast” by Adam White, takes Damariscotta as an example. The town goes mainstream, to “trade ‘authenticity’ for what feels like an airbrushed portrait of itself,” White writes. Maine itself becomes increasingly as if “from away,” part of a culturally homogenized country.

Each year, United Van Lines, a major national moving company, conducts a survey of who’s moving (not only their customers) and why. Its latest study revealed that in 2021, Maine became a leading state for in-migration. Last year, 58 percent of all moves were inbound and only 42 percent outbound.

Who’s coming? Retirees and people seeking a new lifestyle and new jobs. They are mainly 45-54 years old with incomes of $100,000 or more. Who’s leaving? Those who move for family reasons and retirees. They are 65 and older with incomes below $100,000.

The state leading in supply of new Mainers is Massachusetts, while the leading destination is Florida.

Won’t Maine’s high cost of living including taxes prevent a real turnaround? The cost difference with other states is largely a myth, because sellers take market conditions into account when they price their products. These days, gasoline costs a bit lower in Maine than in Boston.

Maine’s cost of living was found to be a plus rather than a negative for movers, despite the state having higher taxes than Northeast competitors and Florida. Movers may consider taxes as part of the overall cost of living. And more higher income residents could boost tax revenues, removing the need for future tax increases.

The bottom line, if one is already emerging, is that Maine is changing and it may reflect broader national trends. The nature of the American economy may be transformed by the warming climate and the effects of Covid-19 plus the wider spread of advanced communications and technology.

The result for Maine may be increased population and prosperity, but at some cost to its unique personality.

Gun control: common good vs. individual rights

 

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Gordon L. Weil

“What are we doing?”

Sen. Chris Murphy, a Connecticut Democrat, repeatedly and emotionally asked a nearly empty Senate chamber.

His impassioned speech expressed his sorrowful and angry reaction to the usual lack of government action on gun control after mass shootings like the one in Uvalde, Texas.

But the message of his speech asked questions that go far beyond gun control and reach the inability of the government to function.

The gun debate raises the broader question now dividing American politics. What is the proper role of government?

“The best government is that which governs least.” These words, written by political activist and editor John O’Sullivan, appeared in 1837.

O’Sullivan asserted: “A strong and active democratic government, in the common sense of the term, is an evil, differing only in degree and mode of operation, and not in nature, from a strong despotism.” However, he admitted that the despot and the democrat had far different goals.

Fighting measures from Social Security to Medicare to gun control is part of the GOP’s hallmark opposition to “big government” and its advocacy of the government which governs least.

To strike a contrast with their opponents, GOP leaders label Democrats as “socialists,” a word readily bringing to mind the Communists who call themselves Socialists.

The core issue is government’s role in meeting common needs that cannot be achieved through individual action, which is hardly socialism. Government by the people means that individuals cede some of their individual freedom to undertake joint action to meet agreed common purposes.

The Second Amendment has been interpreted to mean that individuals have the right to own and use guns. In its decision, the Supreme Court ruled that conditions could be placed on that right. Protecting the right to armed self-defense from government action could still allow the government to limit the use of that right.

But the decision did not settle the question, because some people accepted the affirmation of their right, while rejecting any conditions on it. Unlike any other right protected from government action, gun rights are unconditional, they maintain. Government should not merely “govern least,” but not govern at all.

Every crisis, whether it is the Russian invasion of Ukraine or the Uvalde shootings, grabs congressional attention. The question instantly arises if the American government should take any action to meet the crisis, perhaps by adopting policies to prevent or control similar situations. Congress considers how to respond to public concerns.

No matter the views of a majority of Americans, nothing happens on gun issues. Sen. Kevin Cramer, a North Dakota Republican, says that if he supported gun control, “most [voters] would probably throw me out of office.”

Cramer’s admission raises the second major question arising from the Uvalde shootings. Murphy asked his fellow senators, “Why are you here if not to solve a problem as existential as this?”

Congress is now populated by members like Cramer and what they are “there for” is less about public service than about political survival. They might quote the verse: “He who fights and runs away may live to fight another day; but he who is battle slain can never rise to fight again.” Murphy demands to know why this is not that day, when you stand and fight.

What’s missing is leadership. Elected public officials are unwilling to risk losing an election by leading instead of following public opinion, which is often shaped by interest groups or outdated prejudices.

Gun control has become one of the leading wedge issues. Republicans have found that supporting an unconditional reading of the Second Amendment gains them millions of voters and millions of dollars from the National Rifle Association.

Senators can dodge making tough choices without seeming to run away. The filibuster requires an unconstitutional supermajority vote to even proceed to the constitutional simple majority vote. It amplifies the ability of small states whose senators represent less than 20 percent of the population to control all decisions.

The Republicans like the filibuster because without it, they risk becoming a permanent minority unable to pursue the politics of “no.” The Democrats like the filibuster because they are fearful of becoming the minority and losing the power to prevent the unraveling of government.

Result? Nothing much happens except on rare occasions when cooperation serves the political advantage of both parties. Pouring money into a Covid-damaged economy made them both look like they were responsive. Pouring money into Ukraine testified to their historic opposition to Russia.

There are no good answers to Murphy’s questions. Maybe a token firearms bill will pass, because it would serve both parties’ interest to show concern in an election year.

But little will change. There will be more mass shootings and incumbents will hold onto their seats in Congress.