How's that Inflation?

Although official numbers show the recession ended in 2009, 72% of consumers still feel like they're in a recession.

That's inflation folks. It fudges the numbers so you can tell everyone everything is fine, but even if they can't put their finger on it people know it just isn't true. Wages may be going up nominally but the price of goods is going up faster. Portions are getting smaller. Purchasing power is decreasing.  And wealth is systematically getting transferred to banks and political cronies.

Why? Because monetary inflation is caused by Uncle Sam deficit spending and printing money to "pay" for it. This money goes to government contractors and banks first, where they can spend it before the market prices adjust to accommodate the new money competing for the same amount of goods.  The price of goods increases and then wages gradually trail along behind.

But the banks and cronies have already gotten their share of the pie. They spent the money before prices went up; the workers are spending it after. It's traditional buy-low, sell-high and the banks are keeping the spread.

Why can they do that? Because the politicians continue to spend money we don't have by counterfeiting it out of thin air. They keep lying to us that this is making things better and helping the economy.

Somewhere deep inside 72% of people know something is not right. But we'll keep reelecting the same liars until enough of us can finally see through their tricks.

Government Motors Wins Again

Let's recap, shall we?  Taxpayers were tapped to provide bailout money to cover for GM's poor decision making.  Then bondholders and pensioners were pinched to cover for GM's unsustainable union contracts (and potentially as a political "thank you" from the previous election).  Then taxpayers were hit up again to subsidize the Volt program specifically, whether they wanted to pay for an electric car or not.  After all of this, we wind up with a car that still costs about $10k more than its target market and randomly catches on fire.  Da Komrade, the system is working fine!

http://www.bloomberg.com/news/2011-11-29/gm-s-volt-battery-fires-threaten-to-knock-moon-shot-off-target.html

Freedom of Consent

We have to remember that the people in government are just like people in the corporate world.  They're ultimately self-interested.  They need to feel the connection between their actions and their consequences to make good decisions.  The difference is that we've entrusted them with coersive power; the authority to use force to compel us to do or not do certain things.  And power once ceded is rarely given back.  We really ought to remember that before inviting them into every aspect of our daily lives:

The problem... is that government is no different from any other organization in society -- it seeks its own aggrandizement. AT&T, General Motors, and Microsoft would love to have world monopolies, controlling all the resources and expanding into every corner of people's lives. But they are limited by competition, the dynamics of the marketplace, and the need to win people's consent in order to market their products.

Government is different. It expands by fiat, through legislation, through taking advantage of emergencies, and by declaring that private entities can't be trusted and government intervention is necessary. Most of all it grows by raising taxes and hiring more and more people so that soon its voter base approaches a majority of the electorate.
http://spectator.org/archives/2011/09/26/the-moochers-credo/

Let's face it.  It's easier to convince a majority of 435 people in Washington D.C. than it is to try to win the consent of millions of consumers exercising their freedom in the market.

Grading Solyndra on the Adoption Curve

So Solyndra goes bankrupt and the taxpayer is left holding the bag, to the tune of five-hundred million dollars ($500,000,000).  This really isn't a surprise and is a stellar example of why the free market, rather than government, is much better suited to speculative investment.  This is especially true in the case of technology.  Now, I'm a dollars and sense kind of guy, and I'll adopt "green" technologies when it makes sense.  Kinda like the commercial where all these folks are badgering this guy to "save the planet" and finally the technician says "The money you save on the washer will pay for the drier" and the guy says "Why didn't you say that in the first place?"

For example, ten years ago I looked at hybrids and there was just no way; they were too expensive.  Five years ago I looked again and I actually considered it; but the numbers still didn't quite work out.  I imagine in a few years the return on investment will be there and I'll buy some sort of low fuel consumption vehicle.  Until then, I'll keep driving my 27 mpg sedan.

This is known as the technology adoption curve:















Full Size Version

Once something becomes indisputably efficient and easy to adopt, it becomes mainstream and the majority of consumers buy it.  Until then, people buy the technology for other reasons: because it's "cool" or a status symbol, they like "new" things or because they want to make an investment (and possibly make a profit).

Those early adopters can afford to throw money away, and it's their choice to do so.  However, when government gets into the game it makes ALL of us into early adopters, whether we want to or not, whether we can afford it or not.  This sort of "venture cronyism" is a bad parody of its free-market equivalent.

I accept that businesses fail.  That doesn't bother me.  What makes me mad is that someone else forced me to cover a throw of the dice and they came out snake-eyes.

Successful Subsidized Energy? Not so fast...

The news coming out of the German energy market is a fascinating case study but it follows the typical pattern. Central planners decide they want to influence the supply and demand by manipulating producers and consumers. They are successful in that they get more of what they subsidize and less of what they penalize. However, they also have unintended consequences. In this case it is surpluses and shortages, reminiscent of the gas shortages of the 70s in the US and numerous other examples in the USSR. Laws are in place preventing the individuals from making adjustments to address the imbalance, in this case compulsory preference for the intermittent energy sources (solar and wind). Consumers still need a reliable source of energy that can pick up the slack when solar and wind are unavailable, but government interference is discouraging investing in conventional plants. Since the people are bound by law from fixing the problem it falls to the central planners to develop a solution. Their answer is as typical as it is ironic; subsidize coal plants.

But wait! Consumers are getting paid to use energy! They're getting it for free, right? Well not exactly. The subsidies aren't free; they are simply obfuscated by the tax code. Furthermore they represent a compulsory cost; what people pay to subsidize the energy industry is disassociated from their purchasing choices or their actual energy use.

The definition of insanity is doing the same things and expecting different results. Central planning consistently results in shortages and excesses, increased collective costs borne by the taxpayer, disenfranchising of the consumer and empowerment of the centralized planners and their crony capitalist / special interest lackeys. This latest example from Germany is no exception.

http://www.bloomberg.com/news/2011-09-29/utilities-giving-away-power-as-wind-sun-flood-european-grid.html