Identity Politics Calculus
16 June 2012
President Obama has put Identity Politics on display with his attempt to put forward an immigration policy (and having that being questioned by Neil Munro from the Daily Caller) that would selectively not enforce immigration law upon certain categories of illegal aliens. Unfortunately as Congress has already debated and not passed versions of such laws, President Obama has forgotten that his duty is to uphold the laws set by Congress as this is an Article I power given to Congress and not delegated as a policy issue to the President. Presidents can have ‘feelings’ about laws, but the job of the President is to enforce the laws of Congress and to let Congress know when he thinks such laws have problems and work with Congress to get such laws amended. That is the job of President as Head of Government: execute the laws set by Congress.
Now, beyond the fact there is no Constitutional standing for a President to set such a policy, this move can also be seen in the Identity Politics prism as a crass play (and one known by President Obama as not being able to stand a legal challenge, but that would take time) to pander to Hispanic voters. When playing the Identity Politics game, however, an action to try and get support from one group can often show insight into how a politician views other groups within his or her support domain. In other words, such a policy direction will give an insight into how other groups that traditionally support the Democratic Party are being viewed by President Obama.
A few groups come to mind for this:
1) Big Labor – In theory the Labor Unions would love to have new, young Hispanics as part of the dues paying membership. Unfortunately the timing of events is such that with the defeat of the Big Labor led recall vote in WI of Gov. Scott Walker, and by the direction of Public Employee Unions (and general labor law) amongst other States such as IN, IL, NY, CA… note that these are not typical ‘Red’ States… and having asked for and not gotten President Obama to show up on their behalf in WI, Big Labor is getting a message from President Obama: Nice knowing you, send cash!
Unfortunately no matter how many new, young Hispanics come in, the general tenor of the population towards Unionization (not just PEUs but all Unions) is in the decline and in the modern era of being able to compare job offers, individuals can often find a better job without Union overhead than one with Union overhead. Putting in a raft of new, young illegal aliens and helping them to find work in preference to Citizens also means that these individuals will tend to be at the lowest end of the pay scale and not readily amenable to Unionization. Plus in shops where low skills and low costs are needed, these individuals will be in direct competition with Unionized labor. While there are pipe dreams from Big Labor on getting a perennial raft of new union members, the fact is that unions are being side-lined to a very small part of the work force over the last 5 decades and are now in single digits for percentage of the overall workforce.
2) Hispanics – Even with a naked pander, this is something that if the Democratic Party wanted to get done in 2009-2010 it could have done so as it had majorities in both Houses of Congress. Any promises made by Democrats are, thusly, coming with a built-in discount on future expectations: if you can’t pass this as law when you have both Houses and the Presidency, then what good are you? Naked pandering can back-fire if it is seen as an insult to the intelligence of those being pandered to, and that is the risk of this piece of political calculus by President Obama.
The other factor that plays into the identity politics game is that Hispanics are in the majority Roman Catholic. In passing Obamacare and then setting it up as part of a ‘War on Women’ on mandatory payment for contraceptive services, the process of Obamacare is running straight into a 1st Amendment clash with religious organizations that provide health care, and the main point on this pushback is… the Roman Catholic Church. It is a piece of political calculus to try and bring religious implementation of moral doctrine into secular domains, against all the protections against such in the US Constitution, and by taking on the RCC the Obama Administration also ends up taking on Hispanics. As this is an ongoing set of legal battles, they do not fade from the view of the devout, and President Obama can be seen as giving the back of his hand to religious moral teachings while trying to offer a carrot on immigration policy. Being coerced and cajoled to just ‘play along with the man’ is not a good recipe for success especially when you have railed about the excesses of the power structure when out of office. By taking up such means beyond what is given as law, President Obama also then brings into play another splinter of Identity Politics.
3) Legal Immigrants – Play by the rules and uphold the systems. Those who apply to become citizens, learn civics and then demonstrate what they know to get citizenship are having their hard work demeaned by President Obama who is offering goodies to those who refuse (for whatever reason) to join the legal system and play by the rules. It doesn’t matter how long they have been in the US, who brought them, or any other thing: once they are adults they are given adult decisions to make and must act as a good citizen of their Nation of origin. Legal immigrants do this, they uphold the Law of Nations and domestic law by doing this. Illegal aliens do not do this and erode the Law of Nations and domestic law of the US and any Nation that has treaty obligations with the US on immigration. No matter how ‘nice’ someone is, there is a difference between upholding the law and not upholding it, and special favors are not to be given to those who do not uphold the law as a matter of policy.
Since a large number of Hispanic families are first or second generation of legal immigrants, they have a large stake in upholding the legal process and are demeaned by being told that now they shouldn’t have done the right thing and followed the law and that those not following the law will be granted special protection from the law by not having it applied equally to them. If a President is short of funds and personnel to uphold the laws set by Congress he needs to say so and send the ball back into Congress’ court to either find more funds, amend the law or change the enforcement of it to fit the will of Congress.
4) Poor Working Citizens – If you are poor and still have a job in this economic climate, you are in a select class of people that are doing the hard scrabble work of providing for your family to keep their heads above water. Now with a change of enforcement policy, you will be competing against illegal aliens who can undercut your pay (albeit under the table, but that is a problem of getting employers to follow the law) and take your job while being protected from deportation by the federal government. The working poor are on the front lines of this problem and if citizenship is demeaned for them, and special favors and protections are given to those who do not follow the system, then those putting such policy in place can only be seen as hostile to the working poor.
This is a demographic that votes in preponderance for Democrats historically, although some of that has been eroding the last 20 years. The Democratic Party was once the standard bearer for the poor in America: the citizens who vote who have been given support by Democratic politicians and institutions to continue voting in the goodies from government. Government is, however, now broke, by and large, due to the giveaways and wealth transfer from working rich to working and non-working poor. When nearly half of the population pays no income taxes (yes they do pay into SSA, but that is not investment, just a tax) and when half of all households get some form of government support (local, State, federal) then there is a class that is expected to show gratitude by voting for those giving them the handouts. Those handouts are not economically based and breaking apart the budget of not just the US, but all of Europe and other Nations that have embarked on this foolhardy scheme of over-taxing the rich to give goodies to the poor. Now the door of participation in the economy can be seen only as being undermined by protecting illegal aliens and the working poor American Citizen is being told that they will be forever in the working poor to non-working poor by government fiat of unconstitutional policy. You aren’t just being told the game is rigged against you, those doing that telling are now doing the rigging right before your very eyes and they want to shut the door on the pathway towards the middle class and achievement… as the goodies system collapses and soon won’t be there for you, your children or any other of your friends who are also part of the poor in America.
5) Black Americans – This demographic represents 10% of the electorate (give or take and it varies by State) and voted in the 90% range for President Obama. President Obama has done nothing to help out African-Americans in the US and is actively trying to hurt the working poor Black American Citizen who partake of being part of the working poor Citizenry. All of the problems seen for the working poor, in general, are double for the Black community which has had its once coherent neighborhoods broken up through ‘Urban Renewal’ (started by President Truman), and then put into government supplied housing (as part of the ‘Great Society’ under Johnson): all large scale policies meant to impoverish Black Americans, take them out of being home owners, and then break up the multi-generational culture by putting housing in place that barely catered to a two parent family. Putting in ‘activists’ and race baiters, and then adding in goodies through the CRA for home loans (after destroying the community based S&L system via ‘securitization’ ushered in by Nixon), the Black community has been pushed around, broken up and had its once vibrant culture eroded and corroded to the point where being young and black in America corresponds to being unemployed, single and often with a rap sheet added on.
At some point the African-American community will start to walk away from identity politics as it has now made the poor, poorer and the rich aren’t even being brought down into the middle class, and yet the government coffers are running on red ink and soon won’t be able to provide any support that was promised to the neediest by politicians. If the Democratically backed ‘Jim Crow’ laws of the South weren’t just plain awful, then the plight of Black America would be seen as the true tragedy it really is. In many ways those who did the abusing of Black America under ‘Jim Crow’ then changed over to the goodie providing culture that did even worse than just killing you: it impoverished you, took your property under legal fiat, densified your population into government housing that would have made the USSR cringe, cut off pathways to excellence by degrading Public School performance by softening the rigor of education (this is the tragedy of lowered expectations), and now seeks to lock a large percentage of the Black Community into poverty by depriving yet another generation of opportunity by protecting another identity politics splinter: Hispanics. This is pitting the legal poor against the illegal alien, and raising tensions between Black and Hispanic communities.
All in one policy presentation.
This is the problem with ‘identity politics’: no one is just one thing. And when you promise new goodies and protections at the expense of other parts of the splinters that are at the root of ‘identity politics’, the end state is not a coherent group voting for you and, in fact, the likelihood of chaos increases no end as faction is set against faction on the most personal of scales possible: within families and communities. At that point government is seen as the causer of the problem, not the upholder of equality of application of the law. Chaos is what happens when you don’t apply the law equally to all: it makes the system one of favors, not of process.
That is why we have a Constitution guaranteeing equal application of the law and protecting the rights of all Citizens.
When you announce you are no longer doing that, you are announcing that your will is above that of the elected representatives of the People.
That never ends well.
Subsidizing stupidity
19 November 2011
First a look at what happens with subsidies on the effects side, not the ‘lets put them in place’ side of things. First off is China and gasoline from Chua Baizhen at Bloomberg News 09 JAN 2011:
China has subsidized gasoline use for quite some time and the government has been feeling the effects of trying to provide a ‘stable’ price point for gasoline to the Chinese public. I had looked at in part in a larger article on the Directivity of China that I put out in FEB 2007 as the subsidies were whipsawing the central government of China.
Consider that when external prices are higher than the internally subsidized prices, then the Chinese government must pay the difference between world market prices and local prices if it wants to keep supply constant. To do that requires incurring debt. This also creates an unsustainable demand for product which, when not having to adjust for market prices, is used as if there was no change in the economic cost of the gasoline. Thus the product loses its ‘value’ that is its perceived benefit per cost, because prices are artificially low.
If it lets supply float, however, and China is unwilling to pay market prices, then supply drops (long term supply contracts would still keep amounts flowing into China, but only to contract levels) because there is a delta between demand and the amounts supplied on the non-spot market. This creates scarcity of product, although at a given price point. The product is seen as having a set price but has a higher ‘value’ due to its scarcity and is used less.
Now in the ‘salad days’ when external prices are below the ‘subsidized’ prices, the government reaps a net gain either via companies selling gasoline paying more in taxes or, in the case of State purchasers, the government reaping a windfall between low purchase cost and high sales cost. What happens in this scenario, as I outlined, was smuggling, as lower cost gasoline is smuggled in through the Chinese borders and sold at a cost lower than the subsidized, or set, fuel cost. In this case the set price as compared to the market price changes the ‘value’ perception as well, and the higher ‘value’ gasoline is that which is smuggled in as it has a lower cost.
It is all the same gallon of gasoline, mind you.
Government interference in pricing structure changes not just the price but the perceived value of the good in question.
This I went over in a 2008 post on Bipartisanship the opposite of good government, which looked at the housing bubble and its bipartisan support, and then the US Senate ignoring testimony on how the world oil market could be gamed as pointed out by the US Senate Committee on Energy and Natural resources by Steve Layton, President and CEO of Equinox Oil Company, part of the Independent Petroleum Association of America. I’ll excerpt this part to show how the concept of ‘subsidies’ works here, as well:
This had been exacerbated by problems in some Asian economies but put China in the seat of having the ability to draw in funds under bonds to boost industrial development via changing its investment climate. In a very serious way Saddam Hussein was hurting the US domestic oil production system (that is the independent small producers) and due to consumption drops in places like S. Korea and Japan, allowed the Chinese central bank to reap a windfall between set pricing internally and external pricing that was aided by changes in investing law. The Chinese economy picked up steam and increased its productive capacity and was able to roll over its 5 year bonds in 2002-3 by demonstrating continued production. The problem was that those 5 year vehicles started coming due, again, after 2007-8 and some investors wanted their actual full face value of the bonds paid out.
As I wrote in 2007 China was undergoing the whipsaw from low oil costs to high ones and had to start inching prices up for gasoline then.
Now over to Iran which subsidizes its gasoline and natural gas industries.
Iran faced a major problem at the end of 2007, in that its major natural gas supplier (who supplies 5% of the domestically used natural gas in Iran) was Turkmenistan, which I examined in The shockwaves of 5%, where jihad meets economics. Turkmenistan is a major conduit and supplier of natural gas which has not only normal economic ties, but ones to a Red Mafia outfit that wheels and deals in natural gas (as well as tv stations, hotels, and all sorts of other things). Europe was seeing the need to meet natural gas consumption and was raising the price of natural gas on the global market. Although Turkmenistan doesn’t have a direct pipeline to get natural gas to Europe, it has intermediaries that could move it through Russia to Ukraine and then into places like Poland, Romania and Hungary, to sell it at a higher cost.
I have examined Iran’s oil system in two previous posts: Iran’s Oil Problem and Iran’s Oil Outlook.
Facing the multi-million if not multi-billion dollar price differential between fixed contract prices to Iran or fluid and higher prices in Europe, Turkmenistan was seeing potential dollars fly out the window. It conveniently had ‘supply problems’ with Iran and trillions of cubic feet of natural gas wound up in holding facilities in Ukraine (although anonymously, no one ‘claimed’ it) and Iran faced a sudden and immediate supply problem for natural gas. Its refineries have not been kept up since the revolution and can supply such a small portion of natural gas and gasoline, that Iran is forced to import both. When sections of Tehran must go cold and dark to make sure bakeries can keep running, the government in Iran suddenly faced a major problem. It caved and paid higher fees and the natural gas flowed again. Presumably the amount siphoned off went to Europe so it was a ‘win’ for the anonymous holders of the gas in Ukraine, a ‘win’ for Turkmenistan, a ‘win’ for Europe and a ‘loss’ for Iran.
Iran got to this predicament through a multi-fold governmental problem that, primarily, refused to keep up the oil infrastructure in the country. The refineries are the most complex part of the system and they are on their last legs and no one will invest in them as Iran keeps an insane contract policy of charging what it feels like charging for crude oil, without regard to market price. If it needs more billions to run terrorists, it charges more. Gazprom warned Putin about this and China found that their ‘investment’ wasn’t going to get them better treatment or stable prices, so they yanked $10 billion out when they found this out. After that, Iran subsidizes oil and natural gas use.
It is, therefore, priced below market cost and the delta is made up in crude oil sales.
With that said there has been no marginal expansion of the oil fields in Iran (to keep nominal production constant) and the infrastructure is losing oil in the pipelines through poor maintenance (not stolen as in the case in some African countries, just leaking out of the system). Higher world costs helps a bit on getting income, but when gasoline prices go up faster than the rate of crude oil increases (it is a refined or value added product, after all, and has a production cost delta added in), then Iran must pay that cost. Most oil producing nations with refineries are also natural gas exporters as natural gas is a byproduct of refining crude oil. Iran must import BOTH gasoline and natural gas, which tells you what is about to happen to their oil system. They can keep patching it up a bit, but without a major re-investment in new facilities, plus a major production expansion, Iran is facing a huge economic crunch.
What the subsidies do is to put a set, below market price on gasoline and natural gas, which means that it is not gaining a true ‘value’ perception by the population. They then use it to the maximum of the low price, which is above what can be sustained and more is imported to meet demand. Iran has slowly had to move away from subsidizing both products, because its faltering oil production is not meeting the cost of increased use of both products.
Now lets shift from China and Iran to the good old US of A!
Lord knows we love our subsidies!
We subsidize: home sales, retirement, medical benefits, student loans, ‘clean fuels’, agricultural products (both raw and refined)… and we get bubbles, lots of economic bubbles… You name it and our lovely Congress probably has a subsidy that comes in many forms: price supports, direct subsidies, rebates on taxes, and the ever lovable ‘regulations’ to support ‘social causes’. This goes far beyond Fannie/Freddie/Ginnie/Sallie, SSA, the M&Ms, ethanol, solar power, mortgage debt, student loan debt, unsustainable retiree benefits plans, IRAs, HSAs, and on and on and on.
Since we have all seen the housing bubble (and, btw, the laws and regulations that caused those have NOT been repealed, which means we can get ANOTHER one any time Congress feels like putting another few trillion on the debt) and, instead, go to everyone’s choice for ‘why the hell are we doing this?’ which is the shifting away of cropland for producing food to producing ethanol. This is done via regulations (mandating a certain amount of gasohol to be sold or ethanol added to fuel), direct subsidies to farmers and some payoffs on the tax side for use via equipment purchases. All of these have created a problem because the US Big Agribusiness (which benefits immensely from this) has done damage to the global market for corn. In particular it has hurt our NAFTA partner Mexico as I go over in Where is the international law with NAFTA? which looked at this phenomena.
Ahhhh… Free Trade! The great panacea! Unless you add subsidies, of course, and then you get unintended consequences as unsustainable and bolstered trade tends to hurt Free Trade. In this case the victims are multi-fold but the main one is Mexico. First off our subsidies to farmers makes our already low cost of production of crops even lower than any other Nation on the planet. No one can compete with crop outputs like those in the US. Don’t worry, our government has a solution to that. Mexico, with its relatively backwards agribusiness, soon saw the small and local farming communities having to compete with subsidized corn from the US produced from huge systems and farms that could utilize modern technology to the utmost to cut per acre cost of overhead beyond what any small farm could ever hope to do. Well that was OK in the early days as, hey, those stupid Gringos were opening factories just over the border in Mexico!
Mexican workers flocked to them and the agricultural sector suffered as all those good, high paying jobs in the factories meant people could buy cheap corn from the US.
Those were the days, huh?
Remember Saddam Hussein and last barrel sold setting price from above? Yeah, subsidized crude oil prices to keep prices low, globally. Remember him? Remember what happened in China?
Yeah, Chinese labor was cheaper than Mexican labor so the factories promptly went transnational and moved production to China. All in the name of subsidies: in the US, in China, in Iraq.
And the Mexicans? Well they still had cheap corn and many people went to work north of the border in farms which paid a bit better than the failing system in Mexico.
I’m not painting Mexico out as a ‘victim’ here: they have their own regulation and subsidy problems with crude oil which add no end to their internal problems. Especially when you get all ‘environmentalist’ on those topics. Mexico is in no way, shape or form a ‘victim’ save of its own corrupt system.
What we did in the grand old US of A was up the subsidy for ethanol via various means.
Farmers saw that you could make more, per acre of marginal income, by producing the corn that would be made into ethanol, which isn’t a food crop nor a feed crop for animals.
There is a set amount of arable land in the US and when production of a subsidized crop increases it does two things: it reduces the yield of its similar counter-parts (feed corn) and it starts to look to expand its output by putting fallow land to use which raises the price of fallow farmland as it sees a demand increase.
What happens is that feed corn (both for cattle and human consumption) undergoes a price increase as less is produced, farmland property undergoes an increase in valuation due to increased demand, and we produce more of a product that is subsidized to protect it from lower cost producers overseas (mostly Brazilian ethanol but others also produce it cheaper).
In Mexico the price of corn for tortillas skyrocketed in 2006-09.
Elsewhere in the world food shortages started to appear in Egypt, India, and since China has done wonderfully Progressive things with its farming sector it has gotten a Progressive Dustbowl and a decrease in farm labor due to its subsidizing industrial output.
Everyone, and I do mean over 3 billion people, depend on the US of A for FOOD.
The US of A sets food prices like nobody’s business because our subsidized Big Agriculture generally outcompetes everyone due to vast acreage put into production and modern farming techniques.
Our educational system, meanwhile, has been concentrating on the humanities and subsidizing those, so we don’t produce many new farmers, agronomists, and even folks in the hard sciences and engineering have suffered in output because of subsidized student loans. In the hard fields of maintenance blue collar jobs the US is no lacking a half million welders, alone. This isn’t talking about the other jobs necessary to maintain our infrastructure: pipe-fitters, bricklayers, sanitation personnel, road crews, ditch diggers… there are good jobs going begging because of the feeling of ‘entitlement’ to a good life without having to maintain it via our educational system.
And that elite education costs too much.
Well, it is subsidized, after all, and so you get a bubble economy in it.
If we were still training the maintenance people at a clip to maintain the infrastructure, this wouldn’t be a problem for our civilization. Maintenance and marginal expansion would help us get through tough times. Iran doesn’t do that to their oil infrastructure and is now paying a price in unrest and having to demonize external enemies for internal problems.
OWS isn’t a disease, it is a symptom of rot to the very core of our society manifesting on its skin.
To that we can thank: subsidies put in by government regulation which now strangles every aspect of our economy.
Let go on with a bit from Vladimir Dvornikov’s article On “Iron Laws” of Economics and this is not an endorsement of his full line of thought it is an illustration of where we are and he is coming in after talking about minimum wage laws:
The more government regulates the less it can adequately control and no one trusts that control as it sways only to its own wants for power via the forms of politics. The very regulations that are meant to ‘uplift’ and ‘protect’ people become the instrument to use against them as the political winds blow. All of those wishing for government to ‘moderate’ any economic ill then proceed to lobby politically to get that done so yet more falls under sway of government and out of kilter with economics.
Yes there are Iron Laws of economics.
Our entire world has been trying to deny this for decades due to the siren’s song of subsidies, promising everlasting good and inculcating everlasting agony. It isn’t the only siren sitting amongst the rocks, but it is the easiest to succumb to and once the ship heads towards the rocks then others of its kind are then the focus of attention.
More subsidies!
More regulations!
The loss of freedom and liberty amongst those rocks? Ah, those who listen never tell us about those, now, do they?
Filed under accountability, bureaucracy, commentary, economics, history, law, liberty, society