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Monday, May 01, 2006

# Posted 11:11 PM by Ariel David Adesnik  

WHAT DEMOCRATS THINK ABOUT FREE MARKETS: Picking up on my last post, I thought I would reproduce some of the gems provided by Sen. Durbin. As noted below, the GOP hasn't been great on this issue either, but almost all of yesterday morning's idiocy belonged to the Democrats. First, are some highlights from Durbin's rant on Meet the Press:
MR. RUSSERT: Senator Durbin, in your mind, why has gasoline gone up 60 cents per gallon in one month?

SEN. DICK DURBIN (D-IL): I think there are two things, and one that you alluded to in your second question, profit taking by the oil companies. Last year, $110 billion in profit by the oil companies.
The transcript doesn't do justice to the contempt in Durbin's voice. He made it sound like making a profit was part of a some great big conspiracy, not a normal function of the marketplace. Besides, have you ever heard Durbin complain about consumers robbing oil companies of their just income when prices are too low?
SEN. DURBIN: Am I the only one of your guests here that think that profit taking is a problem? [I hope so! Socialism is so 1973.] I mean, I understand the basic laws of supply and demand. I understand that if the input costs have gone up, it’s going to reduce your, your profitability. But here we have the most enormous profits in the history of the United States of America in business. The equivalent of $1,000 per household in America for profits. All of the market factors you described may suggest that the product is going to be more expensive to sell, but they don’t forgive what I think is an outrageous profit taking by this industry.
Nor can I forgive the outrageous profit taking of Apple Computers. Why did I have to pay $300 for my iPod to listen to Dick Durbin when Apple could've sold it to me for a fraction of the cost?
SEN. DURBIN: At this point in time, I tell you there is a boom now and opportunities for these ethanol production facilities. I want to see that happen. You know why? Because in downstate, small town America, that I represent as well, these are the best job opportunities they can find. These are business opportunities in communities that have otherwise almost given up. They have a chance now. And if you’re going to allow us to become, allow this import of fuel from Brazil we may find ourselves as dependent on foreign ethanol as we are today on foreign oil.
God forbid we should be dependent on a friendly, stable democracy like Brazil rather than Nigeria, Saudi Arabia and Venezuela! And by the way, Brazil can't produce more than a fraction of the ethanol necessary to satisfy potential US demand. Keeping their ethanol out is just plain protectionism.
DURBIN: You know, I drive a hybrid car at home. My wife and I, we bought a Ford Escape hybrid. I think it’s a move in the right direction.
Blue book retail value of a Ford Escape Hybrid: $26,691. Blue book retail value of a standard Ford Escape XLS: $19,751. (Both models 2WD, 4 cyl, 2.3 ltr, automatic transmission.) Hmmm. Another well-paid liberal outraged by what consumers are paying at the pump but insistent that they should pay thousands more for an eco-friendly car.
DURBIN: To reach a point of 40 percent reduction [of oil use] over 20 years, which was the Democratic position on the Energy Bill is doable. It means making a commitment to doing some things we’re not doing, promoting energy independence and energy technology development that is environmentally responsible.

But it also means two other elements we shouldn’t overlook: punishing profiteering. All the market forces not withstanding, if the oil companies still insist on these outrageous profits, the consumers will lose and the American economy will lose.
Which must be why our GDP growth rate is 4.8%, inflation is low and consumer confidence is high. Three cheers for liberal economic policy!
(8) opinions -- Add your opinion

Comments:
I read that you would have to plant corn in all of the USA including the cities to have enough methanol for fuel.

Oil is the fuel for transportation for a good number of years. WE should drill off the continental shelf and in ANWR.
 
yes, it is nice to see that our elected reps. can afford the nice hybrids that we common folk cannot afford(or get tax breaks for). Kerry made the statement that he and Edwards were on the list to get one of the few Ford Escape hybrids made. Nice that the guys who can afford the $3.00 per gallon gas get the cars(which probably sit in a garage somewhere) while the people who really could use them have to pay a premium to get one because they are in high demand.
Oil profits are being turned into new technology to find new oil. With the price of a barrel of oil above $50.00 it makes it feasible to drill in places in the US that were unthinkable at $30.00 per barrel. We can also look at oil shale and other sources that will now look affordable at $75.00 per barrel. The supply and demand system is working, don't mess with it. What I don't understand is how Democrats who have been advocating for years to have more fuel efficient vehicles, cleaner fuels,and more public trans-portation are upset when the market is now providing the motivation to move to these goals.(oh right, they didn't get to raise the gas tax to do it)
 
as usual your insights into the talking heads on tv is right on the money. your comments about sen durbin are delicious ones and just shows how ignorant the man is. i thought that the energy secretary put him down when he said that a man as smart as durbin could not believe what he had been sahying on the program. but the sssumption of the mans capability to understand economics is wrong. durbin is durbin and hes the no two man in the senate next to other featheweight leader sen reid. doesnt give on a warm feeling about competance. rhetoric maybe but comnpetance never. oh well even russert looked bad since he too is a political zealot and doesnt understand technical matters that count. his producers let him down. the whole show with durbin and russert makes one believe even more that many of the talking heads celebraties are badly educated in many matters. the two thousand dollars suits dont cover this fact up well..
 
Here's the problem I have with this post:

-The first quote is fact. The writer can lament all he wants about "the contempt in Durbin's voice," but that doesn't change the facts. And why is the writer defending oil companies? This is the equivalent of our raising our taxes to get a budget surplus, and then using the surplus to raise the salary of every Senator in office. We wouldn't stand for that; why is this any different?

-The second quote is also fact. The writer is trying to compare iPods to gasoline, an analogy that fails miserably. If you don't want to buy an iPod, don't! There are plenty of similar products on the market. But that's not the case with gas prices. If you don't want to buy gas, sure, you could take the bus or walk. But how many other things are affected by gas prices? Airline tickets, heating bills, etc. There is no product on the market Americans can buy in place of gas.

-Ignoring the obvious stupidity on the writer's part, the only thing I'm going to say about the third quote is Brazil's production, which is robust enough for our needs (http://sg.biz.yahoo.com/060410/15/3zzi7.html)

-In the fourth quote, the Durbin says that he bought a fuel-efficient car, as a "move in the right direction." The author does a little research on prices for hybrids, and shows that the higher end hybrid is $26K, and the lower end is $19K. He then says "Another well-paid liberal outraged by what consumers are paying at the pump but insistent that they should pay thousands more for an eco-friendly car." Did I miss something? Did Durbin say, "I encourage all Americans to purchase hybrid cars?" Besides which, the best selling car in 2005 was the Toyota Camry (http://www.msnbc.msn.com/id/10736236/), which retails from $18K (low end) to $25K (high end) (http://www.toyota.com/camry/index.html?s_van=GM_HOME_FLASH_CAMRY). Exactly how is this thousands of dollars more?

-Finally, in Durbin's last quote, he talks about the Democratic fiscal plan. And while the author is correct in saying that the GDP growth rate is 4.8%, he fails to explain how annual salaries are down 0.3% since Bush took office (http://online.wsj.com/public/article/SB114341649383308604-n4_olq41qXEvqTb_wgFhndoEDow_20070327.html?mod=blogs ). He also mentions that consumer confidence is high, but if that's true, why was there a selling run on stocks Monday? (http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B9F1518AF-B0E1-4AD8-A7B6-7FCCF7369A7C%7D&siteid=google )
 
So he drives a hybrid when he's at home, eh? Any hybrid limos around to carry them off to K Street?
 
To address Kevin's points...
- No comparison to oil profits and congressional pay raises. Oil companies produce a product that we want and need enough that we make a conscious decision to buy it everyday. Congress produces nothing and only gets our money through the force of law. If what we paid in taxes was based upon demand and customer satisfaction, the deficit would increase by a factor of 50.
- The analogy between the iPod and gasoline fails miserably? So did your explanation as to why.
- Brazil's production of ethanol relies upon sugarcane, which Brazil can grow in much larger quantities due to their climate. We have to rely on other agricultural products that are less efficient.
- A run on stocks on Monday means that consumer confidence is not high? Okay.
 
Ok, so you completely don't address Kevin's points. He may have not articulated them as clearly as he could have, but you sidestep the issues he raises entirely:

- First of all, stop pretending that the price of oil is entirely driven by a free market. Our meddling in oil-producing countries changes that equation significantly. Furthermore, oil companies are getting record levels of tax breaks. Why should taxpayers be subsidizing an industry that is making record profits? The answer, of course, is somewhat related to Kevin's assertion about Congressional pay, except that the money isn't going to them directly (except in the case of some corrupt ones), rather it's going to their war chests so they can get re-elected, give oil companies tax breaks, which are then use to fund the war chests that get those Congress members re-elected. That's not democracy, and it's not a free market. It's patently un-American, in fact.

- Kevin explains exactly why your iPod analogy fails; you just say his does and assume we'll accept that as fact. But I think hidden in your dismissal of Kevin's response is an innate disregard for the average working person, who can't just stop using gas to get to work, who has been forced by our out of control housing market to buy or rent a house miles from work. iPods: Optional. Gasoline: Not really option for most people who work for a living. Is that simple enough?

- Forget Kevin's point about what the stock market is doing day to day: Can you address this? "he fails to explain how annual salaries are down 0.3% since Bush took office". No, you can't. GDP is not the only valid measure of the economy, and it certainly doesn't address how the economy affects the average working person, it's just a statistic the GOP and Bush apologists cling to because it makes them look good, and is easily gobbled up by talking heads and other Bush sycophants.

- I'm sure you think that America is the best country ever to exist. While I don't blindly accept that, clearly America has many fantastic qualities. Certainly, our "can-do" attitude and drive as a country is one of those qualities we all prize. So, explain to me why we, if Brazil can achieve energy independence, we can't?
 
To reaffirm my point about consumer confidence (above):

http://www.washingtonpost.com/wp-srv/business/interactives/consumercomfort/consumercomfort.html
 
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