Arkansas Capitalist Connection

How many Britons does it take to assist a prince in changing his princely skivvies? Try 40. The Prince's entourage for his tour of the United States included 40 staffers. Imagine all the hydrocarbons burned in the course of this expedition. Just thinking about it is enough to make a block of the arctic ice cap fall in.

That so many hydrocarbons could be burned for a series of photo-ops caused the Arkansas Capitalist to initially conclude that it must have been the other Prince Charlie who last week anounced that global warming was terrifying, terrifying. Some theories suggest that it is the burning of hydrocarbons that causes the global warming. Charlie, like so many other liberal hypocrites, wants to regulate everyone's consumption except his own.

Check out this book for more examples of liberal hypocrisy.

According to a recent Census Bureau Report the median household income of black families is 62% of that of white families. Hispanic families the median household income is 70% of that white families. Median income of women is 77% of that of men.

Discrimination, says the left, and they know how to fix it. Regulation, tax increases, civil rights laws, increases in welfare benefits, affirmative action, increase the minimum wage, employment discrimination laws, government action to promote unions on and on and on.

While the causes of inequality can be debated (our recommendation) the Arkansas Capitalist wonders what would happen if all the "solutions" of the left were actually implemented.

We have the perfect laboratory to study these "solutions". Donald Rumsfeld refers to it as Old Europe. It is difficult to think of a single current policy initiative of the American left that isn't already in place in some form in Old Europe. Bureaucratic unionized high tax welfare states are an Old Europe specialty.

Unfortunately, these solutions do not work. According to the American Enterprise Institute per capita income in the United States now exceeds that of France by close to 40 percent, when adjusted for differences in price levels. Germany and Italy lag even further behind. The French in France are doing about as well as blacks in American, and falling far behind Hispanics and women in America. How is that for discrimination?

The Arkansas Capitalist is a fan of French President Jacques Chirac. Actually a fan of Chirac in the same way that supporters of the New York Mets are Bill Buckner fans. Thanks for screwing things up because it helps the United States compete, Jacques.

When debating economics, liberals often point out that there is no such thing as a free market and that the economy in most nations is a mix of free market and regulation, therefore the threat of regulation is overstated by the right. The economy has been much more regulated since the 1930s, they say, and we are doing just fine. This argument misses the fact that economic development just isn't about how capitalist one country is, but how capitalist one country is when compared to other countries. A mixed economy in America is just fine, as long as America is the most capitalist.

The new challenge faced by America is that Pacific Rim countries are determined to be more capitalist than America, and thanks to dopey European leftists like Jacques Chirac, we do not have to face a two front battle.

Jacques is helping by supporting the Kyoto Treaty. The problem with Kyoto is that China and India are exempt. China and India are currently using their low cost labor pool, lower taxes, and lower cost regulatory environment to take American jobs, and costs added by Kyoto would increase the flow of jobs out of America and into China and India.

Europe claims that it will abide by the Kyoto emissions standards. It is a few years before any money will change hands, and the Arkansas Capitalist is willing it to bet that Europe has a change of heart before it starts writing checks and packing up jobs for shipment overseas. In the mean time you will be hearing weeping, wailing and gnashing of teeth coming from Europe about global warming and how irresponsible America is for rejecting the Kyoto Treaty. This is because the Europeans have tied one arm behind their back, and they want the United States to do the same. We could still kick European butt with one arm tied behind our backs, but the Pacific Rim is more of a challenge.

Kyoto is a classic illustration of the ignorance and hypocrisy of the American left. Take whatever pollution is caused by making 1000 widgets in America, and compare it to the pollution caused by making the same 1000 widgets in China or India. Kyoto does not prohibit the making of widgets, it just results in more widgets being made in the places where making widgets creates the most pollution. Kyoto creates more pollution by shifting production from places which produce less pollution per widget to places which produce more pollution per widget. And they call this "environmentalism".

Furthermore, what the left really wants is for there to be less widgets made, because the only way to actually reduce pollution is to reduce consumption. Politics prohibits them from admitting this, so instead they hide behind the ignorant, hypocritical and counterproductive Kyoto Treaty.

Keep Jacques Chirac in your prayers. We can only hope that he will continue to be so stupid as we continue to compete with the Pacific Rim. And perhaps we should send some New Orleans police officers to help quell the rioting in Paris. Every little bit helps.

This article tells the story about how the house pictured on the right is offered at a price of $1.2 million. Does the junk come with it?Manuel Corchuelo, the owner of the house, has some Las Vegas condo developers strapped over the barrel, and he is gouging the hell out of them. Go Manuel.

Hot air will be the probably result of all the price gouging discussions, but if there is legislation, the Arkansas Capitalist hopes that Manuel will still be able to sell his house for any price he wants, and that eBay sellers will not be required to accept the second or third highest bids. Everyone sells something, and their free will influenced by prevailing market conditions should determine the price.

Pulaski County Judge Buddy Villines says that unless voters pass a tax increase, they might wake up to a burglar in their house. This kind of garbage is similar to the Washington Monument ploy, an ancient device favored by big spending politicians. When required to meet some arduous budget number by producing cuts, the crafty bureaucrat proposes cuts that he knows will never be accepted, such as closing the Washington Monument. Overspend on things that do not matter, and then declare a "crisis" with respect to a priority that can only be fixed with more taxes.

The Arkansas Capitalist isn't buying it. The Pulaski County budget doubles every 10 years. There was enough money to plow up perfectly good streets, install railroad, and circulate a trolley without passengers. The county had the money to protect its citizens, but chose to spend it on things that didn't matter, and then come to the people asking for more money.

It is time to call Buddy's bluff. And by the way, the Arkansas Capitalist is ready for any burglar that might visit.

U.S. Rep. Maxine Waters (D-CA) thinks that the predominately low income people she supposedly represents in the U.S. Congress should pay more for toothpaste and frying pans, and many other household items. She doesn't want Wal-Mart in her district.

The people in the suburbs, make that the higher income SUV driving suburbs, like their Wal-Mart. The more money you make, the less money you have to pay for coffee cups and clock radios. If this was a discussion about taxes, the left would be howling unfair and regressive policy. Inequality! In this case, the inequality in prices for consumer products is self-inflicted.

Liberals like Maxine Waters would rather pander to unions, who are angry that Wal-Mart isn't unionized, than do what is in the best interests of their constituents. Check out this drivel to see what the unions say about Wal-Mart. Unions provide more campaign contributions than do the residents of low income neighborhoods, and as a result the residents of those neighborhoods do not get the benefits of price competition.

Price competition is how the consumer holds business accountable. It forces business to build not only a better mousetrap, but a cheaper one. Remember the 1980s movies and commercials that made fun of the yuppie fixation on cellular telephones back when cellular telephones were seen as toys for the self indulgent rich? Cell phones have taken 20 years to go from a toy for the rich to so affordable that many below the poverty line now have access to the technology. Price competition works.

The unions target Wal-Mart for public relations purposes, but they are not targeting only Wal-mart, they are targeting any business (Target, Best Buy, etc.) which seeks to attract consumers through price competition. They want you to pay more for everything you buy. The left has abandoned its long held position as the champion of the consumer. The right should take up the pro-consumer banner. It is good policy and good politics.

Where is Bill Halter? After making a big splash in the Governor's race, he disappeared. It was as if the Stanford economist did not have anything to say about Arkansas. As of today, the last "news" posted on his website is dated October 10. Put enough whiskey and wing-nuts in a room, and someone might conclude that Bill Halter was invented by the blogs. A combination of Max Headroom and the Wizard of Oz.

Just when it seems reasonable to think that Bill Halter is the figment of someone's imagination, the man behind the curtain speaks. In a Benton County Daily record story Halter said:

"I think that's my overriding philosophy, and at the same time to ensure that we have a tax system that is competitive and that puts Arkansas in a position, vis a vis other states, where we are well-positioned to attract jobs and capital to the state, so we can have higher incomes for all Arkansans."

Tax policy effects job creation? Haven't we heard that before?

Hutchinson noted that Arkansas is in the top 10 states in the nation in terms of high income tax and sales tax rates, and that the state's tax structure is not competitive with surrounding states with lower tax rates. The result, Hutchinson argued, is that it is more difficult to attract new industries or retain those already on the state. "Capital is fleeing the state, and it's taking job opportunities with it," Hutchinson said.

That would be Hutchinson as in ASA!

Although its always good to see a Democrat talk straight about taxes, why take your chances? Bill Halter needs leftists to support him in a Democratic primary, and leftists have yet to discover that taxing employers out of existence costs jobs. The Arkansas Capitalist will stick with the real deal, and that is ASA!

... that the Arkansas Capitalist likes paying high gas prices, or is sufficiently invested in oil stocks so that the gain exceeds the pain. This is not the case.

There are 3 things you can do about high gas prices.

First is to be a vigilant consumer and follow the prices at both the wholesale and retail level. Bloomberg tracks wholesale gas prices. A permanent link to Bloomberg Energy Markets appears on the left side of this page. Movement in the retail price usually occurs 2 or 3 days after movement in the wholesale price. There is a 60 to 90 cents per gallon markup which represents transportation and retail costs. Follow the wholesale market and you will know what is going to happen with gas prices in the next few days. Time your fill-ups accordingly. Local web pages cover retail gas prices.

The second thing you can do is understand how markets work, why the alternatives to markets have been failures and vote for capitalists. Auto manufacturers have a 72% capacity utilization, which is why so many incentives are offered. Refineries do not have that problem, they are using over 95% of their existing capacity. This is why the hurricanes had such an effect on prices. Capacity utilization of an industry is strongly correlated with that industry's pricing power.

New refineries cannot be built because of environmental regulations. Do an internet search if you want to read more about that. You will find that crude oil prices are driven by recent increases in demand in India and China, and that gasoline prices are driven in part by crude prices and in part by lack of refinery capacity. Those are the facts, regardless of how much political pandering and pretending goes on.

The liberals ignorantly dismiss anything promoting the construction of new refineries as helping rich oil companies. Oil subsidies are not needed, because if the profit incentive is not enough of a reason to invest it is a bad investment by definition. What we need to do is remove regulations that act as barriers to entry into the refinery business, so that more refineries will be built. The market will work to benefit consumers if the leftists will get out of the way.

The final alternative is to do nothing. How much environmentalism can you afford?

The Arkansas Capitalist is mad as hell about price gouging, and the wrath is not directed at big oil. Dell makes ExxonMobil look like a piker when it comes to corporate profits. Unlike the so called main stream media, the Arkansas Capitalist has facts and figures to back up assertions.

Everyone knows that the oil companies have posted "record profits". What has not been reported is the amount of capital invested in order to achieve those record profits. The percentage of return on the total investment is what really matters when making a comparison of relative profits.

This MSN Money Dell stock quote shows that Dell's return on equity over the past 12 months is a whopping 62.9%. ExxonMobil managed only 28.3%. That is a very good return on equity, but any objective definition of price gouging that includes ExxonMobil must necessarily include Dell. To make a valid comparison, profit should not be measured only in the number of dollars, but also in the percentage return represented by those dollars. Of course, the main stream media are not interested in valid comparisons, but pandering for ratings/circulation by making screeching "I feel your pain" arguments.

You have already heard all about price gouging over the past few weeks, and will doubtless hear a lot more about it. One thing you will NOT hear is an objective definition of "price gouging" that can be applied to all sectors of the economy. Pander on politicos and journalists, the Arkansas Capitalist will stick to the facts.

Liberals often complain about urban sprawl. They say that if "we" would invest in our downtown core, "we" would save lots of money on highways and gas used for commuting. Whenever a liberal talks about what "we" can do, watch your wallet.

The Arkansas Capitalist knows how to stop urban sprawl. First, we require Walmart, Best Buy and other retailers to jackhammer half of their parking lot, and replace the parking spaces with flower gardens. Next, we place parking meters at the remaining parking spots, and hire some unfriendly people to write tickets for all those who are parked for more than 30 minutes. Finally, we create a maze of one way streets and stop lights that you have to navigate before you can enter the parking lot.

What liberals fail to understand is that urban sprawl is the free market's response to the high cost of housing or commercial space. When you artificially restrict supply with land use regulations designed to stop urban sprawl, the price of property shoots up. Have you seen the latest price statistics on houses in San Francisco?

A senate committee voted to include drilling in Alaska in the budget reconcilliation bill, which avoids a potential fillibuster in the U.S. Senate. Given that supply and demand control price in the market, this is good news for anyone feeling the pinch of higher gas prices. Environmentalists opposed the provision.

Environmentalists argue that drilling would harm wildlife, including polar bears, caribou and migratory birds, that use the refuge's coastal strip.
http://www.newsday.com/news/nationworld/nation/sns-ap-arctic-refuge,0,1214611.story?coll=ny-leadnationalnews-headlines

The next time you pull up to the pump think about which side you want to be on: The side of a warm cozy polor bear, or the side of the consumer and whatever that bad boy just ate.

Asa wants to reform and cut taxes for all the right reasons.

Hutchinson noted that Arkansas is in the top 10 states in the nation in terms of high income tax and sales tax rates, and that the state's tax structure is not competitive with surrounding states with lower tax rates.

The result, Hutchinson argued, is that it is more difficult to attract new industries or retain those already on the state.

"Capital is fleeing the state, and it's taking job opportunities with it," Hutchinson said. http://www.asaforgovernor.org/

Only private sector investment creates private sector jobs. Private sector investment is most likely to occur where the return on investment is greatest. The rate of taxation effects the return on investment, and influences the place where investment occurs. Whoever gets the investment gets the jobs. It doesn't have to be that way. The government could be the only employer, and we wouldn't have to worry about private investment. That is how it works in North Korea and Cuba.

Tax debates often morph into debates about statistics. Liberals say that in terms of the amount of taxes paid, Arkasas is a low tax state. This is true, but misleading. Of course Arkansas is a low tax state because it is a low income state. When the amount of taxes paid is expressed in terms of percentage of income, Arkansas ranks 11th nationally in state and local taxes. http://www.taxfoundation.org/research/topic/14.html This calculation includes property taxes. Exclude them and Arkansas is in the top 10 in sales and income taxes.

The tax question is an economic development question, and Asa has the right answer.

Anyone who has ever booked a flight on the internet knows that once you find a flight that fits your schedule, you sort by lowest price. All the planes come from Airbus or Boeing and cost about the same. Unless fuel costs are hedged the fuel costs about the same for all airlines. So what causes most of the airline ticket price differential? Labor costs. http://www.businessweek.com/magazine/content/03_14/b3827047.htm

When you sort by lowest cost, you are asking your computer to tell you which greedy airline is working its pilots, flight attendants and other employees the longest hours for the lowest pay.

Although the Arkansas Capitalist wonders what happens when Dick Gepheardt or John Kerry books a flight, the real question is what would Max do?

Remember the 3 stooges skit when Moe tells Larry to hit Curly, but Larry misses Curly and hits Moe instead? So it is with the American left. For years the left has been complaining about SUVs and their impact on the environment. Greedy industry is destroying the planet... blah blah blah.

Now, gas prices are killing SUV sales. That will teach those greedy automakers, right? Wrong. The UAW has agreed to a billion dollars worth of concessions to GM. The reason is slumping SUV sales. http://www.nytimes.com/aponline/business/AP-GM.html

The market doesn't lie. What is good for ExxonMobil is bad for GM, and its employees. The left often acts as if business is one big monolith out to get the little guy(unions), when in this instance, big GM and big unions were on the opposite side of the table from Big Oil.

And where was the American left? They were pretending to be on the side of the worker, when in fact they are on the side of Big Oil, supporting regulations that enhance the pricing power of Big Oil by erecting barriers to entry into the refining business, resulting higher gas prices and lower SUV sales.

The left took a swing at big bidness, and managed to hit the working man right in the kisser.

Recently there was a meeting in a deep dark secret place. Greedy oil men were everywhere, Haliburton provided whiskey and cigars. The topic was gas prices in general and how to screw the little guy in particular. Bush (both actually), Rumsfeld, King Abdullah, the Trilateral Commission, the Mafia Commission, and various Bilderburgers all showed up. Both the Sultan of Brunei and the Brunei of Sultan were there. The Illuminati had to participate by conference call, because they were busy resolving the constitutional crisis in Iraq.

You know a meeting like this means one thing, gas prices are going up. Its all a big conspiracy to screw the little guy. We know they are too greedy to let gas prices stop at $3 a gallon. Just as sure as an international banking conspiracy rules the world, we know gas is going to $4. They are just too greedy for anything else to happen.

I know how we can get even. Remember what Lenin said about buying rope from a capitalist, and then hanging him with it? These NYMEX dudes( http://www.nymex.com/gas_pre_agree.aspx) are willing to sell us gas for $1.80 a gallon, but they sure wouldn't if they knew that the international oil conspircacy is going to run up the price another dollar. We quit smoking dope for month, sell the weed, and use the money to buy gas at NYMEX. When the conspirators run the price up to $4, we will have locked in at a much lower price. We will get rich off the greedy bastards. Hey don't be skeptical, this is how George Soros got off of welfare. We can use the money to gas up our chartreuse microbus and use the rest to feed the homeless and discover and AIDS vaccine. How about those beans?

John Edwards of "two Americas" fame has joined a Wall Street firm. While moonlighting from his day job, which is studying poverty, Mr. Edwards will be "providing support in developing investment opportunities worldwide and strategic advice on global economic issues." Although review of Mr. Edwards campaign rhetoric indicates that he will be advising the firm to start a global trade war and to use tarrifs to screw consumers, this news confirms the most basic principal of the Arkansas Capitalist: Everyone is a capitalist when it comes to their money.

This whole 2 Americas thing also arouses our curiosity. Mr. Edwards has a million dollar house in a lilly white neighborhood in DC, a million dollar house in a little white neighboorhood in North Carolina, and a beach house. Which America is Mr. Edwards in? Does Mr. Edwards commitment to equality extend all the way to equality with HIM? The Arkansas Capitalist would settle for just one million dollar home in any neighborhood.

If the liberals really want to make poverty a moral issue, they should start with a definition of equality. One can assume that Mr. Edwards believes that his own seemingly unequal status is morally justified, and if asked about it he would say "I earned it." Is inequality ok if someone "earns" it? Does anyone think Mr. Edwards will study this question while he studies poverty?

Another way of saying that inequality is ok if someone "earns" it is to say that equal opportunity is essential, rather than equality of results. Although Mr. Edwards has been described as the first candidate to discuss poverty in a national campaign since RFK, it turns out that his definition of equality has alot more in common with that of George W. Bush than that of Che Guevara.

Mr. Edward's joining of a Wall Street firm as well as his previous career as being a mouth piece for whoever wanted to pay him the most money causes the Arkansas Capitalist to conclude that Mr. Edwards is less concerned about poverty than his is about using poverty as a political football. Welcome to the game, John.

Those who understand basic economics know that in a market economy the consumer is protected by competition. When profit margins in a particular sector of the economy get excessive, new players enter the market, seeking to get in on the action. The new players seek to gain market share by undercutting the existing providers on price, and the existing providers reduce their price to preserve market share. Price conscious consumers drive this process. A problem occurs when because of regulation or litigation, new players cannot enter the marketplace. Then the market is distorted, consumers get hammered, and excessive profit margins remain.


There has not been a new refinery built in the United States since the mid 1970s. Imagine the price of houses if no new houses had been built in the last 30 years, or the price of hamburgers if no new hamburger stands had been built for 30 years. For the last 2 years, gas prices have been going up. The market has been screaming that it needs new supply, yet no refineries have been built.

The reason for this is environmental regulations and local zoning restrictions. Several days ago, the Congress voted on a bill that would relax some of these regulations, so that the more refineries can be built and competition can work to protect consumers. Vic Snyder voted NO, so the next time you go gas up, think a kind thought about Vic Snyder and other evironmental wackos that cause these high prices.
Reference: http://www.chron.com/cs/CDA/ssistory.mpl/business/energy/3384205
See also: http://www.forbes.com/energy/2005/09/07/katrina-oil-refineries-cx_tvr_0907refineries.html

Just when we were wondering about our faith in the resilience of American culture, a report like this crosses the wire:

The Wal-Mart store in uptown New Orleans, built within the last year, survived the storm but was destroyed by looters. "They took everything - all the electronics, the food, the bikes," said John Stonaker, a Wal-Mart security officer. "People left their old clothes on the floor when they took new ones. The only thing left are the country-and-western CDs. You can still get a Shania Twain album." http://www.jsonline.com/news/nat/sep05/356668.asp

Thats right folks, the Zamfir crap that Al Gore listens to was gone, stuffed into the trunk of a Volvo no doubt. Sorry Reverend Jackson, the rap was gone also. And don't even think "no one listens to that crap anyway". Walmart has a real time inventory tracking system, and if the country music wasn't moving, Walmart would ship it back to Nashville and get their money back.

The market doesn't lie, even when the goods are priced "free". God bless the American redneck.

The Arkansas Capitalist Connection is a weblog devoted to debate of economic issues, the application of free market economics to public policy questions, and to holding politicos in Arkansas accountable when they say things that conflict with basic economic principles.