Tuesday, April 30, 2013

Not Mutually Exclusive

The latest course offering from Prager University tackles the oft cited notion that faith and reason are not compatible:

How many times have you heard the argument that atheism is rational and scientific, whereas belief in God is mere faith, unsupported by any evidence? I'll bet you've heard that a lot --especially from college students. Maybe you've even said it yourself.

But what if there is a rational reason to believe that God exists?

In this week's Prager University course, Peter Kreeft (one of the most esteemed theologians of our time) talks about why the existence of God is not only rational, but is supported by scientific evidence.

Friday, April 26, 2013

Invisible Airwaves Crackle With Strife

Local talk radio host Bob Davis has ran afoul of a local member of MoveOn.org and she's started a petition to stop the hate:

Bob Davis, a radio host on Twin Cities News Talk in Minneapolis, a Clear Channel station, said that he'd like to tell the parents of Sandy Hook victims to "go to hell" for infringing on his Second Amendment rights. He also said, "I'm sorry that you suffered a tragedy, but you know what? Deal with it, and don't force me to lose my liberty, which is a greater tragedy than your loss." To compare the loss of political ground to the brutal and violent loss of a child is disrespectful and inhuman.

This hate-filled talk is unimaginably painful for victims' families. Sensationalism, while it sells lots of advertisements, appeals to our worst selves and has no place in a time when deep divisions in our country require us to find common ground.

Enough is enough: We have to start standing up against hate speech.

That's why I created a petition on SignOn.org to Clear Channel CEO Bob Pittman, which says:

Bob Davis, a radio host on Twin Cities News Talk AM 1130 in Minneapolis, said that he'd like to tell the parents of Sandy Hook victims to "go to hell" for infringing on his Second Amendment rights. Take Bob Davis off the air; he is a stain upon your station's reputation. Victims deserve respect and compassion, not vitriol and hate.

How will Mr. Davis sleep at night knowing that he is a considered a voice of hate. My guess? Like a baby.

Saturday, April 20, 2013

An Offer They Can’t Refuse

George Cross, former President of the University of Oklahoma, famously said in support of his request for more state funding for his institution, “I would like to build a University of which the football team could be proud.”

I’m sure University of Minnesota administrators would love to add that to their justifications for their biannual request for ever more millions.  Unfortunately that appeal requires a football team that has earned the right to be proud over something, a prerequisite the Golden Gophers have lacked for about two generations.  So they’re stuck with begging for more money for neuromodulation and water quality.  Good luck with that, Poindexters!

The spirit of George Cross does exist in Minnesota however, if not at the U, then at the State Capitol.   The other day Governor Mark Dayton expressed his wish that he’d like to build a citizenry of which the Legislature could be proud. Or, as stated in his own inimitable style:

This legislature I believe is terribly underpaid.  And I think Minnesotans, you know, are getting a better legislature than they deserve.  

He actually said that.  If you don’t want to take my word for it, here’s the video:

This is the kind of gaffe that would have resulted in breaking news updates on local TV and special editions of the Star Tribune, had a Tom Emmer or Michele Bachmann said it.  But I’m not aware of anyone covering it other that WCCO, in this brief snippet.   The AP report, on which most news outlets rely, used the less inflammatory front half of his quote and grafted on a noncontiguous ending:

"The Legislature, I believe, is terribly underpaid," Dayton said, calling for an even bigger legislator raise. "A part-time Legislature is a long ago myth."

Getting beyond this white wash and back to reality, the kicker in Dayton’s comment is:

I think Minnesotans, you know, are getting a better legislature than they deserve.  

Makes you wonder, in Mark Dayton’s mind, what kind of godawful, crappy legislature do we deserve to have?   Not that we risk having, but we DESERVE to have.

The current overqualified, underpaid bunch brought us such classics as relying on electronic pulltabs for picking up the $350 million public subsidy of the Vikings stadium, and only falling 95% short of its revenue goal.  My god, what if we had the legislature we deserve to have? It could have fallen …. 96% to 99% short!  Or maybe they would have stumbled into a way to warp the laws of mathematics and fall more than 100% short.  That’s what we deserve.

Of course, there is no objective standard for what our legislators “should” be paid.  According to Dayton, we’re getting high quality people despite the fact they haven’t gotten a raise in 15 years.  That tells me these politicians are motivated to seek these jobs for reasons other than money.  If that is the case (and it is), we’d be fools to pay any more than we do now.

The dismal science of economics also helps explain why legislators are getting paid less than what they think their qualifications and long hours entitle them to.  From the Wikipedia discussion on the subjective theory of value:

… a buyer in a free market who offers to pay a price lower than that which is commensurate with the amount of labor used to produce the good merely communicates information to the seller about the value the good might create for the buyer. (The price offered is not a measure of subjective value; it is just a means of communication between the buyer and the seller.) The offer is in one sense an expression of the buyer's opinion, which the seller is free to reject.

That pretty much sums it up, doesn’t it?

Something tells me the same political class we have now will be once again begging for their jobs next election cycle, no matter what price we offer to pay.

The People Came

It’s been an absolutely insane news week and a lot of events were overshadowed by the attack and manhunt in Boston. One of those events was Margaret Thatcher’s funeral. Peggy Noonan has a wonderful column today on how Britain Remembers a Great Briton:

At the end of the funeral they all marched down the aisle in great procession—the family, the queen, the military pallbearers carrying the casket bearing the Union Jack. The great doors flung open, the pallbearers marched forward, and suddenly from the crowd a great roar. We looked at each other. Demonstrators? No. Listen. They were cheering. They were calling out three great hurrahs as the pallbearers went down the steps. Then long cheers and applause. It was electric.

England came. The people came. Later we would learn they'd stood 30 deep on the sidewalk, that quiet crowds had massed on the Strand and Fleet Street and Ludgate Hill. A man had held up a sign: "But We Loved Her."

"The end is where we start from." That is T.S. Eliot, whose "Little Gidding" she loved. When they died, Ronald Reagan, John Paul II, and Margaret Thatcher were old and long past their height of power. Everyone was surprised when Reagan died that crowds engulfed the Capitol; people slept on sidewalks to view him in state. When John Paul died the Vatican was astonished to see millions converge. "Santo Subito."

And now at the end some came for Thatcher, too.

What all three had in common: No one was with them but the people.

Margaret Hilda Thatcher, rest in peace.


Friday, April 19, 2013

Crafty and Canny

More and more craft brewers have decided to package their product in cans rather than bottles and I’ve become a big fan of that approach. Cans are much easier to pack up and take with you. You don’t have to worry about that potentially embarrassing (or worse if you’re bringing beer somewhere you shouldn’t) clinking of bottles banging together. You also don’t have to worry about having an opener on hand. I admit that there is something to be said for the tactile feel of a bottle in your hand that’s superior to a can, but if you’re drinking good beer you should ALWAYS be drinking it in a glass (and a clean one at that). And I love to see the inventive label designs that craft brewers that come up, but there’s no reason that you can’t have great designs on cans too. The most important advantage of cans for those who take their beer seriously is that it’s the best way to preserve the full flavors of beer.

Surly was one of the first craft beers that I enjoyed out of can. Now, there are scores of brewers who package that way including Tallgrass, 21st Amendment, Avery, Big Sky, Great River, Indeed, Karbach, Oskar Blues, Ska, Steamworks, and a score of others. I was recently in Miami and was pleased to see that Tampa’s Cigar City is now available in cans. And many others well-known brewers like Sierra Nevada and Two Brothers are now offering some of their beers in cans. There’s a great site called CraftCans.com: News and Reviews for the Canned Beer Revolution that tracks all the brewers who can and the beers they have available.

The latest brewer to join the can revolutions is Finnegans Charitable Beer Company which is based in Minneapolis. In order to promote the switch to cans, they’ve come up with a unique contest:

Cans are a beautiful thing. Environmentally-friendly, easy to transport, and better at protecting and preserving what matters most (the beer, of course!), cans are perfect for gratifying an active lifestyle.

That's why FINNEGANS, the beer company that turns beer into food by donating 100% of its profits to hunger relief charities, is thrilled to announce the launch of its new can packaging at Third Street Brewhouse in Cold Spring, MN. Having been "canning" hunger for more than a decade, the time has come for some real aluminum. This green company just got greener.

FINNEGANS donates all of its profits to the FINNEGANS Community Fund (501c3) to support hunger alleviation programs in every market where the beer is sold (MN, SD, ND, WI, and FL). Beyond just donating a lot of food, FINNEGANS works with local farms to distribute fresh produce to those area food shelves (in Minnesota, this is through the Emergency Foodshelf Network's Harvest of the Hungry Program).

In celebration, FINNEGANS is seeking CANverts everywhere! During the month of May, fans are invited to pick up the cans--available in both Irish Amber and Blonde ales at retailers statewide--and make fun crafts out of them. Take a CANdid picture and upload it here. Yeah, we're crafty craft brew buggers over here. The most creative photo will receive an entire year's worth of FINNEGANS beer.

I’m not usually much of a craft sort of guy in that sense, but a year’s worth of beer is a year’s worth of beer.

Thursday, April 18, 2013

You Know How To Take The Reservation

While I’ve been on Twitter for a few years now, I never really viewed it as much more than a tool for following news and sharing views on topics of interest to me (politics, beer, sports, etc.). I usually dismissed claims about how it and other social media tools like Facebook were going to revolutionize business interactions and that companies needed to have a social media presence (more than just advertising) or risk being left behind as overblown hype.

Now, while I still remain skeptical about much social media is really going to “change everything” when it comes to business, a recent experience has at least partially opened my eyes to the power that social media can provide to consumers and the businesses who serve them.

A few years ago, the company in whose salt mines I toil switched car rental vendors from Avis to National. While I never really had any issues with Avis, I quickly became a fan of National after the transition. I’m an Emerald Club member which means that when I arrive at a National location I proceed directly to the rows of Emerald Club vehicles, choose the one I want (I usually drive a different car each time) , and head to the exit. After a quick ID check and a couple of questions (fuel, GPS), the gate is raised and I’m on my way. It’s a quick, simply, and efficient process which is what most travelers are looking for.

When I return the car, the process is equally painless. By the time you get your belongings out of the vehicle, the National customer service rep already has your receipt printed out and you’re on your way. Again, it’s quick, simple, and efficient. I probably end up renting through National ten to twelve times a year and I’ve always had good experiences with them.

So when we were planning a family vacation to visit my wife’s sister’s family in Miami I decided that we should get a minivan from National. Traveling with three small boys, suitcases, and car seats is anything but a quick, simple, and efficient process. So anything that would help ease that pain was much desired. Last year on the same trip, we rented a minivan from Dollar. We saved some money upfront, but had to wait in line forty-five minutes before we could get to the vehicle. After a long day of travel with kids, that’s the last thing we wanted. It’s true that time is money, but not all time is equally valuable. It’s hard to put a price on the value of time not spent in line with restive children.

When I discovered that I could use some of my Delta sky miles to rent from National, it seemed like the perfect solution. Yes, it would cost more (based on the miles to dollars equivalents) to go with National this way, but it would ensure a much smoother pick up process and would avoid at least some of the stress of family travel. It was relatively easy to book the minivan through Delta’s site. There wasn’t an opportunity for me to add my Emerald Club number to the reservation, but I assumed that I could do that later on.

I assumed wrong. First I tried to do it online through National’s site. I got a message that since the reservation wasn’t made directly with National the only way to add my Emerald Club number was to cancel the existing reservation and make a new one with National. That seemed silly to me and I assumed that I could resolve the problem with a phone call.

Again, I assumed wrong. I called the general National customer service number and explained my problem to the rep. All I wanted to do was to get my Emerald Club number added to the reservation so that I could pick up the minivan the same way that I always did when renting with National. The rep explained that this was not possible. The “system” would not allow it since my reservation was a “voucher” reservation. Therefore, I would have to go to the National counter in Miami when we arrived, wait in line, and then they could add my Emerald Club number. I reiterated that this was exactly what I wanted to avoid seeing that I would be traveling with family in tow. I was again told that there was nothing they could do. Maybe if I called the Miami office directly they could resolve. After getting that number, I assumed that one more call would be required to set things straight.

Wrong again. The rep in Miami told me the same thing: they couldn’t add the EC number because the “system” wouldn’t allow it, but if I just went to the counter when I arrived they could do it there. Again, I explained that this was exactly what I didn’t want to do and why. She then said she was sorry, but there was nothing they could do because it was a “voucher” reservation. She then added that this wasn’t the first time a customer had complained about this problem. Really? Then why don’t you fix it? I didn’t mean her personally, but she should at least someone at National know this was an ongoing issue. I was 0 for 2 at this point, but still clung to the belief that if I only talked to the right person all would be okay.

Strike three was a call to the National Emerald Club service line. I went through the same rigmarole with a rep who finally asked if I wanted to speak to his manager. A manager? Yes, now you’re talking. Finally, someone with the authority to take care of business. After explaining the background of the situation for the fourth time, I was again told that it was impossible to do anything. The manager took an interesting tack by trying to place the blame on Delta. My reservation’s not with Delta, it’s with you, I explained to no avail. I then detailed how it should be relatively easy for National to avoid this problem in the future by allowing customers to enter their Emerald Club member when making one of these now notorious “voucher” reservations. Well, I couldn’t fix that, he said, it would take someone at a VP level to do that. I’m not asking YOU to correct it, I just want you to at least acknowledge that you’ll pass this on to someone who can. Is that too much to ask? Apparently, it was as the call ended with no offer to do anything from his end and no satisfaction on my end.

At this point, I had pretty much given up. Just for the heck of it I sent an e-mail to National’s customer service as well without much hope that it would do much good. Then, I had another thought. I had mentioned National on Twitter once and knew they had an account (NationalPro). Why not give that a shot?

So I tweeted that I was a loyal National customer, but was not happy with their response to my present problem. It wasn’t long before I heard back from NationalPro. I followed them and they followed me so we could send direct messages. After a couple of messages, I was told to send an e-mail to their “social customer service team” and after doing that I shortly received a response that everything would be taken care. My Emerald Club number would be added to the reservation and I could pick up the minivan without having to wait in line. Just like that all was right with the world again.

Three phone calls and an e-mail to the traditional National customer service outlets had yielded nothing. A couple of tweets and an e-mail and it was resolved. My reaction to this is mixed. On the one hand, it was gratifying to have things set straight through Twitter and to realize how effective it can be for consumers. On the other hand, why doesn’t National empower its other customer service agents to resolve matters in the same way? One of the lessons that I learned from this is that I’m better off going right to Twitter with a problem instead of calling or sending e-mails. Is that really what National or other companies who provide similar support on Twitter really want? It will be interesting to watch how as businesses try to strike the right balance between traditional methods of customer service support and social media.

POSTSCRIPT: We were able to pick up our minivan in Miami without having to hit the National counter and we put it to good use on our vacation in Florida which, in addition to Miami, included side trips to Islamorada in the Keys and Bonita Springs on the Gulf Coast. It was almost always sunny with temps in the low to mid-eighties. Now, we’re back in Minnesota and it’s snowing on April 18th. Welcome home?

Tuesday, April 16, 2013

Reality Check

No matter how much we may hope and wish for a return to it, the reality is that the post-World War II American economy was an anomaly brought about by a series of circumstances that won’t be occur again. Sorry, the 1950s US economy of strong unions, plentiful manufacturing jobs, and sky-high taxes isn’t coming back:

It was a time of strong labor unions, plentiful manufacturing jobs, and high taxes. If it worked before, why not go back to the future? Some new research shows why America likely won’t, and why liberals are wasting their time pushing nostalgia economics:

1. The decline in manufacturing jobs, though not manufacturing output, stems from globalization and automation. And this is a phenomenon hardly restricted to the US. Lane Kenworthy:

Protecting existing manufacturing jobs, bringing back lost ones, and creating new ones is a perennial aim of the left. But possibilities here are limited … manufacturing’s share of employment has been shrinking steadily in all rich nations. Even South Korea, which didn’t industrialise until the 1970s and 1980s, has joined the downward march. … Two decades from now, manufacturing jobs will have shrunk to less than 10 per cent of employment in most affluent countries.

The good news here is that while this may problem for income growth, it doesn’t have to be one for job growth: “There is no tendency for those with a larger share of employment in manufacturing to have a higher employment rate.

2. As with the decline of manufacturing jobs, the decline in unionization is widespread. Again, Kenworthy:

Unionisation has been falling in most affluent nations. Only five now have rates above 40 per cent, and four of those (Belgium, Denmark, Finland, and Sweden) are countries in which access to unemployment insurance is tied to union membership. … Even if there is no further reduction in bargaining coverage going forward, in all but a handful of the rich countries 20 percent or more of the employed already are outside the reach of collective agreements. And in half of the countries it’s 40 per cent or more.

3. As Paul Krugman has enthusiastically noted, “[In] the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years.”

In short, the rich paid more and the system was fairer. But in a study for the Manhattan Institute (from which the above chart is taken), Arpit Gupta argues the facts say otherwise:

1. In the 1950s, very few people paid the very high income-tax rates aimed at the wealthiest.

2. Claims that wealthy people paid more taxes rest instead on the assumption that the rich, as stock owners, bore the entire burden of higher corporate taxes of that era. There are good reasons to doubt this assumption about corporate taxes.

3. Even if we leave these assumptions unchallenged, the economy of the 1950s was so different from our own that its tax structure cannot be reproduced today. …The collapse of the global economy after World War II and the nature of postwar industrial capitalism, created a period of high corporate earnings in the United States. American firms did not vie then, as they do now, with competitors on every inhabited continent. Both law and convention supported large, monolithic corporations in an environment in which disruption was rare. Capital was relatively immobile, and corporate profits were high—boosting redistribution in the forms of union activity (resulting in higher wages and benefits for workers) and government taxation.

Half a century later, the nature of global capitalism has drastically changed. Though the U.S. still has a high statutory corporate tax rate by developed-country standards, corporate tax revenue today is far lower as a percentage of GDP. Greater competition within industries, the spread of corporate tax loopholes, and the global spread of business and capital mean that domestic capital and corporate earnings are no longer a “captive” source of revenue that can be easily taxed away. Additionally, the holders of capital have diversified. They now include pension funds and ordinary investors. Therefore capital taxes no longer fall so sharply on the very top end of incomes.

4. The most plausible viable paths to higher taxes in today’s economy would render the tax system less fair, not more so.

Gupta’s bottom line: “It is potentially misleading to imagine that U.S. taxes in the 1950s can serve as a model for a better approach in 2013. Income tax rates actually paid in the U.S. have remained stable for decades.

Corporate taxes may have played a role in pushing up the total tax burden for the rich during the 1950s, but this is not as clear-cut as is claimed. And even if high corporate tax rates did lead to high tax burdens on the rich in the past, it is unlikely that we can replicate that experience today.

Time for a new model.

Thursday, April 11, 2013

HWX, with CJ Box

After a rare and well deserved break, the Hinderaker-Ward Experience (HWX) returns for a very special episode.   Topics of discussion include:

* the weather outside (frightful)

* the life and legacy of Margaret Thatcher
* sequestration

* illegal immigrants dreamers

* Loon of the Week (Martin Bashir)

* This Week in Gatekeeping (New York Times on the meaning of Easter, take 2)

We were also joined by one of our favorites, novelist CJ Box, author of the entertaining new thriller Breaking Point.   He's one of the great novelist of our day, and his name is THE greatest Scrabble entry in modern American letters.

Many ways to hear the podcast, including over on the mothership at Ricochet.  You can be sure to never miss an episode by subscribing via iTunes or Feedburner.  Or just use the player embedded in the upper right hand corner of this web site.  If all of these fail, send me an email and I'll come to your house and read from a written transcript.  Hope you enjoy.

Tuesday, April 09, 2013

Strong and Simple

Noted historian Paul Johnson on The World-Changing Margaret Thatcher:

Thatcher's strongest characteristic was her courage, both physical and moral. She displayed this again and again, notably when the IRA tried to murder her during the Tory Party Conference in 1984, and nearly succeeded, blowing up her hotel in the middle of the night. She insisted on opening the next morning's session right on time and in grand style. Immediately after courage came industry. She must have been the hardest-working prime minister in history, often working a 16-hour day and sitting up all night to write a speech. Her much-tried husband once complained, "You're not writing the Bible, you know."

She was not a feminist, despising the genre as "fashionable rot," though she once made a feminist remark. At a dreary public dinner of 500 male economists, having had to listen to nine speeches before being called herself, she began, with understandable irritation: "As the 10th speaker, and the only woman, I wish to say this: the cock may crow but it's the hen who lays the eggs."

Her political success once again demonstrates the importance of holding two or three simple ideas with fervor and tenacity, a virtue she shared with Ronald Reagan. One of these ideas was that the "evil empire" of communism could be and would be destroyed, and together with Reagan and Pope John Paul II she must be given the credit for doing it.

Among the British public she aroused fervent admiration and intense dislike in almost equal proportions, but in the world beyond she was recognized for what she was: a great, creative stateswoman who left the world a better and more prosperous place, and whose influence will reverberate well into the 21st century.

Monday, April 08, 2013

The Cure is Worse Than the Disease

The latest course from Prager University tackles a question not asked often enough about an important period in American economic history:

When you think of the Great Depression, do you also think of President Franklin Roosevelt rescuing the American economy from the abyss? Conventional wisdom holds that FDR's New Deal regulations, such as wage and price controls, helped to end the Depression. But did they? Did FDR really end the Depression?

What if FDR's policies actually extended the Depression by several years, keeping millions of Americans in poverty longer than if the free market had been able to operate as it had in previous economic crashes?

In our latest five-minute video, "Did FDR End or Extend the Depression?" UCLA economist Lee Ohanian explains how FDR's big government policies made the Depression worse, not better. Professor Ohanian's short but informative history lesson will make you sound like an economist the next time you're in a discussion about this crucial era of American history. And if enough people watch it, skepticism about the New Deal could even find its way to high school and college econ classes.

The answer isn't only important in setting the historical record straight. It has great relevance today as Americans continue to look for answers for how we can best get the economy back on its feet. We should at least know what doesn't work.

Friday, April 05, 2013

Beer of the Week (Vol. CLXXII)

Another edition of Beer of the Week sponsored as always by the happy-go-lucky folks at Glen Lake Wine & Spirits who can help find the wine, whiskey, and beer you need to deliver the most bang for your buck.

Our featured beer this week is from Colorado’s Crazy Mountain Brewery. Horseshoes and Hand Grenades Extra Special Bitter:

When our brewmaster was first learning to brew beer, he mentioned to his instructor that he hoped his batch would turn out close to the way it was supposed to taste. The instructor told him, "Close only counts in horse shoes and hand grenades." Our American ESB showcases a complex maltiness and unique hop character. Chinook and Amarillo hops coupled with 5 different types of malt make this beer one-of-a-kind. Enjoy this ale when close just won’t cut it.

22oz brown bottle sells for $4.99. Well-designed label with a light brown background and couple of characters chucking shoes and grenades who would look like they stepped out of a Seventies agit/prop piece.

STYLE: Extra Special Bitter


COLOR (0-2): Amber brown and clear. 2

AROMA (0-2): Sweet herbal smell. 2

HEAD (0-2): Off-white color. Slight volume which faded quickly. Decent lacing. 1

TASTE (0-5): Malty backbone with sweet caramel and nutty flavors and not much to speak of on the hoppy side. Light carbon, thin mouthfeel, and a medium body. Pretty drinkable. 3

AFTERTASTE (0-2): Good follow through. 2

OVERALL (0-6): A decent beer that didn’t live up to expectations. The flavors are fine, but there seems like there’s something missing that holds the beer back from being more than average. 3

TOTAL SCORE (0-19): 13

Thursday, April 04, 2013

A Team Player

A great story on legendary coach John Wooden appeared in the Notable and Quotable section of today’s WSJ:

From "Wooden: A Lifetime of Observations and Reflections," published in 1997 by Hall of Fame UCLA basketball coach John Wooden:

There was a rule against facial hair for players on UCLA basketball teams. One day Bill Walton came to practice after a ten-day break wearing a beard. I asked him, "Bill, have you forgotten something?"

He replied, "Coach, if you mean the beard, I think I should be allowed to wear it. It's my right."

I asked, "Do you believe in that strongly?" He answered, "Yes I do, coach. Very much."

I looked at him and said politely, "Bill, I have a great respect for individuals who stand up for those things in which they believe. I really do. And the team is going to miss you."

Bill went to the locker room and shaved the beard off before practice began. There were no hard feelings. I wasn't angry and he wasn't mad. He understood the choice was between his own desires and the good of the team, and Bill was a team player.

I think if I had given in to him I would have lost control not only of Bill but of his teammates.

Wednesday, April 03, 2013

Break Out

When talks turns to tax reform or limiting federal government spending in any way, many progressives reflexively trot out the well-worn canard that we before we cut a dime of spending (which instantly initiates austerity Armageddon), we should get rid of the “special tax breaks” for big oil and gas companies. Keith Ellison, my representative in the House, regularly invokes these “subsidies” or “giveaways” to Big Oil and seeks to create the impression that we’re giving away millions, maybe even billions of dollars to these companies, money which could instead be used to help “working Americans” (a label that doesn’t apply to anyone working in the oil and gas industry apparently).

In today’s WSJ, Merrill Matthews has a piece called About Those Tax Breaks for Big Oil... which drives a stake into the heart of this long held myth. Interestingly enough, the best evidence that oil and gas don’t get special breaks and in fact are specially targeted comes from a progressive proposal.

Thanks in part to a bill sponsored by Rep. Chris Van Hollen, a Democrat from Maryland and ranking member on the House Budget Committee, it's all much clearer now. The congressman has inadvertently called attention to the fact that those special tax breaks just for the oil and gas industry don't exist. Mr. Van Hollen proposes to create some very special punishments instead. Regardless of the bill's fortunes on Capitol Hill, it has already performed a public service by illuminating the fallacy behind assaults on the industry.

Mr. Van Hollen's ''Stop the Sequester Job Loss Now Act" would raise taxes on individuals—what he calls the "Fair Share on High-Income Taxpayers"—and effectively hike taxes on the oil and gas industry by changing the way their taxes are calculated. The problem with the bill is that the so-called tax breaks the industry would lose are not specific to oil and gas at all. They are widely available to lots of industries.

This goes to the heart of what has always been especially disingenuous about the claims of “special breaks” for the oil and gas industry. These “breaks” are not specific to oil and gas, they just happen to be one of the industries that has taken advantage of them.

Title III of the act goes after oil and gas with: a limitation on the section 199 deduction; a prohibition on using last-in, first-out accounting for major integrated oil companies; and a modification of the foreign tax-credit rules.

Section 199 is part of the domestic production activities deduction that was included in the American Job Creation Act of 2004, which passed with strong bipartisan support, especially in the Senate. It currently provides a 9% tax deduction from net income for businesses engaged in "qualified production activities" in the U.S. Those activities include manufacturing a product, selling, leasing or licensing it, and engineering and software activities related to that production. The deduction was intended to encourage domestic manufacturing, and in the hope that the tax break could provide a slight competitive advantage against foreign competition.

The oil and gas industry, especially in its extracting and refining, is heavily involved in U.S. manufacturing. Congress already penalizes the industry by only giving it a 6% deduction, rather than the 9% that other industries receive.

So not only is this not a “special” tax break for oil and gas, the industry actually doesn’t get the same benefit from it that other industries do.

But whatever the percentage allowed, this isn't a special deduction for oil and gas. Many other manufacturing industries—including farm equipment, appliances and pharmaceuticals—take the deduction. Mr. Van Hollen's bill refers to the disqualification of two industries from these benefits as a "Special Rule for Certain Oil and Gas Companies." In terms of fairness, it's like telling oil company workers that they can't take the home-mortgage deduction anymore because they work for politically targeted companies.

The reality is that the oil and gas industry makes for an easy target for cheap demagoguery about “fairness.” Progressive like to talk about jobs for “middle class” Americans yet never acknowledge the jobs created directly by the oil and gas industry in the United States or indirectly be providing lower energy costs for other industries. And when it comes to taxes, few industries pay more than what oil and gas does.

Ironically, USA Today just published the top-10 list of companies that paid the highest U.S. income taxes as of 2012, and oil industry companies took three of the slots. Number one was Exxon Mobil at $31 billion, followed by Chevron at $20 billion, and sixth was ConocoPhillips at $8 billion. That is about $60 billion in taxes among them, more than the other seven companies on the list—including Apple and Microsoft—combined. Don't look for a presidential attack on Apple or Microsoft anytime soon.

And don’t expect progressive attacks on oil and gas companies to stop anytime soon no matter how unfounded they may be.

Monday, April 01, 2013

No Foolin'

After a rollicking weekend of college hockey tournament action, King Banaian leads the Fraters group with nine points in the USCHO Pickem Challenge. Overall, he ranks #436 out of 11,110 entrants. King still has four points on the table, which he can secure if UMass-Lowell beats Yale in their Frozen Four semifinal. If that happens, he will win the group and have college hockey bragging rights for the next year (and a round of golf at the expense of the Nihilist in Golf Pants).

Interestingly enough, while King did correctly pick his own St. Cloud State Huskies to reach the Frozen Four, he didn’t think they would advance any further. In fact, no one in the Fraters group correctly predicted the 2013 NCAA national champion. We all went with teams who have already been eliminated. The only way for King to lose the Fraters group would be if Yales beats U Mass-Lowell and if SCSU downs Quinnipiac, a tradeoff that I’m sure King would make.

On the other end of the spectrum is the Nihilist in Golf Pants. Not only did he lose his side bet with King on the Notre Dame-SCSU game, he somehow only picked two of the opening eight games correctly and zero second round games. Which gives him a grand total of two points for the tournament.

My heart was broken when the Gophers lost to Yale in overtime on Friday afternoon and by Saturday afternoon my bracket was as well. My theory of the superiority of the WCHA proved badly misguided as the only WCHA team to reach the Frozen Four was St. Cloud State and four WCHA teams lost in the first round. Before the tournament, I joked on Twitter that the ECAC was clearly the best conference in the land and now there exists the very real possibility of an all ECAC championship game in Pittsburgh. The world truly is turned upside down.

One final note: I received a late invitation to join another group in the USCHO Pickem challenge. I filled out that bracket in my eldest son’s name and took all of about thirty seconds to complete it. I had a Minnesota-SCSU final in that bracket and so can still pick up some more points if the Huskies win their semifinal game. At this point, that bracket has won eleven points and is ranked #47 overall. And that’s the bracket that I didn’t put any thought into. Seems like there’s a lesson in here somewhere.