Letters to the Editor: The Readers Write in Again...

IN MY FIRST “letters to the editor” article, I used one very short e-mail from one reader as a basis for writing about 3,300 words on Planning, Policy, Strategy, and Energy. Today, I turn the tables. This is your column, dear readers, offering a representative sampling of some of the many e-mails you sent to Greg and me. I am editing the e-mails only for the sake of fitting as much of your content as possible into this space. I will, of course, make some very short comments, because your e-mails tend to be well written and thought provoking. Thank you all for writing.

From Imbrilla, Location Unknown:

“Loser-tarians? The reason Libertarians don’t win elections is that people such as yourselves who are philosophically aligned with them don’t vote for them. Why? Because they don’t win elections! Why don’t they win elections? Because people don’t vote for them! You ought to try it sometime. That way you wouldn’t have to hold your nose, and you wouldn’t have to feel ashamed of the disgraceful policies of the current administration (that you helped elect), because you wanted to vote for someone who would win. Yay! My team won! I’m not a loser. (Politics is) not a sports wager — it’s the future of our country. Why do you complain so much about the idiot politicians that you elected? Your newsletter is thoughtful and insightful, yet you don’t take that mindset into the voting booth. There is no chance of ever changing this country’s direction unless you start doing just that.

“I can proudly say that not a single one of the criminals currently in power is there because of my vote. I breathe freely at the polls, and I feel no shame regarding this country’s demise, because I am not responsible for it. But I can’t change it by myself. When this ship sinks, we’ll all be losers. But I’ll be one of the few Americans who will be able to say don’t blame me, I didn’t elect the sleazebags responsible. If your idea of participation in the voting process is to perpetuate the status quo, you really needn’t bother; the only thing that changes, and rarely at that, is the name of the person and party responsible for bankrupting this country. In the spirit of name-calling, I’d rather be called a loser-tarian than a Retardican or Dumbocrat.

“I enjoy your newsletter immensely, despite the tone of this e-mail. Keep ’em coming.”

Byron’s Reply:

You rock, Imbrilla. We will keep our newsletter coming. And if you ever run for political office in Pittsburgh, you will probably get my vote, as have some other Libertarians in the past. I ran for political office one time, and did not win. What I discovered was that running for office takes all of your time and most of your money, if not most of your time and all of your money. And I found out that I just do not have the necessary personality disorder to spend my life in the political arena. But bravo to the likes of Ron Paul (R-TX). He is the closest thing in Congress to a Libertarian, and a native of Pittsburgh to boot.

From Craig in Minnesota:

“[The United States has] not done much to increase fuel efficiency since the days of the Carter administration. What is the true cost or value of gas and oil? Gasoline costs $7, $8, or $10 plus per gallon when you consider military expenditure, the war and wars to come, men, women, and children killed or maimed. Increase the gas tax and require signs at gas stations stating the amount of money by which that gas is subsidized, all things considered…

“Keep up the great work.”

Byron’s Reply:

Good points, Craig. The price at the pump does not include what I consider to be the other true costs of oil dependence. This includes the cost for the overseas military commitment to, as the saying goes, “ensure access” to oil supplies. Over the past few years, the United States has, in essence, borrowed those funds from overseas lenders. Nor does the pump price of fuel include other externalities such as the increased carbon load that is returning to the atmosphere after millions of years of being locked up in the geological column of the Earth. It all pertains to a geological concept called the “carbon cycle,” which I will not discuss here simply for reasons of space. Another topic for another time.

From Arthur, Location Unknown:

“I find myself often thinking to myself that Agora, in general, supports anything that keeps Wall Street stable. I am one who has defected from both major parties because I see them both destroying Constitutional law as developed by our founders. I am not, however, a Libertarian. Certain laws are required for a society [to function]. Almost all our politicians push the term ‘democracy.’ Our nation is not a democracy. Democracy has never worked. We are a representative republic…

“We have made many bad amendments to the Constitution, certainly none worse than the 17th [Ed: Allowing for direct election of U.S. senators]. It was Abraham Lincoln who destroyed our basic law… Honesty? Our whole central government has been a lie since 1860.”

Byron’s Reply:

So you think that Agora Financial works to “keep Wall Street stable?” No, Agora Financial is geared to keeping its subscribers stable. We might go out on some limbs every now and then on one topic or another, but at root, we publish material that we hope will help people to be better investors. The writers at Agora Financial have been discussing investments in gold and energy, for example, for several years. If you followed the recommendations, you should have made some serious money. And I agree with your comments on the 17th Amendment. I wrote about that in my Whiskey & Gunpowder articles on Woodrow Wilson.

From Trevor in Australia:

“It always brings me up with a jolt to recall that the largest economy and the ‘world policeman’ has noncompulsory voting, unlike the civilized [sic] world. In Australia, we have just seen a prime result of such a deficient electoral system, in the Solomon Islands. The election threw up a prime minister generally known to be in the pockets of the Chinese entrepreneur class, so they were incited to riot by opposition members and destroyed Chinatown, three casinos (rightly seen as socially destructive by the largely Christian natives), and much other properties and infrastructure.

“With voluntary voting, the laid-back don’t vote, and the voters tend to be those whose passions have been stirred up by rabble-rousers or corrupt money. Bad outcomes. “

Byron’s Reply:

I would prefer voting reforms in the United States that tend to eliminate voter fraud, such as the simple step of requiring someone to show a photo identification card at the polls. Nothing galls me more than the thought that my vote is being canceled out by someone else who is voting more than once or some batch of political hacks filling out reams of absentee ballots in some dark room. Say what you want about the qualities of any given crop of political candidates, but voter fraud steals away what small stake I have in the system.

From George in the Upper Midwest:

“DON’T KNOCK THE SWEDES! I’m not a Swede, but I grew up with many in Minnesota. They are the salt of the earth, hardworking, honest, and many beautiful females, as I recall. We should be pushing hard for the same energy independence, instead of waiting for a miracle until the lights go out.”

Byron’s Reply:

I agree, especially with the part about the good-looking Swedish ladies.

From Bill in Ohi

“I read with a grin your response to Jim from South Carolina dealing with the inevitable decline of petroleum worldwide. I fully agree that we are in the midst of an irreversible decline (in available oil supplies) and that one form of change or another will take place…The short version [of your position] is we’re running out of readily accessible petroleum, and the United States would be better off by making a strategic decision to reduce consumption and/or develop domestic alternatives.

“What is worrisome about the position that you seem to take is the rationalization to increase taxes at the pump to influence the market in the direction of conserving and establishing a more economically justified basis for development of alternatives. This sounds like the same Democratic position I’ve heard for years and come to suspect. The hair on the back of my neck stands up when I hear, “Let’s increase taxes for the good of the country.” This rationalization has resulted in growth of taxes far beyond necessary, to the detriment of the taxpayer, and I submit what’s bad for the taxpayer is bad for the country.

“Let’s assume members of a republic have common sense. Let’s spend just a little money advertising a common thread, namely that petroleum is running scarce. You should expect prices to go up, on average. Here are some suggestions to adapt — drive less; when you drive, drive slower; carpool whenever possible; install some solar panels on your roof; invest in an electric-powered vehicle; etc.

“Frankly, I’m worn out by every time someone whose crystal ball is sending them a message that all should be aware feels the need to impose their interpretation of the data on the rest of the nation in the form of one control or another. Whether they are right or wrong doesn’t matter. They don’t have any right to force it on me, as the liberal community has done for years. Let’s focus on education and give our fellow citizens the right to make their own choices. So I agree with your forecast, and keep up the education.”

Byron’s Reply:

Lots of good points and red meat here. My only nibble is that motor fuel taxes are, at root, a voluntary form of taxation. They are a consumption tax, and you can choose not to pay them directly by declining to purchase gasoline or diesel fuel. (Do you live near a streetcar line? Huh? What’s a streetcar?) Either way, I believe that the overriding U.S. policy goal needs to be to reduce aggregate oil demand. Otherwise, we are destined for failure as a nation, points I have made many times before. The geology is clear that world oil production is about to enter into a period of absolute long-term decline. The oil will not be there. Adjust now, or adjust later. You will adjust, one way or another. You will not escape the adjustment. You cannot fool with Mother Nature. Mother Nature will kick your butt.

From Bob, Location Unknown:

“I turn 50 this year. As the tail end of the baby boom generation, I can see what’s happening. I am a loyal follower of Agora Publications, a Libertarian, and an owner of an Inc. 500 firm. My father is a Depression child born in 1921, and I’ve heard about it all my life.

“Business is good. We don’t sell abroad, and our money is made in the real estate industry. Despite recent slowness in the market, our subscriber count has been up almost every month for the past six years, [but] I can’t imagine that it will continue much longer.

“In any case, your latest post under the subject of ‘Letters to the Editor: Planning, Policy, Strategy, and Energy’ is troubling to me. Not sure if you were just playing with us mere mortals, but you are most clearly looking for a fight from the Agora readership. Why? [Ed: No Bob, we like and respect our readers. There is a difference between trying to be thought provoking and picking fights.]

“My father was and still is the ultimate skinflint. At 85, he still takes daily showers with his wife and tells us it’s to ‘save hot water heating costs.’ Peanut butter and jelly is his favorite lunch, and beans and rice is his favorite dinner. He has amassed a fortune through his frugality (and the fact that there was a massive bull market for the past 25 years). He still has an old $5 gold coin that the family kept and didn’t surrender during the government’s gold confiscation. When I was a child, he said not to mention it to anyone!

“My dad is a capitalist. My grandmother, on the other hand, was practically communist. In fact our family history up until my father was quite communist/socialist…Oh my…Your treatise promoting government taxation on gas is too much to take. I can hear my late grandmother loving you.

“In any case, I just wanted to let you know that most of my same-aged friends have/had parents like mine that are/were frugal to an extreme. We know, through past stories, about how tough things can be during an economic collapse. Many of us are saving money, buying gold, and are actually looking forward to a complete disintegration of the U.S. economy as a validation of the frugality of our fathers. Our biggest problem is that we don’t have the guts to shoot our neighbors.

“Please do not publish your thoughts if they include the use of government force to steal money from us. It is going to get ugly and the support you publish for the government only makes it worse, as some of our neighbors may actually believe that government is good.”

Byron’s Reply:

My father was a Depression-Era child as well. He never threw out an old tool, no matter how beat-up it may have been. And he kept jars of screws and coffee cans full of old nails down in the basement. “You never know when you might need one of these,” he would say. My dad’s family did not have any gold coins back in 1933, but I am truly glad that yours did. I doubt that my father would have turned in his gold, either, so maybe your dad and mine were neighbors. Or maybe they shared a certain dissenting mindset of America in that era, if you know what I mean? I say that because it is interesting to think about a national mentality of the 1930s that would enable people voluntarily to walk down to the local bank, and just plain hand-in their gold to some Treasury agent, and on behalf of an executive order signed by Franklin Delano Roosevelt. At the time, the federal government foisted the gold turnover on the people as a “loan” of their gold to the government during the period of economic crisis. But it did not work out that way, did it? I discussed the decline of the U.S. dollar since 1913 in my article “Ten Gold Dollars From the Bottom of the Sea.” I discussed the U.S. Supreme Court’s “Gold Clause” holdings in one of my articles on John Roberts last summer (see Part III). As for “not publishing” my thoughts? Sorry, Bob. I work for Bill Bonner, and he wants me to publish my thoughts.

From Walter in Washington:

“I don’t believe that poor old Jim in South Carolina was in conflict with the basic thesis of Peak Oil depletion. Your answer devoted an enormous amount of space to repeating and defending your arguments on that subject. I, too, appreciate and endorse that we have that problem. Nor do I have any argument with Japan or Sweden having a long-term national policy of oil independence. It would be nice if our government could eliminate all the petty party politics and squabbling long enough to formulate a similar policy and then to have the guts crisply move to implement it. But it probably won’t happen in my lifetime. They don’t seem to be capable to organize a two-car parade, much less a valid policy of this national importance.

“But I would like to extrapolate on your ‘tax is a tax is a tax’ logic. If it is true that high fuel taxes actually help a country’s export economy, then great, why not endorse a 100% or 200% tax per barrel? According to your reasoning, that would promote even greater ‘national cohesion and sound economies over the long term.’ It would surely cut down on the use.

“Your referred-to numerous, decades old, economic studies which empirically demonstrate high taxes can be good for you were probably funded in whole or part by the same taxing authorities that benefited from them. Nationally, we seem to have that same childlike belief problem today with the CPI and employment hedonic adjustments that are applied by the government authorities as a feel-good measure. Their application misstates employment and reduces our retirement funds, pensions, and Social Security payments in favor of the payers and bureaucrats. Anyone that believes in the validity of government-provided statistics or funded study results is either naive or one taco light of a combination plate.

Byron’s Reply:

You are skeptical of government-supplied information? Join the club, although I have met Neil Armstrong and he assured me that he did, in fact, walk on the moon. At some point, however, in other endeavors, one has to choose data and run with it. As for your suggestion of a 100% or more tax on oil? In the late 1990s, oil sold for as little as $10 per barrel. Now it is at $75 per barrel. There is a 650% increase in price in about seven years. I can envision realistic scenarios in which oil could cost $250 per barrel, and that within a matter of months. Will this occur? Doubtful, but still possible all the same. All that the consumer ever sees is the final price of fuel, not what goes into that price. If raising gasoline taxes will reduce total aggregate oil demand, then less of the underlying price component will go overseas to the likes of Comrade Chavez, Herr Ahmadinejad, or any of the multitude of other worthies who take U.S. dollars and use them against U.S. interests. Yes, it is all so complicated. I never said that it would be easy.

For now, however, let me thank you for your notes.

Until we meet again…
Byron W. King
May 14, 2006

Headline(s) of the Week: “US competitiveness ‘threatened'” ~ BBC News
“Scramble to recruit commodity traders” ~ FT.com

Quote(s) of the Week: “The major thing that has changed for me is that I no longer see a dollar crisis as a high-probability outcome for an unbalanced world. Courtesy of encouraging actions by the stewards of globalization, the fat tail has just gotten thinner. That hardly puts me in the strong dollar camp. It means, instead, that I now embrace a managed dollar-decline scenario that could take the broad dollar index down on a “measured” basis by about 10-15% over the next couple of years. What that also means, of course, is that in the end there must be far more to global rebalancing than currency realignment. The heavy lifting on the policy front has only just begun.” ~ Stephen Roach

“Thousands of Denver homeowners gambled on adjustable rate mortgage loans three years ago. Now those bets are coming up short. These homeowners are facing the hard truth that their ARM mortgage payments are going up several hundred dollars more each month as their rates adjust skyward.” ~ Rocky Mountain News (hat tip to CalculatedRisk)

Chart of the Week:


The Daily Reckoning