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These Widespread Shortages Can’t Be Explained by Supply Constraints Alone

Poorer markets can still clear. So why won’t they?


All sorts of shortages are now popping up in our economy. At the head of the list is undoubtedly infant formula, but there are literally dozens of other items in short supply. There are so many of them that I feel constrained to mention them in alphabetical order, lest I inadvertently miss one or engage in double counting.

Here they are, as best I can list them: aluminum, avocado, bicycles, blood collection tubes, blood for transfusions, canned vegetables, cat food, chlorine, Christmas trees, coal, coins, commercial air tickets, computer chips, cream cheese, dye used in CT scans, eggs, fuel oil, garage doors, gasoline, girl scout cookies, hand sanitizer, home covid tests, infant formula, juice boxes, liquor, lithium, lumber, maple syrup, meat, motorcycles, natural gas, paper towels, pet food, potatoes, semiconductors, soap, soda, sunflower oil, toilet paper, tomato paste and wine. Peanut butter has not yet been mentioned in this regard but will soon, undoubtedly, be added prominently to this list.

I’m not kidding: each and every one of these items has been mentioned in this regard in the major media. What is going on here? Has the economy gone crazy, or what? According to several headlines, that is just about what is occurring. Here are a few of them: “The world is still short of everything; get used to it.” “America is running out of everything.” “Product shortages and soaring prices reveal fragility of U.S. supply chain.”

If the shortage list is long, the presumed causes of this economic malfunction are almost as large. For peanut butter, it will be a recall due to contamination; a salmonella outbreak. But this is an input into many other products, such as fudge, chocolates and peanut butter sandwiches, which will also soon be hard to find. For many items on the list the antecedent is the Coronavirus, which has led to supply chain problems. Paying workers to stay home and earn as much or more than their salaries, a few months ago, also contributed. Blame was also laid at a harsh winter. Imports from abroad have been subject to sudden border closures. Ships stuck at harbors on the west coast have been vulnerable to shortages of truck drivers and regulations. Computer chips have been susceptible to supply inelasticity; new offerings as a result of higher prices take a great amount of time to become forthcoming. Consumers have been castigated for hoarding. Staffing problems have been held responsible for commercial air travel disruptions. Drought, the bird flu and the Ukraine war have been held culpable.

But we have had all of these things before, war, pestilence, disease, bad weather, ill health, government regulations, before. However, massive shortages, not of everything under the sun, but almost pretty close, have never before disrupted the economy to anything like the degree we are presently experiencing (apart from the two world wars, of course).

Where is the much-vaunted free enterprise system in all of this? Nowhere, that is where. Has it succumbed to so-called “market failure?” Not a bit of it. Rather, the difficulty is that public policy has made capitalism operate with one arm tied behind its back, and it has not been able to function when hemmed in by a plethora of restrictions, limitations and regulations.

Basic introductory Economics 101 teaches us that a shortage occurs when demand for an item exceeds its supply. What invariably occurs then? Why, prices rise. When this takes place, businesses are incentivized to produce more, buyers to purchase less. Voila, the shortage ends. Why doesn’t this occur under the Biden Administration? Why do we have so many shortages?

One possibility not at all in the public eye is that business firms are afraid to raise prices lest they be charged with price gouging. And why in turn might this be the case? The Bidenites are not exactly friends of the free enterprise system. Yes, to be sure, prices have indeed been rising. But are they increasing fast enough so as to quell shortages? Evidently not. Why not? This is possibly due to fear of being accused of gouging, and being subject to antitrust attentions. Wages, too, are on the incline. But likely not sufficiently so as to overcome the supply inelasticity difficulty. Why not? Firms may well be leery of so doing, in case they have to be decreased later on, and will be accused of exploiting, or victimizing laborers, or some such.

Prices and wages are typically somewhat sticky; that is, they are not instantaneously and fully flexible. But an anti-business philosophy of the sort now prevailing in Washington D.C. makes them even less able to perform the tasks for which we need them, than would otherwise be the case.

AUTHOR

Walter Block

Walter Edward Block is an American economist and anarcho-capitalist theorist who holds the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the J. A. Butt School of Business at Loyola University New Orleans. He is a member of the FEE Faculty Network.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

There Ain’t No Such Thing as a Cost-Plus Lunch! Who’s really to blame for rising prices?

Why are restaurants adding “inflation fees” to their checks?


A group of friends had just finished a meal at Romano’s Macaroni Grill in Honolulu when one of them noticed something odd about the check. As a local television news station reported in April, a “Temporary Inflation Fee” of $2.00  was nestled inconspicuously between the $4.50 Flavored Tea and the $14.00 Spinach & Artichoke Dip.

The restaurant chain’s website explained that the charge was added to “partially offset… operational cost increases” due to unusual economic conditions including “global supply chain shortages and ever-growing pressure from inflation.” The statement said, “we believe these burdens will eventually pass,” which is why they resorted to a temporary surcharge instead of simply raising the listed prices. An alternative explanation is that surcharges that show up on the check but not the menu are a sneaky way to try to raise prices without losing customers.

The Wall Street Journal recently cited this incident as part of a general trend:

“Lightspeed, a global developer of point-of-sale software, said fee revenue nearly doubled from April 2021 to April 2022, based on a sample of 6,000 U.S. restaurants that use its platform. The number of restaurants adding service fees increased by 36.4% over the same period.”

The Journal cited industry analysts who basically agreed with Romano’s, explaining that:

“…this wave of surcharges is mostly being driven by restaurants trying to cope with the impact of rising inflation and a tight labor market on their bottom lines.” (…)

“​​Inflation and the pandemic posed particular challenges for the restaurant industry. The average price of supplies for a restaurant operator increased by 17.5% since last year, according to NPD Group. By comparison, consumer spending at restaurants rose 5% during that time.

The increase in surcharges is a way for businesses to recoup at least some of those costs, said David Portalatin, a food-industry adviser with the group.”

In media coverage of today’s rising prices in general, this has become a prevailing narrative: “businesses are passing their rising costs onto consumers.”

While superficially plausible, this gets the economics of prices the wrong way round.

The explanation refers to “cost-plus pricing,” which is the business practice of setting prices by starting with your costs and then adding a markup.

Of course, nothing in economics says that a business owner cannot use this method to decide on a price to quote. Surely, some do exactly that. But it is only a heuristic and it is not what fundamentally drives price changes.

Just as “there ain’t no such thing as a free lunch” (TANSTAAFL), there ain’t no such thing as a cost-plus lunch.

To explain price increases as resulting from “passing costs on to the customer” is to implicitly embrace a “cost of production” theory of value and prices, which, in a nutshell, maintains that costs determine prices.

Of course, costs are prices, too. A business’s “costs” are the prices it pays for factors of production (land, labor, and capital goods). So, in a bigger nutshell, this theory posits that “factor prices determine product prices.”

But this is the exact opposite of how an economy actually works. As Murray Rothbard wrote in his economics treatise Power and Market, “Prices, however, are never determined by costs of production, but rather the reverse is true.” In other words, it is anticipated product prices that determine factor prices: prices that determine costs, not the other way around.

This insight was one of the great discoveries that resulted from the “Marginal Revolution” of economics in the 1860s and 70s. This was a literal “revolution” in the sense that it showed the old economic paradigm to be upside-down and then turned it right-side-up.

Before the Marginal Revolution, the “classical economists” largely subscribed to Adam Smith’s cost-of-production theory of value or David Ricardo’s labor theory of value. The latter, like the former, derived the value of products from the value of factors: specifically the factor of labor. (Incidentally, Karl Marx largely based his exploitation and class war theories on Ricardo’s labor theory of value.)

For example, classical economists might have traced the high value of a bottle of fine wine to the high real estate value of the vineyard and/or the amount of labor that went into producing the wine.

But the Marginal Revolutionaries—William Stanley Jevons, Leon Walras, and Carl Menger—upended that paradigm. They and their followers (especially the Austrian school of economics, founded by Menger) explained that the value of a good is based on its “marginal utility,” which is the usefulness for want-satisfaction of an additional unit of a good. And what’s useful about a factor of production is that it can help produce useful products.

For example, the utility of a wine vineyard is that it can yield wine grapes. The same goes for the utility of a vineyard worker’s labor. And the utility of wine grapes is their contribution toward producing enjoyable wine.

So Austrian economists do the opposite of what the classical economists did. Austrians trace the real estate price of the vineyard and the wages of the vineyard worker to the anticipated value of the wine at the end of the production line.

The insights of the Marginal Revolution made it clear that prices determine costs (product prices determine factor prices), not the other way around, and that ultimately consumer preferences determine all prices.

(Note: Alfred Marshall tried to reconcile the classical cost-of-production theory with marginal utility theory in a “neoclassical synthesis” that has influenced mainstream economics to this day. See here for Murray Rothbard’s Austrian critique of that attempt.)

So the “cost passing” explanation of rising prices is a retrogression to a long-overthrown economic paradigm: the economic equivalent of forgetting the heliocentric Copernican Revolution of astronomy and explaining planetary movements using the archaic geocentric model of Ptolemy. Just as the sun does not revolve around the earth, consumer prices do not revolve around producer costs: quite the opposite.

Many on the political left blame corporations for “price gouging” in order to fatten their profits. But blaming rising prices on profit-seeking is like blaming a plane crash on gravity.

Gravity is always pulling down on planes. To explain a plane crash, you have to explain what happened to the factors that had previously counteracted that downward pull. Why did gravity yank the plane down to earth when it did and not before?

Similarly, businesses are always seeking profit and are always ready to raise prices if that is what will maximize profits. To explain precipitous price hikes, you have to explain what happened to the factors that had previously put a lid on that upward price pressure. Why did profit-seeking propel prices skyward recently and not in 2019?

This question is also tricky for those (including some on the political right) who blame rising prices on rising costs. If businesses can preserve profits by raising prices now that their costs are higher, why wouldn’t they have increased profits by raising prices before when their costs were lower?

A business’s customers don’t care about that business’s costs. They care about value. Based on the value they expect from a product, there is a limited price range they’d be willing to pay for any given amount of it. That translates into the market demand for the product: the quantity of a good that would be bought at any given price point. The value of, and demand for, a product does not fluctuate with its production costs.

Even businesses don’t (or at least shouldn’t) really care about past costs when it comes to pricing. Past costs are sunk. Whatever was spent to produce it, at any given moment a business has a given inventory. Its best interest is to price that inventory so as to maximize revenue given current demand. Based on that definite demand, raising prices past a certain point will result in less revenue, regardless of past costs. If the most revenue they can hope for is less than their past expenditure, that’s just the way things turned out. They can learn from that error and from those losses by spending less and/or differently in the future. But they cannot change the past or defy the economic reality of the present.

As economist Jonathan Newman told FEE in an interview:

“There is no change in costs that directly affects the revenue-maximizing price. If the prevailing market price is one that maximizes revenue for the firm, then it is impossible for the firm to ‘pass on’ costs to the consumer by increasing prices, because this would result in less revenue.”

Newman reminds us that, “factors of production are valued because they help us make consumer goods, not the other way around. What consumers are willing to pay for consumption goods determines what entrepreneurs are willing to pay for land, labor, and capital goods.” He offers an extreme example to make this point:

“Suppose that tomorrow the government decides to tax the sale of ink for ballpoint pens at $1 billion per mL. Would pen makers be able to carry on as usual and pass this increased cost on to consumers? Would consumers be willing to pay $1,000,000,000.25 for a pen? Of course not. Anticipated consumer demand is a limit on what producers will pay for inputs. More expensive inputs does not mean consumers are ready to pay a higher price for outputs.”

So if “cost passing” isn’t what’s driving up prices, what is? Newman points to monetary expansion by central banks, especially the Federal Reserve:

“I suspect that many firms will be able to get away with increased prices because of this. Even if their stated intention is to ‘pass on’ or share costs with their customers, the increased demand from the trillions of dollars that have been injected into the economy over the past couple years is what really makes their price increases both necessary and feasible.”

It is important to note that monetary price inflation is also not “passed on” from suppliers to customers, as “inflation surcharges” might lead you to believe. Again, the reality is the reverse of that. Extra money enables customers to bid up the prices charged by their suppliers, who in turn use the extra money to bid up the prices charged by their suppliers, and so on. That is how new money raises prices across the board (although, unevenly) as it circulates through the economy.

Another contributing factor to rising prices, at least in many specific industries, is today’s supply chain crisis. To an extent, Romano’s and industry analysts are right to blame rising restaurant prices on supply constraints. But they are wrong to characterize it as a matter of “passing on” or “recouping” costs. Rather, it is a matter of greater scarcity translating into a higher marginal utility of certain goods and thus higher prices.

For example, a major factor in today’s high food prices is undoubtedly the war in Ukraine. Both Ukraine and Russia were major exporters of grain. But, owing to Russia’s blockade of Ukraine and the West’s sanctions on Russia, grain exports from both countries have been throttled.

As a result, food processors have less grain to produce foodstuffs like, for example, macaroni. And as a result of that, restaurants have less macaroni to produce macaroni dishes. And when there’s less of something, its price tends to go up. That is probably one of the reasons why the Honolulu diners at Romano’s Macaroni Grill discussed above paid $11.00 for “Signature Mac & Cheese Bites.”

This phenomenon is not “passing on costs.” It is the rippling repercussions of economic destruction and impoverishment. The word “passing” implies that consumers are impoverished while producers are not. But that is not the case. Diminished production and greater scarcity impoverish everyone involved.

It is also confusing to call that “inflation,” although both academia and the media tend to lump all price increases together under that term. For any given increase in prices, part of it may be caused by monetary expansion, and another might be due to supply constraints. Personally, I think it would be clearer to call only the former, and not the latter, “inflation.” Price increases due to an increasing abundance of money should be distinguished from price increases due to a declining abundance of goods and services, although the former very frequently causes the latter (especially by creating economic bubbles and crashes).

Especially since the advent of the Covid crisis in 2020, we have suffered plenty of both. Central banks have been driving up prices with money printing sprees undertaken to finance government spending sprees. Governments have also been driving up prices by sabotaging supply chains through lockdowns, business shutdowns, wars, trade restrictions, and other policies of mass economic destruction.

As prices continue to rise and living standards continue to drop, it is important to understand how it is happening, why it is happening, and who is truly to blame.

AUTHOR
Dan Sanchez

Dan Sanchez is the Director of Content at the Foundation for Economic Education (FEE) and the editor-in chief of FEE.org.

EDITORS NOTE: This FEE column is republished with permission. All rights reserved.

High Gas Prices are Caused by Governments, Not Companies

When Governor Newsom and New Zealand Prime Minister Jacinda Ardern met to announce a deal between the tiny country and the broken state, it was another example of California illegally enacting its own foreign policy. And a reminder of why California gas prices are so high.

The memorandum had California promising to be “carbon neutral” by 2045 and to promote the “environmental integrity of carbon pricing instruments”. California’s crooked carbon pricing schemes have become notorious for both their worthlessness and their corruption.

And California drivers are paying the price.

report from Stillwater Associates last year found that California consumers were paying an extra $1.19 a gallon. This year the added costs include a 51 cent state excise tax, an 18 cent sales tax, 20 cents for Fuels Under the Cap, part of the state’s corrupt environmental cap and trade program and 17 cents for the Low Carbon Fuel Standard.

Californians are paying a $1.41 federal and state tax markup on $3 bucks of crude.

Or almost half.

Biden and other Democrats have blamed corporate profits, but the gas stations and suppliers are making a mere 33 cents a gallon or less than a third of the state’s added $1.08 in various taxes. Even the refiners are only making 72 cents. The biggest piece of the pie is coming from the taxes, many of them hidden, imposed by Democrats in the name of saving the planet.

While Newsom and Big Green describe some of these taxes as “allowances” and “credits” as part of a “marketplace”, they are really a corrupt scheme to force consumers to pay money to special interests and politically connected companies under the guise of “saving the planet”.

The Left now attacks Elon Musk, but California’s environmental regulations kept Tesla profitable. For example, in 2020, Tesla reported $428 million in sales from “regulatory credits” amounting to “four times Tesla’s $104 million of net profit for the quarter”. In the first quarter of 2021, Tesla sold $518 million in “credits” and Autoweek noted that it was making “more money selling credits and bitcoin than cars.” Credits are like bitcoins the government forces you to buy.

Regulatory credits are a corrupt environmental scam in which car makers who sell regular cars to ordinary people have to buy “credits” from electric car makers like Tesla, who sell to the rich, and then pass on the high costs on to working class and middle class car buyers.

The dirty truth about California’s electric car market is that it’s subsidized by people who can’t afford them. And the same situation applies to gas prices with their burden of green taxes.

Democrats sold the fuel taxes as penalties on polluters. They claimed that imposing them would “make the polluters pay”. Few Californians seemed to understand that by “polluters”, the Sacramento political establishment meant the single mother picking up her son from school, the supermarket cashier commuting to work, and everyone else who can’t afford a Tesla.

The California average gas price is now over $6 a gallon, compared to $4.60 for the rest of the country, because Democrats are making ordinary drivers, whom they call “polluters”, pay.

Gov. Newsom is touting his new deal with New Zealand, even though most California environmentalists have turned on the corrupt green scam that’s killing the state.

ProPublica, a leftist group, noted that, “California’s oil and gas industry actually rose 3.5% since cap and trade began.” While the idea that there’s anything wrong with carbon is an environmentalist hoax that props up corrupt green special interests, the Brown-Newsom green tax isn’t even coming close to accomplishing the stated goals that is the basis for those taxes.

Bloomberg article last month began by arguing that, “California’s carbon market was supposed to be a model for the US, harnessing the power of capitalism to fight climate change in the world’s fifth-biggest economy. But nearly 10 years after ‘cap and trade’ began, there’s little proof the system has had much direct impact on curbing planet-warming pollutants.”

Before bitcoin, environmentalists created an imaginary “carbon currency” and a marketplace around it that forced ordinary consumers to fund corporate bribery of top Democrats. Some of the biggest companies in the country boast of going “carbon neutral” by 2030, 2045 or 2980, when what that actually means is that they’re buying “carbon offsets” and changing nothing.

The carbon scam has made the right sorts of people rich and everyone else much poorer.

California began trading “emissions” in the 90s with the Regional Clean Air Incentives Market (RECLAIM).A decade later, Anne Sholtz, an environmental law academic and emissions broker who helped set up the program, had been arrested by the EPA on wire fraud charges.

Sholtz had all but invented the modern electronic pollution marketplace. She met with Al Gore and gave plenty of interviews until she was arrested for trying to trade credits she didn’t have.

But can there be fraud when the whole thing is a scam?

Big Green created a massive industry based on trading indulgences from government environmental mandates. An industry now worth billions, is being touted to investors as having the potential to hit $100 billion or $200 billion or infinity by 2030. It’s an industry that, unlike those it’s using the government and leftist activists to shake down, is worth nothing, produces nothing, and exists purely as a rent-seeking parasite destroying American living standards.

Each company and investor joining the regulatory Ponzi scheme is now motivated to pressure governments, local and national, to impose more taxes and push more companies into the market so that those who got in earlier will steal more from those who come in later. This perverse socialist mockery of capitalism is depicted as “saving the planet” even though it has failed to do anything to move the dial even on the environmental hoax that justifies its existence.

And that is one reason why California’s gas prices are some of the highest in the nation.

But like vegans, legal shoplifting, and shopping bag bans, what starts in California, doesn’t stay there. Biden and Senate Democrats have tried to impose a national carbon tax on Americans.

Had Senator Manchin not rejected last year’s proposed carbon tax, the whole country would have been hit with a tax of at least another 18 cents per gallon. Senator Whitehouse’s proposal would have added about 14 cents a gallon, but would have increased “5 percent above inflation annually.” That kicker, also a part of California’s gas taxes, is what’s really making them rise.

And that’s just for starters.

The Obama administration was proposing a carbon tax that would have added over 40 cents per gallon. The EU’s $75 per ton carbon tax applied here would mean over 60 cents more per gallon. A former Carter adviser has proposed a tax that would be closer to 90 cents.

And it would only go up from there.

California is a cautionary tale that when environmentalists, leftists, and other Democrats claim that they want to “make polluters pay”, they mean you.

Driving by a Los Angeles gas station last week, I saw that the price was approaching 7 bucks.

They’re making us pay. Every single day.

AUTHOR

Daniel Greenfield, a Shillman Journalism Fellow at the Freedom Center, is an investigative journalist and writer focusing on the radical Left and Islamic terrorism.

RELATED ARTICLE: White House disarray: Low approval ratings rattle Biden, ‘frighten’ Democrats

EDITORS NOTE: This Jihad Watch column is republished with permission. ©All rights reserved.

While Americans Can’t Afford Gas, Biden Slashes Drilling

It’s not Putin’s price hike, it’s Biden’s. And he insists on reminding us of that every few days.

The Biden administration on Monday reversed a Trump administration plan that would have allowed the government to lease more than two-thirds of the country’s largest swath of public land to oil and gas drilling.

The Bureau of Land Management’s decision will shrink the amount of land available for lease in the National Petroleum Reserve in Alaska…

The decision returns to an Obama administration plan that allows fossil fuel extraction in up to 52% of the reserve, compared to the Trump administration’s effort to open up 82% of the land to drilling.

Nationally gas prices continue to rise, despite increased production, hitting an average of $4.13. Of course, where I live, people would wait on line for an hour to get $4.13 gas and consider $5.13 a mouthwatering bargain.

But that’s what happens when you put enviros in charge of a city, a state, or a country.

While Biden and his lackeys advise Americans to buy $55,000 electric cars, they fly jet planes everywhere and then keep blocking efforts to make America energy independent.

AUTHOR

RELATED ARTICLE: ‘Robert Spencer’s Qur’an: A new annotated Qur’an that belongs in every sensible citizen’s library’

EDITORS NOTE: This Jihad Watch column is republished with permission. ©All rights reserved.

Higher Gas Prices Add to Economic Slump

Courtesy of the Heritage Foundation:

Unemployment is at 8.3 percent. The economy is sputtering at 1.5 percent growth. Food prices are rising due to drought conditions across the country. And gas prices are up again, pinching Americans’ summer budgets. It is past time for the President and Congress to pursue smart policies that would put us on a path to relief.

According to AAA’s Fuel Gauge Report, the current national average for regular is $3.66 per gallon. That’s up 28 cents per gallon from a month ago, and July had its biggest price jump since AAA started tracking prices in 2000. To see the average for Florida click here.

There are many factors affecting prices that we cannot control—worldwide tensions, especially in the Middle East, can drive up oil prices. Global demand, especially from China and India’s rapidly growing economies, continues upward.

But after three years of adding regulatory hurdles and blocking exploratory access and development, President Obama’s policies are helping keep prices higher than necessary.

If the President truly wanted to lower gas prices, he would work to increase supply. But when given the opportunity, he has done the opposite. He turned down the Keystone XL pipeline, which would bring up to 830,000 barrels of oil per day from Canada. His Administration has made it even harder for companies to explore and extract domestic energy resources by canceling, delaying, or withdrawing a number of lease sales for exploration and development. Meanwhile, huge swaths of federal lands have been put off limits for energy exploration.

Domestic refinery outages have had a recent impact on gas prices. Two of the factors holding back domestic energy production are regulatory red tape and litigation—and these, we can do something about. As Heritage’s Nicolas Loris notes:

Environmental activists delay new energy projects by filing endless administrative appeals and lawsuits. Creating a manageable time frame for permitting and for groups or individuals to contest energy plans would keep potentially cost-effective ventures from being tied up for years in litigation while allowing the public and interested parties to voice opposition or support for these projects.

We don’t have to stand still. Congress could alleviate the energy crunch in 10 different ways by taking action on things we can control, like restrictions on oil shale development and offshore drilling.

One of the most common objections is that increasing domestic oil production takes too long and would not impact the market for at least a decade. The longer people make this argument, however, the longer it will take. The sooner we make investments in domestic energy, the sooner those benefits will be realized. And with some serious reforms, some of this oil can reach the market in much less than a decade.

Gas prices aren’t under the control of any one President. But Americans shouldn’t settle for policies that restrict oil exploration, refining, and production and artificially drive prices higher.

MORE FROM THE HERITAGE FOUNDATION:

High Gas Prices: Obama’s Half-Truths vs. Reality

President Obama’s 10 Worst Energy Policies

Republicans and Democrats Alike Want Higher Food, Fuel and Energy Prices

Gallup Politics recently did an Environmental poll (see the below chart). The results shows that a majority of Republicans and super majority of Democrats favor actions that will lead to higher food, fuel and energy prices. While there are more Republicans that favor opening public lands to exploration and drilling the end results of their support for policies like increasing regulations to reduce “emissions and pollution standards for businesses” means higher costs for all consumers.

Americans polled may not understand the difference between “emissions” and “pollution”.

Emissions/greenhouse gasses, e.g. CO2, primarily occur due to water evaporation from the earth’s oceans and seas. When 50% of Republicans want government to “impose mandatory controls on carbon dioxide emissions” many consumers wonder if they understand that we cannot control water evaporation from happening. The EPA recently issued a CO2 emissions ruling that impacts all of U.S. coal fired plants and will cause many to shut down because they cannot meet the new standards. This will drive up energy costs and thereby food costs.

Government spending on solar and wind power has been a disaster with many of the companies failing to produce a cost effective product, moving their operations to China or going bankrupt. All of these companies are a further drain on our economy because they are not producing cheap and reliable power, they are producing just the opposite, which drives up energy costs and thereby food costs.

While Republicans generally favor opening public lands to oil, natural gas and oil shale exploration and production, nearly half want stronger enforcement of environmental regulations and higher emission standards for automobiles. One negates the other.

The environmentalists are licking their lips at these numbers.

The pollster’s state:

Gallup has tracked seven of the eight proposals periodically since 2001. Support for all but nuclear energy has declined since last measured in 2007, with the largest drops seen for spending government money to develop alternative sources of fuel for automobiles, strengthening enforcement of environmental regulations, and setting higher auto emissions standards.

These declines could be due to Americans’ reduced priority in the last several years for preserving the environment at the expense of economic growth, an outgrowth of the economic downturn. However, they are also likely to stem from heightened public concern about government spending and regulations specifically, particularly among Republicans.

Some do not find these numbers low enough to keep Republicans, in an election year, from stopping the power grab by the EPA. If this is a campaign issue then the consumer loses. As food, fuel and energy prices rise so will inflation. The column “Our Bubble Government” notes that inflation will burst both the dollar and debt bubbles. The higher the cost of goods and borrowing the more likely the current recession will last or deepen.

From this Gallup Environment poll some see trouble brewing on the horizon and its name is – inflation.

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