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LATE-STAGE SOCIALISM: Crisis in Venezuelan hospitals — too many patients, too few beds.

Services are very limited in both public hospitals and private clinics, where shortages of supplies have reduced the number of beds available to little more than 25 percent of what the country needs, according to experts.

But finding a hospital bed is no guarantee that the patient will receive the required treatment because hospitals have less than 5 percent of the supplies and medicines needed to function normally, said Douglas Leon Natera, president of the Venezuelan Medical Federation.

“Any Venezuelan who gets sick here in the country today runs the risk of entering a clinic only to have the relatives leave crying” because “there’s nothing” in many hospitals, Leon Natera told el Nuevo Herald in a telephone interview.

“We have barely 3 or 4 percent of the supplies and medicines [needed], which is really nothing,” he said. “And the showcase hospitals, which receive the most resources, may have only 10 to 12 percent.”

Pummeled by the collapse of the Chavista economic model and low oil prices, the government of President Nicolas Maduro has put strict limits on the importation of food, medicines and other basic goods.

Unexpectedly.

HMM: Amazon Puts Whole Foods on Fast Track to Conventional Supermarket.

Under the changes planned to begin in April, Whole Foods’ 470 locations will no longer allow brand representatives to promote their products or check to make sure they are stocked and displayed correctly.

Whole Foods also is centralizing much of its decision-making regarding the assortment of products across the country. Instead of allowing brands to frequently pitch their products to individual stores or regions, Whole Foods executives in its Austin, Texas headquarters will choose a higher percentage of the items stores carry.

The move had slowly gotten under way in recent months, but Amazon.com Inc.’s AMZN 0.35% merger with the chain in August provided additional incentive for Whole Foods to move away from its decentralized model and become more efficient.

“This is another step in the conventionalizing of Whole Foods as we know it,” said Jim Cusson, of Charlotte, N.C.-based Theory House, a brand consultancy.

Amazon is hoping to boost sales at the struggling grocer, in part, by standardizing operations and prices. Market reports show traffic improvement since the deal closed last month, likely because the chain lowered prices on key items like eggs and milk.

“Conventional” for grocery stores also means “low margins,” which would be new for Whole Foods. But Amazon has always been happy with low (or nonexistent) profits, so long as cash flow remained high and competitors were brought low.

TRAGEDY: Amazon lowering Whole Foods prices will hurt those who think they’re better than you.

BLUE-LIGHT SPECIAL: Amazon slashes Whole Foods prices by up to 43 percent on first day.

Amazon had said last week that it would cut prices when the deal closed so that Whole Foods — whose natural and organic products often carried premium prices that resulted in the upscale chain being derisively dubbed “Whole Paycheck” — would instead start to become “affordable for everyone.”

“It’s impressive they would execute the pricing strategy so quickly,” said Mark Hamrick, senior economic analyst at Bankrate.com.

More price cuts on more items are expected at the 470 Whole Foods stores in the United States, Canada and Britain, and Whole Foods said the price cuts were not temporary.

It’s that aggressive approach to pricing, a hallmark of Amazon, that has sent shock waves through the $611-billion U.S. grocery industry.

Whole Foods had experimented with cutting prices to drive more food traffic, but without much success. I suspect part of the reason may have been a consumer expectation that, Whole Foods being Whole Foods, the cuts would be short-lived. With Amazon in charge, the expectation game might change.

HALF PAYCHECK: Amazon moving swiftly to cut prices at Whole Foods.

RAND PAUL: Retaining instead of repealing Obamacare will be Republicans’ undoing.

If we are to subsidize health insurance, why not food? Or water? Or housing? You may respond, yes, but we already do that. You are right we have subsidized, for the poor, food and housing, but we didn’t, until now, attempt to subsidize a market item for all.

With this bill, Senate Republicans declare they have overcome Hayek’s protestations about the pretense of knowledge — the idea that no central planner can know enough to engineer an economy successfully.

With this bill, Senate Republicans declare they have the knowledge to determine and correct prices for millions of Americans who purchase health insurance. Pretense? You bet it is.

Markets are incredibly complex interactions between millions of people in a nearly simultaneous bazaar of trading. No one man or woman possesses that knowledge, so anyone who sets or attempts to set prices for health insurance is doomed to fail.

And mark my words, this Senate Healthcare bill will fail just as its twin Obamacare has, for they suffer from the same pretense of knowledge. No one is smart enough to plan even the simplest of marketplace prices — no matter how much data is available.

Entitlements are just as addicting for politicians of either party as they are for their beneficiaries — a fact Democrats have been counting on for generations.

AN ACTUALLY GOOD COLUMN FROM DAVID BROOKS ON HOW THE “NEW CLASS” IS RUINING AMERICA:

Over the past generation, members of the college-educated class have become amazingly good at making sure their children retain their privileged status. They have also become devastatingly good at making sure the children of other classes have limited chances to join their ranks. . . .

The educated class has built an ever more intricate net to cradle us in and ease everyone else out. It’s not really the prices that ensure 80 percent of your co-shoppers at Whole Foods are, comfortingly, also college grads; it’s the cultural codes.

Status rules are partly about collusion, about attracting educated people to your circle, tightening the bonds between you and erecting shields against everybody else. We in the educated class have created barriers to mobility that are more devastating for being invisible. The rest of America can’t name them, can’t understand them. They just know they’re there.

And that’s why you got Trump. Related: How David Brooks Created Donald Trump.

UPDATE: A lot of people are mocking Brooks for this, and understandably I suppose. But this is actually news to Brooks, and his readers. We should cheer when a bit of fresh air makes it into the bubble.

BAD LUCK, THEN AND NOW:

Shot:

In the economically illiterate hope that raising prices would increase incomes and restore prosperity, the New Deal cartelized agriculture. Landowners raked in subsidies for taking land out of production and destroying crops and livestock, which threw huge numbers of agricultural laborers, tenant farmers, and sharecroppers out of work and made food and clothing more expensive. FDR himself, having created the opportunity, built his coalition by decrying “one-third of a nation ill-housed, ill-clothed, and ill-nourished.”

* * * * * * * * *

Of course, not all groups saw increased opportunity during World War II. The book’s shocker is buried on page 299, thanks to the perverse geographical organization: Hello to Manzanar—or at least, to Tule Lake. Every collectivist agricultural revolution needs its kulaks, and the administration at last found a population that was compelled to obey commands and (at least in the case of its businesses) be liquidated. Japanese Americans, subject to intense racial discrimination before the war, had created an entrepreneurial niche in truck gardening: fruits and vegetables for urban markets that we would today call “locally sourced.” After being forced to sell their businesses for pennies on the dollar, they were shipped off to internment camps.

You can’t make omelets without breaking eggs, and you can’t collectivize agriculture without creating food shortages: The Roosevelt administration disrupted the West Coast’s efficient fruit and vegetable agricultural sector just as the region’s population exploded with war workers. New Deal Photography offers a single color Russell Lee picture (1942), which the OWI presumably hoped would depict the internees as happy collective farmers among the furrows. They don’t look too happy—nor should readers be, because this appalling culmination of the FSA project has been addressed in depth in several previous books, as opposed to the cursory treatment here.

“Image of a Decade,” Jay Weiser, the Weekly Standard, May 29 issue.

Chaser:

A California farmer is facing a $2.8 million fine for failing to get a permit to plow his own field.

John Duarte bought 450 acres of land near Modesto in 2012 and is now being sued by the federal government for plowing near areas the government considers to be “waters of the United States.”

The case will head to trial in August. The government claims that Duarte violated the Clean Water Act because he did not obtain a permit to work near the wetlands.

“Farmer facing massive fines for… plowing his own field,” Jazz Shaw, Hot Air, today.

(Classical reference in headline.)

HAVE YOU HUGGED A FRACKER TODAY? How cheap oil is changing the world.

Now then you get a country like Venezuela, which was on the edge even before prices fell from $100 a barrel, well they’re running out of foreign exchange reserves, they’ve fallen from $66 to about $15 billion. And they’re collapsing collapsing and they’re running out of the ability to import food and other materials, and so there you’re dealing with almost societal instability, and order is being maintained by folks with guns.

And so countries are dealing with it differently, it’s been very very difficult. They all want to get out of this as fast as possible – those towering oil inventories and the risk of another oil price collapse and prolonging this hemorrhaging – because no matter what strategy they’ve chosen, they’re all painful. They want out. All producers want out.

But the question is are they willing to cut and cooperate collectively? What we’ve seen since the beginning of the oil market is that it’s very difficult to get producers to cooperate collectively to restrain their production. The temptation is to cheat, to let somebody else do some cutting and you enjoy the higher oil prices. This has always been a challenge for the oil industry.

It couldn’t happen to a nicer bunch of kleptocratic petrostates.

DEMOCRATS’ WAR ON THE POOR: Walmart is the most efficient anti-poverty program in America, but Mayor Bill De Blasio won’t let them open a store in New York. He’d rather force the poor to pay higher prices than displease the food-workers’ union that helped elect him. My City Journal article notes that a majority of New Yorkers — including those in union households — want Walmart stores in the city, and that support for Walmart is especially strong among blacks and Hispanics.

The economist Richard Vedder and I defended the proposition, “Long live Walmart,” Walmart in a recent Intelligence Squared U.S. debate in New York. We expected to have a tough time convincing the liberal audience, but they ended up voting in favor of Walmart. Of course, the economic arguments for Walmart don’t carry the same weight at City Hall as union campaign contributions.

MEXICO’S GREAT GASOLINE PRICE WAR CONTINUES: The attacks on gas stations in Mexico continue. There is no doubt that Mexican citizens across-the-board are angry with President Enrique Pena Nieto specifically and the government in general.

The L.A. Times lead is a bit sensational but essentially correct:

In Tijuana and Nogales, massive demonstrations over rising gasoline prices forced authorities to temporarily close crossing stations on the U.S.-Mexico border, while in Rosarito protesters cheered as a man intentionally drove his pickup into a group of federal police officers.

More than a week after the government of President Enrique Peña Nieto deregulated gasoline prices, which instantly rose as much as 20%, Mexico is engulfed in a nationwide rebellion.

Four people have been killed and more than 1,500 arrested while looting, staging road blockades and marching in protests such as the weekend demonstrations in Rosarito and along the border.

The price hike, which many believe will lead to higher prices for food and household goods, is opposed by 99% of Mexicans, according to a recent poll, and has drawn the condemnation of business groups, truckers unions, leaders of the political opposition and even the Catholic Church.

Pena’s pulling an Obama and blaming his predecessor for the price hikes.

Do the gas protests connect to the Cartel War? Good question. There is a very reasonable fear in Mexico that some cartel gunmen will toy with political revolt.

That’s why the December 30 report that cartel gunmen had threatened attacks on gas stations caused an immediate sensation. However, within a day the Jalisco state attorney generals office determined the message was a fake.

Here’s part of the alleged message from the Jalisco New Generation Cartel (CJNG):

“The CJNG, in support of the working class, commits itself to making burn all the gasoline stations that to December 30 of the current year, at 10:00 p.m.” — before the price increases go into effect — “have not normalized the sale of fuel at the fair price,” the message said, according to the Mexican news outlet Aristegui Noticias.

Stay tuned.

RELATED: A little background on the “impunity issue” that haunts Pena.

DIET: The meals your parents made for you are now too calorific for modern lifestyles.

An analysis of 30 years of data by the LSE has proven that the obesity crisis is largely driven by modern lifestyles, which have allowed people to become so inter-connected that they barely need to leave their desks or sofas to work, socialise or shop.

It means that traditional meals recommended by parents are now simply too much for a less-active generation.

Trade deals between countries have also caused food prices to tumble, creating virtually unlimited access to unrestricted calories for most people, while on-tap entertainment through television, smartphones and personal computers has replaced many traditional hobbies and activities.

Recommended calorie counts, which have been about 2,500 for men and 2,000 for women since the First World War, were set at a time when people naturally moved far more in their daily lives. But the new study suggests those counts may now be too high and researchers say that people need to stop eating the way their parents taught them.

There’s also evidence that a low-calorie diet in itself can be life-extending.

But it still might be smart to spend more time away from the desk and off of the sofa — I know I’m trying to.

MY FAVORITE PART OF THE OBAMA ERA IS ALL THE REGIONAL HEALING: The New War Between The States.

This reflects an increasingly stark conflict between two very different American economies. One, the “Ephemeral Zone” concentrated on the coasts, runs largely on digits and images, the movement of software, media and financial transactions. It produces increasingly little in the way of food, fiber, energy and fewer and fewer manufactured goods. The Ephemeral sectors dominate ultra-blue states such as New York, California, Oregon, Washington, Massachusetts, Maryland, and Connecticut.

The other America constitutes, as economic historian Michael Lind notes in a forthcoming paper for the Center for Opportunity Urbanism, the “New Heartland.” Extending from the Appalachians to the Rockies, this heartland economy relies on tangible goods production. It now encompasses both the traditional Midwest manufacturing regions, and the new industrial areas of Texas, the Southeast and the Intermountain West.

Contrary to the notions of the Ephemerals, the New Heartland is not populated by Neanderthals. This region employs much of the nation’s engineering talent, but does so in conjunction with the creation of real goods rather than clicks. Its industries have achieved generally more rapid productivity gains than their rivals in the services sector. To some extent, energy and food producers may have outdone themselves and, since they operate in a globally competitive market, their prices and profits are suffering.

It’s not even the economic divide that’s the worst, it’s the smug basket-of-deplorables, standard-redneck contempt.

THE WAGES OF SOCIALISM: Starving Oil Workers Sell Clothes for Food in Venezuela.

The latest horrifying example of the depths of Venezuela’s economic crisis comes courtesy of the country’s struggling oil industry, where hungry roughnecks are being forced to literally sell the clothes off their back to feed themselves and their families. . . .

There’s a nasty cyclical effect to all of this, too: runaway inflation is making oil workers’ salaries insufficient for necessary purchases, which is leading to “worker disillusionment, absenteeism, and a brain drain” in the oil industry, which is leading to a drop in the country’s oil production, which is dragging down the entire Venezuelan economy, which in turn is hurting oil workers…etc., etc.

Oil exports make up 95 percent of Venezuela’s export revenues, and a fall in output isn’t the only thing rocking the petrostate—there’s also the collapse in crude prices over the past two years from more than $110 per barrel down to around $50 today. Current prices are a very far cry from the reported $120 per barrel Caracas needs to balance its budget.

Nothing is going right in Venezuela right now. It’s producing less oil and earning less cash for what it is capable of drilling, its workforce is going hungry, and its economy is locked in a death spiral, exacerbating all of these problems. And, for Caracas, things are going to get even worse before they get better.

Bad luck.

WELL, YES: Competition Works Best to Control Drug Prices.

Companies are indeed greedy, but they are always greedy — it’s a constant, like the speed of light. You don’t see prices suddenly popping up because of a constant. You see prices suddenly popping up because something has changed.

And what might that something be? One thing that changed is that nine years ago, Mylan bought the rights to make the device. And Mylan decided to raise prices.

But that’s not quite enough of an answer. Companies often decide they’d like to raise prices. And yet, we rarely see markets where prices shoot up by a factor of five when there’s been little change in the underlying costs.

However, those markets have something that the market for EpiPens lacks: competition. People trying to produce a generic version of the EpiPen are held back by the difficulties of getting approval from the Food and Drug Administration.

Obviously, the solution is more bureaucracy.

“BAD LUCK” STRIKES AGAIN: Is Doomsday Inevitable For Venezuela?

Venezuela is facing the worst economic and humanitarian crisis in its history. Venezuela has been hit by the 24 months collapse in oil prices. Its economy is expected to shrink 10 percent at the end of 2016, the biggest contraction in the last 13 years, while inflation has reached more than 700 percent according to the International Monetary Fund (IMF). Other analysts say that inflation has already reach 1,000 percent.

Venezuelans are living day-by-day facing a very complicated situation with rising crime and corruption rates, daily electricity blackout, medicines and food shortage (more than 80 percent). Venezuelans can’t get even the most basic lifesaving medical supplies as antibiotics.

On Monday 22th August 2016 Brent oil traded around $49 a barrel, but two years before Brent was $102 a barrel, and even then Venezuela was already having economic problems. Even with a recovery in crude, higher prices are unlikely to solve the economic, humanitarian and political crisis.

As long as you have socialism, “bad luck” is inevitable. Flashback: Joseph Stiglitz, in Caracas, Praises Venezuela’s Economic Policies.

WALL STREET JOURNAL: Anaphylactic Political Shock: Sorry, Hillary. The feds are to blame for Mylan’s EpiPen monopoly.

EpiPen should be open to generic competition, which cuts prices dramatically for most other old medicines. Competitors have been trying for years to challenge Mylan’s EpiPen franchise with low-cost alternatives—only to become entangled in the Food and Drug Administration’s regulatory afflatus.

Approving a generic copy that is biologically equivalent to a branded drug is simple, but the FDA maintains no clear and consistent principles for generic drug-delivery devices like auto injectors or asthma inhalers. How does a company prove that a generic device is the same as the original product if there are notional differences, even if the differences don’t matter to the end result? In this case, that means immediately injecting a kid in anaphylactic shock with epinephrine—which is not complex medical engineering.

But no company has been able to do so to the FDA’s satisfaction. Last year Sanofi withdrew an EpiPen rival called Auvi-Q that was introduced in 2013, after merely 26 cases in which the device malfunctioned and delivered an inaccurate dose. Though the recall was voluntary and the FDA process is not transparent, such extraordinary actions are never done without agency involvement. This suggests a regulatory motive other than patient safety.

Then in February the FDA rejected Teva’s generic EpiPen application. In June the FDA required a San Diego-based company called Adamis to expand patient trials and reliability studies for still another auto-injector rival.

Mrs. Clinton claims the EpiPen price hikes show the need for price controls, and she says she’ll require drug makers to “prove that any additional costs are linked to additional patient benefits and better value.” Somebody in Congress should require the FDA to justify how its delays are advancing the same goals.

Requiring bureaucrats to justify their actions is anathema.

JOEL KOTKIN on why Blue cities are such cesspits of inequality.

There’s little argument that inequality, and the depressed prospects for the middle class, will be a dominant issue in this year’s election, and beyond. Yet the class divide is not monolithic in its nature, causes, or geography. To paraphrase George Orwell’s Animal Farm, some places are more unequal than others.

Housing represents a central, if not dominant, factor in the rise of inequality. Although the cost of food, fuel, electricity, and tax burdens vary, the largest variation tends to be in terms of housing prices. Even adjusted for income, the price differentials for houses in places like the San Francisco Bay Area or Los Angeles are commonly two to three times as much as in most of the country, including the prosperous cities of Texas, the mid-south and the Intermountain West.

These housing differences also apply to rents, which follow the trajectory of home prices. In many markets, particularly along the coast, upwards of 40% of renters and new buyers spend close to half their income on housing. This has a particularly powerful impact on the poor, the working class, younger people, and middle class families, all of whom find their upward trajectory blocked by steadily rising housing costs.

In response to higher prices, many Americans, now including educated Millennials, are heading to parts of the country where housing is more affordable. Jobs too have been moving to such places, particularly in Texas, the southeast and the Intermountain West. As middle income people head for more affordable places, the high-priced coastal areas are becoming ever more sharply bifurcated, between a well-educated, older, and affluent population and a growing rank of people with little chance to ever buy a house or move solidly into the middle class.

Ironically, these divergences are taking place precisely in those places where political rhetoric over inequality is often most heated and strident. Progressive attempts, such as raising minimum wages, attempt to address the problem, but often other policies, notably strict land-use regulation, exacerbate inequality.

The other major divide is not so much between regions but within them. Even in expensive regions, middle class families tend to cluster in suburban and exurban areas, which are once again growing faster than areas closer to the core. Progressive policies in some states, such as Oregon and California, have been calculated to slow suburban growth and force density onto often unwilling communities. By shutting down the production of family-friendly housing, these areas are driving prices up and, to some extent, driving middle and working class people out of whole regions.

They’ll turn us all into beggars ’cause they’re easier to please.

BAD LUCK: Venezuela is on the brink of total collapse.

Home to the world’s worst economy, Venezuela is beset by severe food shortages, riots in the streets and hyperinflation that’s closing in on 700 percent. World oil prices have plummeted — and Venezuela relies on oil for 95 percent of its income.

Agriculture was neglected as Chavez and Maduro placed all their economic chips on crude and elected to import goods from abroad while spending on social programs that rallied the poor behind the government.

But now Venezuela has no cash to import food or other essentials. And because Chavez nationalized so much industry, it has no private sector to compensate.

So Maduro has now issued an executive decree that subjects all workers to being forced to work for 60 days (or more, “if circumstances merit”) in the fields, growing badly needed food.

Economically, the move makes no sense. Morally, it’s barely one step up from government-sanctioned slavery.

It is government-sanctioned slavery. If only someone had written a book about how this thing always seems to happen to centrally-managed economies.

ARE THERE ANY GREEN PROJECTS THAT AREN’T JUST MONEY-SIPHONS FOR CONNECTED CRONIES? America’s Biofuel Boondoggle Rife with Fraud.

To try and artificially grow a domestic biofuels industry, the United States installed the Renewable Fuel Standard (RFS) in 2007, relying on a system of annually increasing mandates for the quantities of biofuels refiners blend into gasoline. The scheme was created under the Bush administration and dutifully expanded by the Obama administration—and it’s been an unmitigated policy disaster. The RFS has created an arena ripe for hucksters to fraudulently make millions of dollars, and Bloomberg has a long report on some of the most galling examples of these system-cheaters. . . .

It’s worth your time this weekend to go ahead and read the whole thing. It’s a quick overview of what the RFS actually is and how it’s been taken advantage of.

Fraud isn’t the only issue with America’s biofuels problem. The quota system has raised global food prices, starving the world’s poor and potentially inciting riots abroad. It has cost drivers billions of dollars (billions!), and maybe worst of all—it’s actually been bad for the environment.

Our biofuel boondoggle hits one of those rare policy sour spots, making very little sense from every angle and managing to frustrate every relevant stakeholder (excepting the corn industry). If Bloomberg’s story of the brazen fraud this artificial biofuels ecosystem has created makes you angry, well, it should. The sooner we end this farce, the better.

With fracking, we don’t need these scams. In fact, we never actually did.

21ST CENTURY SHOPPING: Walmart Is Offering a Free Trial for Its Amazon Prime ‘Killer’

The world’s largest retailer, looking to rev up online sales growth that has sagged in recent quarters, said on Tuesday it was as of Friday offering a free 30-day trial of ShippingPass. That annual subscription service, like Prime, offers members unlimited free two-day shipping (that was three days until recently for Walmart) and no order minimums. The program’s cost is $49 a year, compared to $99 for Amazon Prime.

It would take a lot to wean me off of Amazon Prime.

However, the VodkaWife recently switched from King Sooper’s $10 grocery delivery service to Walmart’s free grocery pickup service. She said that the selection was good-if-not-great, but that the food prices were generally lower — and on some items much lower.

BLUE-MODEL ABSURDITY IN SAN FRANCISCO: Generous amenities for the wealthy and eviction notices for ordinary workers: Is this the future of the progressive city?

In a whirlwind session earlier this week in which it mandated gender-neutral bathrooms and passed the nation’s most aggressive paid family leave law, the San Francisco Board of Supervisors also “doubled down on its liberal credentials by enacting expansive anti-eviction protections for tenants who work in San Francisco schools, from teachers to janitors and cafeteria workers,” the SF Chronicle reports.
“This sets us on the level of European social democracies that have more forward-thinking policies,” Supervisor Eric Mar said proudly of the family leave law. Maybe so. But it’s hard to think of a more backward-thinking policy than the Board’s desperate, rearguard effort to protect teachers from skyrocketing rents (which now exceed $3,000 per month for a one-bedroom unit, on average—the highest in the country).

As Gabriel Metcalf has argued in CityLab, San Francisco is being devastated by a housing affordability crisis that was engineered by an alliance between wealthy NIMBYs interested in jacking up their home prices and grassroots progressive activists convinced that blocking new development was somehow sticking it to plutocrats. Now the same Board of Supervisors that refuses to amend zoning rules to bring down prices is instead handing out eviction exemptions to favored political constituencies. And of course, these new rules will drive up rents even higher by making landlords wary of signing leases with public employees.

Just as Chicago is the poster-child for the destruction wrought by blue city budgeting brought to its logical extreme, San Francisco is a case study in what happens when pie-in-the-sky progressives are allowed to set housing policy. The Golden Gate City is a idyllic haven for the tech and financial elite, who enjoy access to luxurious apartments without a high-rise in sight, a Whole Foods on every corner, and as much high-end shopping and dining as their hearts desire. Meanwhile, working class people—including, ironically, many of the progressive artists and activists who historically backed San Francisco’s exclusionary zoning laws—are being forced across the bay to places like Oakland and San Leandro, and the city’s homeless population is so large that the city is installing outdoor urinals in its public parks.

The future of the human race is a bum, peeing in the park, forever.

HOUSING REGULATION AS A ROOT CAUSE OF INEQUALITY: Joel Kotkin: This Is Why You Can’t Afford A House.

There’s little argument that inequality, and the depressed prospects for the middle class, will be a dominant issue this year’s election. Yet the most powerful force shaping this reality—the rising cost of housing—has barely emerged as political issue.

As demonstrated in a recent report (PDF) from Chapman University’s Center for Demographics and Policy, housing now takes the largest share of family costs, while expenditures on food, apparel, and transportation have dropped or stayed about the same. In 2015, the rise in housing costs essentially swallowed savings gains made elsewhere, notably, savings on the cost of energy. The real estate consultancy Zillow predicts housing inflation will only worsen this year.

Driven in part by potential buyers being forced into the apartment market, rents have risen to a point that they now compose the largest share of income in modern U.S. history. Since 1990, renters’ income has been stagnant, while inflation-adjusted rents have soared 14.7 percent. Given the large shortfall in housing production—down not only since the 2007 recession but also by almost a quarter between 2011 and 2015—the trend toward ever higher prices and greater levels of unaffordability seems all but inevitable.

The connection between growing inequality and rising property prices is fairly direct. Thomas Piketty, the French economist, recently described the extent to which inequality in 20 nations has ramped up in recent decades, erasing the hard-earned progress of previous years in the earlier part of the 20th century. After examining Piketty’s groundbreaking research, Matthew Rognlie of MIT concluded (PDF) that much of the observed inequality is from redistribution of housing wealth away from the middle class.

Rognlie concluded that much of this was due to land regulation, and suggested the need to expand the housing supply and reexamine the land-use regulation that he associates with the loss of middle-class wealth. Yet in much of the country, housing has become so expensive as to cap upward mobility, forcing many people to give up on buying a house and driving many—particularly young families—to leave high-priced coastal regions for less expensive, usually less regulated markets in the country’s interior.

It’s as if Blue areas are all about feudalism, despite all the talk about ending inequality.

BAD LUCK: First Restaurants Raise Wages. Then What?

Restaurants are running out of chefs. The work is astonishingly unglamorous: hot, manual labor performed in a tiny space. It also pays abysmally; the median hourly wage is just $11 an hour, and the 90th percentile, the elite of the profession, makes a princely $15.35. As student loan burdens have gotten more burdensome and urban real estate prices have soared, restaurants in pricey areas are finding it harder to attract workers willing to endure a long commute in order to spend hours getting hot and dirty.

Why don’t they just pay more, demands Kevin Drum? “Offer them, say, $15 per hour, and who knows? Maybe there are plenty of good entry-level cooks available. This would raise your total cost of running the restaurant by, oh, 2 percent or so, but it’s not like restaurants are competing with China. They’re competing with other restaurants nearby that have the same problem. If the price of a good cook is going up, it’s going to affect everyone.” . . .

Would people really stop going to restaurants over a measly 7 percent of the check?

Well, yes. But not all people, and not all the time. Many people would eat fewer meals outside the home. There’s a restaurant near my house that I’d say is 20 percent overpriced for the neighborhood and the quality of the food it serves. It had no competition nearby but still opened empty, and remains mostly that way a year later. The food is good — not stellar, but I’d be happy enough to eat there, if it weren’t for the fact that everything costs too much. If prices at the pub that opened nearby went up by the same amount, I wouldn’t simply start splitting my time between the two; I’d eat out less.

Americans spend a phenomenal amount of money consuming food outside their homes, and a major reason is that with restaurant labor so cheap, the convenience and price are attractive to people who don’t feel like cooking. If the wages go up, that calculus shifts. And unfortunately those “rich bosses” can’t just take it out of their profits, because margins in the industry are under 5 percent, and the difference between making that profit and closing up shop can be surprisingly thin.

People who have never run a business are good at airily dismissing such things.

WELL, GOOD: Green Europe Moves Against “Green” Biofuels:

Brussels put another dagger in the heart of the “green” biofuel industry this week, coming to a preliminary agreement on limiting mandates for crop-based biofuels. . . .

Just a few short years ago breathless greens were touting the environmental merits of growing our gas, but the facts have quickly overtaken those claims—and the myriad government subsidy regimes they spawned.

The more you think about it, the less “green” crop-based biofuels appear: They’re often an inefficient and therefore costly way to produce transport fuel; their ability to reduce emissions is dubious at best (in some cases they’ve been shown to actually increase greenhouse gas emissions); they often lead to local environmental damage as farmers eager to take advantage of government support clear-cut their way to unsustainability; and they drive up global food prices, starving the world’s poor.

Nothing to be proud of, there.

SOCIALISM ALWAYS STARTS WITH THE SAME PROMISES, AND ENDS WITH THE SAME EXCUSES AND ACCUSATIONS: Kevin Williamson: The Left’s Mess In Venezuela:

Venezuela had a good run of it for about five minutes there, at least in public-relations terms. When petroleum prices were booming, all it took was a few gallons of heating oil from Hugo Chávez to buy the extravagant praise of House members, with Representative Chaka Fattah (D., Philadelphia) issuing statements praising Venezuela’s state-run oil company “and the Venezuelan people for their benevolence.”

Lest anybody feel creeped out by running political errands for a brutal and repressive caudillo, Joseph Kennedy — son of Senator Robert Kennedy — proclaimed that refusing the strongman’s patronage would be “a crime against humanity.” Kennedy was at the time the director of Citizens Energy, which had a contract to help distribute that Venezuelan heating oil — Boss Hugo was a brute, but he understood American politics.

Celebrities came to sit at his feet, with Sean Penn calling him a “champion” of the world’s poor, Oliver Stone celebrating him as “a great hero,” Antonio Banderas citing his seizure of private businesses as a model to be emulated in the rest of the world, Michael Moore praising his use of oil for political purposes, Danny Glover celebrating him as a “champion of democracy.” His successor, Nicolás Maduro, continued in the Chávez vein, and even as basics such as food and toilet paper disappeared the American Left hailed him as a hero, with Jesse Myerson, Rolling Stone’s fashionable uptown communist, calling his economic program “basically terrific.”

Some of the more old-fashioned liberals at The New Republic voiced concern about Venezuela’s sham democracy, its unlimited executive authority, political repression, the hunting down of government critics, the stacking of elections and the government’s perpetrating violence inside polling places — but Myerson insisted that Venezuela’s “electoral system’s integrity puts the U.S.’s to abject shame.” Never mind that opposition leaders there are hauled off to military prison after midnight raids. Vice President Biden, who can always be counted on to cut straight to the heart of any political question, ran into Maduro in Brazil and, noting the potentate’s thick mane, commented: “If I had your hair, I’d be president of the United States.” Tragically for the Sage of Delaware, hair transplants don’t work that way.

That is all going down the memory hole. The Obama administration has announced economic sanctions on Venezuela’s rulers and its intelligence agents, citing the “erosion of human-rights guarantees” – erosion, as though this were something new, as though Hugo Chávez hadn’t been a tyrant back when President Obama’s ally Representative Fattah was carrying his political water all over the eastern seaboard. In the New York Times’ account of Venezuela’s woes and Maduro’s misrule, there is no mention at all of the critical role the American Left played in lending legitimacy to Chavismo, of the so-called liberals and progressives who denounced legitimate protests against Maduro’s brutality as nefarious U.S.-backed coup attempts, who remained — and remain — silent on the regime’s censorship, political repression, torture, and economic incompetence.

Memory holes go with leftism, too.

JOEL KOTKIN: U.S. Economy Needs Hardhats Not Nerds.

One consistent theme of blue-state pundits, such as Richard Florida, is that blue states and cities “are pioneering the new economic order that will determine our future.” In this assessment, the red states depend on an economy based on energy extraction, agriculture and suburban sprawl. By this logic, growing food for mass market consumers, building houses for the middle class, making cars, drilling for oil and gas—all things that occur in the red state backwaters—are intrinsically less important than the ideas of nerds of Silicon Valley, the financial engineers of Wall Street, and their scattered offspring around the country.

But here’s a little problem: these industries do not provide anything like the benefits that more traditional industries—manufacturing, energy, housing—give to the middle and working classes. In fact, since 2007, according to the Bureau of Labor Statistics, the information and technology sectors have lost more than 337,000 jobs, in part as traditional media jobs get swallowed by the Internet. Even last year, which may well prove the height of the current boom, the information and technology industry created a net 2,000 jobs. And while social and on-line media may be expanding, having added 5,000 jobs over the last decade, traditional media lost ten times as many positions, according to Pew.

In contrast, energy has been a consistent job-gainer, adding more than 200,000 jobs during the same decade. And while manufacturing lost net jobs since 2007, it has been on a roll, last year adding more than 170,000 new positions. Construction, another sector hard hit in the recession, added 213,000 positions last year. The recovery of these industries has been critical to reducing unemployment and bringing the first glimmer of hope to many, particularly in the long suffering Great Lakes region.

These tangible industries seem to be largely irrelevant to deep blue economies. A prospective decline of energy jobs, for example, does not hurt places like California or New York, which depend heavily on other regions to do the dirty work. Overall, for example, California, despite its massive energy reserves, created merely 15,000 jobs since 2007, barely one-tenth as many as in Texas. Energy employment in key blue cities such as New York and San Francisco has remained stagnant, and actually declined in Boston. . . .

The new ephemera-based economy thrills those who celebrate a brave new world led by intrepid tech oligarchs and Wall Street money-men. The oligarchs in these industries have gotten much, much richer during the current recovery, not only through stocks and IPOs, but also from ultra-inflated real estate in select regional areas, particularly New York City and coastal California. As economist George Stiglitz has noted, such inflation on land costs has been as pervasive an effect of Fed policy as anything else.

Even in Houston, some academics hail the impending “collapse of the oil industrial economy,” even as they urge city leaders to compete with places like San Francisco for the much ballyhooed “creative class.” Yet University of Houston economist Bill Gilmer notes that low energy prices are driving tens of billions of new investment at the port and on the industrial east side of the city. This growth, he suggests, may help offset some of the inevitable losses in the more white collar side of the energy complex.

The emergence of a new ephemera-led economy bodes very poorly for most Americans, and not just Texans or residents of North Dakota. The deindustrialized ephemera-dominated economy of Brooklyn, for example, has made some rich, but overall incomes have dropped over the last decade; roughly one in four Brooklynites, overwhelmingly black and Hispanic, lives in poverty. Similar patterns of increased racial segregation and middle class flight can be found in other post-industrial cities, including one-time powerhouse Chicago, where areas of concentrated poverty have expanded in recent years.

Nowhere is this clearer than in ephemera central: California.

The rich get richer, the poor get poorer, and the middle class gets squeezed. Hope and change!

IT SUCKS. Venezuela’s Bishops Have A Message For Pope Francis on Communism.

In a refreshingly powerful and direct statement, Venezuela’s bishops Monday blamed “Marxist socialism” and “communism” by name for the horrors and chaos gripping their country, according to a story in El Universal.

The bishops said the long lines of people trying to buy food and other basic necessities and the constant rise in prices are the result of the government’s decision to “impose a political-economic system of socialist, Marxist or communist,” which is “totalitarian and centralist” and “undermines the freedom and rights of individuals and associations.”

The Venezuelan bishops specifically stated that the private sector was critical for the well being of the country. The document, read by Monsignor Diego Padron in Spanish, said the country needs “a new entrepreneurial spirit with audacity and creativity.”

So not only did these bishops diagnose the cause of the misery correctly; they also warned that communism harms the poor most of all.

This should be obvious, even to an Argentine.

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IT’S AS IF MARKETS ENCOURAGE COMPANIES TO GIVE PEOPLE WHAT THEY WANT, AT LOWER PRICES, OR SOMETHING: Whole Foods’ Success Breeds Competitors, Squeezes Profit Margins. “The problem is that at Whole Foods, shoppers have been paying way over the cost of regular produce, and its success in getting them to do so has now attracted a lot of competitors, from rival organics chains like Sprouts and Trader Joe’s to mass-market retailers like Walmart and Costco. As a result, the price premium for organic produce is crashing down. On a recent shopping trip, a pound of organic apples cost $2.99 at Whole Foods but just $1.99 at Sprouts and even less at Costco.”

BUT DON’T WORRY, INFLATION IS NO THREAT: As Food Prices Rise, Fed Keeps a Watchful Eye.

JAMES TARANTO: Walmart and Welfare: Low-wage employers aren’t to blame for food stamps.

David Tovar, Walmart’s vice president for corporate communications, certainly earned his paycheck last week by preparing a devastating Harpers magazine-style annotation of a column by the New York Times’s Timothy Egan. Egan denounced Walmart for poor corporate citizenship, a metaphor that he seems to take literally: “As long as the Supreme Court says that corporations are citizens, they may as well act like them.”

(As an aside, that’s an embarrassing error Tovar doesn’t correct. The court has never said corporations are citizens. Presumably Egan has in mind the court’s findings that the government may not infringe on free speech merely because it comes from an incorporated organization. But the right to free speech–unlike, say, the right to vote or run for office–belongs not only to citizens.) . . .

This columnist has no particular interest in Walmart, apart from shopping there on occasion, but we’d like to take a deeper conceptual look at Egan’s argument, which is far from original to him (we rebutted a version of it last month).

The complaint about food stamps (and other welfare programs) seems to be an effort at a cross-ideological appeal. Normally the left not only doesn’t object to food stamps but claims that objections should be out of bounds: In 2011, as the Daily Caller noted, MSNBC’s Chris Matthews accused Newt Gingrich of “talking in this dog whistle like the white racists” because Gingrich had called Barack Obama “the food stamp president” owing to the explosion in the number of beneficiaries during his presidency. But all taboos are off when liberals can vilify a big corporation, especially one they see as déclassé.

The notion is that food stamps amount to a sort of corporate welfare for Walmart and other employers of low-wage workers. But that makes no sense.

Walmart, after all, does not set eligibility standards for food stamps, a program created by Congress and administered by the U.S. Department of Agriculture. The benefits go to individuals with low incomes, whether they work or not. (True, Walmart is an indirect beneficiary of the food-stamp program in its capacity as a retailer of food. But its critics never give it credit for helping beneficiaries stretch their food-stamp dollars by selling food at low prices.)

Contrary to Egan’s needlessly repeated claim, Walmart does not force anyone to collect food stamps. Those who are eligible need not enroll in the program, and Walmart employees who are eligible would not lose their eligibility by quitting.

But it’s a Democratic talking point.

JOEL KOTKIN: Stop favoring investors, speculators over middle class.

I, like most members of the middle class, particularly in California, just paid a tax bill that seemed less like my fair share than a shakedown by the Mafia. Increasingly, for people who run small businesses or earn a decent income, the tax bite is becoming ever more like in Europe, with total bills in high-tax states like ours reaching upward of 40 percent. It’s like paying the bill for a big dinner without eating the food – we get hammered like Swedes but without the free education, health care and other benefits of a more conventional welfare state.

Most galling is that, while the middle class has endured ever-higher taxes, those who have benefited most from the Bernanke-Obama “recovery” continue to get the biggest tax breaks. This is largely the investor class, who have been able to reap the benefits of the stock-market boom and, in some areas, including coastal California, the steep rise in real estate prices.

Of course, the rich and corporations have all sorts of ways to avoid taxation – like offshore accounts – but the real class divider is capital gains. Today, long-term capital gains are taxed at the federal level at a maximum 20 percent, while the small-business owner, writer, consultant or professional, if they do relatively well, are stuck with income tax rates up to 39.6 percent, approaching twice that level.

Overall, you don’t have to be super-rich to be hit. The portion of the tax burden absorbed by the top 20 percent of earners has grown – a California family with an income of $150,000 would qualify – from 65 percent to 90 percent. Even worse off are younger families, which generally have less to invest and have been stuck with a tepid job market; from 2007-10, households of people under age 40 have seen their net worth drop, while older Americans have now recovered most of their losses from the economic downturn.

You know what else helps investors and speculators but not the middle class? Open borders. Plus:

[I]ronically, one wonders where the class warriors of the Left are on this. They have become increasingly bold (or honest) in stating that we should continue raising taxes on the middle and upper-middle classes, as a recent New Republic piece suggests, but seem less than vehement about equalizing taxes on capital gains and other income.

This may have something to do with the shift in backing for “progressive” causes coming from the very people – Wall Street traders, venture capitalists and tech executives – who benefit most from the capital gains scam. The confluence of big money and populist rhetoric is epitomized by New York’s powerful senior senator, Charles Schumer, who has made a career of both raising money from Wall Street financiers and defending preferential treatment for their outsized profits. Their growing power over the party of ever-expanding government leaves only one place to finance Democrats’ ambitious plans – the middle and upper-middle classes.

I don’t hold all that much hope that reform will be pushed by most Republicans either, since they for far longer have been the party of accumulated wealth. But, as far as I can see, it is mainly conservatives, such as retiring Congressman Dave Camp, who seem ready to embrace the notion that taxes should be equalized between income and investment within the context of a flatter revenue system.

While we’re at it, can we repeal the Hollywood Tax Cuts?

FOOD INFLATION: Beef, Pork And Shrimp Prices Soar To Record Highs.

HOW’S THAT HOPEY-CHANGEY STUFF WORKIN’ OUT FOR YA? (CONT’D): CBS News: Food Prices Soar As Incomes Stand Still.

ConvergEx market strategist, Nick Colas, said that mothers could tell the government a lot about inflation.

“Food inflation is far greater than the government thinks it is,” he said.

But the big problem for families: Wages are not budging.

“If my income isn’t going up, how am I going to keep up with inflation?” Singer asked. Median income is up only 1 percent a year. For Singer, that makes it hard to save for college tuition – which has been rising 6 percent to 8 percent every year for five decades.

“The price of college is terrifying and so we’re looking at cheaper schools or scholarships, I hope,” she said. “You know, ‘Run faster in track.’ That will really help me out a lot.”

Many are concerned that while economists paint a benign picture, middle-class families are quietly struggling.

You know who’s not concerned? President Obama, who cranks the thermostat, eats Wagyu beef, and golfs on private courses while moms like Jen Singer turn the heat down and only buy bacon when it’s on sale.

JAMES TARANTO: Punishment for Gluttons: Why our diets are hard to police.

The reason that gluttony is a problem–the reason people tend to crave more food than is healthy (at least in the long term) to eat–is biological. Our ancestors had no Costco or McDonald’s; conditions of food scarcity were frequent enough that natural selection favored the instinct to eat when food was available and the capacity to store nutrients as fat as a protection against lean times.

If Bruni had omitted obesity from his discussion of Costco, it would have been a paean to the glory of the free market. Not only is the average American free from worry about famine or malnutrition; he can purchase vast quantities of good food at low prices. Even an indigent American has access to plentiful food via government programs like food stamps and school lunches.

What we are describing is not a market failure or a government failure, but a massive success of both the free market and redistributionist welfare policies, thanks to which no one in America need go hungry. The problem is that the human body is not optimally designed for conditions of such plenty. If you simply follow your appetites, you’re likely to get fat. Eating healthy requires knowledge, cognitive ability and self-discipline.

Can government regulation help? Probably not much.

The people who run our governments aren’t very good at self-discipline. What suggests that they might be able to instil in others what they so thoroughly lack themselves?

DON’T THEY CARE ABOUT THE CHILDREN? WILL NO ONE THINK ABOUT THE CHILDREN? HEARTLESS. The Hill: Democrat’s latest farm bill strategy: Threaten to double the price of milk.

The top Democrat on the House Agriculture Committee has launched a new strategy for passing a farm bill this year: threaten to send milk prices skyrocketing.

Rep. Collin Peterson (D-Minn.) said he called Secretary of Agriculture Tom Vilsack this week suggesting that the agency begin the process of implementing the 1949-era dairy policies that would take effect Oct. 1 if Congress fails to act on a farm bill before then. . . .

The 1949 law requires the Agriculture Department to manipulate the dairy market in such a way that milk is priced at a floor of roughly $39 per 100 pounds – a figure that would lead milk prices to roughly double at today’s rates.

Peterson’s strategy is not to see that happen, but to rouse the affected industry groups – particularly the powerful International Dairy Foods Association (IDFA) – into pressuring Speaker John Boehner (R-Ohio) and other GOP leaders to enact a bill preventing the cost hike.

I think that Collin Peterson just wants to starve poor children. Because he’s mean. I mean, that’s how all the press coverage would go if he were a Republican, so . . . .

CRIME AGAINST HUMANITY: EU Ethanol Fuels Boondoggle Raising Global Food Prices. “Getting rid of biofuel programs would cut Europe’s food costs in half by 2020, and lower global food prices by 15 percent.”

Hey, it’s not me calling it a crime against humanity. It’s a United Nations expert.

EVERGREEN HEADLINE: Ethanol Still A Boondoggle.

The ethanol targets set by the Renewable Fuel Standard are out of sync with both the demand for ethanol and its potential supply. Gasoline consumption is projected to be relatively flat this year, a change that the Renewable Fuel Standard lacks a mechanism to account for. This shortfall in demand could potentially be fixed if producers up the percentage of ethanol they mix in with their gasoline past the current industry standard of 10 percent, but few oil companies are willing to move past this so-called “blend wall,” citing studies that link higher ethanol content with engine damage. Even if refiners started blending in more ethanol, the supply problem remains: this year’s supply is projected to be less than the mandate.

All of this explains why oil companies are snatching up increasingly-rare RINs at ever-higher prices. Oh, the RIN-sanity!

This is a mess even before you consider the foibles of the source of the lion’s share of this ethanol: corn. Before the Renewable Fuel Standard set these arbitrarily high targets, the US used just 23 percent of its corn to produce ethanol. Last year 43 percent of our corn crops went towards producing the biofuel. That shift has driven up global prices for corn, starving the world’s poor and potentially fueling food riots. And to what end? Corn ethanol is categorized as a biofuel, but it doesn’t reduce emissions. Advanced biofuels produced from such sources as sugarcane and algae pass the green test, but they haven’t yet proven their commercial viability.

It’s a crime against humanity. When do the trials start?

UPDATE: Reader J. Johnson writes:

Something that very seldom is mentioned in re the ethanol boondoogle is the profound effect the ethanol mandate has had on land prices in the midwest USA. The impact of ethanol on corn prices has been monumental, with average prices per bushel nearly double (and sometimes much more than that) what they were prior to the ethanol mandate. In turn, this has driven the prices of ‘corn ground’ profoundly higher, such that there are now hundreds of thousands of acres in the midwestern corn belt and elsewhere with prices (as much as $12,000/acre) which are completely unsustainable if the mandate was eliminated or substantially rolled back. It would result in a farm-belt crisis akin to what happened in the early 1980’s when tens of thousands of farmers went bankrupt when land prices collapsed.

A ‘partner in crime’ in this fiasco is Bernanke, whose zero interest rate policy has allowed farmers, bankers and speculators to pay exhorbitant prices for farm ground that is used strictly for producing corn for ethanol and servicing of the enormous debt associated with much of this acreage depends totally on continuation of the ethanol mandate. This mostly hidden debt bomb probably explains why the mandate not only continues, but is possibly going to get even more onerous. There are just too many money men who have too much to lose if anything changes.

Seems like it’s market-distorting cronyism all the way down, these days.

WELL, REMEMBER, THE DEMS CAN’T EVEN PASS A BUDGET ON TIME: Acing the SNAP Challenge: GOP communications director eats for $4.50 per day.

A Republican hill staffer participated in a publicity stunt designed to bring awareness to the plight of food stamp recipients by spending only as much money on food in a week as the federal food stamp program provides.

The SNAP Challenge, as it’s called, referring to the Supplemental Nutrition Assistance Program, isn’t as difficult as many Democrats claim, he says.

“I wanted to personally experience the effects of the proposed cuts to food stamps,” said Donny Ferguson, communications director and agriculture policy adviser for Rep. Steve Stockman (R., Texas), in a news release.

“I didn’t plan ahead or buy strategically, I just saw the publicity stunt and made a snap decision to drive down the street and try it myself,” Ferguson said. “I put my money where my mouth is, and the proposed food stamp cuts are still quite filling.”

About thirty Democrats have said they will participate in the SNAP Challenge, which requires participants to eat on only $4.50 per day, or $31.50 per week. . . .

Ferguson says Democrats are playing up the difficulties of the challenge in order to boost the political case for increasing food stamp benefits.

“Not only did I buy a week’s worth of food on what Democrats claim is too little, I have money left over,” Ferguson said.

“I didn’t use coupons, I didn’t compare prices and was buying for one, instead of a family. I could have bought even more food per person if I were splitting $126 four ways, instead of budgeting $31.50 to eat for one.”

Or you could just raise your debt limit and buy whatever you want on credit. We’ll call that the OBAMA Challenge.

HIGHER EDUCATION BUBBLE UPDATE: Obama and Elizabeth Warren Feed the College Beast.

The proposals put forward by Obama, House Republicans, and Senators Jack Reed (D-RI) and Dick Durbin (D-IL) would tie student loans to the market rate (either the 10-year or the 91-day Treasury rate), though each with its own variation. The boldest plan, from new Senator Elizabeth Warren (D-MA), would reduce student loan rates to .75 percent (the rate at which banks borrow from the Federal Reserve) for one year.

These proposals would offer students some relief, but none of them address the core problem that rising college tuition rates are closely linked to the increased availability of government loans. Stafford loans have been around for just over forty years, and over the past thirty, college tuition and fees surged 1,120 percent—four times faster than the consumer price index, more than medical or food prices. And this isn’t all due to a rising cost of teaching: Colleges have used their newfound wealth to bloat their administrative ranks and spend lavishly on construction projects.

These new student loan proposals, particularly Warren’s, will only feed the higher education beast. Perhaps lawmakers should give more thought to policies that would increase price competition among universities and drive down costs.

I think making them bear some of the loss in defaulted student loans would help.

MIKE BLOOMBERG HARDEST HIT: Denmark Repeals Fat, Beer & Soda Taxes. “Ultimately, the taxes simply drove up food prices and put jobs in jeopardy.”

AMERICA AT AN “END STAGE METASTASIS”?:  So says David Stockman, former budget director under Reagan, in this provocative NY Times op-ed.  Stockman asserts:

Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.

These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.

Anyone wanna chip in and split the cost of buying an island somewhere and starting our own country?

THE CRUCIAL WORD NOT APPEARING IN THIS ARTICLE ON WALMART’S STAFFING WOES: “And what is that word?”, Moe Lane asks. “Why, it’s Obamacare:”

Walmart has earned this.  By supporting Obamacare in the first place the company decided to put politics above its mission statement, which is to sell reasonably sturdy consumer goods to middle and lower income workers at reasonably cheap prices.

You would have thought they’d have learned their lesson in 2011, when Wal-Mart backed away from supporting Al Gore’s environmentalism:

The failure, in large part, can be pinned to Leslie Dach: a well-known progressive and former senior aide to Vice President Al Gore. In July 2006, Dach was installed as the public relations chief for Wal-Mart. He drafted a number of other progressives into the company, seeking to change the company’s way of doing business: its culture, its politics, and most importantly its products.

Out went drab, inexpensive merchandise so dear to low-income Americans. In came upscale organic foods, “green” products, trendy jeans, and political correctness. In other words, Dach sought to expose poor working Americans to the “good life” of the wealthy, environmentally conscious Prius driver.

* * * *

Like other real-world experiments, the Wal-Mart story exposes the failure of progressivism in the marketplace, as the Dach strategy has been a fiasco: the merchandising turned off low-income (and largely Democratic-leaning) customers. Says former Wal-Mart executive Jimmy Wright:

The basic Wal-Mart customer didn’t leave Wal-Mart. What happened is that Wal-Mart left the customer.

Wal-Mart seems determined to live out at least two of Conquest’s Laws:

1. Everyone is conservative about what he knows best.

2. Any organization not explicitly right-wing sooner or later becomes left-wing.

3. The simplest way to explain the behavior of any bureaucratic organization is to assume that it is controlled by a cabal of its enemies.

Lather, rinse, and repeat, at least until you realize that appeasing your enemies does not make them your friends. (Or you run out of customers.)

UNINTENDED CONSEQUENCES: Ethanol Mandates Are Making Super Bowl Chicken Wing Buckets Go Bye-Bye. “According to Gallup, nearly 76% of Americans say higher food prices are hurting their family’s finances, and this year’s Super Bowl festivities will be the latest manifestation of that fact. Prices are only estimated to get even higher. Converting 40% of our animal feed to gasoline because of the renewable fuel standard is not helping consumers or their pocketbooks, as misguided energy policies continue to ‘peck’ away at our recovery.”

HEY KIDS, WHAT TIME IS IT? Time to Defuse the ‘Food Bomb’ in Farm Policy. “Unless Congress acts, food prices could spike by 40%-100%.”

ANDREW MORRISS: Ethanol Scam Driving Up Food Prices. “An inconvenience for wealthy people, rising corn prices are disastrous for the poor, at home and abroad.”

STARVING THE WORLD’S POOR TO FEED GREEN BIOFUELS:

To make things worse: evidence suggests that the corn ethanol program, for the sake of which callous greens condemned the world’s poor to higher food prices, is a failure even on environmental terms and fails to reduce greenhouse gasses.

We’re betting that this news won’t dent greens’ self-confidence. They will still insist that unless they are put in charge of the entire world economy we face disaster. The sad truth is that the more power they get, the more damage they do.

The world needs a smart green movement. Barring that, a green movement that bothered to think through consequences and make a serious cost benefit analysis on its proposals would be an immense improvement over the shambles we have now.

It’s about control. And if people starve, that’s not a bug, but a feature, because they don’t much like people.

UPDATE: More on trading food for fuel.

ANOTHER UPDATE: Ramirez illustrates.

HOW’S THAT ARAB SPRING THING WORKIN’ OUT FOR YA? “At a central Cairo produce market, vendors have increased prices for green beans by 33 per cent, tomatoes by 50 per cent and zucchini and bananas by 100 per cent. Imported coffee prices have risen more than 20 per cent. The price of bread, a staple of the Egyptian diet, has gone up by 20 per cent in poor neighbourhoods and by even more in well-to-do areas.”

Walter Russell Mead comments: “Most Egyptians live very close to the margin; a 20 percent rise in the price of bread means that many people will be eating fewer calories and giving less food to their kids. For people in this situation, the only important political question is the availability of the basics you need for survival. The Muslim Brotherhood promised change; so far, the change involves mostly belt-tightening.”

As I’ve noted before, when you import half your calories, you shouldn’t be discouraging tourism, which is what brings the foreign exchange. Barbaric laws, mass sexual assaults on foreign women in public places, and general instability don’t do much for tourism.

CHANGE: U.S., Canada, and Oz Prepare for the Asian Gas Wars.

Australia has designs on becoming the leading natural gas supplier for not only Asia, but the entire world. Indeed, the country has the offshore resources and the thirsty markets nearby in Asia to pass Qatar as the world’s top supplier of LNG.

However, Australia’s march towards energy superpowerdom is beginning to run into domestic problems—and new competition. Rising labor costs and high prices in Australia’s booming economy are making it unexpectedly difficult for the Aussies to export their gas and now energy-hungry Asian countries like China and Japan are starting to eye alternative and equally cheap gas from North America. . . .

Whether it’s Australian, American, or Canadian gas that wins the race to the Asian market (and most likely, there is plenty of demand for all three), a few things seem clear:

(1) The long era in which the Middle East was the global supplier of hydrocarbons is coming to an end.

(2) A global switch from coal to natural gas is one of the most practical ways available for civilization to begin the transition to a new kind of energy market. Greens take note.

(3) Asia is not going to be self sufficient in either energy or food in the 21st century, which, from the standpoint of those who hope to see the world becoming a more peaceful and economically integrated place, is a very good thing. The rising Asian powers will need a healthy, stable and secure global system to feed their people and run their economies.

Indeed.

HMM: China’s Inflation Accelerates as Food-Price Gains Quicken.

THEY MAY WORRY, BUT THEY DON’T VOTE LIKE IT: Voters Worry More About Inflation Than You Think. As for this — “the fact that so many people named rising prices was somewhat surprising because consumer prices actually haven’t been rising all that much” — I think that the prices for things people buy regularly like food and gasoline have risen a lot.

TWO DEBATE OBSERVATIONS FROM MICHAEL WALSH:

First, speaking as the son of a Marine Corps officer and the brother of a Navy officer, I think Obama’s “horses and bayonets” wisecrack wasn’t his biggest miscalculation. All that did was lose him the military vote in the Norfolk area and thus, most likely, the state of Virginia. Rather, it was the weird way he kept conflating the war-fighting purpose of the military with “taking care” of the veterans after they come home. Military personnel deeply resent the implication, so earnestly peddled by the bed-wetting civilians at the New York Times, among others, that returning vets are just a PTSD psycho hair-trigger away from going postal. They’re soldiers, Mr. President, not crybabies.

Second, I think the moment that won the debate, and perhaps the election, for Romney came near the end, when Romney was speaking and Obama fixed him with the Punahou Death Stare . . . and Romney just kept right on going, making his points directly to Obama, entirely unflustered by the president’s juvenile tactics. That spoke volumes about the character of the two men and no one who was watching could have missed it.

And from Roger Kimball:

Probably Romney’s single best line last night was “Attacking me is not an agenda,” but his more devastating responses centered on two large issues: the president’s record, which has been an unmitigated litany of failure, and his lack of a coherent plan going forward.

“Forward,” of course, is the president’s campaign slogan, and Romney adroitly turned that around: Yes, we need to go forward, but another Obama term would mean going back to the failed policies that brought you a $16 trillion federal debt ($5.5 trillion added all by his lonesome self in less than fours years), high unemployment, record deficits, record numbers of people on food stamps, high energy prices, etc., etc.

For his part, the president returned again and agin to two themes: 1. it was Bush’s fault (with Dick Cheney thrown in at one point to frighten the children), where by “it” I mean whatever problem is at hand, foreign or domestic: it’s all Bush’s fault, unless there was a success, in which case, the glory is all Obama’s; and 2. we can solve the economic crisis by asking “the wealthy” to pay a little bit more.

Blaming George Bush for anything at this point, four years on, is simply embarrassing, so I will pass over that. But it is worth spending a moment on the president’s aria about “the rich.”

Read the whole thing.

HOPEY-CHANGEY: Global Food Prices Set To Soar–Again. “The last food price bubble triggered riots around the world. Now prices are set to rise again, say complexity theorists.” Weather is blamed, but this is also a consequence of central-bank money-printing, driven by unsustainable spending and borrowing.

“BLOWBACK:” NOW THERE’S A TERM WE USED TO HEAR A LOT: “From the Arabian Spring of hope (although technically protesting soaring food prices, something which is about to happen all over again) to the Arabian Fall of anti-American revulsion in under two years: has to be a blowback record. The latest casualty: the German embassy in Sudan.”

How’s that “smart diplomacy” workin’ out for ya?

Related: Bloody Hand Prints at Consulate Reveal Americans Were Dragged From Building Before Their Death.

Also: Ouch.

Maybe Obama really should fire Hillary. Or maybe she’ll resign to avoid going down with the ship. . . .

UPDATE: Bloody handprints: The defining image of the Obama Administration? “The parable of the scorpion and the frog has never been more applicable.”

With Bush it was purple fingers . . . .

HIGH GAS PRICES: WHO KNEW?

You know, I don’t drive much. I don’t even leave the house much. But sometimes I have to go out, and sometimes I even need to gas up the car, but since I do it infrequently, I’m not always aware of the gas prices.

So, imagine my surprise when I went to my favorite gas station and found “regular” gas running at 4.19 per gallon. Yeah, even higher than that picture!

Yes, I was shocked, and while I pumped my $40 worth, I chatted with the fellow on the other side of the aisle who was watching the digit-counters while shaking his head.

“I hadn’t realized gas had gotten so expensive,” I said.

“You live on Mars?” he asked.

“Well, you know, I’m not even seeing it being reported on in the headlines,” I answered. “I just lost track.”

“That’s true,” he said, as though it was a new awareness. “Usually there are news reports…”

Yeah, there are. Pulling away with my not-full tank of gas, I considered the media silence on these high gas prices, and I began to get mad. Once upon a time — and not that long ago — high gas prices were leading stories on nightly news programs. Grim-faced anchors introduced stories of family budgets becoming strained; earnest reporters shoved microphones into the faces of working people and asked whether they were having to make hard choices. It was all very solemn and serious. People were choosing between food and fuel, and winter was coming, and home-heating oil would likely be sky-high, too, and we all knew whose fault it was, didn’t we?

But now, with gas at $4.19 — higher, near the expressway — here in New York? Not a whisper. Not a headline.

Gosh, if only Mitt Romney had “big oil” pals. We’d hear about this story every night, and I wouldn’t have been so surprised, today.

If only. See, if you want media scrutiny of the regime, you need to elect a Republican president. It’s as simple as that.

CHANGE: Experts Issue A Warning As Food Prices Shoot Up.

FOUR YEARS AGO IS LOOKING PRETTY GOOD: Investor’s Business Daily: Better Off? Let’s Count the Ways We’re Not.

By most measures the country isn’t making slow progress; it’s falling further behind. Some examples:

• Median incomes: These have fallen 7.3% since Obama took office, which translates into an average of $4,000. Since the so-called recovery started, median incomes continued to fall, dropping $2,544, or 4.8%.

• Long-term unemployed: More than three years into Obama’s recovery, 811,000 more still fall into this category than when the recession ended.

• Poverty: The poverty rate climbed to 15.1% in 2010, up from 14.3% in 2009, and economists think it may have hit 15.7% last year, highest since the 1960s.

• Food stamps: There are 11.8 million more people on food stamps since Obama’s recovery started.

• Disability: More than 1 million workers have been added to Social Security’s disability program in the last three years.

• Gas prices: A gallon of gas cost $1.89 when Obama was sworn in. By June 2009, the price was $2.70. Today, it’s $3.84.

• Misery Index: When Obama took office, the combination of unemployment and inflation stood at 7.83. Today it’s 9.71.

• Union membership: Even unions are worse off under Obama, with membership dropping half a million between 2009 and 2011.

• Debt: Everyone is far worse off if you just look at the national debt. It has climbed more than $5 trillion under Obama, crossing $16 trillion for the first time on Tuesday and driving the U.S. credit rating down.

Ironically, the only people better off under Obama are corporate chieftains, who’ve seen corporate profits climb more than 50% under Obama’s “recovery,” and investors, who’ve benefited from a near-doubling in the Dow industrials from its March 2009 lows.

Given this record, we can only hope Obama doesn’t have the chance to get a “complete” on his plans.

Indeed. Oh, what the hell, let’s run that graphic again:

A FOLLOWUP ON FOOD PRICES, from Insta-Reader Deb Call:

I just wanted to weigh in on the food inflation issue with a local data point. I live in Southern Iowa and have a small flock of sheep (12) that I use for weed control in my vineyard. I feed grass/alfalfa hay in the winter months (roughly early November through mid-March), and typically start planning in early summer, for how much hay I’m going to need to have on hand to get the sheep through the winter. I have a hay field that my neighbor cuts and bales for me, and we split the hay (he has the big equipment needed for this job) so I don’t have to go searching for hay, fortunately. Anyway, I was chatting with him the other day and we were discussing the impact of the drought and the small hay yield compared to last year. Last year, I had roughly 36 big round bales (about 1400 lbs each), and solely due to the lack of rain this year, the yield this summer was only 18 bales. That’s a pretty drastic drop and pretty standard for this area under the current conditions. People are scrambling everywhere to get hay lined up for this winter, and not just cattle operators. Craigslist is loaded with horses for sale at fire sale prices because people are having trouble lining up enough hay for this winter, at a price they can afford.

Many farmers in this area are chopping their almost-dead cornfields right now and baling it for winter cattle feed, instead of waiting to harvest it because the ears have not filled with kernels, but the stalks are still useful to feed their cattle. I asked my neighbor what he was doing about the hay issue, and he said he was downsizing his cow herd (sending some of his breeding cows to auction) and a lot of people he knows are doing the same because between the scarcity/cost of hay, and the cost of feeding grain through the winter, he wouldn’t break even. This is an ongoing issue in this area because more and more pasture ground is being planted in corn; even marginal cropland that previously would have been used for grazing cattle. The lower yield of this marginal cropland previously would not have produced enough bushels to justify the per-acre cost of the inputs (fertilizer, fuel, fungicides, herbicides, pesticides, etc), but with corn at $8+ a bushel and soybeans over $17, it’s tempting for farmers to put even marginal ground into production, leaving a lot less ground for grazing. That does not bode well for long-term beef prices, particularly if a lot of cattle are dumped on the market before the end of this year. In spite of the news coverage lately, I’m not sure most people have any idea how widespread the crop losses due to this drought are going to be out here, or the wide range of food items that will be impacted by it.

I’m not happy.

UPDATE: Reader Robin Tilling writes:

I just wanted to second Deb Call’s comments on food prices. I too have a small flock of sheep in upstate NY, which I use for the fleeces (I spin and knit) and meat for my family. I have a hay delivery coming this morning and my provider told me to be prepared for the huge increase in price this year. Upstate NY has also been saddled with a very dry summer, bringing production down significantly, and many farmers are shipping what they have out west as they can command a higher price.

It’s going to be a terrible year for anyone with livestock. I was lucky enough to sell off 60% of my flock at the beginning of the summer, so we’ll be okay, but I am getting emails from the woman I bought my flock from desperate to unload some sheep before winter.

I plan on stocking my freezer this fall in hopes that it will get us through much of next year, otherwise it’s beans for us!

Good luck! But I’d prepare for the worst.

READER PATRICK CARROLL EMAILS ON FOOD PRICES:

I’m the cook for my family, always have been. My wife refused to learn how to cook, while I was taught by a Cypriot Greek when I came to the US to work on my summer vacations while going to university in Ireland.

While working for Sophocles (yes, that was his name), I learned how to cook for large groups of people. Working for Sophocles, the typical recipe started with “Render two sheep into one inch cubes……” This serves me well today, as I make meals for a family. Typically, I cook “by the vat.” I cook a load of food of a single type, and we live off it for the week. Then I do something else. This weekend I was getting ready to cook my vat, so I went to Publix looking for deals. There were great deals on pasta and pasta sauces, so pasta it is for this week. Normally I take the shop pasta sauces and augment them with garlic, mushrooms, onions, other herbs, and ground beef. Weekends are a good time to buy ground beef because you can get the ground beef that’s about to go out of date for a decent price. I’m cooking for a group. Price is a consideration.

This weekend, I found the on-sale (i.e., about to go out of date) ground beef at over $5.00 per pound. This is about 60% over the normal price. I’m buying about half the normal amount of beef and adding more veg (ok, onion) to compensate.

The press may not talk about inflation in food prices, but it’s happening.

Yes, I do our grocery shopping and I’m frequently appalled. The other thing that appalls me is how surreally low the interest rates banks are touting have gotten — 0.5% on a CD! Woohoo! If we had a Republican president, the press would be full of tear-jerking reports about senior citizens being squeezed between rising food prices and rock-bottom interest rates as a result of his horrible economic policies. But since we have a Democrat in the White House, it’s just one of those things that happen, waddyagonnado?

UPDATE: Reader Chris Fox writes: “If you think food prices are high now, wait until you see meat prices next year. We actually expect beef prices to drop as ranchers liquidate their herds this summer after running out of pasture. Corn prices are just too high to profitably feed the cattle and sell them at current beef prices. You’ll get a drop in prices this year, and a spike next year, as the beef glut turns into a shortage. We in the financial industry have been talking about this for months. I’m starting to see articles in the regular papers discussing same.”

Fill your freezer when prices drop. And I guess this is a good time to post that Strategic Shopping link again.

ETHANOL VS. THE WORLD: The corn fuel mandate is raising food prices and hurting the poor.

In 2007 and 2008, food prices spiked, resulting in much higher U.S. grocery bills and far more hunger in the poorest countries as the global supply chain buckled. The world may now be on the cusp of a 2012 reprise amid the drought in the Midwest farm belt, the worst in 50 years. Luckily, there are plenty of simple, modest things Washington can do to alleviate and even prevent another crisis.

The problem is that these fixes are opposed by a minor industry that adds little if any value to the economy, even counting its prodigious Beltway operations. Yup, the ethanol lobby strikes again. It can’t succeed without a mandate that forces consumers to buy its product every time they fill up the tank, and if the resulting corn shortages drive food prices up in a way that punishes consumers around the world, so be it.

They’re politically well-connected.

I BLAME GEORGE W. BUSH: U.S. Drought Could Cause Global Unrest. “USDA needs to figure out a way to remove the mandate on ethanol use from corn . . . . If we could free up 20 to 30 percent of the U.S. crop, reduced as it is, it would bring corn prices down very quickly.”

UPDATE: A reader who requests anonymity emails:

I work for a grain and ethanol company. Our ethanol guys say cutting the ethanol mandate would not solve the supply and demand issue until fuel refiners adjust their blends to remove ethanol. The mandate created ethanol demand which will be difficult to “unwind.” I don’t believe it is easy and I know it is not cheap. I think the comparison is somewhat similar to the problems with switching from winter to summer gasoline blends but on steroids. The government would need to mandate limits to blending ethanol to cut use (unless corn prices get really stupid). Think this will happen in the fall of an election year ? With real corn supply problems meat prices will not get silly until next year. Herd/flock liquidation may depress meat prices in the short run. Buy a freezer.

Getting more discussion in the grain trade is the issue of aflatoxin. The weather in the corn belt makes this a likely problem. Corn over 20 ppb aflatoxin has very limited uses. What is “available” may not be entirely usable.

Ugh.

CHANGE: Corn and soybeans hit record highs, stir food crisis fear. “Corn prices crossed into uncharted territory above $8 per bushel — about three-and-a-half times the average price 10 years ago of $2.28. Soybeans punched past $17 for the first time — also three-and-a-half times the 2002 average. Analysts said that while forecasts for continued dry weather are expected to sustain the rally, corn prices could be vulnerable to any move by the government to lower the amount of corn-based ethanol blenders are required to mix with gasoline. Even as chatter about a possible revision of the ethanol mandate has escalated, U.S. Agriculture Secretary Tom Vilsack, the former governor of top farm state Iowa, has ruled out such a move.”

Related: World Braced for New Food Crisis.

The drought in the US, which supplies nearly half the world’s exports of corn and much of its soyabeans and wheat, will reverberate well beyond its borders, affecting consumers from Egypt to China.

“I’ve been in the business more than 30 years and this is by far and away the most serious weather issue and supply and demand problem that I have seen by a mile,” said a senior executive at a trading house. “It’s not even comparable to 2007-08.”

David Nelson, global strategist at Rabobank, added: “Today the [US crop] disaster is real, whereas to some degree the big run-up in prices in 2008 was speculatively driven.”

Oh, goody.

MORE ON THE DROUGHT AND FOOD PRICES: Reader Peter Behlen writes:

I farm in western Minnesota where we’re still hanging in there with decent crops though we haven’t had rain for a month. Just because it doesn’t match the drought of the 1930’s doesn’t mean it isn’t dry. The biggest problem is where it’s dry. Right in the corn belt. Corn is above $7.00 and will most likely continue to rise. Price increases for food are inevitable I think. There’s even been talk of eight to ten dollar corn which would be a disaster. Most of us don’t want corn to run that high since it would have many undesirable effects. Anyway, the drought is real and may be coming to a grocery store near you.

Time for more strategic shopping. And Spam!

UPDATE: Farmer/reader Bart Hall writes:

Here in eastern Kansas the corn crop is pretty well a goner, browned off with empty ears. A dry lightning strike could set of one hell of a fire. Trees are dying; these days they’re competing vigorously for the attentions of our four dogs. Any President with half the common sense of a fencepost would issue an Executive Order immediately suspending all fuel ethanol production, but Obama doesn’t have that much sense, and besides he’s long since been bought by ADM, by far the nation’s largest ethanol producer and (ever since his campaign for the Illinois state senate) at or near the top of Obama’s contributor list. Cronyism is sometimes the things that DON’T happen, and I’ll guarantee that ADM has long since contracted its entire corn feedstock supply at vastly lower prices. Farmers will have to purchase 10-dollar corn to fulfill a 4-dollar contract, and it will destroy them.

On our own farm (we grow vegetables and alfalfa) it’s not just the drought, but the unrelenting triple digit heat. Last Thursday, when it was 109 F in the shade here, I took a meat thermometer out into our cucumber field. The internal temperature of those cukes was 162 F — well done for beef. By the next morning many were split, having obviously exploded because they got to boiling and their water turned to steam. It’s going to be a long, desperately difficult year, but I guess because I refuse to take government subsidies I don’t deserve to succeed.

Ugh.

ANOTHER UPDATE: Reader Brett Law writes:

I haven’t seen it getting a whole lot of attention, but the August 2012 spot price for fuel ethanol is $2.65 today. It was $2.20 two weeks ago. A number of ethanol plants have been temporarily closed due to rising prices. Gasoline, unsubsidized has been trading at $2.70 – $2.90 per gallon wholesale for most of the summer. These streams look likely to cross in the near future. This is interesting because at some point the “cheap” ethanol that is in our gasoline may become the floor for gas prices.

Well, at 10-15% ethanol, I’m not sure how big an impact this will have, but it won’t help.

FOR EVERY PROBLEM, THERE’S A SOLUTION!:  Governing through the eyes of progressives: An overview

Problem (Americans are….)/Progressive Solution:

Too fat?  Ban bake sales and junk food; mandate broccoli

Too ignorant?  Censor journalists; control the curriculum

Too rich?  Tax the greedy bastards

Too white?  Favor non-whites whenever possible

Too individualistic?  Encourage dependency

Too uninsured?  Mandate health insurance

Too carbon-y?   Ban incandescent lightbulbs; loan billions to friends who start “green” companies; cap and trade; demonize energy consumption

Too unemployed?  Raise taxes to pay for temporary government jobs; discount jobless numbers by excluding those who have given up on finding a job

Too American?     Cede U.S. sovereignty to supra-national U.N. bodies whenever possible; use international and foreign law when interpreting the U.S. Constitution

MATT WELCH: When Losers Write History: Why legacy-newspaper media reporters get their own industry so wrong.

Imagine for a moment that the hurly-burly history of American retail was chronicled not by reporters and academics but by life-long employees of A&P, a largely forgotten supermarket chain that enjoyed a 75 percent market share as recently as the 1950s. How do you suppose an A&P Organization Man might portray the rise of discount super-retailer Wal-Mart, or organic foods-popularizer Whole Foods, let alone such newfangled Internet ventures as Peapod.com? Life looks a hell of a lot different from the perspective of a dinosaur slowing leaking power than it does to a fickle consumer happily gobbling up innovation wherever it shoots up.

That is largely where we find ourselves in the journalism conversation of 2012, with a dreary roll call of depressive statistics invariably from the behemoth’s point of view: newspaper job losses, ad-spending cutbacks, shuttered bureaus, plummeting stock prices, major-media bankruptcies. Never has there been more journalism produced or consumed, never has it been easier to find or create or curate news items, and yet this moment is being portrayed by self-interested insiders as a tale of decline and despair.

It is no insult to the hard work and good faith of either newspaper reporters or media-beat writers (and I’ve been both) to acknowledge that their conflict of interest in this story far exceeds that of, say, academic researchers who occasionally take corporate money, or politicians who pocket campaign donations from entities they help regulate, to name two perennial targets of newspaper editorial boards. We should not expect anything like impartial analysis from people whose very livelihoods—and those of their close friends—are directly threatened by their subject matter.

This goes a long way toward explaining a persistent media-criticism dissonance that has been puzzling observers since at least the mid-1990s.

Read the whole thing.

THIS IS ONLY NEWS TO PEOPLE WHO DON’T BUY THEIR OWN GROCERIES: Food inflation seen back on the table as prices rise. I do most of our grocery shopping, and frankly I’m not super-careful about prices, but even I have been shocked by how much more things cost. Maybe it’s time for strategic shopping. Anyway, I’m pretty sure that this, along with skyrocketing gas prices, is why the White House would rather have people talk about hoodies and birth control.

UPDATE: Reader Greg Beairsto writes:

Not only are food prices suffering from inflation, the actual amount of food in the various packages is suffering from deflation. The standard 5lb bag of sugar from C&H is now 4lbs. Buy a pack of fun size candy bars and they rattle around in the packaging. Ounces and pounds are now missing from lots of different packaged foods. Any way it happens, the price per ounce is going up on just about everything.

We’ve also noticed a decline in serving sizes, particularly at ice-cream places. Smaller scoops for the same price . . .

WHAT MITT ROMNEY REALLY SAID. “Romney as the nominee will be flyspecked and criticized over every word. He needs to avoid actual gaffes. But he can’t keep the media from editing out all the inconvenient parts of every sentence, paragraph and interview. He’ll need to work on talking directly to voters, making his case in ads and debates. The good news for him, at least in the primary, is that the media that are predisposed to pounce on every (other) word and offer the most negative interpretation of his every statement and performance appear to have zero influence among voters.”

Frankly, I think he’s got a point. People whose livelihood comes from the government — whether the very poor, or the government employees — are doing fine. It’s people who depend on the actual economy who are hurting.

Meanwhile, my call for “shared sacrifice” back in 2008.

UPDATE: Reader Jeffrey Hollister writes: “I wonder if anyone has passed along your wise advice to Team Romney: always have your own video crew recording everything whenever the MSM’s cameras are rolling.”

I may be wrong, but I don’t think a lot of folks there read InstaPundit.

MORE: Bill Quick says I’m wrong. But the “very poor” on government assistance, while they have serious problems, haven’t been hit by the economic downturn the way the middle class has.

STILL MORE: Brian Epps says Bill Quick is right and I’m wrong:

The very poor have to spend more, as a percentage of their income, on food and transportation than those better off. When one considers the fact that gas and food prices have risen dramatically in the last three years with no end in sight, I’d say that there is reason to be concerned about the very poor.

While income inequality has dropped in recent years in dollars, in terms of actual buying power, the poor have had their incomes slashed by Obama’s inflation tax on necessities. Even if one wants to get out of the hole and off the dole, the path to self-reliance has had caltrops tossed on it with the increase in minimum wage and the current policies that discourage hiring, especially on the low-wage, low-skill level most of the very poor are qualified for.

Good point.

HOW’S THAT HOPEY-CHANGEY STUFF WORKIN’ OUT FOR YA? (CONT’D): Soaring Beef Prices Force Shoppers To Find Other Foods.

BUT REMEMBER: WITHOUT REGULATORS, WE’D ALL BE EATING POISONED MEAT. The Failure of the FDA: Why We’re Still Using Antibiotics on Livestock. “For more than 35 years, the FDA has recognized that giving antibiotics to farm animals poses a risk to human health, yet the agency has done almost nothing to stop it. Indeed, it has mastered the art of making inaction look like action.”

UPDATE: Ric Locke emails: “The FDA fulfills its intended purpose marvelously well. That is, it keeps riffraff competitors from bothering the Big Important Food And Drug Companies, and provides a near-unending set of opportunities to cross a politician’s palm with silver.”

ANOTHER UPDATE: Researcher William Eichinger thinks this is misleading:

With regards to your comments on the FDA. Let’s be real for just a moment. We use a great deal of animal products, that is the reality. For example, we use roughly 700 million eggs a day in the US. Can you imagine supplying that many eggs each and every day without massive use of automation? The use of automation pretty much precludes “free range” egg layers. So we end up with buildings in which 5000 or so hens are laying. The reality is that if one of those hens gets sick, all of them do (think of preschoolers, the same effect. One of them is sick and the whole class is sick). Entry into these buildings is highly controlled and contrary to the article, the operations are quite hygienic. People who enter wear clothing that limits contact. These farmers use the drugs to keep them healthy. Ascribing nefarious motivations is not productive and is insulting to what these people are trying to do. We haven’t even talked about the health issues associated with the alternative, “free range” eggs; eggs that are laid pretty much everywhere and are decidedly not hygienic. Not to mention issues related to finding, collecting, and processing these eggs at anything like reasonable prices.

Similar arguments for hogs and cattle. I don’t like the situation either. But it is unreasonable to expect farmers to produce the amount of animal products that we use every day without “factory” type farming. These farmers are doing the best they can (and while I am no fan of the FDA, just banning the use of these drugs is not going to be helpful).

Bill

Just for the record, part of my research concerns the airborne emissions from these facilities. So I have met and worked with quite a few of these people. They try to do the “right thing”, but just what that is is not always clear.

Noted.

WHAT THE WORLD NEEDS: Booming Food-Price Volatility. “With non-existent wage growth and a dearth of investment opportunities, these price advances in food costs have much more impact than it appears. What asset classes are keeping pace with the year-over-year increases in food? . . . On a year-over-year basis through November, according to USDA, beef prices are up 9.8%, egg prices are up 10.25%, and potato prices are up 12%.”

Buy a freezer, clear out some pantry space, and start your strategic shopping.

UPDATE: Reader Alysia Lucas writes: “Thanks for linking the strategic shopping article. I just blast emailed it to my friends and family. I’m not much of a couponer so this information will come in handy (but now I’ll need to invest in a backup generator for the freezer!)” I just fill the empty space in mine with those “blue ice” things, but we don’t get many (or lengthy) power outages around here. But yeah, that’s a great post, which is why I’ve linked it a couple of times. Well, that along with my expectations for the coming year . . . .

Meanwhile, reader Linda White emails: “Professor, for long term freezer storage (in excess of a couple of months in Ziploc freezer bags), it is essential to freeze food in vacuum sealed bags to prevent freezer burn. At the slightest taste of freezer burned meat, my husband refuses to eat.” Yes, the Insta-Wife’s fussy that way.

HMM: ARE YOU SAVING TOO MUCH FOR RETIREMENT? This seems politically convenient at a time when so many people’s 401k funds have taken a hit.

UPDATE: Reader John MacDonald writes that no, you’re not saving too much:

Financial planners factored in 6-8% returns on your nest egg.We’re in an environment where the banks pay a whopping 1% on your money.So if you had $500,000 and took out 4% a year ($20,000)- supposedly it would last 25 years.However real inflation is about 3% (gas gone down? food prices gone down? what about the printing presses?) so you’d be taking out 4% + 3% inflation so you’d run out of money sooner….and if taxes, “service” fees go up??

Today’s seniors are having a difficult time since their stocks have been shot, housing’s in the dumps and their CD rates are negligible….and that’s for those who have diligently saved for 40 years.

Yeah, as I’ve said before, if we had a Republican President there’d be a lot of tear-jerking press pieces about senior citizens living on dog food because of low CD rates. Now, not so much.

TODAY: Thanksgiving dinner a costlier endeavor than last year. “The price of your holiday meal is up 13 percent from last Thanksgiving.”

A year ago today: Sarah Palin: Inflation Is Coming. Which shows she’s just as dumb as all those lefty pundits say — because food prices aren’t counted in inflation. Which is lucky for us, because if they were, we’d have a big inflation problem now. . . .

UPDATE: Killjoy Tom Maguire writes: “Re your comment about Sarah Palin, the CPI, and food – food prices are included in the standard CPI. Because food and energy prices are volatile, a second “core” CPI excluding food and energy is also commonly bandied about.” Yeah, I know, I was just trying to emulate the style of bestselling political humorist Frank J. Fleming. I suppose that kind of thing should be left to the professionals.

IF YOU’RE THINKING OF STOCKING UP ON PEANUT BUTTER it’s still cheap at Amazon. At least, it was about double this price when I was at Target last night. They were asking $6.99 for a jar. We don’t buy much peanut butter, but that seemed awfully high. More here.

UPDATE: Reader John Marcoux writes: “We were tipped to the peanut butter price rise by Mormon friends in Memphis. Stocked up at Costco.” Yeah, I can see where they’d be up on this kind of news. Here’s a news story on skyrocketing peanut butter prices. “The J.M. Smucker Co. recently announced plans to increase its wholesale prices for Jif peanut butter by 30 percent this month and Kraft Foods Co. raised prices on Planters peanut butter 40 percent on Monday, according to the Associated Press.”

MORE THOUGHTS ON ETHANOL: “Corn has been used for more than human food for years now, as it has been used for animal feed and also used for a cooking oil and sweetener. This past year, American farmers used 5 billion bushels of corn for human and animal consumption and 5.05 billion bushels was used for fuel. This has had an effect on food prices. The price of corn reflects the prices of other foods, and food prices are already steadily on the rise. So this may put more strain on the poor as more corn is grown to fuel cars than to feed people.”

FOOD: SMALLER CORN SURPLUS COULD PUSH PRICES HIGHER. “Food prices could rise next year because an unseasonably hot summer likely damaged much of this year’s corn crop. The U.S. Department of Agriculture estimated Monday that a surplus of 672 million bushels of corn will be left over at the end of next summer. The estimated surplus is down from last month’s forecast and well below levels that are considered healthy. . . . A smaller surplus drove corn prices higher earlier this year. Global demand for corn, soybeans and wheat has outstripped production for the last 10 years. Surpluses, vital to a stable food supply, have shrunk.”

ENERGY OBAMANOMICS: No Green Jobs, And Plenty Of Red Ink. “The unintended but easily predictable consequence of burning our food supply in our gas tanks is that grocery prices have skyrocketed. When the limited supply of farmland is diverted to ethanol, the demand for the remaining land goes up, so all food prices are affected. Simple economics. Food shortages are being felt around the world. When Mexico runs short on corn tortillas, you know there’s a problem.”

THE CAUSE OF RIOTS and the price of food. “This isn’t rocket science. It stands to reason that people become desperate when food is unobtainable. It’s often said that any society is three square meals from anarchy. But what’s interesting about this analysis is that Lagi and co say that high food prices don’t necessarily trigger riots themselves, they simply create the conditions in which social unrest can flourish.” So maybe printing money and promoting food-based ethanol is a bad idea? Unless, you know, you want to create social unrest. (Via Ken Anderson).

SPEAKING OF INFLATION: A paper on food prices and political instability in North Africa and the Middle East. Spengler has been writing about this for some time.

LEFTIES PROTEST for higher food prices. Help the working man!

VICTOR DAVIS HANSON: St. Obama And The Debt Dragon.

Note well this pattern of suddenly turning to the neglected debt: Obama lectured for most of 2008 that “drill, baby, drill” was silly, given his belief that increased supply would only marginally affect then climbing prices, and his religion that high gas prices are good in that they make wind/solar subsidized energy more attractive, encourage less energy use and thus cool the planet, while favoring government mass transit rather than the mindless individual’s use of a private car. Then as reelection neared, he tapped the strategic petroleum reserve on the logic that while drilling more new oil does not lower prices, pumping previously drilled oil most surely does.

Note well that suddenly Obama called for withdrawal in Afghanistan, on the logic that, while a few months ago a surge, a new commander, and a sustainable commitment were vital to winning the “good war,” now, with reelection looming, it is time to start packing it in.

Plus this:

To save us, we would have to slash two or three entire departments (e.g., perhaps energy, education, agriculture, etc.), end all agriculture subsidies, raise the retirement age, freeze cost of living raises for Social Security, clamp down on food stamp and entitlement abuses (almost 50 million now receive them), and do far, far more — while encouraging the private sector to drill, mine, grow food at unprecedented rates, as government trimmed regulations and revised the tax code to encourage wealth creation.

But it is far easier to create monsters and joust over the slices of a shrinking pie. So the current economic paralysis will persist as we continue demonizing the mythical “them” — until we stop acting like Greeks cursing better off Americans as if they were German bankers who are to be damned for their success.

Demonization, followed by a “disgusted-headmaster act,” is all Obama seems capable of.

THE ECONOMIC “RECOVERY” TURNS 2: Feel Better Yet? “Unemployment has never been so high — 9.1 percent — this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged just 6.8 percent. The average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans.”

Related: Here Is Your Lost Decade.

WALTER RUSSELL MEAD: The Failure of Al Gore: Part Deux.

It is a measure of how far Gore has fallen that almost all the scanty attention the piece received focused on Gore’s criticism of what he sees as President Obama’s failure to lead on climate change. Gore, like the global green movement he champions, has fallen by the wayside. Despite terrible weather, despite tornadoes, droughts, food crises and high oil prices, the world conversation has moved on. The question is why. . . .

The global green treaty movement to outlaw climate change is the most egregious folly to seize the world’s imagination since the Kellog-Briand Pact outlawed war in the late 1920s. The idea that the nations of the earth could agree on an enforceable treaty mandating deep cuts in their output of all greenhouse gasses is absurd. A global treaty to meet Mr. Gore’s policy goals isn’t a treaty: the changes such a treaty requires are so broad and so sweeping that a GGCT is less a treaty than a constitution for global government. Worse, it is a constitution for a global welfare state with trillions of dollars ultimately sent by the taxpayers of rich countries to governments (however feckless, inept, corrupt or tyrannical) in poor ones.

For this treaty to work, China, India, Nigeria and Brazil and scores of other developing countries must in effect accept limits on their economic growth. The United States must commit through treaty to policies that cannot get simple majorities in Congress — like sending billions of dollars in climate aid to countries like Iran, North Korea, Syria and Pakistan, even as we adopt intrusive and expensive energy controls here at home.

To some, of course, that’s not a bug, but a feature. But not to enough.

Plus this: “Mr. Gore’s work up to and including his latest Rolling Stone essay has taken a demagogic rather than intellectual approach.” Yes. As he’s gotten older and fatter — even “jowlier” — Gore has come to resemble Jerry Falwell in many ways, including but not limited to the physical, though it appears he is less intellectually and politically sophisticated.

GAS PRICES FALLING, but food keeps going up. “While gasoline is off more than 5 percent over the last month, prices for coffee, fruit, bacon, pasta and a slew of other food items have registered gains over the past year as high as 40 percent.”

FOOD: Soaring feed costs may lead to hog herd culls. “US hog producers may begin culling herds as the sputtering economic recovery stymies pork demand while tightening corn inventories increase livestock-feed prices — thus, curbing animal supplies and increasing costs for meatpackers.”

FOOD: Wet spring cuts corn crop, prices to stay high. “U.S. food prices are expected to stay high through 2012 because a wet spring will likely cut the size of this fall’s corn harvest. The United States will have a surplus of just 695 million bushels of corn next year, less than the 900 million estimated last month.”

I THINK I’D RATHER HOARD NICKELS, THANK YOU: Invest in Bull Semen?

THE POLITICS OF FOOD: “China, India and Saudi Arabia have lately leased vast tracts of land in sub-Saharan Africa at knockdown prices. Their primary aim is to grow food abroad using the water that African countries don’t have the infrastructure to exploit. Doing so is cheaper and easier than using water resources back home. But it is a plan that could well backfire.”

CHINA FOOD CHOICES reshaping world markets. “World food prices climbed to record highs this year after drought and flooding reduced harvests in major producers such as Australia and Russia. Although prices have come down somewhat, analysts noted a decline in key reserves and other evidence that markets for basic food commodities may now be persistently tight. . . . Now, with key reserves of many commodities at or near record lows, World Bank President Robert Zoellick has said the world is ‘one shock away’ — a major crop shortfall in a large nation, a run of bad weather — from a serious food crisis. The potential fallout is clear: Rising food prices were partly behind recent unrest in the Middle East, and the bank estimates that food inflation has pushed tens of millions of people into poverty over the past year.”

JIM TREACHER: Leave Ronald McDonald Alone. “Things can seem bleak these days — wars, unemployment, gas prices, food prices, the thriving career of Shia LaBeouf — but look on the bright side. We can’t have too many problems as a society if people have the luxury of worrying about a circus clown who sells hamburgers to children.”

FOOD: Grain, Soybeans Surge on Adverse Weather From U.S. to Europe. “In the U.S., corn planting was 63 percent complete as of May 15, down from the 75 percent average in the past five years, as soggy fields hindered fieldwork, mostly east of the Mississippi River and in northern states, government data show. Spring-wheat, soybean and rice sowing also were behind the pace of recent years. The Ohio Valley and North Dakota will see more rain this week, AccuWeather Inc. said. . . . Europe’s crop, making up a fifth of global output, is under threat in the U.K., France and Germany from the driest growing conditions in at least 36 years. France, the world’s second- largest exporter, may produce 12 percent less this year than a year earlier, Agritel, a Paris-based farm adviser, said.”

Related: Mississippi Flooding Harms Agriculture in Several US States.

UPDATE: A reader emails:

With all the talk of how-

-food prices are rising
and
-food scarcity is growing

due to ethanol production, cold & wet weather, and other problems, has it occurred to anyone that we’re just one good volcanic eruption (Tambora, etc., but just a good 1990’s Pinatubo would do, or the recent Iceland volcano unrest) away from a serious food crisis? A serious cooling triggered by an eruption would probably drop the temps from the point of marginal production (see what’s going on now) to below the point that serious production issues would arise.

Yes, we’re uncomfortably close to John Ringo territory. Earlier item here.

ANOTHER UPDATE: Reader Mike Wall writes:

The only wise part of the ethanol program is that if corn prices reach “too high” the program can be shut down. This of course would lead to a huge correction in the price of corn, and all other grains as well, as billions of bushels would be released into the world market to get rid of it. I am not saying this is going to happen but the safety valve is there. China also continues to be the elephant in the room as their weather has been poor for several years and there are problems with several crops and water levels in various areas. Combining their increasing prosperity and subsequent demands for higher quality food and meat and declining production Chinese imports could easily be the volcano event rather than a real one.

Well, perhaps we’ll luck out and muddle through. That appears to be our national strategy, anyway.

MORE: Wichita reader Bill Rickords writes:

Watch the price of wheat also….about 60% of our wheat here in Kansas is in “extremely poor” condition due to lack of rain during the time where the heads of grain are filled out. Takes a lot of water for the soft putty like grains to fill out and harden. Heads will be shriveled and not weigh the 60 lbs. per bushel that is wanted. Not much rain this year where it’s needed.

Ugh.

BOB ZUBRIN: Rising food prices are the result of rising oil prices, not a growing market for ethanol.

CHANGE! U.S. Inflation Jumps as Gas and Food Prices Rise. Do tell.

CHANGE: UN Reports April Food Prices Climb Again, Hit Second Highest Ever.

Meanwhile, in the midwest you see a lot of stories about a wet, cold spring delaying spring planting.

IS THIS THE HOPE, OR THE CHANGE? Why food prices are rising and why they are likely to stay high for a long time.

RIGHT TRACK OR WRONG TRACK: 21% Say U.S. Heading in Right Direction, A New Low.

Related: “New applications for unemployment benefits in the U.S. unexpectedly rose last week to the highest level in three months, a sign progress in the labor market may be stalling.”

Also: Four in 10 approve of Obama’s handling of economy; marks all-time low.

UPDATE: Obama Approval At Lowest Level Ever In Pennsylvania, Quinnipiac University Poll Finds. “President Obama, who carried Pennsylvania 55 – 44 percent in the 2008 election, is underwater mostly because of his deterioration among independent voters, who disapprove of his performance 57 – 37 percent, compared to 50 – 46 percent approval in February.” But he’s even losing Democrats.

ANOTHER UPDATE: Reader Bill Archer writes:

As a PA resident I can attest to the sea change in attitudes towards Barack Obama here.

It’s public, it’s palpable and it’s entirely due to inflation.

It’s astonishing to me that a bunch of guys who are supposed to be so smart think that women aren’t going to the grocery store and leaving in a state of shock, disbelief and, occasionally, panic.

And a Democrat who frightens women cannot win anything. Period.

I just started playing a sort of instant citizen poll at stores. It began a week or so ago at Sams’ Club:

I was in one of THOSE lines and ended up chatting with a well dressed middle aged woman with a cart half full of grocery items.

I made mention of the fact that while I didn’t normally make the hike to Sams’ that with prices going up I figured I had to make the effort.

She exploded: Prices are sky high, she’s feeding three kids, eating store brands and sale items but can’t afford to stock up, on and on.

Then the lady in front of HER piped in: if prices keep going up she doesn’t know what she’ll do, their budget is already at the breaking point, trying to keep a daughter in college, off she goes.

Then a man in the next line over heard them and HE jumped in: this is ridiculous, Washington is killing us, economy broken, he’s off to the races.

I thought maybe this was just a coincidence, so I’ve started the same conversation in store lines twice more in the past week and it’s exactly the same: people are frightened and EVERYONE wants to talk about it out loud.

The interesting thing to me is that everyone used to be very reluctant to speak out in public against Obama. You were always afraid some leftie whackjob would hear you and tear into you. You know what I mean.

But now the gloves are off, people are freaking out and Obama can raise FIVE billion dollars for his campaign and organize until the cows come home and call everyone in the country a racist until he turns blue but it’s not going to convince anyone that they’re not paying an arm and a leg for half a cart worth of food.

There is no more basic thing to people, and it’s off the hook.

I don’t see how the Republicans could possibly mess this up. Then again, after a lifetime of watching them do just that, if there’s way they’ll find it.

Indeed. They don’t call ’em the stupid party for nothing. But yeah, it’s hard to hide inflation. Unemployment only hurts the unemployed; EVERYONE feels inflation.

UNEXPECTEDLY! Economic Growth Slows As Inflation Measure Spikes Up. “U.S. economic growth slowed more than expected in the first quarter as higher food and gasoline prices dampened consumer spending, and sent a broad measure of inflation rising at its fastest pace in 2-1/2 years. . . . The Federal Reserve on Wednesday acknowledged the slowdown in first-quarter growth, describing the recovery as proceeding at a ‘moderate pace’—a slight step back from a statement in March when it said the economy was on a ‘firmer footing.'”

GAS PRICES TOO HIGH? Buy a new car! Food-price inflation cutting into your budget? Get a better job!

Who said there were no easy answers?

NEW YORK SUN: Sarah Palin For The Fed?

The big question as Chairman Bernanke gets set for his first quarterly press conference is how Sarah Palin was able to figure out sooner than everyone else that the Federal Reserve’s campaign of quantitative easing wouldn’t work. Disappointment in the Fed’s policies is being reported this morning at the top of page one of the New York Times. It reports that “most Americans are not feeling the difference” from the Fed’s “experimental effort to spur a recovery by purchasing vast quantities of federal debt.” It reports that “a broad range of economists say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise.”

It’s a terrific story, and well-timed, given that on Wednesday Mr. Bernanke will break tradition and meet with the press. It is part of the Fed’s effort to get ahead of what is emerging as a public relations catastrophe, as gasoline is nearing six dollars a gallon at some pumps, the cost of groceries is skyrocketing, and the value of the dollars that Mr. Bernanke’s institution issues as Federal Reserve notes has collapsed to less than a 1,500th of an ounce of gold. Unemployment is still high. Shakespeare couldn’t come up with a better plot. But how in the world did Mrs. Palin, who is supposed to be so thick, manage to figure all this out so far ahead of the New York Times and all the economists it talked to?

She did this back in November in a speech at Phoenix, which the Wall Street Journal, in a laudatory editorial at the time, characterized as zeroing in on the connection between a weak dollar and rising prices for oil and food. “We don’t want temporary, artificial economic growth brought at the expense of permanently higher inflation which will erode the value of our incomes and our savings,” the Journal quoted Mrs. Palin as saying. “We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.” Now here is the New York Times quoting a raft of economists who have reached the conclusion that Mrs. Palin’s warning was right down the line.

Read the whole thing.

UPDATE: Don Surber:

The Fed bet $900 billion it didn’t have — and it lost. . . . There should be severe penalties and frankly, not only should we fire Ben Bernanke, but we should strip him of his pension and sue him for economic malpractice. There should also be a federal grand jury investigating this monumental failure.

I think we’ll hear more sentiments along this line as the news of the Fed’s failure sinks in.

ANOTHER UPDATE: Reader Mike Cardwell writes:

Inflation is poorly understood, but let me submit a basic propositions. The much more obvious reasons for inflation are rising input prices due to increasing restrictions on supply of these key ingredients. There’s much to blame Obama and the Democrats for. They’ve made working more expensive (min wage, health care, etc) and crummy foreign policy is making oil more expensive. Labor and oil are basic ingredients to most every good created by our economy, and so we get price inflation.

Whatever the policy failings of the Fed are (and I could go on at length on them), this isn’t one of them. The simple truth is both easier to understand and more damning. But we have to understand it in order to fix it.

The test of understanding is predictive power. And reader Eric Schubert emails:

As much as it pains me, I have to strongly disagree with you and Sarah. I’m a financial historian by background whose doctoral study focused on financial crises. I strongly agree with the Fed Chairman’s choices in quantitative easing. He is more than aware of some of the inflation risk associated with his actions, but I agree with his assessment that the absolute devastation that accompanies real deflation more than offsets the well-know downsides of QE. The Chairman made his bones studying the Great Depression, and he is determined to avoid that death spiral. He should be applauded, not condemned.

If you need to blame someone, blame the President and former Speaker Pelosi who utterly wasted $800 billion on a rushed, ill-conceived, politically-driven stimulus package. Spending on public goods can be very beneficial when they complement the private sector, rather than focusing on consumption spending or social engineering.

The Fed Chairman was the only adult in the room in economic policy from the Fall of 2008 through the Fall of 2010. He can’t control the stalemate in Congress, nor can he be held responsible for the unwillingness of large portions of the public to face up to our poor long-term finances.

Well, that’s certainly true.