As unemployment rates continue to hover around double digits, universities are using federal funds to create internships in a sector that the Obama administration has repeatedly said will lead the U.S. out of the recession.

This assumes that jobs created is the same as a net gain in jobs.  An easy mistake to make (one the Obama Administration has made many a time), but a mistake nonetheless because it falls afoul of the “Broken Window Fallacy.” First articulated by Frédéric Bastiat, it basically says you have to take hidden costs of a particular action into account. In the parable Bastiat used to illustrate his point, the shopkeeper’s careless son breaks his father’s window, and a sequence of actions follows: the shopkeeper pays the glazier six francs to fix the window, who uses the money to pay another merchant, who uses the same money to buy goods from another merchant, etc.

To the onlookers, the son is a hero! He broke a window which caused the glazier to get money, which he used to buy more goods, down the line. But Bastiat says, hold on one second. The onlookers are only looking at the benefits accrued to the glazier et al. What about the initial cost to the shopkeeper? Instead of paying six francs to fix the window, maybe he wanted to buy a jacket for his wife which cost 12 francs? So now he’s out six francs and has to save up more, with no economic expansion because all that happened was a pre-existing window was replaced.

Back to the jobs created by the federal grant money. We see the internships provided by the grant money (which at UNC amount to $324,736), but what else could have been used with that money? Think about it. $5.6 billion, immediately added to our national debt (which impacts interest rates for borrowers). $5.6 billion which sucks up labor and resources that could have been directed elsewhere, in a more efficient manner. And $5.6 billion which is being used to prop up an already economically inefficient industry (seeing as it wouldn’t exist without huge government subsidies) by training people to learn economically inefficient skills for economically inefficient jobs. See where this is going?

The only way this all makes sense is if you believe the threat posed by global warming (climate change, take your pick) is great enough to warrant massive inefficiencies. But then we’ve finally dispensed with economics and have moved full on to the moral imperative of action. Which is fine, you just can’t have pundits and politicians claiming “green jobs” are economically efficient or will create a net gain in jobs because that’s just empirically false.

However, on my own initiative, I tracked down North Carolina’s numbers, and the data was quite interesting. For example, take North Carolina’s 37^th Congressional District, where two jobs were created or saved with about $4 million. Or take the 14^th District where 0 jobs were created or saved with $180,000. Of course the problem here is that North Carolina only has 13 Congressional Districts. But even disregarding that, $4 million for two jobs?

Source: www.recovery.gov

This reveals several things. First, it shows that all of the claims made by the Obama administration about how they’ve created or saved so many jobs are false. At best they are gross exaggerations, at worst they are outright lies. This of course calls in question all the numbers put forth by the Administration. Things like the unemployment statistic announced by the Labor Department should be viewed with considerably more scrutiny after this rather shameless attempt to delude the American people.

Also, how exactly does one quantify a “saved job”? This, of course, is another attempt by the Administration to inflate its accomplishments (or lack thereof) and to sell the supposed success of the stimulus package.

What’s also interesting is where the money is being spent. Districts represented by Democrats received $3,219,725,447 or 86.11% of the money allotted to North Carolina. Districts represented by Republicans received $591,809,554 or 13.75% of the money allotted to North Carolina, despite making up 46% of the Congressional delegation. The money is being spent disproportionately in Democratic districts. One could interpret this as an attempt to buy off these districts and ensure that they stay solidly blue. But of course, it would take a really cynical person to think that.

Perhaps what most reveals that the stimulus package is not what we’re told it is, is the fact that the unemployment rate continues to rise. It currently resides at 10.2%; well above the 8% ceiling the American people were promised.

Enjoy!

www.youtube.com/watch?v=kkPGxmSQgyw

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www.youtube.com/watch?v=zlWLc8fF5wY

www.youtube.com/watch?v=RcISx8oAITQ

www.youtube.com/watch?v=ZUw7yompl_k

www.youtube.com/watch?v=yiW_OGbVFiY

The first is that employers are shedding far fewer temp employees than in months prior.  The temp employment market normally precede normal employment markets, so the fact that the temp market is stabilizing is a good indication that a recovery is in the offing.

The second is the front page article in today’s paper reporting that Cadbury rejected an acquisition bid by Kraft. The recent burst of activity on the mergers and acquisitions front is always a good sign and indicates that the recession is on its way out.  The Kraft bid follows Disney’s purchase of Marvel, JBS’s bid for Pilgrim’s Pride (to make it the second largest meat company in the world), and Baker Hughes $5.5 billion purchase of BJ Services to consolidate its oil- and gas-field services operations.

M&As mean that there is no longer a liquidity problem as banks are willing to extend credit to these corporations to make these purchases, but, equally important, they mean that business are confident and optimistic about the future.  The economy will stabilize and employment will increase.

All of this no thanks to the stimulus package or any action on the part of the Obama Administration.  We’ve spent only 10% of the $787 billion package (~$78.7 billion), yet the economy is now recovering.  In fact, according to the head of the Federal Reserve in Dallas, the recession is over.

So, think about it. The economy is recovering before any major overhaul of the financial sector, before nationalizing health care, and before a substantial portion of the stimulus package was spent.  We can conclude that we could have achieved the same results of the $787 billion stimulus package with a stimulus package of $78.7 billion, avoiding such a gargantuan increase in the national debt and the requisite pain and suffering for our posterity.

Or maybe, just maybe, we can conclude the recovery isn’t related to the stimulus package at all, and the Keynesians have been wrong all along…

Nevertheless, today’s Democratic majority in Congress, with UPS now aligned with the Teamsters, wants to put FedEx’s ground pickup and delivery operations under the NLRA, thereby making FedEx’s entire integrated system susceptible to disruption by local disputes.

He goes on to explain how Democrats are planning to expand the National Labor Relations Act to cover FedEx’s ground division which is currently covered by the Railway Labor Act. As Will explains, the RLA “ensure[s] that any bargaining unit for workers must be systemwide so that no local unit could hold the railroads hostage.” Operations like FedEx were covered by the RLA instead of the NLRA because this didn’t allow a unit in Nashville, TN affect a unit in Anchorage, AK for example. All union negotiations are made on a system-wide level.

Right now, UPS isn’t doing too hot. And UPS happens to be a Teamsters’ stronghold while FedEx is not. So, as the government no longer respects the free market and contracts between two parties (i.e. employment contracts), they’re trying to harm FedEx. But not by offering a better product or services, reducing prices, or doing anything that would attract consumers to them and not to FedEx. They’re trying to harm FedEx by bringing the coercive arm of the government to implement a law that would make FedEx’s operations more suspectible to stoppages due to local disputes.

Yet another example of why the government should not involve itself in the free market. Big Business teams up with Big Government to make our economy less efficient which ends up being paid for, not by Big Business, but by consumers, individuals like you and me. Because if the law is changed, FedEx will be forced to cancel a “multibillion-dollar order for 15 Boeing 777s” which would not only make FedEx operations more efficient (thereby reducing costs), but also keeps people employed making aircraft. Something that would actually “create or save” thousands of jobs which just might be welcome in this economy.

Representative Henry Waxman (D-CA)

Here’s hoping for the “off.” At least for Representative Henry Waxman, the California Democrat who was recently the subject of a book, The Waxman Report. The Washington Post recently published a fawning book review which contained the following:

“But the corruption of Congress, the corrosive influence of money and lobbying and the failure of one Congress after another to address the country’s biggest problems have done much more to undermine the reputation of our legislative branch than Watergate and Vietnam. To his credit, as the new chairman of the House Energy and Commerce Committee, Waxman is currently addressing one of the nation’s most complex crises: climate change.”

That people fail to make the connection between an intrusive government and lobbying is one reason why we must continual bemoan the “influence of money” in Congress. As government regulates more and more, more and more people are affected which naturally leads to lobbying. The only reason people have to lobby is to attempt to have government legislate policies that positively affect them.  Mr Waxman’s climate change will be no different looking at the bill recently passed by the House.

One of the more obvious cases of this is regulation of businesses. Back in the day, Bill Gates used to brag that he never paid attention to what was going on in Washington. Then suddenly the Department of Justice got involved with a possible antitrust lawsuit against Microsoft. Gates realized his mistake and quickly hired Washington lobbyists and consultants to preserve Microsoft’s interests. He later lamented:

I’m sorry that we have to have a Washington presence. We thrived during our first 16 years without any of this. I never made a political visit to Washington and we had no people here. It wasn’t on our radar screen. We were just making great software.

The same occurred with Wal-Mart. Sam Walton rarely disguised his disdain for Washington. Then Congress and state assemblies started passing laws that adversely affected Wal-Mart (e.g. mandating health coverage or anti-Wal-Mart zoning laws like in Maryland). Wal-Mart quickly opened up a Washington office and engaged a team of lobbyists.

These examples are illustrated in Ayn Rand’s Atlas Shrugged where Hank Rearden focused solely on his company, trying to improve his product and increase sales with only Wesley Mouch on payroll as a Washington lobbyist. Then the government started to oppose Rearden Metal because other steel firms had more lobbyists and could influence key officials to try to stifle competition from Rearden.

This is the unintended consequence of expanding government in the free market: The business with the most lobbyists uses government to shut down competition. Phillip Morris and other large tobacco firms used this with the tobacco lawsuit settlement and now Wal-Mart is trying to use it with health care now that President Obama has promised them “a seat at the table.”

The review ended with this aspiration:

“The Waxman Report explains, at least, how Congress can work, and it is fun to read. You finish it with gratitude to the voters of Beverly Hills and nearby areas who keep returning this ornery fellow to the House to challenge entrenched special interests. More Henry Waxmans on both sides of the aisle would give us a much better Congress than the one we’ve got.”

Well, not really. We should only want more Henry Waxmans if we have a national death wish. Basically, if we eventually end up with more Henry Waxmans, we’ll end up with more and more lobbying and government being used to stifle competition by big business. We ignore the consequences of increased government intervention at our peril.

An array of tubes used to grow and harvest algae.

A start-up company called Sapphire Energy is working on methods of growing algae and converting it into biodiesel fuel. They say they can produce one million gallons of fuel annually by 2011 and one billion gallons by 2025.

According to Sapphire, biodiesel made from algae is chemically identical to crude oil. That means it can be refined to whatever standard is needed and then used in today’s vehicles without an special modifications. The fuel has already been used to power jet airplanes on test flights.

Algae-based biodiesel delivers 10 to 100 times more energy per acre than ethanol. Also, the algae is grown in transparent tubes which require only sunlight and fertilizer. These tubes can be placed on non-arable land so they don’t compete with food crops. An acre of agae tubes will be able to deliver 10 to 100 times more energy than ethanol. It also requires less water than corn. In addition, algae eats up a massive amount of CO2 during its growth (oceanic algaes are actually the main purveyors of photosynthesis on planet earth). This is enough to offset the amount of CO2 released by burning the fuel, meaning algal fuels are CO2-neutral.

Sapphire Energy’s main hurdle is convincing people to switch over to the new fuel. They aren’t getting any government subsidies, which means they won’t be producing fuel no one is buying. In order to get people to switch over to algal based fuels, they need to offer a fuel that will make them a profit while being more economical than gasoline, either by being cheaper or by being more efficient. That’s the only thing that will cause biofuels to become widely adopted.