Why Ron Paul > Newt Gingrich, and More Thoughts on the Revolution

Newt is a status-quo candidate. Newt is a slog-it-out candidate with an uninspiring message. Newt communicates fear rather than thought. Newt talks the talk the median GOP voter wants to hear. Newt does not profess; he calculates and thinks quantitatively. Newt shamelessly panders. He has barely a shred of political and personal decency left. Newt as nominee is another episode of the same phony soap opera.

We have come to expect our presidential candidates to be full of (sh)it. We know they pander to what we want to hear; always walking a tight line between the median voter, careful not to deviate too far from the status quo.

Ron Paul is the antithesis of the status quo. He is consistent and has been fighting for his beliefs since 1976, when he first was elected to Congress. He is not wishy-washy. Ron Paul is a momentum candidate with inspiring, new messages. Paul does not make you fear, he makes you think. Paul is a paradigm shift. Ron Paul professes, he does not calculate. Paul thinks qualitatively. Paul walks the walk, even when it’s not the “cool thing to do”. Paul is humble and a gentleman. Ron Paul is an indisputable change from the status quo.

Yet it’s widely acknowledged people don’t like change. We shy away from what is perceived as different. We are infamously intolerant. We prefer to be boxed into the viewpoint we know, rather than explore a viewpoint we don’t. We don’t bother to evaluate the opportunity costs and externalities of our viewpoints. Given this, it’s no surprise Paul is ridiculed for not delivering a politically safer message; a message more in line with the status quo. But that doesn’t mean Paul is wrong.

Many people think Paul is right. Like Ron Paul, his supporters do not flip-flop. Ron Paul’s supporters do not care about the stigma and intolerance associated with challenging the status quo. Paul’s followers are just as genuine about him as Paul is for his message. The more support Paul picks up, the more “cool” his messages becomes, and the more momentum he picks up. Paul is viral.

The status quo is a drug and we are addicts. When you think about Paul’s explanations for his positions, our drug loses its appeal. It’s only a matter of time before people vote for rehab. 

The True Costs (and Opportunity Costs) of War

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. […] Is there no other way." - President Eisenhower

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." - President Eisenhower

From: MilitaryEducation.org

Just Who is Threatening Who?

Visually, this whole Iran debate looks much much different.

The Difference Between Isolationism and Non-Interventionism

Here's my comment on George Will's latest Op-Ed in yesterday's Washington Post:

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I have much respect for George Will, but to label Ron Paul as an "isolationist" is flat out disingenuous. Isolationists believe their country should abstain from political or economic relations with other countries (paraphrase from Webster dictionary).
Ron Paul has publicly stated he supports trade between countries (not any big news there...most candidates believe trade is good), and cites peace as one of the main benefits of international trade (based on the assumption you're less likely to go to war with your business partner). North Korea is an isolationist state. Ron Paul is not an isolationist.

Ron Paul is a non-interventionist, and there is a big difference. Noninterventionists (again paraphrasing from Webster) think their country should not intervene in the affairs of another nation, specifically military affairs that are not related to their own direct self-interests. Thomas Jefferson once said, "Commerce with all nations, alliance with none, should be our motto." Sounds like he had a bit of the non-interventionist streak in him as well.

I would expect other, less-reputable, and more flamboyant conservative writers to disingenuously label Ron Paul an isolationist, but not George Will. He should be ashamed for not holding himself to higher standards in today's column.
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Apart from Will's poor choice of one adjective, he writes a pretty darn good article on why neither Mitt nor Newt are good for the GOP nomination. It's too bad he dismisses Paul based on his own misunderstanding of isolationism and non-interventionism.

Is Ron Paul Definitively Bad for Science?

On my way to work this morning I received my usual weekly Quora update email (for those unfamiliar with Quora, it's a website that allows users to seamlessly submit questions and answers about a range of topics..HT Omar El-Ayat) and, for some reason, got really fired up when I saw Josh's answer to the question: Is Ron Paul definitively bad for science?

You can read Josh's answer here, and my reply to Josh here.

Here's to the End of Energy Subsidies

Here is an interesting op-ed by Jigar Shah, the co-founder of SunEdison (which was bought my my company MEMC in 2009). Shah was an early pioneer in the utility and commercial scale solar market and, like most entrepreneurs and legendary visionaries, has a perceptive and enlightening personality. In the article, Shah argues that America benefits from China's support of it's solar cell and module manufacturers. I wholeheartedly agree!

For the record, America should not emulate nor envy China's mistaken policies of using government to promote certain industries. Industrial policy is a terrible idea and usually comes back to bite governments and their economies in the butt. China's industrial policy is unsustainable; their loose monetary policy and cheap debt has led to price inflation and civil unrest.

Mr. Shah also addresses energy subsidies in his op-ed and argues "[America needs] incentives to incubate new technologies to reach the scale necessary to reduce costs, we do not need to incentivize proven existing technologies."

I partially disagree with this statement because solar and wind are not "new". Both are proven technologies that have existed for decades and therefore should not receive federal subsidies or special tax treatment of any kind. Secondly, the federal government should quit subsidizing all forms of energy. Doing so would create a level playing field where energy technologies compete based on their inherent advantages (aka benefits) and disadvantages (aka costs).

If the government wanted to promote renewable energy deployment, it would be best implemented at the state level via renewable portfolio standards (RPS). Under RPS the state’s ratepayers who benefit from, for example, a large scale solar farm would see the costs and benefits of that solar farm reflected in their electricity rates, and hopefully the air they breath (although there are positive externalities since air does not adhere to artificially created state boundary lines).

Most governments promote alternative energies via feed-in-tariffs (FIT) subsidies, which, if not properly structured (an easy mistake since FIT are set by politicians/bureaucrats and not the market), can lead to unsustainable bubbles and inefficient costs for renewable electricity. Spain in 2008-2009 is a good example. The U.S. thankfully does not have a national FIT administered by the federal government. Unfortunately, we still have other energy (and non-energy) subsidies.

When the federal government involves itself in energy via FIT, investment tax credits and loan guarantees, then the taxpayers of all 50 states share in the associated costs and a disproportionate amount of the benefits. Why should taxpayers in the not-so-sunny state of Minnesota subsidize California’s alternative energy ambitions?

If you read my blog (you probably don't...nobody reads this thing) then you know I have my qualms about the federal government's one-size-fits-all/monopoly approach to governing. The federal government could do Americans a favor by ending all energy subsidies (and all other subsidies too) primarily because 1) it's not explicitly stated in the Constitution, and 2) they do a poor job executing on their strategy. State governments are better suited to pick up the slack by providing their own RPS incentives--if that’s what their constituents want.

Opponents to my anti-subsidy position may ask, “how will these technologies achieve scale and lower costs?” To that I answer: fossil fuels took off in the 19th and 20th centuries because consumers were excited about the new possibilities that were suddenly available to them thanks to fossil fuels and the internal combustion engine. The fundamentals surrounding fossil fuels enabled private investment to flow into the sector. Scale was achieved. Costs came down.

In the early 2000s, prices for fossil fuels began to rapidly increase as demand for fossil fuels exploded and supply stagnated. High energy prices, plus worries surrounding pollution and global warming, excited consumers about the prospects of alternative energy and energy efficiency. Sure enough, global investment began to flow into the alternative energy sector. Scale increased. Costs continue to fall.

Take for example Evergreen Solar's November 2000 IPO. This capital raise was, at the time, a highly successful event for the Company and their venture capital backers. Private investors took on Evergreen’s technology, execution and scale risk. Subsequent to the IPO, the state of Massachusetts offered Evergreen a low interest loan as an incentive for locating the Company's manufacturing plant in Marlborough, MA. Evergreen accepted and shortly thereafter, Massachusett's high labor costs hamstrung the Company and Evergreen eventually declared bankruptcy (but not before Evergreen's executive team desperately attempted to save the Company by raising more private capital and moving to China in 2010). Of course Evergreen's unconventional wafers didn't help their economic vitality.

Starting in 2000 and continuing to present day, private investors have taken on a great deal of alternative energy risk because the global consumer wants cleaner energy. Public entities have been less successful at creating sustainable alternative energy markets. Public entities can help deploy alternative technologies, but they should not repeat the mistakes of Massachusetts…oh wait they already did in 2009 when they gave a ~$530 million loan guarantee to risky Solyndra who, like Evergreen, attempted to manufacture in a high-wage region and also had an unconventional product. The point is that the U.S. is not a good place to manufacture low-tech products (e.g. solar cells and modules). Our workers have higher wages than Chinese workers because, on average, U.S. products and services add more value than Chinese products and services. Therefore, U.S. workers should focus on their competitive advantage, which include activities like: designing more efficient and less expensive solar technologies, installing/developing solar projects, etc, and does not include monotonous activities like solar cell and module manufacturing.

"Smart government" (translation: smart bureaucrats and smart politicians) needs to realize how difficult it is to subsidize the "right" solar company, or alternative energy technology. Let the market do that. And if citizens want to have cleaner energy, then state-level RPS standards seem like the best way to go.

America's Crumbling Infrastructure?

"America's infrastructure is crumbling" is an oft repeated belief held by both conservatives and liberals.

But just how true is that statement? Charles Lane explores the question in this WaPo article.

Here is an excerpt:

"The United States probably needs more infrastructure spending. It also needs a serious debate about how much cash to invest and how to invest it. Alarmism promotes the former, not the latter."