A Fearless Free Market Solution to Lower Gas Prices

I have often been fascinated that many of the people who complain that Wal-Mart’s prices are too low are often the same people who complain that gas prices are too high. I wonder whose side these people are on when it comes to Wal-Mart’s attempt to sell their gas at or below cost? That’s right, Wal-Mart is willing to sell gas at a loss to attract more customers to its stores. So what’s stopping them? You guessed it, the government. The next logical question: why? Because many states consider selling products such as gasoline at or below cost as ‘predatory’ to other businesses in the same market. Apparently federal and state governments can not only penalize businesses that are ‘gouging’ but also can penalize businesses that use ‘unfair’ marketing using ‘predatory’ low prices. As of the date of this article, in Minnesota officials can put a lock on gas pumps which price gasoline under the $.08 minimum markup price.

I can empathize with someone who owns a small filling station who would see Wal-Mart’s strategy as a threat to his or her business, but maybe there is a bigger picture many people are not seeing (besides the notion of a free market): a free market solution to bring the overall cost of gasoline down. What if these predatory pricing laws were repealed in every state which would allow Wal-Mart to set prices below costs? Other filling stations simply could not compete because unlike Wal-Mart, most other stations would not be willing to sell gasoline at a loss (which is understandable). If Wal-Mart’s competition refused to sell any gasoline at all, this would force the large gas and oil companies and OPEC to re-evaluate the cost of both the refined gasoline and crude oil.

As I explained in a post I wrote back in September of 2005, the supply of gasoline is limited because of government environmental regulations, a lack of refining capacity, and uncertainty in the market due to instability in the Middle East. Meanwhile, the world demand for gasoline is greater than ever. The price of any product is dependant on supply and demand (Econ 101 stuff here). While all of these factors would still be true if enough filling stations refused to sell gasoline at a loss, such a move would force the gas and oil companies to make whatever adjustments necessary to bring the cost down to a level where retailers would make a profit and Wal-Mart would no longer have a reason to sell gasoline below cost.

Unfortunately, most people would rather involve government even more to try to bring gas prices down. Even President Bush and other cowards in the Republican Party (the party of limited government and free markets right?) have caved in to the ‘price gouging’ crowd calling for an investigation. Here we have politicians telling private businesses how high and how low they can sell their products (whatever the product happens to be). What nerve! If I want to sell gasoline at $.50 a gallon, that ought to be my call. If I think I can sell gasoline at $10 a gallon and people are stupid enough to buy it, that ought to be my call.

Don’t get me wrong, there are a few things the government can and should do. First of all, since our elected officials are so concerned about how much we are paying at the pump, all federal taxes on gasoline should be cut by at least 50% or eliminated altogether. According to the most recent government report (2004 averages), federal taxes make up 23% of the cost of a gallon of gas while ‘refining costs and profits’ make up 18%. Why should the government receive a bigger cut than those who provide us the product? The obvious argument against this of course is ‘how will we pay for the interstate highways?’ Ever heard of toll roads? What about scrapping last year’s God-awful highway bill and start over without the waste? I’m sure there are many other areas of wasteful spending that could be scrapped as well. I wonder if this will be part of the probe? Don’t count on it.

Secondly, lest anyone accuse me of always sticking up for BIG OIL, when I say I support a free market, I mean I support a free market: the federal government should immediately stop subsidizing the oil industry (and every other private industry for that matter). Corporate welfare is just as bad (arguably worse) as welfare for the poor.

Last and perhaps most importantly, government needs to allow greater exploration in ANWR, of the Gulf Coast, the East Coast, the West Coast, and every other area where reserves are likely to be and lift restrictions for building new refineries.

There you have it; my fearless free-market solution to bring down gas prices: Wal-Mart, cut gas taxes, cut wasteful spending, end corporate welfare, allow more exploration, and allow the private sector to build more refineries. Is there even one brave politician or reporter out there willing to advocate this? Probably not; it’s much easier to rant and rave over the ‘windfall profits’ of the oil companies and continue to watch the price of gas rise.

10 Terms and Phrases to be Wary of

Activist vs. Lobbyist
Have you ever noticed that people who support left-wing causes are referred to by the media as ‘activists’ while people who support non-left-wing causes are referred to as ‘lobbyists’? Example: Sarah Brady’s Campaign to Prevent Gun Violence is usually referred to as an activist group. The National Rifle Association is more often than not referred to as a lobbyist group. Both organizations have members who contribute money to their respective causes, both have representatives who ‘lobby’ congress to influence the legislative process, and both groups ‘actively’ engage in the political debate. Why is this a pet peeve of mine? Activists are normally referred to in positive terms while lobbyists are referred to in negative terms. The message seems to be that the activists (leftists) are trying to improve this country while the eeeevil lobbyists (Republicans/Libertarians) are trying to sell the country out. The truth is that Brady and the NRA are both activist and lobbyist groups.

Affirmative Action
Affirmative Action is completely at odds with Martin Luther King Jr.’s infamous ‘I Have a Dream’ speech:

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

What is Affirmative Action if it is not judging by one’s color, gender, or other minority characteristics? Wasn’t the point of the civil rights movement to give everyone a fair shake based solely on character and qualifications? That under the rule of law everyone is subject to an equal justice, rights, etc? Supporters of Affirmative Action go even further to say that anyone who opposes race or gender based preferences is a bigot. Certainly America has had problems with race and gender discrimination in the past but turning the discrimination around in the opposite direction breeds more resentment and intolerance in everyone.

“Bush lied about WMD in Iraq”
This one is a little bit subjective. If you honestly believe that President Bush lied about WMD in Iraq then this does not really apply to you (If you do take this position, you must also believe that Bill Clinton, Hillary Clinton, Al Gore, John Kerry, the intelligence personnel of the United Nations, Germany, and France were also lying because they where all saying the same thing). According to Dictionary.com as well as my understanding of the term the definition for lie is as follows:

A false statement deliberately presented as being true; a falsehood. Something meant to deceive or give a wrong impression.

Despite this common understanding of the term many leftists insist that President Bush lied whether he knew the truth of the existence of WMD or not. If most or all of his intelligence was telling him that Iraq had WMD and the intelligence was wrong but the president believed it to be true then he was not lying but simply just wrong*. When a meteorologist says that it is going to rain tomorrow and it doesn’t, does that make him a liar or just wrong?

* The initial intelligence that Iraq had WMD may have been right all along. Read this, this, this, this, and this for more information. If it turns out that Bush did not lie, does that really change your opinion about whether or not the U.S. should have liberated Iraq? I didn’t think so.

Democracy
I’ve written many times on this blog about my disdain for the notion of ‘democracy.’ People who should know better from the president on down refer to our constitutional republic as a democracy. Democracy and liberty are by no means synonymous with each other and our founders understood this. Probably the easiest route to a socialistic system is through democracy. There are a number of excellent articles on Capitalism Magazine which explain why democracy is dangerous and why we should stop thinking of our government as a democratic one as opposed to a republican one. This article by Alexander Marriott is among my favorites.

Economic Equality
Everyone is supposed to have an equal share of wealth? Where have I heard that before? See also the next entry: Income Gap.

Income Gap
This one really gets under my skin. I wrote on this ignorant argument about the gap between the rich and the poor in part four of my four-part series titled: What I Have Learned from Air America. Here is an excerpt:

The gap between the rich and the poor is growing larger and larger? I sure as hell hope so! If the gap between the rich and the poor is shrinking, it isn’t because the poor are getting less poor; it is because the rich are getting less rich-not a good scenario for our economy, especially for the poor. The fact that the rich have the ability to get richer tells me that the American dream is true. The sky’s the limit.

Unfortunatley, this notion of the ‘income gap’ is not restricted to the leftists on Air America. I recently overheard a conversation about how the gap between the rich and the poor continues to grow. As if there is no middle class! I would bet the gap between the poor and the middle class is also growing, hopefully it is. Most people want to separate themselves from poverty as much as possible (thus creating a gap) .

Okay, so there is an income gap between the rich and the poor; what are we supposed to do about it? Should we contact our representatives and tell them we should eliminate the income gap by redistributing the wealth equally among all Americans? Of course such systems have been created under such a theory, a theory most of us know as socialism.

Living Wage
What amount should we consider a living wage and whose responsibility is it to achieve this wage? Those who argue in support of this so-called living wage obviously believe it is the government’s duty to force companies to pay a minimum wage which should be enough to ‘live off of.’ Is every job regardless off how menial worth, say 7, 8, or $10 an hour? Why not make it 15 or $20? Do I hear $25?

Ironically, those who support increasing the minimum wage contribute to the same income gap that they are trying to close. How is this? If you are a restaurant owner who needs to hire someone to bus the tables or great customers at the door, should you be forced to pay that person $8 or so an hour? Let’s say you manage a grocery store; you need to hire someone to stock the shelves and bag the groceries, should you be forced to pay that person $8 or so an hour?

When I got my first job when at 16, the federal minimum wage was $4.25 an hour. How likely would it have been for me to get that job if my employer was forced to pay nearly double that? I’m thinking my odds of landing that job would not have been so good. When the minimum wage is raised, certain people with few skills are priced out of the job market. If I own a business and the government tells me I must pay my employee over a certain amount regardless of its effect on my bottom line, I am going to require a person with more refined skills who can perform more duties to fill that job. I’m not going to hire a pimply-faced teenager with little or no skills for a wage that doesn’t make sense for my business. These jobs we now call ‘minimum wage jobs’ used to be known as ‘entry level jobs.’ What ever happened to the concept of improving one’s skills to make a better living?

Price Gouging
What in the hell is price gouging? From what I gather it is another un-definable emotional term. Does it make me angry that the gas prices continue to rise? Of course. But are the gas companies ‘gouging’? How can anyone answer that question? Democrats tried to move a bill through congress recently making price gouging of gasoline a crime with a penalty up to $100 million and 10 years in prison. And how did this wonderful piece of legislation define ‘price gouging’ you ask? An "unconscionably excessive" price or a price that "indicates the seller is taking unfair advantage." I’m sure glad that our elected officials could clear that up for us.

Undocumented Immigrant
Undocumented Immigrant, undocumented worker, and migrant, are all terms we need to dispose of if we are ever going to have an honest conversation about illegal immigration. These terms are used by dishonest supporters of illegal immigration to confuse the issue. If you truly support illegal immigration, say you support illegal immigration but don’t tell me that I am anti-immigration because I am not. Of course many supporters of illegal immigration say that America is inhumane in the way illegal immigrants are treated. Chief among the critics of America’s immigration policy is the Mexican government (surprise, surprise) because they welcome all immigrants with open arms right? If America’s immigration laws were anywhere near as draconian as the critics would have us believe, then America’s immigration policy would look a lot more like Mexico’s immigration policy (.pdf).

Working Class
How often do you hear a politician referring to a constituency called ‘the working class’? Who is in the working class? Those who work the most hours right? Somehow I do not think politicians are referring to Fortune 500 CEOs or business owners (of any size). Most people tend to believe that business owners and (especially) CEOs spend scarcely any time at all doing any actual work spending whatever time they do work playing golf and counting their money. According to results from a survey of Fortune 500 CEOs taken in 2003, the average ‘working class’ office worker works an average of 46 hours a week while the average Fortune 500 CEO works 61.3 hours a week. If these figures are accurate (I tend to believe the CEO number is low and the office workers’ number is high), that means Fortune 500 CEOs work nearly 800 more hours every year than his or her ‘working class’ counterpart. The bottom line is this: if you earn a paycheck of any size from providing goods or services then you are part of the working class. We know there is such a thing as the working class because there is at least one other class which does not contribute anything to society and indeed are a parasite to society: the non-working class (I’m not referring to people who are unemployed and are looking for work but people who have no job and no intention of finding one while living on the dole).

Fearless Philosophy Flashback: We Can Make April 15th Just Another Day

(Original post published here on April 14, 2005)

It’s that time of year again – April 15th, the federal income tax deadline. Time to cross your fingers and hope you filed correctly lest you be visited by your friendly neighborhood IRS agent. Let’s be honest, the current federal income tax is too intrusive, too complex, too costly, and punishes both entrepreneurs and everyday wage-earners. There is a better way. The Fair Tax plan will allow workers and retirees to keep their entire paychecks (minus other non-federal withholdings), close all tax loopholes, eliminate the need for individuals to file tax returns, abolish the IRS with the effect of ending tax audits, eliminate hidden taxes on goods and services, increase government accountability, level the playing field for American-made products with foreign competitors, and allows families to buy basic necessities tax-free.

In 1998, the IRS budget for collecting income tax was $8 billion. In the same year, Americans spent $225 billion to comply with the tax code for that tax year. Businesses would have cut compliance costs by 95% had the Fair Tax been in place at the time and would have eliminate compliance costs completely for individuals. What kind of economic impact would that have had allowing Americans to keep that $225 billion? Would that money have created more jobs, encouraged more investment, or allowed more people to buy a home?

The economists measured the economic affects of adding the proposed 23% tax on goods and services (assuming that all federal income taxes are abolished) to determine whether or not the price of goods and services would actually increase. Some people would probably believe that businesses would selfishly keep the increased profit margin with the elimination of the corporate taxes (another false notion thanks to the media, the government, and public education). Companies would need to keep their prices low to compete in an increasingly competitive marketplace. In today’s market, most large corporations operate on less than a 1% profit margin (those greedy bastards). In the current system, all corporate taxes are reflected in higher prices. Likewise, if those costs disappear, any savings will be passed on to the customer.

According to Dr. Dale Jorgenson of Harvard University the average producer would reduce prices by 20% in the first year under the Fair Tax system and would ultimately keep prices on the end products at about the same rate as before. In the current system, the American citizen already pays these hidden taxes in addition to what is withheld from his or her paycheck.

If the Fair Tax passes, the daily lives of Americans of every walk of life will have the choice of how much taxes they pay based on the financial decisions they make. No longer will investors be penalized for saving or contributing to the market. The only taxes any individual would pay regardless of income status would be the amount of money he or she spends above the determined poverty level for the size his or her family. The tax code will be much easier for the average person to understand and would eliminate the anxiety of potentially being audited by the IRS.

This is only the tip of the iceberg; the Fair Tax has many other benefits. Don’t take my word for it, do your homework and find out for yourself if this bold step should be taken. Visit http://www.fairtax.org/ and do some other independent research as well.

We must be realistic; however. Passing this legislation will not be easy. The most important part of this legislation will require repealing the 16th Amendment, which would make federal income tax unconstitutional. Also, after viewing the Fair Tax congressional scorecard, most of our representatives in congress have not made a commitment one way or another. This means that most of them are unaware of this legislation, have an incomplete understanding of the bill, are waiting to hear from their special interest groups, or hopefully, waiting to hear from their constituents. Whether your representative is for, against, or undecided on The Fair Tax, we all need to let them know what we want.

Related Posts:
End Success-Based Taxation
What I Have Learned From Air America: Morning Sedition/Final Thoughts

Fearless Philosophy Blogpost of the Month (March 2006)

As I put together my list for the Fearless Philosophy Blogpost of the Month for the month of March, I realized that it has been exactly one year since I selected the first three posts in March of 2005. The three individuals I selected at that time, Brad Warbiany, Eric Cowperthwaite, and Robert Bell, were truthfully my inspiration for putting such a list together each month. Every month since then I have found some exceptional posts by very talented bloggers who articulate their ideas with clarity and conviction; this is my way of sharing these inspiring posts with those who regularly read this blog. I see Fearless Philosophy for Free Minds as something larger than myself. I think of this blog as a way to communicate, debate, and consider both radical ideas and commonly accepted ideas which are rarely challenged.

Someone recently asked how he could submit his post to my ‘carnival.’ This monthly feature in fact is not a carnival but merely a collection of posts which I believe deserve some additional exposure. My selection process is in no way scientific, I simply select the top three posts I have read during the past month (which usually come from the Carnival of Liberty, Carnival of Vanities, or the Life, Liberty, Property blogroll) and highlight the main points which I think are the most important. For anyone who would like to be considered for the next month’s selection or future selections, go to this link for the criteria for what I consider a ‘fearless’ post.

On to the posts…

Third Place goes to Andy of The Charlotte Capitalist with his post: The Charlotte "Representatives Of The Men Who Contribute Nothing" . Have you ever found yourself low on cash flow only to be urged by others to donate money to a charity? Andy relays a tale of a struggling single mom of three young children making under $30k a year who was pressured from upper management to contribute to some charity. Andy explains why he believes that coerced charity should not be considered a virtue:

I would say that the actions of big bank management, King, and Keesler [the aforementioned woman’s bosses] line up with the actions of the men described by AR [Ayn Rand] -- "The representatives of the men who contribute nothing." I include all of them necessarily because they are a part of the culture which incorrectly makes charity a major virtue. And in order to get people to do things that they rationally don't want to do, one has to resort to "commands".If you can't afford charity, then don't give. Your life and your values (your spouse, kids, your goals and so on) come first. Don't be intimidated by "the representatives of the men who contribute nothing". It is your life.

Of course Andy is right, charity starts at home. You shouldn’t feel guilty about not helping others if you haven’t helped yourself and your family first. Besides, wouldn’t society be better off if companies invested more in their own businesses, which would in turn create more jobs, as opposed to donating so much to charity? Would it not be better to teach those in need how to fish rather than constantly providing fish for them? (Ironically, when I looked back at my first ever ‘Blogpost of the Month’ selections from a year ago, the Second Place selection written by Brad Warbiany was written on this very subject.)

Second Place goes to Minh-Duc of State of Flux with a very informative post that points out that Even Black Market Is Better Than Government. When we think of the black market, we usually think about illegal drugs, prostitution, gambling, and a host of other activities that ought not be illegal. What Minh-Duc is referring to here, however, is about the basic necessities of life (such as food, water, and shelter). Minh-Duc recalls his personal experiences living in Vietnam in the 1970’s and 1980’s following the war:

The Communist Forces took over the South in April 1975 and soon after completely nationalized the economy – even small and pop business was illegal. And within a year of it, consumer goods disappeared from the market. I remember standing in line with my mother for half a day to shop at Cooperative stores and by the time we get to the store, there was nothing worth buying. And in the rare occasions when there are something to buy, it is substandard and inferior products. And when I say substandard, I mean standard of a third world country – which is almost no standard…

[…]

As a natural reaction to the economic situation, the black market emerged. At first, it was simply people battering goods and services. A fisherman would give a fish to a barber in exchange for a haircut. Since farmers were not allowed to sell their agricultural goods. However they could exchange it for other things. Illiterate people would give my mother chicken in exchange for reading lesson. This form of battering would later evolved into the black market, as complex as any market…

[…]

One would assume that in a market that is not regulated (it is an illegal market), there would be much exploitation and cheating. But that was not the cases. There were cheatings, but far and few in between. A merchant’s business depends on his or her reputation. Those who cheat do not survive in the market very long...

[…]

It was the black market that ended the starvation – starvation caused by government action. It was the black market that cured people and gave them a decent quality of life. It was the black market that sustained the entire country economy.

And the winner is…

The Fearless Philosophy Blogpost of the Month for the month of March goes to Chas Sprague of Chas’ Compilation with his post titled: Is Islam compatible with a free society? [WARNING: ALL LINKED POSTS FROM THIS SITE CONTAIN GRAPHIC IMAGES] In this post, Chas makes a very important observation:

The compatibility of Islam with a modern and free society has to be one of the most important questions of our times. Our attitude, the way we approach and deal with the Middle East, depends on it. The more I learn about Islam, the more likely the answer would seem to be "no"; at least not without some degree of reformation.

Over the past month or so I have been reading Chas’ blog; one thing seems very clear to me: this man is on a mission to expose the horrors of Sharia Law (Islomofascism). I’m talking about the horrors the MSM doesn’t want to show you on the nightly news (though they have no problem showing images of a few rogue soldiers abusing these same Neanderthals at Abu Ghraib). I’m talking about women being buried alive for allowing some skin to show or stoned to death for being raped. I’m talking about a culture where it is common to hang men, women, and children from cranes in urban areas for all the town’s people to see. I’m talking about a religious festival where even children are encouraged to take a sword to their scalps to make themselves bleed in a "festival" known as Ashoura (shown in the selected post). We are not at war with a civilization; we are at war with barbarians! To call Sharia a ‘civilization’ would be an insult to civilization.

Shame on all the peace-loving tolerant Muslims out there for allowing these sick bastards to continue to commit these acts in the name of their religion (Though from what little I have read from the Koran, the ‘radical’ Muslims are following their religion more closely than the ‘moderate’ ones. The Koran does mention killing non-Muslims in many places.) I would have to conclude that Islam itself needs to be either seriously reformed from within or outright rejected by the civilized world. When we speak of tolerance, these barbaric traditions cannot be part of the conversation. We should all applaud Chas for daring to expose these barbarians for who they are.

Hats off to the top three posts of March!