Are We in a Recession or Should I Say a “Banana”?

What is a Recession?

In the 1970’s Alfred Khan, an economist who was responsible for fighting inflation during the Carter administration, used the word “banana” as a substitute for “recession” when speaking to the press. His reasoning was that it made people nervous when he used the word “recession.” Apparently, he later switched to “kumquat” when a banana company complained. He was a funny guy.

We seem to be at a similar moment in history. First, let’s get the definitional argument out of the way. The National Bureau of Economic Research (NBER) uses a variety of factors to say whether the economy is in recession. Two consecutive quarters of negative GDP growth are among those criteria, but there are others. But to be honest, lots of people use the two quarter decline in GDP as a marker for a recession and you wont find many historical periods which had two such quarters that are not now considered to have been in a recession.

So what is the big deal?

Folks who root for the Democratic Party are reluctant to have the word “recession” associated with the Biden administration. Folks who cheer for the Republican Party are eager to tar the Biden administration with the term. The argument is pointless. The fact is the economy is slowing down and two quarters of negative GDP growth are a good marker for that.

Is a slow down bad thing?

In my opinion, a slow down is actually exactly what we need. More than a decade of loose monetary policy accompanied by aggressive fiscal stimulus, supply chain problems, and war have created the worst inflation in 40 years. The Federal Reserve needs to bring that inflation under control quickly before inflationary expectations become ingrained. That means higher interest rates with reduced demand for housing, cars, and capital investment. All of those mean a much cooler labor market. In the context of accelerating inflation these are good and necessary things. Ideally the slow down will be mild and brief, but make no mistake it is necessary.

What Should We Call the Current Phase in the Economy?

If it makes you happy you can call it a recession. If you prefer you can call it a temporary slow down (crossing your fingers and hoping for the best). Or you can follow Alfred Kahn’s lead and call it a “banana” or a “kumquat.” Whatever you call it remember it is not, necessarily, a bad thing.

Opportunities to Move Politics Toward the Center.

Vote in the Primaries

Opportunities to Vote for the the Center and Against Extremists

There are a number of excellent opportunities to prune the political tree of extremists today, August 2, 2022.

On the Democratic Side

Representatives Cori Bush (D-Mo.) and Rashida Tlaib (D-Mich.), both members of the so-called Squad are being challenged by more centrist Democrats in their primaries today. Please vote for the centrists. Representative Andy Levin (D-Mich.), a member of the Congressional Progressive Caucus is being challenged by Representative Haley Stevens (D-Mich.), who belongs to the more centrist New Democrat Coalition in a new district created by redistricting. Please vote for the more centrist candidate, Haley Stevens.

On the Republican Side

Donald Trump has, helpfully, compiled a list of candidates to vote against. (A specific list of 25 candidates Trump endorses in today’s primaries is included in this link.) He calls it endorsements. Absent any other information simply voting against these candidates would help move American politics back to the center.

Please Vote

Please vote in the primaries. If we have no centrist candidates to vote for in the general election, we have only ourselves to blame.

Why is Russia Choking Off Gas Supplies and How Should the West Respond?

Why is Russia Chocking Off Natural Gas Supplies?

If an Embargo of Russian Gas is a Good Idea, Why is Russia Cutting Off Supplies?

In earlier posts I have pressed for an embargo on Russian natural gas exports. I still think this makes sense, but I can also see the wisdom of a buyers’ cartel that would cap the price that Europe would pay for Russian gas (also explained here). What gave me pause in these thoughts was Putin’s decision (and I am assuming it was his idea) to reduce Russian gas exports through the Nord Stream pipeline. Why would he voluntarily forego this revenue? Does he really think it hurts the West more than it hurts him? Does he just think that Western leaders, particularly German leaders, are so weak-willed that even a small amount of pain will cause them to collapse like a house of cards? Is he just acting like a spoiled child, threatening to hold his breath until his parents give in?

The Role of Contracts

One clue as to what is behind the choking off of gas supplies is the excuse offered: technical problems with the generators that push the gas through the pipeline. The company responsible for maintaining the compressors says that it is unaware of any problems. Why offer this excuse? Presumably the gas flowing through the Nord Stream pipeline is sold under a long-term contract with a fixed price (or some complicated formula that limits the extent of fluctuation in the price). What this means is that even though natural gas prices in Europe are exceptionally high, Russia is receiving a price for the gas that is substantially lower.

Isn’t Russia Contractually Obligated to Supply the Gas?

There is, probably, an out in the contract, for technical problems or “acts of god” that make it difficult to supply the gas. My guess is that Putin is using this ruse to limit Europe’s ability to stockpile gas for this coming winter.

What Should the West Do?

If there are contracts that govern the sale of gas through Nord Stream and other pipelines, the West ought to seize the opportunity created by Russia’s abrogation of its responsibilities under those contracts. The West should “renegotiate” the terms of purchase under those contracts at a lower fixed price determined by a Western buyers’ cartel. By the way, there is no reason why this arrangement should not survive the end of Russia’s war against Ukraine. It is important to remember that this is at least the second time that Russia has, probably, violated the terms of its contracts. The first was when they insisted on payment in rubles.

Would this Work?

I am assuming a lot of facts in this argument and would welcome others, who know the details of the Nord Stream agreement, to weigh in. However, if I am right, a buyers’ cartel for gas delivered by pipeline from Russia to Western Europe could accomplish two important objectives. One, it would deny Putin an important source of funds for carrying out his unprovoked war against Ukraine. Two, it would mitigate the harm to Western Europe from continuing to impose sanctions on Russia.

What Would Putin Do?

In response, Putin could do any of the following. First, he could realize that, in the long run, his situation is hopeless and withdraw his forces from all of Ukraine and cease all hostile acts against Ukraine. (I know this isn’t likely, but one can only hope that at some point Putin will come to his senses.) Or second, he could double down on the spoiled child model and refuse to sell gas at the cartel price, in which case we have a de facto embargo. Or third, he could accept that, once again, he has overplayed his hand and accept what he is offered for his gas.

Inflation: What Should the Fed Do and How Far Should It Go?

U.S. Federal Reserve Bank

Inflation is about Monetary Policy

Inflation appears to be at the top of everyone’s mind lately. That is understandable given that current inflation rates are at 40 year highs. It is likely to play a major role in determining the outcome of the 2022 mid-term elections, despite the fact that there is much bi-partisan blame to be parceled out for the current high rates of inflation. There are, also, a lot of silly proposals on the table for combating it, e.g. price controls and gas tax holidays. There are also some ideas that may be reasonable policy suggestions, in their own right, but have nothing to do with inflation, e.g. lowering tariffs, allowing Medicare to negotiate some drug prices, or facilitating more domestic energy production.

Milton Friedman, a Noble prize winning economist famous for his work on monetary theory and policy, said that “inflation is always and everywhere a monetary phenomenon.” Things like supply chain problems, higher oil and gas prices, Russia’s invasion of Ukraine, the rapid snap back from the Covid 19 induced recession, and aggressive fiscal policy did play a role. They helped to kick start the current inflation, but in the absence of accommodating monetary policy they would not have caused persistent inflation.

The Theory

In theory, all of the above would have resulted in some things becoming more expensive. Absent monetary accommodation, these price increases would have been accompanied by declining prices for other goods and services. If those price declines did not materialize, because of “sticky wages and prices” we would have seen a recession until the under-employment of labor and other resources forced a relative price adjustment.

Evidence Backing the Theory

Those who think this is just theory should take a look at the inflation rates in Switzerland. The inflation rate in Switzerland (3.4%) is about half that of the rest of Europe (8.6%), yet virtually all of the litany of other factors listed above were present for Switzerland. What is different? Switzerland does not use the Euro and Switzerland’s monetary policy is not controlled by the European Central Bank (the European version of the Fed). Also of note is Turkey, which runs its own, extremely loose, monetary policy and has an inflation rate of 78.6%.

The History: The Fed, The Energy Crisis, and Monetary Policy in the 1970’s

In the 1970’s the Federal Reserve Board attempted to avert a recession, in the aftermath of that decade’s oil price shocks, by expanding the money supply. The idea was to produce just enough inflation so that wages and prices for non-energy intensive goods could decline in real terms (but stay constant in nominal terms) while prices in energy intensive industries could increase in real and nominal terms. Done just right this results in mild inflation and no recession. Sadly, the strategy is nearly impossible to execute properly. The problem is that inflation, once started is devilishly difficult to stop. The result was the “stagflation” of the 1970’s, high inflation and low growth. It was not until Paul Volcker really put the screws to the system, in the early 1980’s, and drove interest rates over 20%, that inflation was finally crushed.

What Should the Fed Do Now?

The policy solution is straight forward, if somewhat distasteful. The Fed needs to reduce the rate of growth of the money supply and quickly raise real interest rates with all of the tools it has at its disposal.

Calculation of Real Interest Rates

Real interest rates are the difference between the nominal interest rate and the expected rate of inflation.

The 10 Year Real Interest Rate

In calculating real interest rates it is important to subtract an estimate of inflationary expectations rather than a historical inflation rate, like the CPI, from current interest rates. The problem with using calculated measures of inflation, like the Consumer Price Index (CPI), is that they are backward looking and the current interest rate is forward looking. If we use the current nominal yield on 10 year Treasuries of 2.9% and the Federal Reserve Bank of St. Louis’ estimate of average inflationary expectations over 10 years of 2.34%, the real 10 year interest rate is 0.56% (2.9 minus 2.34), or nearly zero.

The Short Term Real Interest Rate

If we use the New York Fed’s estimate of 12 month forward inflationary expectations of 6.8%, the real short-term (one year) interest rate is -3.8% based on the current nominal yield on Treasuries of about 3%.

However you look at it, real interest rates, despite recent Fed action, are still either extremely low or significantly negative.

What Should the Target Be?

How high should the Fed push real interest rates? Reasonable people can disagree about the target and the speed for getting there. My own preference would be to see real short-term (1 year) interest rates at about 1-2% and long term (10-30 year) real rates of 3-4%. Getting there will require nominal interest rates in the high single digits or possibly higher. I am not sure what the appropriate speed should be to reach this target but I am sure that it is faster than the Fed is currently moving.

Will this Mean a Recession?

Maybe, but the longer we wait before trying to bring inflation down, the deeper and longer lasting the recession will be. We have already waited too long.

Hypocrisy of Supporting the Most Extreme Candidate in the Other Party.

Vote to Prune the Political Field of Extremists

I am dismayed by reports that Democrats worked successfully to promote the candidacy of the an extreme right wing candidate in the Maryland Republican primary race for governor. Can it be the case that these folks believe that the only way they can get an odiously left-wing Democrat elected is by having an even more odiously right-wing Republican as their opponent?

The Centrist Independent Voter recommends that Democrats and Republicans cross party lines, where it is permitted, to vote for more centrist candidates. The intent of this strategy is to increase the likelihood that the general election will present voters with acceptable, if not always ideal choices. For more on this issue, visit the strategy discussion on the Candidates page of this web site.

Sadly, what seems to be emerging is the opposite strategy, where Democratic funds and voters are being directed to elect the most extreme candidates in the Republican primaries. The tactic actually has a name, it is called the “Pied Piper” strategy. It was also, reportedly, used by Gov. J.B. Pritzger (D), in Illinois, to promote the candidacy of a weaker, more right-wing Republican candidate in the Republican primary. In Pennsylvania, Democrats helped push state Sen. Doug Mastriano, an avid Trump supporter, to victory in the Republican primary for governor.

In the up-coming August 2nd primary, in Arizona, Democrats are working to support another Trump endorsed candidate, Kari Lake, against the establishment backed candidate Karrin Taylor Robson.

I am unaware of the same tactic being adopted by Republicans. If Republicans are also using this tactic, I find it equally hypocritical. Please let me know, through the comment section below, if you know of other examples of either party promoting extremist opposition candidates.

How can Democratic or Republican loyalists decry the extremism of the other party while working to make the other party’s candidates as extreme as possible?

Apart from the hypocrisy, support for the other party’s most extreme candidate is a dangerous strategy. Candidates fall ill, scandals happen, and the electoral mood shifts. It does not take much imagination to see these weak opposition candidates sometimes winning. Remember, many Democrats, including Hillary Clinton’s staff in a memo to the DNC, cheered Trump and other far right candidates, in 2015, because they thought them unelectable.

How to Discourage this Strategy

This dangerous strategy of promoting your opposition’s most extreme candidate works best in plurality primaries, i.e. ones which do not require a runoff to determine a winner by a majority. The best protection against this strategy is a ranked choice primary, with an instant runoff. The Centrist Independent Voter favors this approach for a number of reasons. To learn more about it visit our policy position on Voting Rights and Reforms.

Packing the Court vs. Ending the Filibuster?

The U.S. Capital Building and The U.S. Supreme Court

In response to the recent Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, which overturned Roe v. Wade, there have been proposals to eliminate the filibuster rule and also to enlarge the number of justices on the Supreme Court. The Centrist Independent Voter opposes expanding the size of the Supreme Court and getting rid of the filibuster rule in the Senate. Our feeling is that packing the Court would result in an endless cycle of Court expansion as party control shifts over time. Similarly, the end of the filibuster would mean that every time the planets aligned with one party in control of the House, Senate, and the Presidency, major legislation would be enacted or repealed, reversing course on a limitless number of issues.

But what if we had to choose?

Suppose we could either hold onto a stable size for the Court or hold onto the filibuster rule, but not both. What should we choose? In that case, my preference would be to keep the Court stable and move toward simple majority rule in the Senate.

The Role of the Court as a Safety Valve, Securing the Consent of the Governed

The current conservative Court is taking the position that the Court’s previous decision in Roe was constitutionally unjustified. They argue that the decision made by the previous Court was a legislative prerogative, and not up to the Court to decide based on a constitutional right to abortion.

The current Court is not taking a position on the policy issue; it is just saying that it is not up to the Court to decide this issue. I would have preferred that they let the precedent stand, but their argument is not unreasonable. But what if the federal legislature is institutionally unable to reflect popular sentiment? For roughly three quarters of a century, the Court has acted as a safety valve. In Brown v. the Board of Education, Roe v. Wade, Griswold v. Connecticut, Lawrence v. Texas, and in Obergefell v. Hodges, the Court has stepped in to resolve issues on which majority opinion, in most if not all of these cases, would have been frustrated by the filibuster rule. Whatever one thinks about the constitutional reasoning in these cases (and I am not disputing that reasoning), the Court served a useful purpose in securing the consent of the governed by reflecting the popular will. This may not be the proper role for the Supreme Court, but it can be argued that it was a useful one.

The Case Against Expanding the Court

There is nothing in the Constitution that dictates the size of the court. It has varied over time from as few as 6 to as many as 10. Re-establishing a liberal court would require increasing the Court to 13. If this were done we could expect that every time the House, Senate and Presidency were all controlled by the same party the Court would be enlarged again without limit. The notion of a massive Supreme Court, flipping every few years in its interpretation of the Constitution is enough to persuade most people that this would be a bad idea.

The Case for Abandoning the Filibuster Rule

If we reject enlarging the Court and the Court refuses to take on the role of providing a backstop when the legislature seems institutionally incapable of representing the will of the governed, what can be done? The obvious answer seems to be reforming the legislature to make it more responsive to the popular will. The simplest solution appears to be going to strict majority rule in the Senate.

The Case Against Abandoning the Filibuster Rule

The case against abandoning the filibuster rule is similar to the case against enlarging the Court. When the House, the Senate, and the Presidency are all controlled by the same party we could expect to see 180 degree turns in public policy, with old legislation being repealed and new legislation being added, reversing the course of public policy. Given the need for stability in public policy, particularly in areas that require long range planning, this seems like a recipe for disaster. To understand the reluctance of some Democrats for eliminating the filibuster one only has to contemplate a national prohibition on abortion.

How Often Does One Party have Total Control of the Federal Government?

Just how dangerous would it be to end the filibuster rule? Partly this depends on the frequency of single party control over the federal government. Unfortunately, single party control, for brief periods of time, is extremely common. Because so many people just vote the party ticket of the President they are choosing, we often have single party control upon the election of a new President. Split ticket voting in Presidential election years is relatively rare and stable at about 4%. The danger of frequent legislative flip-flops is, therefore, all too real.

So Why is Abandoning the Filibuster Superior to Packing the Court?

Abandoning the filibuster rule is better because it can be beneficial if it is done as a half measure. Packing the Court only changes the outcome if it establishes a new majority. Reducing the required vote for cloture (closing off debate and voting) to 55 Senators rather than the current requirement of 60 could yield benefits without losing the benefits of the filibuster rule altogether. Nothing is sacred about the 60 vote limit. In the past, the rule was reduced from 67 Senators to the current 60. Setting the threshold at 55 could allow some legislation, on which there is a measure of bi-partisan support, to get through the Senate. I am thinking that, with a little electoral luck, narrowly crafted legislative protection for the rights embodied under Roe could meet this test. I also think that stronger legislation on universal background checks, age restrictions on the purchase of assault weapons, and better enforcement of red flag laws might also meet this test. It is also the case that 55 Senators, from one party, might be achieved occasionally but not so often as a simple majority. This all makes for a more responsive legislature, but hedges, at least a little, against frequent policy reversals.

What can be done to make this happen?

The reason why the filibuster persists is that both parties recognize the danger of occasionally handing that kind of power to the other side. I don’t think that is likely to change soon, although the concern would be alleviated by the presence of a large number of moderate Republicans and Democrats in the legislature. Putting aside wishful thinking about a less polarized political environment, our best hope is that both sides will see the advantage of weakening, but not abandoning, the filibuster rule and leaving the Court alone. It allows both sides to believe that they might ultimately prevail and mitigates the outcome if they fail to do so.

Price Cap on Russian Oil and Gas Exports?

Oil Or Gas Transportation
Oil tanker on the high sea

There is a proposal, backed by the U.S., to cap the price of oil and gas purchased from Russia. Janet Yellen, the U.S. Treasury Secretary, is apparently attempting to find international support for this plan. I am skeptical that this proposal will work, but it is not impossible.

The first thing to remember is that even if it does work, the objective is to deny Russia some of the revenues from its energy exports. Even if it worked perfectly, it would not lower world oil and gas prices. Why? Because world oil and gas prices are determined by global supply and demand. Capping the price that Russia can receive for its exports will not affect either supply or demand, unless it causes Russia to export less.

That is not to say that a price cap is a bad idea. There are two ways in which it might work.

The first way recognizes that the West has a degree of market power over Russian exports that must arrive by pipeline. If there is no feasible way for Russia to redirect these exports to other markets, Western countries can exercise that power by collectively refusing to pay more than the cap. If Russia wants any revenue from these exports it must accept the price cap. The oil and gas purchased through this buyer’s cartel can then be resold at market prices. The best way of doing this is for the oil and gas to be auctioned off by the buyer’s cartel with the difference between the price cap and the market price being shared by the participants in the buyer’s cartel.

The second way that the price cap might work, that is often mentioned in the press, is for the West to use its control over finance, shipping and insurance markets to coerce Russia to sell its oil and gas exports at the price cap. The problem with this mechanism is that it would be difficult to prevent purchasers from separately compensating Russia for the sale. If China or India, for example, receive the discounted oil and gas they can have a side deal to pay Russia the difference between the price cap and the market price or some portion of it. It is not at all clear to me how we intend to prevent these side deals. It is also not clear to me why Russia would sell its exports to anyone unwilling to provide the side payment.

My feeling is that the first of these two plans is plausible and worth trying. The second proposal strikes me as very difficult to execute effectively. It would leak faster than a ruptured tanker.

June 28, Illinois Republican Primary for Governor.

Illinois Republican Primary for Governor

We are mostly concentrating on the primaries for the U.S. Senate, but we are occasionally endorsing candidates in the House races and a few notable races for governor.

The Illinois Republican primary for Governor is an interesting opportunity to pull the Republican Party back from Trumpism, by voting against the Trump backed candidate. The Democratic Governors Association is trying to aid Darren Bailey, the Trump backed Republican candidate, because they think he is so extreme that he will be easier to defeat in the general election. Illinois also has a form of open primary, in which it is possible for Democrats and independents to declare a Republican affiliation when they vote in the primary and receive a Republican ballot.

Efforts by the Democratic Governors Association to support the ultra conservative Republican candidate strikes us as playing with fire. We also think that voters who vote for the ultra conservative candidate because they feel that he will be easier to defeat in the general election are also making a serious mistake. Candidates have health problems, scandals emerge, and moods change between the primaries and the general election. It is far more important to have reasonable candidates in the general election, than to take this risk.

Ken Griffin, an Illinois billionaire, has spent millions promoting the candidacy of Aurora Mayor Richard Irvin. Irvin is a moderate Republican. His moderate policy positions, plus his opponent’s endorsement by Donald Trump, secure our endorsement in the Republican Primary. We, therefore, endorse Richard Irvin for Governor in the Illinois Republican primary.

J.B. Pritzger, the incumbent Democratic Governor of Illinois, is a heavy favorite to win in the Democratic party primary.

June 28, Colorado Democratic and Republican Primary Endorsements

Vote in the Colorado Primaries

Colorado presents some interesting dilemmas for Centrist Independent Voters. Because Colorado allows “unaffiliated registrants” (a large voting block) to vote in either party’s primary, it provides an interesting illustration of the Centrist Independent Voter strategy. To put it as succinctly as possible we suggest: prune the field of extremists. We view this as far more important than trying to assure the victory of whichever party you favor.

The U.S. Senate

Michael Bennet is the incumbent and is running unopposed in the Democratic Primary.

There are three candidates running in the Republican Primary for the U.S. Senate: Ron Hanks, Joe O’Dea, and Daniel Hendricks (a write-in candidate). Ron Hanks holds an extreme pro-life position (no exceptions) and is a supporter of the “Big Lie” theory that Trump won the 2022 election. Joe O’Dea is reliably conservative but more moderate on abortion rights and he does not believe that Trump won the 2020 election. Hendricks is a mystery to us but he is unlikely to play a role as a relatively unknown write-in candidate. The Centrist Independent Voter endorsement in this primary goes to O’Dea.

There is a complexity here and it illustrates our philosophy with regard to voting in the primaries. There is a charge that a Super PAC, associated with the Democratic Party is trying to promote the candidacy of Ron Hanks. The theory is that this PAC believes that Hanks will be a weaker candidate against Michael Bennet in the general election because Hanks is so extreme. This strategy, which some people believe played a role in Trump’s early successes in Republican primaries in 2016, is playing with fire.

The best hope for our democracy is that we populate the general election with moderate candidates from both parties and let the chips fall where they may. There is just too much at risk to allow extremists of either the right or the left show up in the general election. A candidate’s health can change, scandals emerge, and moods shift. We are all better off if the general election ballot is a contest of moderates who lean right or left but are reasonable people.

The U.S. House of Representatives

As I have mentioned before, the Centrist Independent Voter does not, currently, have the resources to cover all congressional races. For that reason we have been concentrating on the races for the U.S. Senate. Colorado is an exception because Rep. Lauren Boebert, from Colorado’s 3rd Congressional District, is so extremely right wing. She is in the Centrist Independent Voter’s Rogues Gallery of candidates we could never endorse. Her involvement in the events surrounding the attack on the Capitol on January 6th were enough for her to make this list, but she also opposed aid to Ukraine, and opposed the bi-partisan infrastructure bill.

Her opponent is Don Coram. Coram appears to be a classical conservative Republican, principally focused on issues of concern for Colorado. The Centrist Independent Voter endorsement goes to Coram.

Unaffiliated registrants who vote in the Republican primary will have to forgo voting in the Democratic primary. Since Bennet is unopposed in the Senate race this does not matter. There are, however, three candidates vying for the Democratic nomination for the District 3 House seat. They are: Adam Frisch, Sol Sandoval, and Alex Walker. Of these, Adam Frisch gets our endorsement. Frisch has promised to join the Problem Solvers Caucus in the House, which is a major factor in his favor.

CIVPAC Endorsement

Of course, the decision to vote in either the Republican or Democratic primary will depend on a lot of other issues, including races for other offices and ballot resolutions, if any. Putting those aside, our recommendation is that Republican and unaffiliated registrants vote in the Republican primary for Joe O’Dea for Senate and Don Coram (if you are in District 3) for the House. If you are a registered Democrat, we endorse Michael Bennet for Senate and Adam Frisch (if you are in District 3) for the House.

“Galactically Stupid” Policy Ideas

Galactially Stupid Policy Ideas

The Centrist Independent Voter publishes a Rogues Gallery of candidates that we view as so extreme that we would never endorse them.

I think it is time for us to publish a list of policy ideas that are so counterproductive that we would never support them. To achieve this august status, a policy proposal has to not only be less than the best solution, it has to actually make the situation it is intended to solve, worse. I propose that we call these policies “Galactically Stupid.” The phrase is borrowed from “A Few Good Men,” a movie from 1992.

Not all bad public policies are “Galactically Stupid.” Some policies are just bad because there are better ways of accomplishing the same thing. Regulations on emissions of pollution are worse than taxing pollutants but such regulations are better than doing nothing at all.

That said, some policy ideas are just dumb on an interstellar scale.

Galactically Stupid Ideas on the Left

Price Controls

Candidates for the status of Galactically Stupid on the left include: wage and price controls, “windfall” profits taxes, anti-price gouging laws, and rent controls. If you sense a common theme, you are right. All of these involve the government trying to regulate prices.

Prices serve a vital role in an economy. They signal goods whose production needs to be increased or decreased. They signal places where goods are in short supply and thereby direct supplies to those regions. They signal activities that require more investment, or less. Attempt to governmentally control prices and you create shortages, lines and other inefficient forms of rationing, including black markets.

Generally, price controls raise the real price of goods being regulated by making those goods more scarce. You may not see that price, but you will experience it through the difficulty of finding the regulated good at the official price.

President Biden’s implicit threat to regulate refinery margins qualifies as Galactically Stupid. Elizabeth Warren’s anti-price gouging legislation also falls into this group. To understand how bad these policy positions are, it is helpful to reflect on why refinery margins are high right now. Demand for gasoline and refinery margins cratered during the pandemic and many refineries were shut down. When gasoline demand rebounded, refiners were reluctant to invest in reopening those refineries or building new ones. Who would feel like doing so in a “heads I lose, tails you win” environment? Talk of eliminating fossil fuels doesn’t help either, in terms of incentives for refinery expansion.

So having created a problem by destroying incentives for refinery expansion or new refineries, left wing populists use the inevitably higher refinery margins that follow to justify price controls or windfall profits taxes that make the situation worse.

Non-Global Solutions to Global Warming

Unilateral approaches to climate change that fail to address the global nature of the problem also strike me as Galactically Stupid. Banning the use of fossil fuels in America is counterproductive if it simply shifts the production of energy intensive goods to China or India. Remember, the goods then have to be shipped back here with a net increase in green house gas emissions.

The Centrist Independent Voter does believe that climate change is a serious problem and supports a carbon tax with an associated tariff as the best way for dealing with the problem. We suggest that solution because it recognizes the inherently global nature of the problem.

Galactic Stupidity Ideas on the Right

So far, all of my suggestions for Galactically Stupid public policy solutions have come from the left. There is no shortage of Galactically Stupid ideas coming out of the right.

Intransigence on Gun Control/Gun Safety Laws

One that comes to mind is the position that no gun safety/control legislation can be justified. While the Centrist Independent Voter supports the Heller decision that the Constitution guarantees an individual right to bear arms, we also agree with the Supreme Court that this right is not unlimited. Refusal to even contemplate any restrictions on gun ownership only results in increased support for total bans on gun ownership with each mass shooting.

Isolationism

Right wing isolationists, like Sen. Rand Paul, also increase the likelihood that the United States will have to expend lives and money defending ourselves against emboldened and strengthened adversaries, made more powerful by America’s failure to confront them earlier. For these and other reasons, Rand Paul appears in the Centrist Independent Voter’s Rogues Gallery of candidates we can never endorse.

Galactically Stupid Populist Ideas

Protectionism

It has now become acceptable for both Republican and Democratic populist politicians to blame international trade for the loss of U.S. manufacturing jobs. The policy suggestion is higher tariffs on imports and re-writing free trade agreements, like NAFTA, to reflect a more protectionist point of view. (This the purpose of Trump’s USMCA agreement.) The truth is that the relative decline in U.S. manufacturing jobs has far more to do with technological change than foreign competition. It is also important to remember that low cost supply chains are crucial for U.S. competitiveness in global markets.

So what happens when we institute protective tariffs? Well, first the world becomes poorer as other countries do the same and global manufacturing becomes more expensive. Second, the temporarily higher wages in the U.S. accelerate automation and those jobs are permanently eliminated.

Don’t get me wrong. I am not an advocate of unilateral adoption of free trade policies. Sensibly negotiated mutual trade pacts, like NAFTA and the Trans Pacific Partnership (TPP), we’re win-win situations for the participants. The Centrist Independent Voter supports expanding these efforts.

I am also aware that some technologies should not be shared with countries that are antagonistic toward U.S. interests, like Russia and China.

Any Recommendations?

If you can think of other policy proposals that deserve to be labeled Galactically Stupid, please submit them in the comment section below. Remember the key thing that qualifies a policy for this category is that it is counterproductive to solving the problem that the policy addresses.