Speculators and the Price of Gasoline - Discussion

This is an issue that I had not originally intended to discuss. But since it is one of the favorite hobbyhorses of the Left and since Eric Offner of Manhasset Hills, NY has been raising this issue forcefully, I discussed it in my post of March 29, under the heading "Control of the Weather (Discussion)." Offner has now chosen to pursue this, which prompted me to do a fairly long dissertation on the subject. I now want to share my analysis with my readers.

Offner wrote:

First see the article in Business Week entitled "Why Obama's Crackdown on Oil Speculators Won't Work." 

Then answer these questions:

1.) If a crackdown on oil speculators won’t work, does it not imply that there are oil speculators?

2.) Is it possible that Wall Street oil speculators affect the price of oil?

3.) The bigger question is whether speculation on food, water and other necessities exists and whether such action is ethical?

4.) Is failure to restrict unethical behavior unethical?

My response to his questions is set forth under corresponding numbers:

1.) Yes of course there are. The question should not be whether there are speculators but whether it is ever possible to eliminate them and whether they are bad. The answer is that it is not possible to eliminate them and in many cases not even possible to regulate them. Sometimes they are bad, sometimes good, most often neither.

2.) It is not only possible, it is probable. But that is not necessarily bad. Look at the article you sent me. He argues convincingly that speculators even-out the speed at which prices change. Without them, as happened some years ago the price can quadruple almost over-night and a more gradual rise is better for the economy and consumers.

3.) Yes and Yes. Let me take this down to basics. There is a rumor that sugar, or for that matter water, will be in short supply. Most people, i.e. consumers upon hearing this will head for the markets and hoard it. The result is the price goes up and soon the shelves are empty. A self-fulfilling prophecy. Now let us suppose a larger speculator wants to take advantage of the situation and so he goes out and buys many tons of sugar, puts them in a ware house (or he buys futures) and then taking advantage of the rising prices resells it at a hefty profit. As he and others begin to sell the price goes down. Is he/she now a good speculator? How do you stop this? Do you make it illegal for anyone to buy more than a certain amount? How do you determine the amount? How would this effect a legitimate store or a legitimate wholesaler, who by the nature of their trade must buy large amounts?

The way to stop this is price controls and rationing which brings about a black market, where the price is even higher and even less sugar in the stores. We are now seeing this in Venezuela.

Are there times when rationing and price controls are appropriate? Yes!!! But only in extreme cases, such as war-time, when the evils of the black market are preferred to letting hoarding control, but it is always a close question. Where the hoarding is by a limited group, intent on creating shortages and raising prices, it falls afoul of the anti-trust laws and definitely should be prosecuted.

Is Obama's approach sound? I don't know, but it is good politics. He is doing something!!!

Raising the margin price on commodities speculation seems like a sensible thing to do, but it takes someone more knowledgeable than I to analyze the consequences. The article you sent me seems knowledgeable and objective.

I will say this. When Allan Greenspan talked about the stock market suffering from irrational exuberance, the obvious thing to do, as far as I could see and still believe, was to raise the margin requirement, which was within the power of the Fed, but because of Greenspan's hostility to all regulations this was not done - ditto for so many other things that could have headed off the crash.

But I don't know the commodities market - We apparently have regulations but we need money to enforce them. Everything else is shooting in the dark. Simplistic answers whether from Left or Right rarely have any merit.

The article in Business Week appears to be an intelligent one. It recognizes that regulations are important and need enforcing by the CFTC. Thus it is apparent that we have regulations in place that are not being enforced, or at least not being enforced adequately. But the Republican Congress will never appropriate the money needed. Instead, they will make sure that what can be done is not done, and then blame the President, who can only do so much without Congress' help.

There are many problems with the world's food supply that are exacerbated by US policy.

The use of US ethanol as an additive to gasoline has created a shortage of corn and driven the price higher, but the corn lobby will prevent Congress from changing this.

Our foreign aid program with food is counter-productive. The law requires that we not give money to aid organizations for food aid, but rather buy the food from American farmers at much higher prices than we could buy it on the world market and it must be shipped in US vessels. If the law would allow our aid to be by buying the food from African farmers, we would save money both in the price of the food and in the shipping costs and we would aid the African economy. Now it enriches the American corporate farmers and hurts the African economy because it competes with the African grown food and drives that price down.

4.) No and the question is irrelevant since I have said such action is not unethical. But even where it is unethical there is always a weighing of unintended consequences. Simplistic questions and simplistic answers to complex problems are, well, simplistic.

I then added:

The oil market is a world market. How do you regulate trades made outside the US? If you rationed gasoline in the US, it would have no effect on the price of oil on world markets. If you had price controls on gasoline that were below the world price of oil, no one could afford to sell gasoline, since they would lose money on every gallon. World markets and globalization make a new ball game. But we can no more change it than we could stop the industrial revolution and now the technological revolution that brought about globalization.

Furthermore a high price of gas is not bad. It makes clean energy and conservation much more competitive

Even boycotts have limitations. We put a boycott on Iranian oil. But if China does not join the boycott, can it be effective? The boycott might force the price of Iranian oil to go down, in which case China gets a windfall. How do you stop this? Only with a full fledged blockade of Iran, an act of war, which would put us in conflict with China and get Iran to try to close the Straight of Hormuz. Can you imagine what the price of oil would go up to? Speculators will make a lot of money, but they are not causing the price rise - they are taking advantage of it. Is there anything we can do - yes, but I am not smart enough to know what. Ask Barney Frank - he understands these things better than I do, and while I am talking about Barney Frank I commend to you an interview of him, which appeared in New York Magazine.

Also we do have laws on the books and the Commodities and Exchange Commission, which needs more funding as recommended in the article you sent me to enforce the laws and regulations. But the Republicans will never authorize this. What can we do? Get rid of them to whatever extent we can.

But I get tired of the Left and their "it’s the speculators.”

Finally allow me to add that while normally a two party system benefits the country, now a defeat of the Republican Party to the point where we have only one party has the best hope of reforming the system. Now it is broken and can't be fixed. In our system a one party system would not last long. The Democratic Party would split in two.

Talk of a third party in our system is very counter-productive. It would make sense if we had run-offs as e.g. the French and most of the world do.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

The Bishops and the Nuns

I think that by now most everyone is familiar with the reprimand directed by the Vatican against the order of nuns the Leadership Conference of Women Religious for allegedly challenging church teachings on “homosexuality and the male-only priesthood," and promoting “radical feminist themes incompatible with the Catholic faith.” Those not familiar with the matter can read the news article as it appeared in the New York Times here.

One of my subscribers, Pat Burns of Edgewater, NJ, a lifelong Catholic, spoke out in a Letter to the Editor of the New York Times, which was printed in the April 20 edition of the paper as follows:

A Lifelong Catholic Pays Tribute to the Nuns

To the Editor:

Re “Vatican Reprimands a Group of U.S. Nuns and Plans Changes” (news article, April 19):

I am a lifelong Catholic, 80-plus years, and will die a Catholic. But I will not be silent in my support of the tireless work and dedication of the wonderful nuns who serve the poor and the helpless, the sick and infirm, the children and elderly, who even go to jail for the cause of protesting the evil of war and nuclear threats to humanity and the world.

I will speak out loudly in protest at the Vatican document’s citing of nuns for, as your article says, focusing “too much on poverty and economic injustice, while keeping ‘silent’ on abortion and same-sex marriage.”

How can there ever be too much focus on poverty and economic injustice? And how can the Vatican justly rebuke women busy selflessly carrying out Christ’s work caring for the least of our brethren for being silent on abortion and homosexuality, while for decades bishops were silent about grave sins against the innocent in their care?

Herewith is my tribute to the thousands of nuns who deserve our respect and admiration. I am having shirts made up for my Catholic and non-Catholic friends and family to wear that state, "I’m with her!”

Upon seeing the letter I wrote to Ms. Burns:

Allow me to congratulate you on the excellent letter entitled: "A Lifelong Catholic Pays Tribute to the Nuns" that was published by the New York Times today. As always your voice is a beacon of light.

                       

In case you haven’t seen it, the Washington Post’s E. J. Dione, himself a life-long Catholic, also published an excellent article on the subject, which I quote below:

Catholic Bishops’ double message

By E.J. Dionne Jr.

I identify entirely with my friend and colleague Melinda Hennenberger’s excellent take on the Vatican’s crackdown on American nuns. Indeed, I also liked what one commenter on her piece had to say: “The American Bishops should be washing the feet of American nuns and sisters!” Actually, all of us who are Catholic should honor the nuns. The Church would be lost without them. I hope to have more to say on this unfortunate Vatican statement next week.

It’s especially odd that a criticism of the Leadership Conference of Women Religious for apparently placing too much emphasis on Catholic social teaching came in the same week that the Bishops offered strong criticism of Rep. Paul Ryan’s budget (without mentioning Ryan by name). A letter signed by Bishop Stephen E. Blaire on behalf of his fellow prelates called on Congress to “protect essential programs that serve poor and hungry people over subsidies that assist large and relatively well-off agricultural enterprises.” He also said: “Cuts to nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP) will hurt hungry children, poor families, vulnerable seniors and workers who cannot find employment. These cuts are unjustified and wrong.”

There is a real struggle going on in the Church right now between conservatives, who seem intent on making President Obama a target and downplaying the Church’s social mission, and more progressive Catholics, who think the Church should be placing even more emphasis on social justice and issue more emphatic rejections of budget cuts along the lines of Bishop Blaire’s letter. Conservatives have had the upper hand over the last few months, but Bishop Blaire’s statement can be seen in part as a response to the pushback from Catholic liberals who wondered where the Bishops have been in the ongoing budget fight. (Blaire, it should be said, has a strong social justice commitment of his own.)

My hunch is that the attack on the nuns will bring a lot more blowback from progressive Catholics. Up to now, Catholic conservatives have been especially aggressive in pushing the Bishops’ Conference to the right. The Bishops will now be getting a lot more pressure from Catholics on the other side. I think conservatives will ultimately regret targeting the sisters. The nuns have a great many friends in the Church.

The article can be found here.

I then added:

As a non-Catholic, but a keen observer of the Church, I am dismayed at the constant chipping away of the reforms of the Second Vatican Council under Pope John XXIII, who, unfortunately, did not enshrine his legacy by appointing many like minded Cardinals.

I am also surprised that the church leaders, in the Vatican and in the US bishops conference are not more meek in their attack on the church’s mission to aid, assist and protect the poor, particularly after the sex sandals that engulfed and are still engulfing the Bishops, though, I am glad to note that Bishop Stephen P. Blair called on Congress to “protect essential programs that serve poor and hungry people over subsidies that assist large and relatively well-off agricultural enterprises.”

The real shame is the media, who give far more coverage to the churches unfortunate positions, and very little to positives such as the sisters and Bishop Stephen P. Blair's statement.

As in any institution, and indeed in mankind itself, the battle between good and evil is never-ending.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

Education

My last post "Supreme Court on the Health Care Reform Law & the Ryan (Republican) Budget" was posted and distributed on April 6^th. In that post I explained that my discussion entitled “It’s All About Race” would have to be postponed and now I feel I must do so again, but his time indefinitely. However, I will address this complex and difficult subject in due course.

Now to revert to my post as set forth above, Ernest Hauser of the Bronx, NY called my attention to an error. I stated that the Budget Control Act of 2011 was passed in the Senate by a vote of 74 to 26 with 55 Republicans voting for it. Hauser pointed out that this was impossible since there are only 47 Republicans in the Senate. I should have said “with 28 Republicans voting for it.” Sorry for the error.

I also made a misstatement when I said it has not been reviewed by the CBO. This assertion was made after a long and fruitless search for a CBO analysis caused me to conclude that it did not exist. However, in a NewYorker article by James Surowiecki there is a reference to a CBO analysis. Therefore I stand corrected. Mea culpa!

On the other hand Albert Nekimken PhD of Vienna, Virginia and the author of four books complimented me with this:

Well done, as usual. I haven't had time to follow up all of your links included here, but thanks for doing such meticulous work in documenting the ongoing, attempted Republican takeover of our governmental institutions. It's a sad read.

What prompted me to address the subject of education was an insightful article that was posted on the blog of one of my subscribers, Roger Berkley of Woodcliff Lake, NJ, President and CEO of Weave Corporation and past President of the National Textile association. His article is a must read and can be found here.

It was that article that prompted me to respond to it as follows:

You are right that Santorum as an individual is no longer relevant, but as a philosophy, and as one who undoubtedly speaks for millions, he is very relevant.

                       

It is interesting to note that Santorum knocks education for others, while he himself has a BA an MBA and a JD. How hypocritical for a man who has spent so much time, money and effort gaining an education. Talk about elitism. It’s good for him, but not for those adoring followers of his, who in his view, don't need, and shouldn't want the benefits that an education has bestowed on him. Why can't they see what contempt that shows?

                       

Whether it is Santorum or Romney or Ryan - none of them are interested in making education available to the broad population. They want it to be for an elite group like themselves, who will rule over us and tell us that it isn't about achieving equality, that it is about opportunity. But here they are up to their usual tricks. They resort to the old reliable straw man. As though anyone of any consequence wants to impose equality. Opportunity is precisely what it is all about. And that is precisely what they want to deny the bulk of our citizenry.

Many years ago I read Hitler's Mein Kamf. What struck me, and what I will always remember is that Hitler considered the USA a formidable and dangerous foe because he said the educational system of the US comprises all, regardless of class, while Europe was stuck in a class warp. 

                       

To quote from Wikipedia: 

                                   

"By 1900 educators argued that the post-literacy schooling of the masses at the secondary and higher levels, would improve citizenship, develop higher-order traits, and produce the managerial and professional leadership needed for rapid economic modernization. The commitment to expanded education past age 14 set the U.S. apart from Europe for much of the 20th century. From 1910 to 1940, high schools grew in number and size, reaching out to a broader clientele. In 1910, for example, 9% of Americans had a high school diploma; in 1935, the rate was 40%. By 1940, the number had increased to 50%. This phenomenon was uniquely American; no other nation attempted such widespread coverage. The fastest growth came in states with greater wealth, more homogeneity of wealth, and less manufacturing activity than others. The high schools provided necessary skill sets for youth planning to teach school, and essential skills for those planning careers in white collar work and some high-paying blue collar jobs. Economist Claudia Goldin argues this rapid growth was facilitated by public funding, openness, gender neutrality, local (and also state) control, separation of church and state, and an academic curriculum. The wealthiest European nations such as Germany and Britain had far more exclusivity to their education system and few youth attended past age 14. Apart from technical training schools, European secondary schooling was dominated by children of the wealthy and the social elites. The United States chose a type of post-elementary schooling consistent with its particular features — stressing flexible, general and widely applicable skills that were not tied to particular occupations and geographic places had great value in giving students options in their lives. Skills had to survive transport across firms, industries, occupations, and geography in the dynamic American economy."

                       

I am a refugee from Hitler's Holocaust in Vienna, Austria. Even in Vienna my father was a struggling haberdasher. When we came to the US, he took a job as a bottle washer. Eventually, with the help of relatives he advanced to being a technician in quality control, but he never made much money. My brother never overcame these handicaps, became a high-school dropout and eventually a post office mail handler. I was more ambitious. I wanted to go to college. I could not have done so, (and eventually go to law school) if there had not been a free college available close to home. CCNY of CUNY allowed me to live at home, commute by subway for a nickel, and attend college tuition free. This allowed me to save the money I earned working summers, which I could set aside for graduate school. That is over with. There are no free colleges.

                       

How far we have regressed! And they want us to regress still further!

                       

If we are to remain a great nation it will not be by the strength of our military, though we need that too, but by the strength of our educational system. It is time for every state and every city and county, to have a free college system and that will only happen if it is financed at the federal level. Just as between 1910 and 1040 we moved to make high school within the reach of everyone, so we now need to make college within the reach of all. Only in this way will we make this a land of opportunity again, close the income gap, and assure the greatness of our nation in the 21st century. Those who say we cannot afford this are giving up on the future of America, and dooming, not only an underclass to remain an underclass, but are pushing millions who had achieved middle class status in another age, out of the middle class.

                       

Not only will the middle and lower classes benefit from such an approach, but in the long run, so will those at the top. 

                       

It is true that what we want is a larger pie for all, but that will not be achieved, by lower and lower taxes, particularly on the rich, but by evaluating the needs of our nation and then raising the right amount of money to meet those needs.

                       

We must realize that we cannot go on deciding how little we will tax, and then focus on what we can afford. We need to decide on what this nation's needs are, what it will cost to meet those needs, and then focus on what level of taxation is required, to meet those needs. In 1986, during Reagan's second term, our marginal tax rate was 50%. By the time he left office the rate was 28%. At the end of the prosperous Clinton era it was 39.6%. The Ryan plan would reduce that to 20% and raise additional revenues by unspecified (the rabbit in the hat - now you see it now you don't) elimination of tax expenditures. This is a formula that makes nothing possible. It is a formula for an ever-greater divide between the super rich and the rest, and the decline of our nation.

On another note I must call the readers attention to the stepped up War on Women, at least in Wisconsin. See here.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

Supreme Court on the Health Care Reform Law & the Ryan (Republican) Budget

In my last post "Control of the Weather (Discussion II)," I said that I would postpone my discussion entitled “It’s All About Race” because the comments on my previous post were still coming in, and I wanted to share that discussion. Now I feel I have to postpone the discussion on race again, because there have been developments that I cannot ignore.

On the politicized and run away Supreme Court I concluded in my last post with the following observation:

When we know how a justice will rule by which party appointed him/her, then it is an extension of the party, and no longer a judicial forum.

The seriousness of the politicalization of the Supreme Court is now put into the bright spotlight by President Ronald Reagan’s Solicitor General, Charles Fried, who makes these cogent observations. To get the full import of these observations one needs to read the whole interview, which can be found here. But here are some telling quotes:

Justice John Marshall said in 1824 is that if something is within the power of Congress, Congress may exercise that power to its fullest extent. So the question is really whether this is in the power of Congress. 

Now, is it within the power of Congress? Well, the power of Congress is to regulate interstate commerce. Is health care commerce among the states? Nobody except maybe Clarence Thomas doubts that. So health care is interstate commerce. Is this a regulation of it? Yes. End of story….

The other thing is I think it’s Justice Kennedy who said this fundamentally changes the relationship of the citizen to the government. That’s an appalling piece of phony rhetoric. There is an important change between the government and the system. It was put in place in 1935, with Social Security. And it said everyone has to pay into a retirement fund, and an unemployment fund. It was done when Medicare came in the ’60s. That’s a fundamental change. But this? This is simply a rounding out in a particular area of a relation between the citizen and the government that’s been around for 70 years…. 

Politics, politics, politics. You look at the wonderful decision by Jeff Sutton, who is as much of a 24-karat gold conservative as anyone could be. He is a godfather to the Federalist Society. Look at his opinion. Or look at Larry Silberman’s opinion. I don’t understand what’s gotten into people. Well, I do I’m afraid, but it’s politics, not anything else. 

And so the Supreme Court has gone from anointing the President of the United States in Bush v. Gore, to throwing out all restraints on the influence of money in politics in Citizens United v. FEC, to deciding that Congress my not legislate anything that its Party doesn’t want.

Is this the end of Democracy, as we have known it? I hope not, but I fear that it may be.

But this is only one area where the extremity of the Tea Party-dominated Republican Party can be surmised.

The Ryan budget, which has been endorsed by Republican Congressional leaders and by the presumptive nominee, Mitt Romney, clearly tells us where they want to take the country. It is the most radical and dishonest budget ever proposed by a major party.

First unlike the first Ryan budget, which by its own figures never approached any attempt to balance the budget. “Mr. Ryan's (first) plan added (by its own claims) $6 trillion to the national debt over the next decade…” See here and here.

This new one, which passed the House with 10 Republican defections and not a single Democratic vote, does claim to balance the budget. But it is not clear when or how. I have spent hours searching the web for this information. Those discussions I have been able to find charge that the Ryan budget would add trillions to the debt. 

The only place I have been able to find an analysis is in a 98 page document put out by Ryan in PDF format, which for those who want to read all or part can be found here. The most relevant page in that document is page 75 which you can find here. It states: “The non-partisan CBO estimates that this budget will balance and begin to produce annual surpluses by 2040, and it will start paying down the national debt after that.” But this is an outright lie!!! I cannot find any CBO evaluation of this budget. Nor could they evaluate it, since the budget talks about eliminating many tax expenditures (also known as tax exemptions) but does not set forth what they are to be. How a bill can even call itself a budget, when it has no specificity on where and how money is to be raised, is a mystery. But they call it a serious budget. It says: “Relative to the President’s budget, this Budget shows more than $3 trillion in lower deficits over the next ten years.” Where does the money to be obtained from elimination of tax deduction exclusions, or exemptions to come from? Which are to be eliminated. The so-called budget doesn’t say.

What it does say are generalized claims that are not backed up by any specifics. But specifics are what the CBO and the American Public are entitled to. Where will the money from deleting tax expenditures come from. Which budget items are to be reduced and by how much, and what would the real world consequences of such cuts be? Does it provide money for our space program? What happens to future generations of people, who are not yet 55, my children and yours, my grandchildren and yours? What does it do to our infrastructure – of the needed bridge repairs to bridges that are falling down? What does it do to education? What happens to early childhood education, to Pell Grants for College students? What about Medicaid? Ryan says we can’t afford to pay for these things. Instead of raising more revenue, he says, we need to reduce revenue, to make sure that we can’t afford these things. Our present taxes are way below where they were under Ronald Reagan. Why don’t we return to the Reagan tax system? They laud Reagan, but will they adopt his level of taxation?

Let us take page 17 which you can find here. This deals with defense. Item one on this page is not controversial, but the security of the US is provided for by many factors not only by the size of the defense budget. Item two “…defense is not the driver of the debt burden.” This is kind of strange – it seems self evident that any expenditure as well as any cut in revenue adds to the debt. It is absurd to say that an expenditure, whether desirable or not, does not add to the debt. In the next paragraph he (Ryan) states the “The President … imposes nearly $500 billion in defense cuts over the next decade.” “The President imposes”? Just as Romney can’t repeal laws passed by Congress, the President can’t impose defense cuts. Congress does that. See here.

The $500 billion sequester in the Defense appropriation was provided for in the Budget Control Act of 2011, which passed the House by a vote of 269-161 with 147 Republicans voting for it. It passed the Senate by a vote of 74-26 with 55 Republicans voting for it.

The Romney/Ryan axis seeks to gut the present and the future of the United States, in order to increase the wealth of the wealthiest at the expense of everyone else. What kind of a future will we have for our economy without an educated work force, and with consumers too poor to provide the purchasing power that drives the economy. Are we going to attempt to be an export economy? But even that isn’t going to work without enlarging our ports to service the large ships that are becoming the future vessels of the world.

But how radical is the agenda. It repudiates not just Franklin Roosevelt; it repudiates past Republican Administrations. This is a whole new kettle of fish. Listen to a representative of the Cato Institute talk about past Republican Administrations. See here where you can get both the video and the transcript. 

Judy Woodruff: “(Obama) is suggesting that what Paul Ryan is suggesting is much farther right than even these other Republican presidents, what they've done."

Daniel Mitchell: "Well, that's because both Nixon and Bush were both big-government interventionists."

If these Republicans were both big-government interventionists, what about Eisenhower who built our Highway system, or for that matter Reagan who did not hesitate to increase taxes to deal with our then deficit and who saved Social Security instead of ending it for those under 55.

This Republican Party has little in common with the policies of past ones. It is a wrecking crew.

As for the claim of class warfare, is it class warfare to resist polices that would enrich the upper-upper classes at the expense of the middle classes and the poor, a trend already underway, but which the Ryan/Romney policies would expedite.

It should be remembered that the last time class was mentioned it was when Franklin Roosevelt was accused of “Being a traitor to his class.” Isn’t’ that class-warfare? But the real class warfare is the insistent demand that we keep re-distributing wealth upward.

Last, but not least, I recommend to the reader an article which appears in The New Yorker titled "Call That A Budget?" 

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

Control of the Weather (Discussion II)

In my last post entitled "Control of the Weather (Discussion)" that was posted and distributed on March 29, I set forth some comments made by Eric Offner Esq. of New Hyde Park, New York. To access those comments double-click on the title of the post above.

At the end of that post I promised that: “Next time I want to tackle a very important and complicated subject, i.e. the role that race plays in American life and politics. It will be entitled: “It’s All About Race.” But since the discussion emanating from the comments contained in that post continued, I want to share them with you.

In response to the comments I made as set forth in that last post, Eric Offner wrote:

Thank you. Please discuss the present Supreme Court hearings. It seems that we will get a 5 to 4 decision, as was the case in the decision that made Bush President. We can throw out the commerce clause, and cite pre new deal case law. By the way I did not realize that the price of gas issue is a left/right issue, but I do not intend to pursue this. Your scholarly articles are very much appreciated.

To which I replied:

I am sorry to say that the Supreme Court hearings on the Health Insurance Reform Act is not a subject I plan to address in forthcoming commentary. There are only so many subjects I can deal with, and as I have indicated, I am anxious to deal with the issue of race in our society and politics.  

I will say, however, that 5/4 against is not a foregone conclusion. Kennedy has been and continues to be the linchpin, so that we do not have a court of 9, but essentially a court of one. Kennedy decides. However, that does not mean a 5/4 if it is upheld. Some commentators have speculated that if Kennedy goes with the liberal 4, Roberts will join the majority for upholding the law, in order to appoint himself as the one who writes the majority opinion. That would make it 6/3 but assure a narrow holding, with concurring opinions.        

As for the Commerce clause - yes it has been under attack for some time. They are pushing for a pre-New Deal interpretation. Only Kennedy can stop it and if Obama loses, the Right wing Court majority will go to 7/3, when Ginsburg retires or dies, and Kennedy will no longer be the swing vote. It will lead to total Right Wing domination.    

As for the price of gas being a Left/Right issue, it is not. Rather it is a partisan issue. There is a difference. When Bush was President and the price of gas reached levels comparable to the price now, Democrats, including Obama, attacked Bush. I don't remember the details but my guess is that Bush was no more responsible than Obama is now.

But then, after listening to the NewsHour on PBS on Friday March 30, I felt further comments were called for. I wrote:

Since saying "that the Supreme Court hearings on the Health Insurance Reform Act is not a subject I plan to address" I have seen additional facts, particularly on the NewsHour on PBS on Friday that made me feel I had to comment. So here goes:              

In listening to the NewsHour on PBS yesterday I saw a clip of Romney on the campaign trail (See here at two minutes into the video) where he says: Obama Care “will directly control almost half the US economy.” There is a tendency to exaggerate on the campaign trail, but this is beyond all reason. The absurdity is evident when we consider the government will not control anything. It will regulate the health insurance industry. Regulate not control (Medicare or a single payer might be considered as controlling but this does not control, it regulates) and the whole Health Care Industry of which insurance is a small part, is 16% of our economy. See here.              

He then goes on to say, “if I am President I will repeal it.” Doesn’t he ever read the Constitution? The President can’t repeal an act passed by Congress. Only Congress can. 

At 55 minutes 22 seconds into the video we get a discussion between Brooks (representing the Right viewpoint and Shields representing the Left, actually they are both rather moderate) and they both are embarrassed to note that some of the justices during the hearing are actually expressing Tea Party talking points.  

It is difficult for me to understand why there is even a question as to the Constitutionality of the Law. It is no different from any other tax levied, i.e. you pay taxes on your income unless you choose to give money to charity, in which case you don’t have to pay a tax on that portion. Social Security taxes don’t benefit you directly and not immediately. They benefit another generation, i.e. those over 67.              

Talking about forcing people to buy broccoli is and was intended to be facetious. But of course Congress can tax people who don’t eat broccoli, if it is shown that there is a reasonable connection between that requirement and the regulation of Commerce, but that can only be decided when that issues is before the court. Even if such a regulation were ridiculous it would not therefore make it unconstitutional. Some of the justices are behaving like clowns.              

If the court, after the Gore case and the United Case goes down the same partisan ideological route it will discredit its legitimacy. Years ago, (at the moment I can’t pinpoint when it changed) one could not tell how a justice would vote by whether a Republican or a Democrat appointed the Justice. Now that is controlling.              

In Roe v. Wade a decision that was 7 to 2 (not 5 to 4) the majority consisted of Harry Blackmun, William J. Brennan, Chief Justice Warren Burger, William O. Douglas, Thurgood Marshall, Lewis Powell and Potter Stewart. (It was not the Warren Court, and by the way Earl Warren was appointed by Eisenhower, a Republican.)

Blackmun was appointed by Nixon (Republican); Brennan by Eisenhower (Republican); Burger by Nixon (Republican); Douglas by Roosevelt (Democrat); Marshall by Johnson (Democrat); Powell by Nixon (Republican); Stewart by Eisenhower (Republican). Of the 7 justices in the majority, 5 were appointed by Republican Presidents. Yet this has now become a partisan issue.              

When we know how a justice will rule by which party appointed him/her, then it is an extension of the party, and no longer a judicial forum.                       

I don't know what the answer is, but we cannot indefinitely allow a partisan body to have the power to overrule an elected legislature. Only a judicial non-partisan body can be allowed to do that.

And Irving Lesnick Esq. of Boca Ratan, Florida picked up on the issue of eliminating speculation in oil and other commodities, writing:

Your comments are interesting, as always. While I generally agree with them, I will mention a disagreement, or at least a query, since you prefer disagreement, with your statement that outlawing speculation would require banning all commodities trading. It seems to me that the situation here is somewhat like that which prevailed in the life insurance business in the 1700s or so in England. There people were buying what we now call term life insurance on the lives of public figures.  Reportedly, it became a bit of a bubble, and both because it was viewed as morally objectionable as gambling but probably more importantly because some of the public figures began worrying that allowing the wrong people to get into a position to profit from their speedy death, their death might become more speedy than it would otherwise be. The response was the imposition, I think by legislation, of a requirement of insurable interest in the purchase of insurance, which limits insurance purchases to situations where the purchaser would suffer a loss from the occurrence of the insured against event. There are non-speculative reasons for buying and selling commodity futures - a manufacturer who wants to be protected against a rise in the cost of raw materials, an airline who wants to be protected against too much of an increase in fuel prices or and farmer who wants to be protected against a fall in the price of his or her future crop. Requiring participants in futures markets to have these kinds of interest would bar speculation, without banning commodity trading. How to structure such a requirement is, of course, another question.

To which I responded:

Your analysis is worthy of one who was an editor of the Yale Law Journal.                 

You are absolutely correct that there is a way to outlaw speculation without banning all commodity trading, and the insurance industry, (your area of expertise) is clearly a perfect example. But that then brings us to the question of whether it is desirable to stop speculation. I would argue that it is not desirable. If you placed the kind of restrictions on the commodities markets as you suggest, the market would shrink to a degree where "legitimate traders" would have a hard time finding buyers when they were ready to liquidate their positions. Furthermore not all commodity traders can be defined in the futures market as your focus suggests. What about commodities like gold and silver? Traders in gold buy the metal to hedge against inflation. How do you limit this? Or do you limit the market to jewelers.

The problem becomes similar to the stock market, where one could argue that only legitimate investments in a start up business should be allowed, but without a secondary market, the primary market collapses. That is also true in commodities. When you get rid of the "speculators" you are getting rid of the secondary market.                 

Please advise if I am missing something.

And then added:

This reminds me of Revolutionary times. Since the Continental Congress had no taxing power and the states were very poor providers of money to fight the war, the Congress issued promissory notes that went unpaid and because it appeared they would never be paid, they became worthless. A secondary market of speculators arose ready to buy the notes at huge discounts, thus giving them some limited value to the relief of the primary holders. Jefferson argued that the notes should not be paid because that would unjustly enrich the speculators. Hamilton in turn argued that what was at stake was the full faith and credit of the US. Washington sided with Hamilton, the speculators were paid, and the Full Faith and Credit of the US was never in doubt thereafter. [Until the Tea Party (to all intents and purposes, the Republican Party) decided to threaten to prevent the US from paying its debts. For the first time since then, the US full faith and Credit has now been put in doubt.]  The bracketed portion is a bit of a digression, but the point is a secondary market, which usually consists of speculators, is vital to a functioning market.

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