Behold, the Obama Administration's NatGas Politics (and Export Hypocrisy)

Today, Heritage's Ryan Olson picks up on a pretty important trade story that I missed last week: the Obama administration appears to be blocking U.S. exports of natural gas for political reasons:

Currently, liquefied natural gas (LNG) exports are restricted to countries with free trade agreements with the United States. Producers wishing to export to countries without U.S. free trade agreements must first get approval from the Department of Energy (DOE). With proven reserves of natural gas in the U.S. at an all-time high, companies have been flocking to export LNG to foreign markets. However, the DOE is stonewalling, approving only one of the 13 requests to export to non-free trade agreement countries and staking further exports on the release of a report that has been delayed until early next year. These types of bureaucratic hoops only hurt American companies and bring into question the President’s commitment to increasing exports.

The Reuters article that Olson cites helpfully explains that the big report was originally going to be out in March, then got delayed until late summer, and now won't be out until after the November elections.  That, of course, is quite convenient for the Obama administration, as Olson explains:

The Administration appears to be listening to economic advice from interest groups (including environmental groups) who oppose natural gas exports. They argue that free trade in the LNG field will disadvantage U.S. consumers, claiming that as the spread between the international price and the domestic price closes, U.S. prices will rise.

I'd add that many of these environmental groups also argue that the process by which much of natural gas is extracted these days - hydraulic fracturing or "fracking" - is evil dangerous, and thus their opposition to LNG exportation also frequently cites fracking's dangers as grounds to deny export license applications (see, e.g., this Sierra Club brief in opposition to an application from Sabine Pass LNG).  Olson goes on to explain how the administration's stonewalling on these LNG export license applications could seriously harm the US natgas industry (and tons of good-paying American jobs), but, considering environmentalists views on fracking and fossil fuels more generally, that might just be what they had in mind, eh?

But I digress.  For the moment, I'll try to ignore the obvious economic harms imposed by the administration's political stonewalling and instead look at two pretty ridiculous trade angles in this story.  First, as Olson notes, it's rather amazing that a President whose top trade priority is the National Export Initiative is, you know, actively blocking billions of dollars in potential U.S. energy exports:

The President has said he wants to “double our exports over the next five years” through his National Export Initiative. Apparently, those exports don’t include natural gas, a booming and vibrant sector of the national economy....

Recent studies have shown that exporting natural gas could make U.S. producers up to $3 billion per year, creating much-needed jobs for Americans. Reducing burdensome trade restrictions will also make U.S. firms more efficient, encouraging competition and reducing prices—ultimately helping consumers and spurring innovation. The President’s erratic policy of promoting trade in some areas while restricting it in others is hypocritical. Even worse, it sends mixed messages that increase uncertainty, hurt investment and job growth, and threaten American’s economic competitiveness.

Indeed it does, Mr. Olson.  Indeed it does.

Second, and speaking of mixed messages, it turns out that the Obama administration has been fighting against these exact kinds of export restrictions at the WTO.  Before I get to that glaring hypocrisy, however, a very quick summary of the US system and the applicable WTO rules is necessary.  The US export licensing system for natural gas (15 U.S.C. § 717b) provides DOE with unfettered discretion to deny an application to export natural gas to non-FTA partner countries if the agency determines that the exportation would not be in the "public interest."  GATT Article XI prohibits WTO Members from imposing quantitative restrictions on exports (and imports), including those made effective through export licenses.  Although WTO jurisprudence on licensing restrictions remains a little unsettled, one thing is pretty clear: discretionary licensing regimes are impermissible restrictions under GATT Article XI.  So, because the US licensing system provides DOE with discretion to reject any license application based on the vague “public interest” standard (as evidenced by the long delays in the aforementioned LNG applications), it could be WTO-inconsistent.

So why does this little academic lesson matter?  Well, over the last couple years USTR has filed two WTO disputes against China (of course) for its export restrictions on various raw materials (DS394) and so-called "rare earth" elements (DS431).  The US won (mostly) the raw materials case citing, among other things, GATT Article XI, and the new, high-profile rare earths dispute is just cranking up.  In each dispute, one of the primary export restrictions targeted by the United States has been - wait for it - export licensing systems for the covered products.

So, to recap, the Obama administration is attacking Chinese export licensing restrictions on key raw materials at the exact same time that it is restricting US exports of natural gas via a similarly dubious export licensing system.

You cannot make this stuff up.

On the bright side, at least China isn't, you know, really starving for energy or known to retaliate against US trade litigation with cases of its own or anything.

Oh, wait.

Guess Who's Blocking Canada's Participation in the TPP [UPDATED]

Back when Japan announced that it was interested in joining the ongoing Trans-Pacific Partnership negotiations - which currently include the United States, current US FTA partners Australia, Chile, Peru, and Singapore, as well as new FTA partners Brunei, Malaysia, New Zealand and Vietnam - I noted that admitting the economic power and close US ally was a no-brainer.  Certain TPP participants (and their political allies at home), however, weren't so gung-ho about Japan's inclusion in the agreement, and Japan has its own internal politics to sort out, so our friends in Tokyo are still waiting around to see if they're on the TPP VIP Guest List.  Joining Japan on the wrong side of TPP's velvet rope are Canada and Mexico, who announced their interest in joining the agreement shortly after Japan.  Readers of this blog know my affinity for the Harper Government's pro-market, pro-trade reforms over the last few years, so of course I think that Canada's inclusion in the TPP would be a very welcome development.

Unfortunately, however, it appears that certain members of the Obama administration don't agree, and thus the United States might just be the last holdout on Canada's TPP participation.  My source for this juicy gossip, you ask?  Well, none other than PM Harper himself:

Harper sat down with Obama and Mexican President Felipe Calderón for their first such meeting in almost two years -- and the last before Calderón leaves office this fall -- and for all the jovial friendship on display for the cameras in the Rose Garden, some issues clearly rankled.

The meeting, which came up considerably short of the advertised three hours, ended without Canada getting an invitation to join negotiations for a new Trans-Pacific Partnership....

Canada's system of supply-management of eggs, milk and other farm products is seen as a stumbling block to participation in the new free-trade zone.

In scripted remarks, Harper emerged from the meeting to say he was "especially pleased" Obama had welcomed Canada's interest in the trade talks.

But he later pointed the finger squarely at the White House for holding up Canada's formal inclusion. "Our strong sense is that most of the members of the Trans-Pacific Partnership would like to see Canada join," Harper told an audience at the Woodrow Wilson Center. "I think there's some debate, particularly within the (Obama)  administration, about the merits of that."

For his part, Obama did not duck a question that specifically asked if Canada's dairy and egg marketing boards would have to go in order for Canada to join the party.

"Every country that's participating is going to have to make some modification," Obama said, flanked by Harper and Calderón at a news conference in the Rose Garden. "That's inherent in the process because each of our countries has their own idiosyncrasies, certain industries that in the past have been protected."

The prime minister did not answer a direct question on whether he was prepared to abandon the marketing boards, but said his government would do what is needed to protect industries. "Canada will attempt to promote and to defend Canada's interests, not just across the economy but in individual sectors as well," said Harper.

Although some of Canada's agriculture policies are undoubtedly suspect, the idea that its marketing boards - which have been in place for several decades and haven't impeded NAFTA (as a new IBD editorial helpfully notes) - are preventing the United States - one of the largest agriculture-subsidizers on the planet - from signing off on Canada's TPP participation is laughable.  The laughs get even louder when one considers that the "too protectionist" Canada has been unilaterally opening large swaths of its market to imports, while the "free trade" Obama administration has been working hard, in FTA negotiations and via US trade law, to keep ours closed (and to keep those US farm subsidies firmly in place).  Or when one considers the Obama administration's long history of playing the "you're too protectionist on issue [X]" card to justify FTA-related delays (just ask South Korea or, as noted above, Japan).

Then again, if I were in the White House (stop laughing) and had to choose between (1) admitting into the TPP the unilaterally-liberalizing, corporate tax-cutting, FTA-completing Harper Government (and its directly-competitive Canadian farmers, manufacturers and service providers), or (2) just making up some silly "protectionist" excuse in order to stall Canada's admission and cover for my own government's trade/tax policy ineptitude, I'd probably be pretty darn tempted to choose Door #2 too.

Of course, if I were in the White House (seriously, stop laughing), the United States wouldn't be in this embarrassing position to begin with.

UPDATE: A reader passes along this great 2010 op-ed from Peter Clark on the United States, ahem, recalcitrance re: Canada's admission to the TPP.  Clark focuses on one reason for the White House's exasperating Canada-TPP position that I glossed over last night but deserves direct mention: rampant US mercantilism.  US exports already have mostly-duty-free access to the Canadian market through NAFTA, and, as mentioned above, if Canada is allowed into the TPP, competitive Canadian exporters would gain equal footing with their US counterparts in the rapidly-developing, high-demand TPP (especially Asian) markets.  Clark further notes that Canada would likely not support the United States' mercantilist push to retain all the sweet, sweet carveouts and import protection that are embedded in its existing FTAs with TPP participants like Australia.  His arguments seems quite logical - and depressing - to me.  Alas.  (Clark raises other issues in another good, detailed op-ed from earlier this year.)

Hooray, Bi-Partisanship... In Support of Higher "Clean" Energy Prices

I've written a good bit lately about the recent push among US companies and politicians for tariffs and other forms of protectionism against imports of "green energy" goods and services.  One thing I really haven't gotten into, however, is the blatant hypocrisy of such efforts - which inevitably result in higher prices for the targeted goods and services - when undertaken by politicians who at the same time claim to support "clean" energy and its environmental benefits and/or lower taxes on American families and businesses.

You may recall that the Obama administration's Department of Energy - supposedly a champion of "clean" energy production - actually lamented falling solar prices and Chinese subsidies and blamed them for the failure of the controversial Solyndra.  And recently, the administration's Democratic colleagues in Congress have decided to get in on the act.  For example, last Friday a group of 58 congressional Democrats - playing off a preliminary determination by the US International Trade Commission related to potential anti-dumping and countervailing (anti-subsidy) duties on imports of Chinese solar panels - sent a letter to President Obama demanding new trade cases against allegedly subsidized Chinese "clean energy" products:

We write to express our concerns regarding very serious allegations of unfair trade practices by the government of China concerning clean energy products. We urge you to take all available measures to expeditiously investigate these allegations and take swift and appropriate action based on those findings...

It is critical for American businesses and workers to be able to fairly compete in this rapidly growing sector... Already an $80 billion annual market, demand for solar panels is anticipated to continue growing as intense competition and technological breakthroughs further drive down prices.

Two of the letter's lead signatories were Rep. Ed Markey (D-MA) and Sen. Ron Wyden (D-OR), and each touted the letter and the ITC determination on his website.  Both guys are also - allegedly - big environmentalists who really, really care about things like "clean air" and fighting "climate change."  For example, Sen. Wyden's website states:

Protecting the natural environment is one of Sen. Wyden’s highest priorities....

He believes that the Clean Air Act and the Clean Water Act need to be fully enforced in order to keep our environment safe and clean for everyone.

Senator Wyden is concerned with climate change and will continue to oppose bills, such as the 2005 energy bill and the President’s Clear Skies Act, that fail to meaningfully address the problem of global warming.  He will also continue to support funding for agencies, like the National Oceanic and Atmospheric Administration (NOAA), that help us to better understand the impact of climate change.

Rep. Markey has expressed similar concerns, breathlessly complaining that the United States' "continuing addiction to oil presents a serious threat to our national security and economy" and calling for federal efforts to reduce greenhouse gas emissions in an effort to mitigate climate change.

So Sen. Wyden's and Rep. Markey loudly support higher clean energy prices via tariffs on Chinese solar panels or the elimination of foreign subsidies for "green" technologies, yet also supposedly support an significant increase in clean energy production (and concomitant reduction in fossil fuel consumption) for environmental purposes.  And, of course, the biggest obstacle preventing the proliferation of "clean" energy is - you guessed it - its ridiculously high price compared to traditional energy sources.

Regardless of how you feel about clean energy and climate change, the hypocrisy here is obscene.  And one must wonder whether the congressional "environmentalists" who signed that letter to the Obama administration demanding new trade disputes on green energy (and fretting about lower prices caused by "intense competition" and "technological breakthroughs") really care at all about the environment, or just care about funneling cash to their chosen constituents in the unions and "green" energy industry via higher prices paid by US consumers.

The answer to that question seems pretty clear, doesn't it?

Unfortunately, it's not only congressional Democrats who are calling for higher "clean" energy prices in direct contravention claiming to support basic Party principles.  For example, Rep. Jeff Landry (R-LA) has sponsored H.R. 2360, the "Providing for Our Workforce and Energy Resources Act" (the POWER Act), which would extend the Jones Act to the installation of offshore renewable energy resources.  As you may recall, I blogged on the Jones Act in the context of the Deepwater Horizon disaster.  It prohibits shipping merchandise between US ports and performing other maritime activities (such as oil drilling and oil spill clean-up) in US waters "in any other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States.''  The act essentially bars foreign shipping and other maritime companies from competing with their American counterparts, and recent studies by the International Trade Commission have shown that the Act artificially raises shipping costs by over 20% and imposes hundreds of million dollars in unnecessary costs on the American economy.  Another study by the Government Accounting Office showed that it cost American consumers, particularly those in Alaska, thousands of dollars per year.

The POWER Act's extension of the Jones Act to the installation of renewable energy resources like windmills would eliminate foreign competition and, as it's done for all other maritime activities governed by the Act (including offshore production of traditional energy like oil and gas), inevitably raise the prices of energy made from those "clean" resources.  As such, it's a tax on American consumers of "clean" energy which discourages such energy and, in the process, lines the pockets of the unions and companies that handle such work.  (In his press release touting the POWER Act, Rep. Landry states that "our current economic situation is directly related to high energy prices," and that "we must ensure this energy is made by American workers.”  He seems utterly oblivious to the fact that limiting domestic energy producers to American workers will inevitably result in "high energy prices."  Oops.)

The POWER Act currently has eighteen co-sponsors, including Republican Reps. Rodney Alexander (LA), Jo Bonner (AL), Jeff Duncan (SC), Trey Gowdy (SC4), Duncan Hunter (CA), Frank LoBiondo (NJ), Candice Miller (MI), Alan Nunnelee (MS), Steven Palazzo (MS), Todd Rokita (IN), Steve Scalise (LA), Steve Southerland (FL), Rob Wittman (VA) and Don Young (AK).  The GOP has long been a supporter of lower taxes, free trade and economic freedom, and it claims to oppose corporate welfare - particularly President Obama's green energy initiatives.  So it's odd that these Republicans have dropped the party line in order to support the POWER Act and the higher consumer taxes, corporate welfare (and clear reduction in economic freedom) that it would inevitably produce.  In fact, considering the GOP's principled (and correct) stance about expanding domestic production of traditional energy sources, you'd think that these folks would support a blanket repeal of the Jones Act in order to make domestic offshore drilling less expensive, rather than the law's expansion to offshore "clean" energy in order to make that type of energy even moreso.

Then again, when one notices that most of these folks - and their "environmentalist" Democratic colleagues calling for new trade disputes against China - represent the American unions and industries that financially benefit from higher prices for "clean" energy goods and services, their motivation becomes a whole lot clearer, doesn't it?

Let's hear it for bi-partisanship.  Yippee.

Lazy? Really, Dude?

At this weekend's APEC summit, President Obama explained to the audience why, in his humble (stop laughing) opinion, American international trade and investment efforts have lagged over the last few years:



For those of you too lazy to watch the full clip, the money quote from President Obama's answer on why US exports and investment have struggled is the following:

We’ve been a little bit lazy over the last couple of decades. We’ve kind of taken for granted — ‘Well, people would want to come here’ — and we aren’t out there hungry, selling America and trying to attract new businesses into America.

No, seriously.  That's what he said.

Now, I could start some typical Lincicomian (fake word) diatribe pointing out the little fact that the Obama administration had a unique opportunity in January to assert US leadership on global trade and finish the struggling, ten-year old (and now basically dead) Doha Round of multilateral trade negotiations, the conclusion of which would have produced immense market access benefits for US exporters and investors.

Or I could point out that, during Obama's time in office, almost every country on the planet - including our biggest competitors in the EU, Canada and China - has pursued and implemented free trade agreements at a breakneck pace, while the White House's only unique bilateral or regional trade contribution was last weekend's announcement of the "broad outlines" of a Trans-Pacific Partnership Agreement that was (a) actually started by the Bush administration and (b) originally supposed to be finished last week, rather than just, ahem, "outlined."

Or I could point out that Obama administration protectionism - in the form of "Buy American" provisions or the just-resolved ban on Mexican trucks or US tariffs on Chinese tires and chicken or trade remedies duties on key raw materials and other industrial inputs - has cost US exporters billions of dollars in lost export opportunities or increased production costs.

No, instead, I think that nothing hits home the ridiculousness and temerity of the President's accusations of American "laziness" in the international arena better than his almost-three-year delay of completed US trade deals with Panama, Colombia and Korea - deals that Obama himself sold to the American public as great export, investment and jobs vehicles, yet sat moldering in an Oval Office desk due to the President's political cowardice.  As I said in July when President Obama falsely accused Congress of preventing those deals from being completed "right now":

Actually, Mr. President, that could have been done in 2008, had then-Speaker Pelosi (D-CA) not rewritten the longstanding congressional-executive agreement on Trade Promotion Authority (and "fast track" before that) when President Bush tried to implement the US-Colombia FTA. 

And that could have been done in 2009, had you not shelved the FTAs in order to placate your party's protectionist wing. 

And that could have been done in 2010, had you not demanded that each one be renegotiated in order to further stall the agreements and to pay off powerful domestic constituencies. 

And that could have been done earlier this year, had you simply submitted the renegotiated FTAs' implementing legislation to a Republican-controlled House of Representatives that was literally begging for you to do so. 

And that even could have been done last week, had you not attached a "poison pill" to the US-Korea FTA in the form of an expensive and highly controversial Trade Adjustment Assistance (TAA) expansion that congressional Republicans had already voted down in February and had repeatedly warned would be deal-killer. 

And, despite all of this, Mr. President, you and Congress could still implement these FTAs right now if you would just submit clean FTA implementing legislation to the House and Senate pursuant to [Trade Promotion Authority].

Instead, it took three more months to finally push these slam-dunk trade deals through Congress, and they still won't enter into force for several more months.  Until they do, American exporters and investors remain at a disadvantage in key global markets vis a vis some of their stiffest foreign competition.

So, after explaining just how lazy we've been on global trade and investment, I'm sure the President wrapped up the APEC summit and got right back to work ensuring the rapid implementation of the Colombia, Panama and Korea FTAs, the completion of the TPP Agreement and the resuscitation of the Doha Round, right?

Yeah, umm, well:

President Barack Obama is playing golf this afternoon at the Mamala Bay golf course at Joint Base Pearl Harbor-Hickam.

And yet we're the lazy ones.

White House Does the TPA Two-Step; Hypocrisy Ensues

Today comes news from National Journal [$] that the White House supports a strict reading of Trade Promotion Authority, except, you know, when it doesn't (emphasis mine):

The White House pushed back a last-minute attempt on Monday to prevent it from attaching Trade Adjustment Assistance to the pending free-trade agreement with South Korea after closed-door efforts to find an alternative for its renewal failed.

Sen. Orrin Hatch, R-Utah, the top Republican on the Senate Finance Committee, sent congressional leaders a letter requesting an unprecedented “mock conference” to reconcile two different versions of the Korea pact that were approved in committee last week. But, Hatch’s last-ditch effort quickly fell flat as the White House continued on what could be the only sure course to renew the program’s funds.

In his letter, Hatch escalated GOP skepticism of the legality of the White House decision to include TAA in the Korea bill and questioned whether the administration has the constitutional authority to choose between the House and Senate versions of the pact.

“Reconciling the two bills is the exclusive prerogative of Congress, a prerogative which cannot rightfully be devolved to the executive branch,” Hatch said. He urged legislative leaders to call a mock conference to reconcile the bills and present the White House with a template for drafting the final legislation.

Trade agreements, however, are not handled like normal legislation and the White House quickly dismissed Hatch’s claim. Bills on pending trade deals with Colombia, Panama, and South Korea are all slated to move through Congress under the protective rules of Trade Promotion Authority.

“Under Trade Promotion Authority, the results of informal ‘mock’ markups are recommendations to the president as he prepares to submit implementing legislation to Congress,” said an Obama administration official. “Both the House Ways and Means Committee and the Senate Finance Committee have now made their recommendations.”...

Trade agreements moving under Trade Promotion Authority are not subject to filibuster or amendment and only require a simple majority for passage in both chambers.

“We’ve made clear that a robust renewal of TAA has to be part of the legislative agenda, and including it on an implementing bill for a trade agreement is the only viable pathway that has emerged,” the administration official said. “So far, no other credible alternatives have been offered to get the trade agreements and TAA done in a timely fashion.”

So, to summarize the White House's arguments:

• A strict reading of TPA, like, totally precludes unique procedural proposals like Senator Hatch's "mock conference," so his idea is stupid and illegal.  Thus, we're going to ignore it.

• A liberal reading of TPA, like, totally allows unique procedural proposals like our plan to attach expanded Trade Adjustment Assistance to the US-Korea FTA implementing legislation, so our plan is perfectly appropriate and legal.  Thus, we're going to pursue that plan and ram the TAA-FTA bill down the throats of objecting congressional Republicans.

Behold, unabashed political hackery!  Sigh.

I've already laid out - in excruciating detail - why the Administration's liberal interpretation of TPA is complete and utter nonsense (and dangerous nonsense, at that), and it appears that Senator Hatch's office is raising similar legal objections.  Good for them.  I hope they continue to do so.

But if you disagree (expressly or tacitly) with our legal analysis and thus are totally fine with the Obama administration's liberal interpretation of TPA, then surely you oppose the White House's immediate rejection of Sen. Hatch's "mock conference" scheme, right?  And surely you're incensed - and a little embarrassed - by the administration's clear hypocrisy, right?

Or do you, like the White House, have absolutely no regard for the rule of law?

The silence here - by the media and the Obama administration's supporters (redundant, I know!) - is rather deafening.

Trump & China, ctd.

This doesn't really change anything in my earlier post on Mr. Trump, his anti-China rhetoric or some conservatives' embrace thereof.  But still, dude:

Donald Trump has emerged in recent years as the nation's foremost China basher, going after the Asian superpower for undervaluing its currency and for taking American manufacturing and jobs. So it's at least ironic -- and at most an example of gross hypocrisy -- that Trump's own line of men's wear, the Donald J. Trump Signature Collection, is manufactured in China.

I discovered this after walking from Salon's offices to the large Macy's in midtown Manhattan, where an entire section is devoted to the Donald J. Trump Signature Collection of suits and ties. This particular corner of the store is decorated with an oversize portrait of Trump; the line promises to provide "the pinnacle of style and sophistication" and "the necessities to be boardroom ready all of the time."

Here is the tag on one of the Trump shirts:

Yes, that says "MADE IN CHINA." (That pink dress shirt retails, by the way, for $69.50.) Other pieces were made in Mexico and in Bangladesh....

The phone number listed on Trump's website for the Signature Collection goes to the "licensing coordinator" at the Trump Organization, Amy Steinfeldt. She did not immediately return a call. But it appears that the shirts and ties are made by the Phillips-Van Heusen Corp., which owns a license on the Trump brand....

A spokesman for Trump did not immediately respond to a request for comment.

Sigh.

(h/t Mark Perry)

Awesome: The Daily Show on Unions, Hypocrisy and Competitiveness

Once again the folks at The Daily Show convey in one 5-minute skit what I couldn't do in 30 blogposts:

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Working Stiffed
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

I'll again be the stick-in-the-mud and mention that this great skit, while certainly hilarious, also provides several fine examples of things that I've been trying to explain here for a while now:

• Most obviously, unions are self-interested organizations that, contrary to their statements about "greed" or "fairness" or "sticking up for the common worker," are readily willing to jettison their alleged principles when they don't benefit the union.  We've recently seen this union hypocrisy on the trade front, as the United Steelworkers loudly complained about Chinese "green energy" subsidies while conveniently forgetting to mention the billions than Uncle Sam has sent their way.

• Perhaps more interestingly, however, is that when push comes to shove, unions are rational employers that respond to market realities rather than vague concepts like "fairness."  This fact is made clear by the frank admissions of the UFCW's (rather unwitting) leader, Mike Gittings, about why they have hired temporary, non-union workers (and have given them part-time hours and no benefits) to protest Wal-Mart (starting at about 3:55): "Our union members are working.... We don't have union members that are able to go down there on a daily basis.... The alternative to the way that we do it would be to not do it...  We're doing the best we can with our limited resources..."  In short, the UFCW, as an employer without magically unlimited resources, is responding to market realities about its labor needs and costs, and if it adopted a "fairer" approach, simply wouldn't be able to hire ANYONE and thus would have to get out of the protesting business altogether.

• And thus brings us to our last lesson: the result of non-market demands on American employers erodes their global competitiveness and leads to their (a) going out of business in the face of foreign competition; or (b) offshoring of their labor force or hiring of illegal, off-book workers.  Don't believe me that a zany comedy show like TDS is providing this final lesson?  Well, check out correspondent Aasif Mandvi's "solution" to getting the "protesters" he needs at the right (non-government-mandated) price: picking up illegals to do the job.  In fact, Stewart rather coyly introduces the whole skit with an aside about "The American labor movement, sometimes criticized for driving jobs overseas with some outdated demands...."  Pretty clever, eh?  Yet labor unions don't recognize these obvious economic realities and instead choose to blame free trade for offshoring and job losses rather than look in the mirror.  And unfortunately, that's no laughing matter.

Considering that the union's behavior here - treating its own employees far more shabbily than the businesses it routinely demonizes - is hardly an isolated occurrence, these three lessons are broadly applicable.  So hopefully the millions of youngsters who watch The Daily Show instead of the real news absorbed the message.  

I'm not holding my breath, but a guy can dream.

Google CEO: High Taxes Are Awesome... For Everyone Else

It's no secret that Google's Eric Schmidt is a big fan of US President Barack Obama. He campaigned for the President, has vocally supported the administration's economic plans, and has even participated in their development.

Among these economic policies are significantly higher taxes for US corporations. For example, back in May, the administration proposed increasing taxes by about $190 billion on US corporations by "closing loopholes" - including those related to offshore earnings and employment - in order to ensure that US companies "pay their fair share." (Ed. note: actual share may or may not be fair.)  Now, I've written a few times on how bad such tax schemes are, so I won't rehash those arguments here.  Instead, I want to focus on whether the business practices of Mr. Schmidt's company Google actually mesh with the policies that he and the Obama Administration advocate for the rest of American businesses.

Quick answer: they don't.

As it turns out, the boys at Google aren't big fans of corporate taxes afterall, and they actually utilize some of the dastardly tax "loopholes" that the White House has demonized and sought to terminate.  Here's the UK's Daily Mail with the totally unshocking story:

Google avoided paying £450million in corporation tax on its £1.6billion earnings from advertising in Britain last year.

Accounts show the company paid HM Revenue and Customs only £141,519 on other earnings.

Google managed to avoid paying millions here because its European headquarters is in Dublin - and advertising earnings from customers in Britain are funnelled through to the Irish subsidiary.

Accountants say that if the £1.6billion advertising revenue stayed in Britain, it would be subject to corporation tax at 28-30 per cent rather than the 15 per cent levy in Ireland.

Google's bill would have been up to £450million.

But even the accounts for its Irish operation show a low tax bill. While Google is not accused of any wrongdoing, the tax it paid in 2008 was just £6.7million.

So while Google CEO Eric Schmidt vocally supports the White House's push for higher corporate taxes, his company is intentionally avoiding hundreds of millions of dollars in - you guessed it - corporate taxes.

So much for paying their "fair share," huh?

Now, I of course fully support low corporate taxes, international tax competition, and Google's right to find the most beneficial tax jurisdiction on the planet. But I find it a tad disingenuous for Mr. Schmidt to have a lifetime railpass on the Hopenchange Express, while Google benefits from the very economic policies that their boys in the White House loudly deplore.

Then again, considering the stance of other prominent Democrats like Tim Geithner and Charlie Rangel on the issue of taxes (catchphrase: "taxes are awesome because we don't pay 'em!"), I guess Mr. Schmidt's just toeing the party line on this issue.

Shocked & Appalled, part 164

Remember last year when Congress publicly humiliated several executives from the Big Three for taking private jets to congressional hearings on the bankruptcy of the US auto industry? Well, now Roll Call informs us that Congress has just ordered three shiny new private jets of their own:

At the end of July, the House approved nearly $200 million for the Air Force to buy three elite Gulfstream jets for ferrying top government officials and Members of Congress.

The Air Force had asked for one Gulfstream 550 jet (price tag: about $65 million) as part of an ongoing upgrade of its passenger air service.

But the House Appropriations Committee, at its own initiative, added to the 2010 Defense appropriations bill another $132 million for two more airplanes and specified that they be assigned to the D.C.-area units that carry Members of Congress, military brass and top government officials.

Because the Appropriations Committee viewed the additional aircraft as an expansion of an existing Defense Department program, it did not treat the money for two more planes as an earmark, and the legislation does not disclose which Member had requested the additional money. ...

The Gulfstream G550 is a luxury business jet, which the company advertises as featuring long-range flight capacity that “easily links Washington, D.C., with Dubai, London with Singapore and Tokyo with Paris.” ...

Rep. Sanford Bishop (D-Ga.) had submitted a request to the Appropriations Committee for a $70 million earmark for one airplane on behalf of Georgia-based Gulfstream, and Rep. Jack Kingston (R-Ga.) lists the airplane as one of the earmarks that he was asked to request, though his office said he never made the request to the Appropriations Committee.

“The committee saw fit to fund it at that level” without Kingston’s involvement, his spokesman said.

Shocking, I know!

I guess in defense of Congress, one could argue that it's technically not "hypocrisy" because last year the car companies were only going bankrupt, while the US has been bankrupt for years!