A Tale of Two States

A recent Wall Street Journal article compared two oil states – Texas and California. The author's point is that current conditions in both states are a result of good and bad policy choices.

Let's start with Texas. It has doubled its oil output since 2005. Around 400,000 Texans are employed by the oil and gas industry with an average salary  of around $100,000 a year. The industry generates something like $80 billion a year in economic activity.

So how does California compare? Well, oil output is down 21% since 2001. Some might say that this is due to California running out of oil. Not true. Our state has huge reservoirs of oil.

One big reason for the difference between the two states is the political culture. Californians have politicians who don't like fossil fuels and constantly block hydraulic fracturing (fracking) in the state. California has also passed cap-and-trade legislation that adds a lot of cost to conventional energy production and refining.

There's another big contrast. A lot of the Texas oil is on private lands, so oil companies have a chance to work their magic there. However, in California, much of the oil-rich areas are owned by the state or the federal government, so much of it is off limits to oil companies.

What does all this mean? It's no accident, according to the article, the Texas, has been leading the nation in job creation since the recession ended. The energy boom not only creates jobs in the oil industry but also in other industries, such as transportation, high technology, construction, and manufacturing. The Texas jobless rate is close to 6% while California's is the third highest of all states at 9.4%.

One other thing has come out of these two different attitudes. Oil and gas production in Texas has produced so much money in state taxes. The they can avoid a state income tax. Not true in California, where top marginal income-tax and capital-gains tax rate is 13.3%.

What's in the future? Well, it will be interesting to see if our governor out here, Jerry Brown, will split with his party and pursue gas and oil production. Let's hope we start looking a little more like Texas.

A new book on higher education

I find many things interesting, but as a college professor, I'm always intrigued by the world of education. There's a new book out by William J. Bennett called Is College Worth It? that I'd like to share with you.

You can tell from the title the book deals with college costs. There is growing evidence that colleges and universities cost far more than they should, with the result that students graduate with a tremendous debt burden. The author notes that just since 1990, the cost of attending a four-year college or university has gone up roughly 4 times the rate of inflation. And we' re not talking about just the major schools. I've seen the costs jump at the community college where I teach.

But most people wouldn't worry too much about that if the payoff was great. However, the average pay for college grads in America has fallen 5% in the past five years. Here's a startling statistic – almost half of all four-year college grads now work at jobs that don't require a college degree (think Starbucks).

So who does Bennett blame for the soaring costs? The federal government. College tuition soars because the federal government offers subsidies for students. Federal student loans have ballooned by 60% in the last five years alone. Colleges and universities, knowing that Washington is going to dangle more money in front of students, are encouraged to raise their tuitions and fees. Meanwhile, they ignore their own inefficiencies.

A side effect of this is a loss of real education. Schools want these loan-subsidize customers because they have federal money in their pockets, so they often lower academic standards to get them to their school. In addition, grade inflation takes over, and schools offer easier classes and trendy majors.

The result is students with a tremendous amount of debt and a lack of skills to get a job to pay these debts off. College used to be a tremendous help for those at the bottom of the economic scale, but now they're having a tougher time paying for school even with federal help. In addition, taxpayers get stuck for the cost of loans, which students have defaulted on.

Bennett offers some solutions. We should reform K-12 education to make it better for those who do not want to go to college, we need to have students picking more marketable majors, we should encourage ROTC program so the Army or Navy could pay for college, and we should be moving more higher-ed programs over to online courses.

Let's hope some of these changes take place. But American higher education is a fossilized dinosaur that does not want these things to happen. There's more money for them in the system that exists.

Radical Islam in America

There was a powerful piece in a recent National Review the dealt with the Boston Marathon bombers. The pair of brothers who instigated this terrible act were examples of what's happening to many other Muslims as they enter Western nations. They are being told to integrate but not assimilate.

Radical Muslims have a strategy. They want to convince Western leaders and decision-makers of their right to live according to their faith. Now, that sounds good to our ears, because we all want the right to live according to our faith; it's a fundamental guarantee in the United States.

But Muslim supremacists stretched the definition of the word "faith." They are not talking merely about what we would consider religious tenets. Instead, they're talking about full-on sharia law, with its social and political boundaries, its regulation of every detail of people's lives.

These radicals don't want to join the rest of us at America's ecumenical table. What they are demanding is the establishment of autonomous Muslim enclaves within a society of which they are irrevocably hostile.

So the Boston bombers sucked up the ideology that creates terrorism by insulating its adherents and dehumanizing non-believers. But what does our government do about this? It often appeases supremacist agitators.

Consider Sheikh Qaradawi. He is probably the most influential Islamic scholar alive today, being found on advisory boards all over the West. Never mind the fact that he has issued fatwas endorsing suicide bombings against Israel, terror war against American troops in Iraq, and the death penalty for homosexuals. He is a darling of Western universities and academics, who present him as a leading "moderate" intellectual.

Until we get our head out of the sand, we will see more Boston-type events in our future. This is something we can and must fight.

Random stories and quotations that add up to something

I found a few things interesting from a recent issue of National Review. Here goes:

1. Republicans were not able to stop Obamacare, but there was one tiny victory they had – requiring Congressman/women and some of their aides to enroll in what the law calls "exchanges." Now, congressional Democrats are starting to worry that they won't be able to attract young, single staffers, are going to have to pay much more for exchange cover. He then they paid today, thanks to the obscure, intricate regulations and Obamacare. So, guess what? The Democrats are trying to create an exemption for their offices. Is anyone surprised? Congress always passes stupid laws for the rest of us, but they are the first to make sure they get exemptions from it.

2. We now have a new Secretary of State, John Kerry. Listen to a few of these comments by him. When he testified before Congress, he was asked about Benghazi and finished an answer by saying, "we got a lot more important things to move on to and get done." On another day, he made a casual comparison of those who died in the Boston terror bombing to the thugs who lost their lives on the Turkish ship when they attempted to break an Israeli-Egyptian blockade of Gaza. Here's one more Kerry comment on jihadists: "I think the world has had enough of people who have no belief system, no policy for jobs, no policy for education." Well, the individuals he's referring to actually do have a rather well-developed belief system. It's called Islam.

3. I love reading about cars, so I was interested in what happened to an automobile company called Fisker. It was going to build a beautiful plug-in luxury car called the Karma. Unfortunately, the company is nearly bankrupt. Here's for all of us come in – the American taxpayer is on the hook for a loan of over $500 million given to it by the Department of Energy. I keep in mind these are the same people who brought us Solyndra. In fact, VP Biden stood at the site of a proposed Fisker plant in Delaware, promising that the government's investment would return billions of dollars. This is what we get when we have an inefficient government trying to determine winners and losers in the private sector.

4. Remember the terrible explosion in Texas, where a fertilizer-plant blew up, killing 15 people? Some on the left argued that this was due to Texas's lighter regulatory touch. Actually, the facility was supposedly regulated by no fewer than seven agencies. The problem was not the regulations but the regulators –OSHA , for example, had not visited the site since the Reagan Administration. Here we go again: the federal government thinks it knows best, but it fails often in doing its duties.

Well, those are just a few items that interested me. I hope they are instructive to all of us.