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Hendrickson's View

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Hendrickson’s View

Mark W. Hendrickson

Mark Hendrickson is an economist who recently retired from the faculty of Grove City College, where he remains a Fellow for Economic & Social Policy for the college’s Institute for Faith and Freedom. These articles are from The Epoch Times and The Institute for Faith and Freedom, an online publication of Grove City College, in Grove City, Pennsylvania.

Problems with Disney Taking Sides Politically

Disney CEO Bob Chapek has had a tough spring.

First, he upset a vocal portion of his workforce at Disney World by not publicly opposing Florida’s newly enacted (on March 29) “Parental Rights in Education Act.” (The opponents of this law term it the “Don’t Say Gay” law, because it forbids Florida public schools from teaching about such sensitive topics as sexual orientation and gender identity in kindergarten through third grade.)

Then he caved to the outcry of those employees by not only stating that the Disney Company opposes the new law but also promising to spend millions of corporate dollars to lobby against such laws in other states. These pronouncements, in turn, drew major pushback from Florida’s Republican-controlled legislature and Gov. Ron DeSantis, including the loss of tax breaks and other special privileges that Disney founder Walt Disney had procured for the company decades ago.

Chapek’s initial instinct was correct. He should have refrained from stating an official corporate position about the Parental Rights in Education Act. The reason is simple: As the CEO of a publicly traded company, his primary responsibilities are to Disney’s customers, employees, and shareholders. If Disney were privately owned, then whoever owned it would have the prerogative to identify his or her company with whatever causes and public policies he or she wished — such is the privilege of ownership — but Chapek doesn’t own Disney (or rather, he owns only a minuscule percentage of it, however many shares of Disney stock he currently owns). As CEO of The Walt Disney Company, it’s questionable whether Chapek has the legal right to speak on behalf of the entire corporation on issues of public policy, and it’s certain that he doesn’t have the moral right to do so. Plus, it’s simply a bad business practice.

Here’s why:

Legally, Disney has a huge number of owners. It’s safe to say that those individuals (and remember, even the funds that own Disney stock own those shares on behalf of individuals) span the political spectrum. When it comes to a controversial policy, such as that adopted by the passage of the Parental Rights in Education Act, many shareholders support the law and many are opposed. It’s presumptuous for Chapek to speak on behalf of all the owners as if they all agree with his position. They most certainly do not. (It’s his right to articulate the objectives that Disney strives to achieve and the values that the corporation seeks to embody, and that should be the limit of his pronouncements about official corporate policies.)

Similarly, what right does a CEO have to stake out a corporate position that many of the company’s employees disagree with? Doing so creates an unfriendly work environment just as surely as would be the case if a CEO of a public corporation declared, “Our company supports the Democratic (or Republican) Party,” or “We favor Protestants over Catholics, Jews, atheists, et al.” A large corporation will naturally have a politically and religiously diverse workforce, and it should not favor one segment over the others. In this case, Chapek caved to a noisy segment of the company’s workers and adopted their position as the official position of the entire corporation when, in fact, such a position disrespects Disney employees who agree with the new law. It seems to have been a case of the proverbial squeaky wheel getting the grease.

Let me be clear that on issues like what children should be taught in public schools, each employee of the corporation, from the newest park cleaner to the most senior executive, should be free to publicly advocate whatever political goals they favor. But they should do so as individuals, using their own time and financial resources. The non-CEOs of the company should not have to endure the company CEO presuming to stake out an official corporate position on controversial political issues as if they were representing the views of every employee. A CEO who takes divisive positions cannot benefit to workforce morale. It inevitably leaves one side disgruntled.

Finally, Disney’s customer base, being the largest group of people to whom Disney is accountable, is also the most diverse. Why risk antagonizing a portion of them by staking out an official corporate position on an issue that millions of customers or potential customers oppose? If Chapek and his fellow executives read the market as wanting more gay content in Disney movies, fine. Let them respond to market demands by altering their product lines. That is what successful businesses do. But CEOs shouldn’t array themselves against a portion of their customers by openly opposing them in the political realm. Many will forgive Disney and still take the kiddies on a vacation to the Magic Kingdom, but not all of them will.

Chapek’s ill-considered official adoption of a controversial political position reminds me of last spring’s jarring decision by the commissioner of Major League Baseball to remove the 2021 MLB All-Star game from Atlanta. The commissioner adopted without reservation the Democratic Party’s assertion that Georgia’s election reform law was nefarious and un-American when, in fact, millions of Georgians and Americans viewed it as simply improving the integrity of elections. By adopting the Democratic position as objective fact rather than the partisan political spin that it was, the commissioner caused consternation among millions of baseball fans who had thought that major league baseball was apolitical, that it was for the nonpartisan enjoyment of all Americans, not a political actor siding with one party against the other.

Let’s hope that Chapek and other corporate CEOs remember to whom they’re accountable. If they adopt “woke” partisan positions on political issues, they risk alienating customers, dismaying employees, and jeopardizing the profits that shareholders hope for. The bottom line: CEOs should focus on serving all their constituencies impartially, and avoid getting embroiled in political skirmishes.

Florida Enacts Law to Highlight the Evils of Communism

Florida Gov. Ron DeSantis, a Republican, is in the national limelight again. This time, he’s garnering attention for signing legislation that requires public schools to devote at least 45 minutes per year to teaching the “evils of Communism.”

The range of negative reactions to the new law is telling.

One of the more surprising objections was raised by a Chinese émigré who works as an economist at the Mercatus Center, George Mason University’s pro-free-market think tank.

Weifeng Zhong told The Washington Times:

“Immigrants and refugees from China, Cuba, North Korea, and more understand the authoritarian regimes they were once in. They didn’t learn that from mandatory courses in school.”

Quite true. Nobody who has lived under Communism needs to take a course to learn how oppressive and cruel such regimes are. Their personal experiences provide all the evidence they need to understand that basic reality. Unfortunately, however, millions of young Americans are woefully clueless about what daily life is like in a country ruled by Communists. They’re scandalously ignorant of the sheer destructiveness of an ideology that has snuffed out approximately 100 million lives in the past 105 years while enslaving hundreds of millions more. That’s exactly why a law requiring at least a cursory knowledge of the pertinent facts is now needed.

Zhong need not worry about Americans hating those who flee Communist tyranny. A small minority of Americans may resent immigrants whom they perceive to represent a threat to their jobs, but the overwhelming majority of Americans are more than happy to welcome refugees escaping from tyrannies.

The more typical objections to the new Florida law will come from the anti-American left. They’ll point out America’s faults while glossing over Communist atrocities.

A student at the college where I taught gave a lesson about the evils of Communism at the high school where she did her student teaching. After the class, her supervising teacher glared at her and huffily stated that after she was gone, he would teach the students about the good things that Communist governments had done. Huh? What good things? A “good side of Communism” lecture would have to be the shortest lecture (well, the shortest truthful lecture) in academic history. The appalling fact that some teachers teach that Communism has made some positive contributions to human society shows why the Florida law is so needed.

According to the Washington Times’s report, one of the more over-the-top reactions to the Florida law popped up on a feminist website, Jezebel.com:

“For any impressionable Florida kids that may be reading this, please note that there have never been any ‘true’ Communist countries, owing largely to violent intervention from the U.S. and other Western superpowers.”

Let’s gloss over the counterfactual reference to “other Western superpowers.” What’s most fascinating about this bizarre statement is the sudden concern on the left for the “impressionable.” Leftists were loudly opposed to Florida’s recent law banning instruction about gender identity, even though the little tykes covered by that law (those in grades kindergarten through three) are certainly more impressionable than the “kids” who are old enough to be reading about Communism. Yet, it seems that leftists would like to ban any historically factual education about Communism, a political virus that poses an existential threat to the realization of each person’s unique individuality.

The assertion that “there have never been any ‘true’ Communist countries” is a favorite leftist myth. Well, it’s technically true, I suppose, in the sense that there has never been a historical example of a Communist regime imposing a Marxist plan on society and successfully creating a just and affluent workers’ paradise followed by a withering away of the ruling Communist party, its historical mission having been accomplished. But it isn’t correct to assert that “true” Communism hasn’t been tried.

Lenin imposed complete Communism for the first few years that he was in power in Russia. The problem for him and his subject peoples was that Communism in practice was so unworkable that Lenin jettisoned “pure Communism” and replaced it with his New Economic Policy in 1921. The policy permitted limited free market activity, not because Lenin liked economic freedom, but because it was the only way to keep the Russian people from starving to death and strangling his “Communist paradise” in its cradle.

Speaking of starvation in Soviet Russia, it had gotten so bad by 1921 that the United States started sending massive food aid to lessen the death toll of the Russian famine. The aid began to arrive in the late summer of 1921. A year later, U.S. food aid was feeding approximately 11 million Russians every day. Far from “violent intervention,” as alleged in the hysterical rant quoted above, if it hadn’t been for U.S. humanitarian intervention, Soviet Communism would have expired before ever becoming a global menace.

It’s unfortunate that Florida had to enact a law directing schools to acquaint students with the evils of Communism. One would think that American teachers, having lived their whole lives free from political oppression and the impoverishment caused by central economic planning, would, as a matter of course, teach the crucial and profound differences between the American belief in individual rights and Communism. Alas, many teachers and schools have gotten off track; in fact, many of them have adopted leftist curriculums.

Since the left has weaponized education, pushback and countermeasures have become necessary. In that context, the Florida law mandating some modest observances and lessons about the evils of Communism is a welcome development.

The Consumer Fuel Price Gouging Prevention Act: Cynical and Revealing

On May 19, the U.S. House of Representatives passed the Consumer Fuel Price Gouging Prevention Act by a vote of 217 to 207. Four Democrats and every Republican voted against the bill. The purpose of the bill is to empower the federal government (specifically, the Federal Trade Commission) to fine oil companies if they increase prices in an excessive or exploitative way, with the bill, in typical Washington fashion, not bothering to define what constitutes “excessive” or “exploitative.”

This bill — which has little chance of passing the Senate — is both cynical and revealing.

It’s cynical because supporters of the bill are accusing oil companies of doing what the federal government itself is doing — namely, restricting the supply of oil. Rep. Katie Porter (D-Calif.) publicly declared, “Big Oil is threatening our entire economy by keeping supply low and jacking up prices at the pump.”

Rep. Frank Pallone (D-N.J.) who chairs the House Energy and Commerce Committee, asserted in a hearing on May 16, “The problem is Big Oil is keeping supply artificially low so prices and profits stay high.”

It takes a lot of chutzpah to blame oil companies for currently tight supplies when the administration of President Joe Biden has so aggressively pursued anti-fossil fuel policies and repeatedly declared its desire to wean U.S. consumers from fossil fuel consumption. I wrote twice last year about specific anti-oil production policies that the Biden administration has adopted.

Has the administration altered course in response to spiking gas prices higher? Not in the slightest. Just a few days before Reps. Porter and Pallone tried to blame oil companies for tight oil supplies, the administration canceled oil leases in the Gulf of Mexico and Cook Inlet. Existing leases are being held in regulatory purgatory whereby bureaucrats refuse to approve a green light for actual production. A few days ago, Sen. Joe Manchin (D-W.Va.) commented that 16 months after the Biden administration announced a pause on granting new oil exploration leases, “we still have no new leases,” and, “it has become crystal clear that the ‘pause’ is in fact a ban.”

Democrats have a long history of persecuting oil companies. In 2007, the House passed similar anti-price gouging legislation. Multiple times since then Congress has staged the political theater of show trials during which they lambaste oil company executives. This tactic is a classic political sleight of hand. Congress wants to get your attention fixed on the Big Oil bogeyman so you don’t notice how irresponsible Congress itself has been in blocking the development of domestic oil deposits. Interestingly, Rep. Stephanie Murphy (D-Fla.), one of the four Democrats who voted against the bill, referred to it as a political gimmick.”

Besides being cynical, the anti-price gouging bill is very revealing.

The demagogues who voted for it are at war with the inexorable, unrepealable law of supply and demand. The average American understands that gasoline prices are soaring and oil company profits are rising because supply isn’t keeping pace with demand. The politicians who voted for the price-gouging bill prefer to blame greedy oil executives rather than impersonal market forces for higher prices and profits. This raises an important question: If all oil companies have to do to maximize profits is restrict supply, why don’t they do that every year and avoid horrendous years like 2020, when they lost billions of dollars?

There are two realities about the oil market that elude those who voted to punish alleged price gouging: It’s highly cyclical and brutally competitive.

This year’s healthy oil company profits are the result of a still-young upturn in the cycle after the 2020 bottom. Many oil company leaders are hesitant to boost exploration spending now, partly because of how much money they have lost in recent years and partly because they perceive the Biden administration’s zealous anti-oil beliefs.

Not only has the administration been canceling pipelines and leases while rendering existing leases almost worthless by imposing a regulatory freeze on actual drilling, but Biden also keeps talking about weaning Americans from fossil fuels ASAP, praising the U.N. scheme to have financial institutions steer capital away from the oil industry. ESG ratings are branding oil companies as socially irresponsible.

Who would want to go out on a limb and commit huge sums of capital if they fear that Uncle Sam wants to curtail, if not crush, their business?

If Democratic politicians really wanted to lower gas prices for consumers and squeeze oil company profits, they would use the law of supply and demand to help them. They would remove all restrictions from drilling and selling oil. Oil companies would resume the cutthroat competition that has characterized their industry from the beginning. Supply would go up, prices and profit margins would go down, and American consumers would be thrilled.

Instead, these anti-market zealots want to suppress gas prices and squeeze oil profits thwarting oil production at the same time. These economically incompatible goals are irrational. Like socialistic central economic planners, they believe that they can alter the way the world works — reality itself — by legislative will. That’s what makes their passionate desire to control, manage, and direct the economy for the alleged good of the people so dangerous. They think prosperity is a matter of will and that their good intentions will overrule the laws of economics, physics, and so on.

Of course, progressives tend to justify their heavy-handedness on economic policies by invoking “justice.” Democrats are the party of “fairness,” right? Well, not exactly. Consider this: Just as oil company profits are at or near record highs today, so U.S. homebuyers are facing record-high house prices. The reason is exactly the same: low supply relative to high demand. To be consistent, then, shouldn’t Congress fine all those homeowners who are taking advantage of current market conditions to “gouge” buyers? Are those howls of protest I hear? I agree with you! It would be unjust for Congress to limit how much you sell your house for. That would infringe upon your property rights. But then, why should Congress intervene to limit how much a company sells its product for? Morally, there’s no difference.

Progressives reject the rule of law and viciously discriminate against Americans who produce oil. This overt assault on property rights reveals the socialistic spirit that animates today’s progressives.

Our country’s rapid economic growth over the past century and a half has been powered by the energy that oil companies have produced for us. They even produced the oil that Biden is releasing from the Strategic Petroleum Reserve to boost his popularity poll numbers. Congress, by contrast, has never produced a gallon of energy, even as it spends billions of dollars that it has taxed from those companies. How about a little gratitude for American oil companies, Congress?

The only positive comment one can make about the Consumer Fuel Price Gouging Prevention Act is that it makes plain just how allergic progressives are to economic common sense.

Mankind Versus Climate: The Humans Are Winning

The human race has made immense progress in dealing with the reality of climate change. If you wish to characterize the ongoing collisions between mankind and climate as a war, humans are winning that war. It’s time to retire the phrase “existential threat” when discussing climate change. While there’s more yet to be done, many commendations are due for successful steps already taken. Schools should stop teaching gloom and doom to our children. It’s time for all of us to be optimistic about climate change.

You wouldn’t know this if you listen to the political establishment. That cozy club continues to crank out alarming projections. For example, on Feb. 25, the Biden White House released a slew of press releases from the “White House Climate Science Roundtable warning of climate catastrophes if we don’t undertake a rapid, radical changeover from fossil fuels to intermittent (commonly called “renewable”) sources of energy. The Roundtable — a mixture of university profs funded directly or indirectly by government and political appointees — all tout the official party line. They seek “to cut U.S. emissions in half by the end of the decade, to reach 100 percent clean [sic] electricity by 2035, and to reach net-zero emissions by 2050.”

Meanwhile, many scientists outside the political establishment continue to downplay the alleged threat of catastrophic climate change. One example is research published in January in The European Physical Journal Plus. As The Heartland Institute summarizes the findings:

“To sum up on ‘disasters,’ accumulated real-world data does not show cyclones, droughts, extreme precipitation events, floods, heat waves, hurricanes, or tornadoes have become more frequent or intense.”

And as the European scientists themselves conclude, “on the basis of observational data, the climate crisis that, according to many sources, we are experiencing today, is not evident yet.”

Who are we to believe? Each person must decide for himself, but if you examine the agendas of the four key factions of the political establishment, you begin to realize that the proposed switch to intermittent (sorry, “renewable”) energy is often the means to an end having nothing to do with climate.

First, numerous political leaders have explicitly stated that the climate change issue provides them with a convenient pretext to achieve their overarching goal of imposing socialism.

Second, Wall Street, seeing that trillions of dollars are in play, is lining up with Team Biden to direct capital away from fossil fuel companies and toward producers of intermittent (sorry, “renewable”) sources of energy. Get ready to see more cronyism and corporate welfare than you’ve ever seen before.

Third, government-funded scientists have found that lending credence to climate alarmism has been highly profitable for them and their universities, bringing to mind President Dwight Eisenhower’s warning in his farewell address: “The prospect of domination of the nation’s scholars by Federal employment, project allocation, and the power of money is ever present and is gravely to be regarded” and there is a “danger that public policy could itself become captive of a scientific-technological elite.”

Fourth, journalists — many of them ideologically onboard with the socialist objectives and always conscious that scary stories are better for business than reports of benign stability — are all too happy to exploit climate alarmism for all it’s worth.

In sum, the four pillars of the climate change political establishment have found that the personal benefits of being alarmist include power, profits, prestige, and popularity. Might not those allurements influence their thoughts about climate change?

For those of you who still believe that it’s imperative that we transition to intermittent (sorry, “renewable”) energy sources, I have bad news and good news.

The bad news for you is there are two insurmountable reasons why this transition cannot be made. One is cost. According to Bjorn Lomborg, writing in The Wall Street Journal:

“The largest database on climate scenarios shows that keeping temperature rises to 2 degrees Celsius — a less stringent policy than net zero by midcentury — would likely cost $8.3 trillion … every year by 2050 [with costs continually increasing] so that by the end of the century taxpayers will have paid about $1 quadrillion.”

One quadrillion dollars? The global GDP today is barely one-tenth of that. There is no possibility that a whole decade’s worth of production will be spent in the attempt to shave a degree or less off the average global temperature. This would inflict massive and often lethal impoverishment on the human population. It would literally be a genocidal policy course.

The other reason net-zero won’t happen is because of insurmountable physical limitations. As physicist/researcher Mark Mills points out, there exists only a fraction of the capacity to produce the quantity of minerals needed to build a completely intermittent (sorry, “renewable”) energy infrastructure.

But here’s the good news, both for those who believe we must wean ourselves from fossil fuels and for everyone else: We are already winning the “battle” against climate. Even as CO2 concentrations in the atmosphere have been steadily rising over the last century or so, the death toll from climate/weather events has been steadily falling. Indeed, the global climate-related death risk has dropped by over 99 percent since 1920.

The aforementioned European Physical Journal Plus article states, “global average mortality and economic loss rates . . . have dropped by 6.5 and nearly 5 times, respectively, from 1980 - 1989 to 2007 - 2016.” The key to this great progress is growing levels of wealth. It’s encouraging to note that progress toward lower climate-related death rates is not confined to rich countries. Bangladesh, for example, since 1970 “has lowered storm fatalities by a hundredfold while the frequency of destructive cyclones has increased,” according to the Christian Science Monitor.

By all means, let us continue to study and try to learn more about our climate. We humans will never be able to regulate our climate (even if CO2 emissions are stabilized, we won’t be able to control ocean currents, cloud formation, volcanic activity both on land and undersea, variations in solar radiation, etc.). But we have proven very resourceful in finding ways to minimize the damage from climate/weather-related events. We are winning. Let us celebrate rather than cower in fear.     *

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Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

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