As promised, the highly-anticipated sequel to last week’s incredibly successful open thread is finally upon us!! If you would rather not relive the Reformation, the Counter-Reformation, and the Second Great Awakening, this is the place for you!

As with the “Palin Who?” open thread, the rules are simple:

1) Do not post anything having to do with Jeffress or religion in the context of politics, or acat, myself, or a forum regular will assail you with a delicious recipe. (Feel free to post other stories on religion, though.)

2) Post whatever you think would be interesting or useful to the RS community — last time we mostly talked about sports, but as Cole Porter put it, anything goes.

I’ll kick us off by congratulating MI for a job well done in sports and politics lately: between the Tigers beating the Yankees, the Lions’ great season so far, and Gov Rick Snyder’s attempts to make MI business-friendly once more, things are looking up for Detroit in a way that hasn’t been true for years. Requisite article link:

http://online.wsj.com/article/SB10001424052970204294504576617280722057142.html?mod=WSJ_hp_mostpop_read

Since it looks like the front page is going to be consumed with the all-important topic of Palin’s announcement today, I propose an open thread. Only one rule: you cannot mention Sarah Palin in any way, shape, or form. If you do, I will make certain that acat or myself will plague you with a recipe from some ethnic food group.

I’ll kick us off with the following delightful news article about the Bakken oil fields I read yesterday (h/t CNN):

“Believe it or not, a place exists where companies are hiring like crazy, and you can make $15 an hour serving tacos, $25 an hour waiting tables and $80,000 a year driving trucks.

You just have to move to North Dakota. Specifically, to one of the tiny towns surrounding the oil-rich Bakken formation, estimated to hold anywhere between 4 billion and 24 billion barrels of oil[...]

While it is home to less than 3,000 permanent residents, there are about 6,500 people there right now, as job hunters relocate to seek out high-paying jobs.”

Huh, I guess oil extraction *does* produce more than just profits for those evil corporations. Remind me why shouldn’t we drill in ANWR, again?

Not to steal Doc’s thunder, but imitation being the highest form of flattery, etc I just had to point out a quiz that, IMO, is a bit better defined than the Political Compass test. I present to you all (drumroll please!) the Nolan Test! This test was invented by Christopher Nolan sometime in the 70s as a way to see where people stood on the various issues, and should be quite revealing, as well as fun.

Here’s the link to Doc’s diary, so that you can go comment on it: http://www.redstate.com/doc_holliday/2011/02/12/this-might-not-be-a-diary-per-se-but-i-think-it-could-clear-up-a-few-things-and-actually-be-fun/

And here’s the link to the Nolan Test: http://www.nolanchart.com/survey.php

Senator Robert Brady (D-PA) plans on introducing legislation that would, to quote The Hill, “make it a federal crime to use language or symbols that could be perceived as threatening or inciting violence against a federal official or member of Congress.” As an example of such rhetoric, Brady singled out the now-infamous Palin crosshairs map, saying, “You can’t put bull’s-eyes or crosshairs on a United States congressman or a federal official.”

It’s sad that I have to say this in reference to national tragedy, but it is now more than ever that we have to be wary of threats in the form of gun and speech controls. This bill is one such threat, and needs to be opposed strenuously. Sarah Palin’s political speech, and that of others, cannot be held liable for this, or any other, tragedy: a bullseye does not cause or even naturally lead to political violence, and as far as we know, the killer was not motivated by it even one little bit. Peoples’ actions are their own, and removing a cornerstone of free speech will do nothing to prevent future tragedies, all while doing its part to un-Constitutionally restrict political speech. Elected Dems rarely waste a tragedy: don’t let them use this one to pass legislation that shreds our First Amendment rights.

Just when we were all ready to have the US Navy submerge Michigan Atlantis-style to expand the Great Lakes, Justin Amash, an up-and-coming State Representative in Michigan's 72nd District running for US Congress, had to go and disabuse me of that notion. A fan of Fredrich von Hayek, Amash has a framed portrait of the guy in his office, and has actually fought the good fight against spending in the Michigan legislature, rather than just talk about it. More to the point of the title, for the past year he has posted a summary of all of his votes on Facebook, the reasons for his votes, and allows discussion of those votes on Facebook. Even better, he follows up in the comments section to address constituent concerns, clarify, explain how things like tie bars work, and to help educate on the political process -- what a concept! In addition, he posts on upcoming votes and asks for feedback from constituents for how he should vote and why before he votes. With that in mind, here are a few thoughts:

As some of you on RedState know, I am a Puerto Rican: yeah, one of the crazy ones with the 3′ x 4′ flag in his house and a smaller one in his car. My irrational love of all things Puerto Rico matches up quite nicely with the most stubborn Southerner’s love of state, and I would recommend Puerto Rico to anyone wanting to live or vacation there without hesitation. That is why my heart yearns for me to write an uncritical and positive homily on the virtues of PR statehood. Realizing that following your heart only works in Disney movies and radio friendly three minute long pop songs, however, I have this to say: don’t do it. It’s unfortunate, but at present, adding PR to the list of states would be ill-advised for both PR and the US.

That there is a large cultural barrier is indisputable: though it is highly patriotic, the territory is very different in character from the American heartland. While its cultural independence from the other states coupled with national and local patriotism would have made it an ideal member in 1787, it is less ideal in present-day America, where the federal government is far less concerned about its jurisprudence. A Puerto Rican Congressperson won’t be circumspect in his push or larger government: it’s almost expected in PR.

Chronic unemployment is a staple of Puerto Rican politics, and has been since time immemorial. This is largely the result of federal policies which had enormous disparate impact and New Deal holdover legislation, as well as some unfortunate natural disasters. In 1938, for instance, 2/3rds of all textile factories closed when the federal government established a minimum wage of 25 cents (!), because worker productivity wasn’t high enough to justify that price. Operation Bootstrap and other Keynesian programs have been popular among pols looking to increase their stature, and have all failed. Unemployment is currently at ~15%, and is expected to hit 17% shortly. This has made PR susceptible to populists and demagogues promising them a Square Deal which they have yet to deliver.

The exemption from federal taxes has made PR a good place for businesses who want access to US markets to invest. The low wages demanded by PR’s inhabitants have also made it a good place for (relatively) cheap labor. Both of these factors have made it a pharmaceutical and manufacturing center. State pols have taken advantage of this by jacking up territory taxes to an unconscionable level to pay for the incestuous relationship between the public unions and craven politicians (more on that). If they were required to pay federal taxes, the entire structure of PR’s economy and government would change radically. With a rosy economic forecast, this would be difficult to handle well. Under the current economic forecast, it would be a disaster to throw the PR economy so out of whack, and the guy left holding the bag would be Uncle Sam.

Though there are virtually no private unions in the territory (minimum wage has made it impossible to get a job in PR!), public unions are unusually large, powerful, and entrenched. This, as well as PR’s own version of machine politics, have made politicians in the territory subservient to their demands. Unfortunately, this has led to the California-like decline of the island: recently, Puerto Rico’s credit was downgraded by Moody’s Investor Services, with the possibility of further downgrades in the future. It also currently boasts the highest debt per capita of any of the territories or states, including California.

Its current Republican governor, Luis Fortuno, is pretty much our Chris Christie: his budget cuts have led to the elimination of 17,000 jobs, which is unfortunate for those who are jobless, but necessary for fixing the territory’s fiscal mess, which dwarfs California’s. He has put forth his 2010-11 budget here;. Scroll down to page 5 and you can see the problem: “social development” makes up for over half of PR’s expenditures, even after Fortuno’s cuts. Most of what is charitably called “social development” is the operating cost for the fiefdoms established by the public sector unions, and they are quite protective of their holdings! This, in turn, funds the politicians who are elected to do their bidding, and these politicians then continue this positive feedback loop by voting for a larger share of government funds to go to these unions. While I wish Gov Fortuno the best in solving his government’s fiscal crisis, only time will tell if his cuts are lasting, and if they inspire more fortitude on the part of citizens and legislators.

There are certainly aspects of PR that are admirable: if made a state, it would be the most anti-abortion state in the Union. The people of PR are wonderful, and their democratic institutions are well-developed and generally free from political violence. However, its fiscal problems, unemployment level, and distinctness from the American body politic make it difficult for me to recommend statehood. Puerto Ricans have consistently and wisely voted to keep the status quo in referendum concerning this very subject. America, wait a couple of decades before allowing a territory with less fiscal discipline than CA have a say in where your money gets spent: PR is just fine without the state coin, and the current arrangement works better at present than statehood.

With <a href=”http://www.redstate.com/erick/2010/01/11/im-afraid-sarah-palin-might-be-ruining-herself-unintentionally/”>Erick’s well-intentioned post</a> concerning National Tea Party Convention’s legitimacy raising ire among some Palin fans and <a href=”http://www.redstate.com/mbecker908/2010/01/11/sarah-palin-is-a-fox/”>Palin’s signing up with Fox News Channel</a>, it looks like Palin season is upon us. As a result, several comments and <a href=”http://www.redstate.com/scope/2010/01/13/in-search-of-facts-concerning-gov-palins-record-in-alaska”>a diary written by Scope</a> (which I recommend that you read) have been made in support of <a href=”http://gov.state.ak.us/aces/”>Alaska’s Clear and Equitable Share (ACES)</a>, a profits tax on oil companies in Alaska passed during Palin’s tenure as governor of AK. President Obama, and many Democrats, have toyed with the idea of levying a windfall profits tax similar to the ACES scheme on oil companies in the US, and despite support for such a tax having died down since the conclusion of the Bush Administration, it is still very much favored among many on the left. To that end, I have decided to respond to all of these disparate parties supportive of a 70′s-style profits tax on oil through a critique of the ACES tax scheme. Make no mistake: ACES is a profits tax, plain and simple, and while it may not have the “windfall” prefix, it is very similar in structure to many “windfall profits” taxes, including Obama’s proposed scheme. In AK’s special case, where the <a href=”http://ltgov.alaska.gov/services/constitution.php”>Alaskan Constitution</a> entrusts mineral rights to the state, the problem isn’t so much class warfare as it is that profits taxes are both economically inefficient, and an unstable form of revenue for the government. Moreover, they can, in extreme circumstances, create perverse incentives in government. Let me explain.

First of all, there is a significant difference between economic profit and accounting profit. While accounting profit is simply what’s left over when all accounts have been payed with incoming funds, economic profits include all costs, including labor and time, as best it can. (As an aside, Investopedia has a good definition here.) For example, let’s say that you spend $20 to set up a lemonade shop, and you get $30 after two days of working the lemonade stand. Accounting profits would be $10 ($30-20=$10). Now, let’s say that you could have made $35 mowing lawns with those inputs. In that case, your economic profit is negative ($30-20-35=-25)! Why is economic profit important? There are many reasons, but for our purposes, there can only be one [insert Highlander reference here]:

Economic profit, not accounting profit, is what companies are actually getting back for their efforts, because they are inclusive of resources that aren’t strictly monetary, such as time and labor. Therefore, moralistic endeavors to get a “Clear and Equitable share”, of a company’s profits, if that is the intention, should ideally be confined only to the actual “share” in question (which is whatever oil companies’ economic profit actually is, NOT accounting profits, which are much higher than economic profit).

Besides that concern, a tax on accounting profit isn’t very efficient for government: it’s very easy to hide profits in some account or other, and even easier to move profit from the US (or AK) to more favorable areas. A tax on production, OTOH, is difficult to escape: if the oil is produced in the US (or AK), oil companies have less options to escape taxation, and monitoring becomes much easier for the government. Even if all of the enforcement issues are dealt with adequately (and in a way that is more cost-effective than enforcing a tax on production), lower profits would mean less long-term investment in the oil industry wherever this holds true.

From the government’s viewpoint, there are also problems with the stability of such an arrangement as a form of revenue for AK long-term; profits throughout any stretch of time are far more variable than production. This means that incoming revenue is also going to be erratic in nature. Also, production comprises only a small part of what is involved in the overall profit of oil companies: refining, transportation, demand, etc. play a large role in those profits, and are largely dependent on factors outside of AK. Considering that fact, it’s a bit of a stretch to say that a windfall profits tax would fall under Article VIII of AK’s Constitution, though I’m sure AKSteve, Art, or one of our legal eagles would know more about that than me. All of this culminates to create a perverse incentive, wherein legislatures seek to increase oil company profits, instead of production, to increase incoming government revenue. Though both would be somewhat amoral, as we’ve already noted, profits have less to do directly with AK than production, so it is likely that measures to increase government revenue by increasing profits would benefit AK directly less than a production tax. Moreover, some of the indirect benefits of production in AK (workers spending their money on AK goods, company investment in AK, etc.) would also be redistributed away from the state, as the result of a profits tax. In a striking irony, you’re right back where you started: with corrupt politicians working with well-meaning pols and Big Oil to enrich their own coffers, while screwing over AK’s citizens and economy.

So, what were Palin’s motivations in all of this? If you subscribe to Public Choice Theory, or if you’re a cynic, you could make the case that Palin did it for her own benefit: profits were high and in plain view (eliminating the long-term problem of enforcement), and attacking the oil companies for “price gouging” is a time-tested strategy for electoral success. Certainly, I can think of a couple of politicians who would think, “Long-term policies be damned! I’m only in office for the next couple of years; let the next sucker who gets into office figure it out!” I’d bet that a large part of Democratic support originated from that motivation, and there are probably more than a few operatives who hope to characterize whoever is in office when this tax scheme comes under strain as “fiscally irresponsible” for political points, as they did with Bush and the mortgage crisis.

On the other hand, there are plenty of cases where a politician’s good intentions lead to unanticipated results: even Reagan, when he signed the Therapeutic Abortion Act, fell victim to this penchant. If it wasn’t below Reagan to fall privy to such vices, Palin is surely not exempt from the maxim, good intentions=bad policy.

In the end, it’s unlikely that we will ever really know the truth, just as it’s probable that both motivations were at play among the AK legislature. Whatever the case, profits taxes are no better when enacted by Republicans than when suggested by Dems, and we should take note that, regardless of motivations and intent, all that we’re left with at the end of the day are the results of policy, whether good or bad.