• With: Steve Forbes, Quentin Hardy, Rich Karlgaard, Dennis Kneale, Mike Ozanian, Morgan Brennan



    President's new ethanol push fueling food price-spike fears

    Steve Forbes: The president's energy plan takes land that can be used to grow food for people and animals and reverts it to ethanol, switchgrass, and all that other stuff. The bottom line is, the surface of the earth should be grown for food; below the surface is where you get the energy. There's no way all of these alternatives can amount to a mere fraction of our future and current energy needs. Let's get off of it and by the way, Brazil is relying more on oil and gas and less on sugar ethanol.

    Quentin Hardy: Well subsidies for ethanol tend to be subsidies for the corn lobby. It is government welfare and it's bad but at a time when as events in Japan have shown nuclear, like it or not, is probably off the table. We can't afford to narrow our choices. You can make fun of switchgrass but it actually has a much much better yield of corn. That land isn't used to feed animals; basically the American red state farm lobby is keeping Brazil from allowing us to export it to the United States. Obama talked about cellulosic ethanol, that's switchgrass, it's not corn and wouldn't affect food prices.

    Rich Karlgaard: No, food and energy prices are causing a real crisis particularly among working class people. I'd like to point out there are 6.7 billion people on earth and the number one user of fossil fuels in the whole world is the President of the United States. His plane uses one gallon per second of fuel. If he's so excited about switchgrass ethanol, why doesn't he commit to flying air force one on switchgrass ethanol.

    Dennis Kneale: If you oppose ethanol corn subsidies and I do, it's a great argument. I don't think factually it's true, and I don't think it's truly visibly raising food prices. If corn prices go up guys, don't eat corn. And also what's really raising food prices around the world is that the poorest parts have more money to eat and there's more demand for food. Still, you shouldn't burn fuel for food. You should invest in algae.

    Mike Ozanian: More land is being used to grow corn for ethanol because of this policy. But there's also an unintended consequence that's destroying the standard of living for middle class families, which is the use of ethanol and fuel to greater concentration. It's destroying small engines used for lawn mowers, snowmobiles, motorboats, etc. That's another huge cost, it kills carburetors, it kills fuel pumps. So, the unintended consequences when Washington decides to run industry are disastrous.

    Morgan Brennan: It's a great point but let's set the record straight here folks. Ethanol was a fraction of President Obama's energy plan and by the way, as Quentin mentioned, it's ethanol that's not corn based and it's not going to ruin your carburetors and not going to push food prices higher. I think much more interesting is the fact that he talks about pushing natural gas and we've seen stocks rise in natural gas because of it and he talks about drilling more domestically. That's a huge statement from the President. We should be talking more about that.

    Public unions lash out at new 'pay by performance' law

    Steve Forbes: At the state and the federal level, what a shocking thing, trying to devise measurements and metrics to see if you're doing your job. Like for air traffic controllers, so that they don't fall asleep; for teachers, how are your students doing. And if you can't devise the metrics, David, then have competition like school choice, so then they'll devise metrics to reward good teachers.

    Rich Karlgaard: Well, I'm all with Steve in principle but two reasons make this very difficult. One is public employee unions. Heck you can't even fire the worst teachers let alone promote the best. And then you have racial and gender quotas that make it very difficult. How many times have we read about a fire department that's in trouble because it's promoted too many people of one race and not of another.

    Elizabeth MacDonald: I'll tell you something, teachers would love this because they want those bonuses that charter schools would give for "pay for performance." But it's really difficult. Look what happened with a Los Angeles school district. They had to spend something like $35 million to try to get rid of 7, just 7 out of 33,000 teachers. They only could get rid of 5 and when Jimmy Carter tried. He had a "pay for performance" bill and that passed but then they, the government and legislators, watered it down with outlawing favoritism and putting in a lot of stalling tactics like more reviews for these workers.

    Bill Baldwin: Do you want to be pulled over by a cop who gets a bonus for writing more tickets? Do you want your kids' teacher to get extra pay for making sure that the weak students stay home on exam day? And god knows what's going to happen when we having city board workers getting incentive pay for increasing their volume.Dennis Kneale: When Bill was my boss and I was working at Forbes Magazine there were no union step increases it was all on merit. And I remember when I started my career at The Journal, merit pay, the merit raise, was what really made me feel great. When in government have we ever focused on quality and performance? Merit pay would do that.

    Neil Weinberg: Remember public service, the idea that you go into government to do something good for society? I don't think that's all together bad, and I think that if we're going to start having merit pay, it's going to be a mess. As Bill said, we're going to have cops write excess tickets, we're going to have teachers who're cheating. We're going to have all sorts of gaming the system. We're going to have headlines of people making millions of dollars in the public sector.

    D.C. only major city to see home prices rise December to January; are we sending too many tax dollars there?

    Dennis Kneale: Yes and home buyers are chasing those dollars. You know it's an ominous sign, I mean rising prices happen because demand is rising. Housing is a depression market; that prices rose anywhere is almost outstanding; that they rose only in Washington, D.C. is extremely disturbing.

    Quentin Hardy: I think this is why fear mongers want you to be bad at math. When you have a set of twenty anything, one will be best, one will be worst. The fact that Washington was over and the fact that San Diego was over doesn't really mean very much. Over, under the difference is very slight.

    Steve Forbes: When you have 20 metropolitan areas and only one is rising and the rest of the nation is sinking, that means power is going to Washington, tax dollars are going to Washington, lobbyists go to Washington, workers go to Washington. That's where the money is. Washington prospers, the nation suffers.

    Mike Ozanian: The unemployment rate in D.C. is 6.1 percent and to Dennis' point, it's not just a blip. Over the last 10 years, D.C. has had the fastest appreciation of home prices of any: 7.4 percent. But I think there's a little something else at work here too. DC has arcane housing laws. For instance, if you're renting your home out you have to have 4 consecutive days of temperatures of 65 degrees before you can evict the tenant to sell your home. So, there are other things at play here.

    Elizabeth MacDonald: This is going to be the only time you're not going to see Vice President Biden or Nancy Pelosi or Harry Reid talking about how spending federal tax payer money really does create wealth in this country. The European champagne socialists are having a good time of it there in D.C. We saw this happen after the Civil War, WWI, WWII and as Steve said the Great Depression. We always see DC as a boom town. I got to tell you something, it's an argument not to have collective bargaining for federal workers because once the housing market crashes in D.C., they can be hitting up the tax payer drawer.

    Stocks that will stay strong through the next quarter and beyond

    Bill Baldwin: Archer Daniels Midland (ADM)

    Morgan Brennan: Weight Watchers (WTW)

    Neil Weinberg: Big Lots (BIG)

    Elizabeth MacDonald: Walter Energy (WLT)