Tags: economics

Isn't the true villain in the Gulf oil spill... us?

I was reading Ellen Reiss' editorial in the current The Right of Aesthetic Realism to Be Known (from the Aesthetic Realism Foundation), which talks about the Gulf Oil Spill, and attributes it to corporate greed overwhelming public good. And I keep hearing similar complaints from most every source out there: the evil oil giant BP tried to squeeze every last dollop of profit out of their oil trade, and thus cut corners, resulting in this massive disaster. Isn't BP evil.

But what I haven't heard is the true source of the blame: us. We, the people who want more and more oil and gasoline and petroleum products at cheaper and cheaper prices. Give us more gas, make us pay a few cents a gallon less, and we're happy with almost everything.

BP wouldn't have been drilling this well if they didn't know there was a market for the product when they got around to producing it. And if we had been able to say "We've got enough. We're not going to buy any more plastic products this month. We're going to leave our cars in the garage for the next few months and walk," BP wouldn't have been drilling that well in the first place. But we'd never do that. Oh sure, a few of us might pay a few dollars more for "locally produced" food, rather than stuff that's trucked in from the other side of the country (or flown from the other side of the planet), but since the introduction of the internal combustion engine, there has never been a significant, lasting decline in its use. Which means oil companies are going to keep drilling.

But I'm not complaining about our mobile society. A great many good things have come from our increased ability to travel easily. To go back to a society dependent solely on foot and horse power would be a horrible step back. No, what we need is a completely different energy source.

If someone were to pop up tomorrow and say "Lookee here! I've got this new fuel that's easily portable, storable, and replenishable, as safe as gasoline, that doesn't pollute any more than burning fossil fuels, that can be generally available, and that will push your car forty miles for only two dollars," OPEC would shrivel up and die, the oil companies would see their stocks plummet to spare change, and we'd be operating under a new paradigm.

But until that time, we can whine and bitch about BP all we want, but they know, I know, and you know, that we're just like junkies complaining about our pusher. The only thing that really matters is that we're going to hand over our money for his product, again and again. Our words mean nothing compared to our actions.

Where's Daniel Shipstone when we need him?

Thomas Sowell's The Housing Boom and Bust: ignorance really would have been bliss

The Housing Boom and Bust by Thomas Sowell
Basic Books, $24.95, 184pp, hc, 9780465018802. Economics.

This is the type of book that is both exhilarating and frustrating to read. Exhilarating because it's wonderful to find other people who can think clearly and rationally, and cut through the political rhetoric and bullshit to get at the heart of the matter. It's frustrating because it points out just how screwed up we've allowed our economy to get by simply looking away and letting politicians do what they want (while they may say it's for the good of whatever problem they're trying to solve, they don't have a clue; but they do know how to operate the system to increase their own power and reach, and to maintain their offices).

In this case, Dr. Sowell (a senior fellow at the Hoover Institution) looks at the recent housing crisis and boils down its causes, not to a simple "this action caused that", but to the less noticed, more important causes. Among them, land-use restrictions which caused housing prices to rise for no rational reason. He also points to the fact that the vast "crisis" of which the news media and government loved to speak was far more limited than any of them would have cared to tell us (how many times did you hear housing prices were skyrocketing in Idaho, or Oklahoma…). Even more riveting (though obvious after reading the book) is the recent religious drive for "affordable housing" and governmental pressure forcing banks to give mortgages to those who had no chance of repaying them. In short, Sowell says government inserting itself where it wasn't needed, putting pressure on banks, was a major cause of the housing/mortgage crisis (and the full economic mess that followed it), and once the crisis was recognized, governmental response was "we need to involve the government more in these decisions."

Sowell is pretty even-handed in spreading the blame around—neither the Republicans nor the Democrats come out looking all that good—though he has special recognition of the work of Barney Frank and Christopher Dodd. He also reminds us that there's nothing better than a crisis for a ready government to insinuate itself even further into places where it isn't wanted or needed.

It's difficult to read a book like this, knowing that the author is just the type of person we'd love to have involved making the decisions of the government, and knowing that there's absolutely no way such a person could ever get elected. If you've heard anything about housing in the last few years, or been affected by what happened in the economy, pick up this book and give it a read. It won't fix what ails you, but it'll help you focus and direct your anger where it ought to be.

Which is worse: the disease, or the business loss?

I'm somewhat surprised by the uproar I've heard today over Vice President Biden's remarks. It was the lead-in to the swine flu stories on WINS radio, NBC's evening news, and two or three other places I paid attention to today. While the rest of the administration, and Biden himself, fell all over themselves to say Biden misspoke, I'm thinking Biden was right on when first he spoke, and all the "clarifications" are thinking more about the economy than proper health.

Early today, on one of the morning talk shows (see this NBC article, for example), Biden said he'd discourage family members from flying or even taking the subway. This is perfectly logical when you're thinking about a virus for which we don't yet have a vaccine, and which is, according to the World Health Organization, a pandemic. And while it's affected remarkably few people in the US, it has killed more than 150 people in Mexico, and shows no sign of slowing down. The way to fight a virus is exactly what Biden said: don't go near sick people, don't put yourself in places where you're stuck breathing the same recycled air, and practice good hygiene.

But the White House leapt to the defense of the airlines and trains by insisting Biden meant to say he was discouraging just nonessential travel to Mexico, the hardest-hit area.

I don't know; it strikes me as wrong.

Maybe losing one day of mail is a good thing for writers

A few days ago, when I heard the Postmaster General had asked Congress for permission to cut back mail delivery from six days a week to five, my first thoughts were "The USPS is so inefficient, but of course to save money they're going to make their service worse." Of course, I immediately figured he meant dropping Saturday delivery, but no, the Post Office is considering dropping either Saturday or Tuesday delivery. While delivery volume on Tuesdays is lighter, Tuesday is a work day, part of the business week, and to my mind, dropping Tuesday delivery would be a giant step toward proving the irrelevancy of the USPS (consider: most of the no-mail holidays are Mondays, so dropping Tuesday delivery would cut the business week of mail down to three days).

Anyway, I had those thoughts, but didn't think them worthy of sharing, since anyone else who sends and receives paper mail probably thought the same things.

But today, I combined this news with something that had been a general assumption, but seems not to have come to pass: the shortening of the work week.Cut for length.Collapse )

Following up yesterday's links with more

"UAW to Congress: Get a deal done" by David Goldman: because, of course (as I said yesterday), it's the job of the government spending our tax dollars to prop up a company or industry that is failing. UAW President Ron Gettelfinger said "If there's no action, we could see the collapse of one or more domestic auto companies by the end of the year." Interestingly, Gettelfinger said nothing about any action he and his members are taking—other than asking for our tax dollars—to save those companies and their jobs.

On the other side of the issue, there's "No need for bailout, say diners near thriving car plant" by Jim Kavanagh, in which people near a thriving Honda plant talk about their views on how to save the auto manufacturers.

It's the whole "it's not my fault" thing writ large. Sure, it's not entirely the UAW's fault that Detroit is in dire straits, but they are definitely a part of the problem. And if you had the choice between insisting the world let you keep doing what you've been doing all along, and then probably losing your job, or being flexible enough to say "Okay, I'll change these things and take a pay cut to help save my job", which would you do? Wake up, Mr. Gettelfinger: the world doesn't owe you anything; the government is not required to spend my tax dollars to save your job; and it'd probably be a hell of a lot more rational for the big three automakers to file for Chapter 11, cancel their contracts with your union, and then hire workers at a more reasonable, more competitive salary.

And as much as I like the concept of buying "American made" cars, lots of those Hondas and Toyotas and other foreign cars are made in America these days. If GM, Ford, and Chrysler went away, I'd be sorry to see them go, but there will still be cars to buy.

Links: privacy, economy, and archeology

"Murder Suspect Has Witness: A MetroCard" by Benjamin Weiser: shows the positive side of all the new technologies being used to track and follow everyone, but ever since a Law & Order episode several years ago that used a MetroCard record to convict someone of a crime (an issue which is also touched on briefly in the article), I've taken to disposing of the cards when I've emptied them, rather than reloading. I fear there is too much information flowing around, enabling anyone with the least bit of access to track one's movements, purchases, hobbies, everything. That's why I pay cash, replace MetroCards, and scowl at "security" cameras. Are you doing your part to live your life as far from surveillance as possible?

"The Dead Tell a Tale China Doesn't Care to Listen To" by Edward Wong: about the Uighurs living in Xinjiang, and the 3,000-year-old Tarim mummies in the museum in Urumqi, and what the combination of these two groups of seemingly non-Chinese might mean to the official Chinese government take on the region.

"Let Detroit Go Bankrupt" by Mitt Romney: talks about the current situation of US auto makers, and their pleading for government grants to bail them out. I don't want to do that. If my tax dollars are being invested in these companies (or, worse, given to them), I want stock. But if I had a choice, I wouldn't be buying stock in car companies at all.

Romney makes some good points:

"First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers." Key point: he's not saying "costs must be raised for the foreign auto makers." In order to be competitive, the US auto makers have to lower their own costs.Cut for lengthCollapse )

And this interesting sidebar: "A Sea of Unwanted Imports" by Matt Richtel talks about the growing storage problem at the Port of Long Beach, where they're warehousing imported, but unwanted, cars. Also talks about the pileup of suddenly unwanted exports (specifically, waste material for recycling) at the port.

Links

"Dry-Ice Martini and Electric Cake" by Julia Moskin: about engineering in the kitchen. Lots of wonderful ideas. Not quite on a par with Cake Wrecks (scroll down past the Halloween stuff), because this article is, y'know, things you might actually want to do. Expand you're culinary (if not gustatory) horizons!

"Panicked Traders Take VW Shares on a Wild Ride" by Louise Story, Michael J. de la Merced and Carter Dougherty: interesting piece on how volatility comes to a specific stock, and what happens when it does.

Actually, I guess you'd probably want to read that second article first, so that after the heartburn, you can soothe yourself with some cooking innovations.

Links

Sorry I've been so quiet here; it's been a very busy week, although I have been keeping up on my other blog. For that one, I try to keep a more professional attitude, in support of the book, and I'm trying to not cross-post very much, so you might be interested in adding that one to your f-list, too.

Today I want to share links to a couple of pieces, which relate to my previous posts on the economy.

The New York Times Freakonomics column,
"Economist Price Fishback: The Real Facts About the Original Home Owners' Loan Corporation (and What They Mean for a Modern Incarnation)" by Steven D. Levitt, offers a good description of what the Home Owners' Loan Corporation was and what a modern-day version of it might do. He explains simply, but in depth, things you might not have heard about the current proposals.

"Buy American. I Am." is an Op-Ed piece by Warren Buffett, explaining (succinctly) why he's investing in stocks right now. He's definitely a "value" investor, and the man knows a value when he sees it.

Thought Experiment: Science/Economics

If the rising price of oil continues, eventually it will drive the discovery or invention of a petroleum-gasoline substitute—one that is actually comparable to gasoline (as in, is as easily distributable, generates equivalent energy for about the same price, etc.). Although my value of "eventually" in this case is probably somewhere in the $8-$12 per gallon range; as much hand-wringing as we're seeing, I still don't see any real moves away from driving. And to switch over to a different fuel will mean that the energy companies will have to completely retool (a massive investment) and the car companies will have to completely redo their factories (a massive investment), so none of them will be terribly interested in moving away from gasoline-internal combustion engines anytime soon.

At any rate, the thought experiment/question is: If/when we have that substitute, say 25 or 50 years from now, will people look back on the George W. Bush administration as having caused this gas-substitute's discovery (much as the Watergate scandal seems to be the driving force behind campaign finance reform, or the Triangle Shirtwaist factor fire drove labor reform), or will they credit growing global demand and increasing commodities investing/speculation?