Whew! The CAFE debate is still raging: for those interested in further exploration of the topic, a good place to check is The Cato Institute -- or just search Google on CAFE and "rebound effect" together.
Now I'm going to try to explain why fuel economy standards by themselves don't work very well; in order to do so, I want to introduce you to a concept called Price Elasticity of Demand.
Actually, I'm sure a lot of you have already met this concept; it was in bold type on the page of the book that left an ugly crease in your face when you fell asleep on it the night before your Econ 101 midterm. Rather an obscure, stuffy old fellow, Price Elasticity of Demand. But important. Don't worry, we'll try to make it as painless as possible - I promise I won't even try to explain how we calculate the bastard. Just the basics.
Let's start with the demand curve, a representation of how prices work that's so obvious you smack your forehead and wish you'd thought of it. Check out the simple graph below. On the Y axis we show price. On the X axis, the quantity demanded at a given price. They are labeled, for your reading pleasure, P for Price, and Q for Quantity.
Now, as you would expect, the amount of most things that we demand changes with the price. No matter how much you want a triple-mocha half-skim latte, you won't be buying many of them if the Starbucks manager jacks up the price to $30 a pop. Similarly, if the guy down at Tri-State Mercedes drops the price on the SL500 to $5, you'll want a lot more of them than you do right now. Hell, everyone in the family pick one out! Your demand will be limited only by your available driveway space.
All of which is a long way of stating the obvious: when the price of something is higher, we want to buy less of it. When the price drops, we want to buy more. That's why the demand curve, which is what this graph shows, slopes downward: because quantity demanded varies inversely with price. The higher the price, the lower the demand, and vice versa.
Price elasticity is a way of describing how much it varies. When we say that something is highly elastic, we mean that a small percentage change in price produces a big change in the quantity we demand. The bigger the item is as a percentage of your budget, the more likely this is to be true; few people will go out of their way to get 3% off on toothpicks, but most will when they're shopping for that Mercedes. . .
Now, the more elastic demand for something is, the flatter the demand curve, so that something which is highly elastic has a very flat curve, like this one:
Conversely, there are products that are extremely inelastic. Big changes in price produce very small changes in demand. Remember shopping for textbooks in college? Remember how it felt to come out of the bookstore with all those heavy tomes you were never, ever going to read again? Like being robbed at gunpoint by a disaffected 19-year old librarian with a mohawk, that's what. Your professors told you to get this edition of this book by the 1st of September. You didn't have the option of waiting until the December sales; nor would your professor allow you to substitute another Calculus text, no matter how hard you argued it was "just as good". And if you'd actually bought your Microeconomics textbook, instead of just borrowing it from the library one night and trying to osmose the knowlege inside by sticking it under your pillow, you would have known that your demand was highly inelastic. No matter how low a price the bookstore set, you weren't going to buy 3 copies of Remembrance of Things Past. And no matter how high they set the price, you were going to buy one copy because otherwise you'd flunk the course. The bookstore responded to the market by jacking up the rates to levels that would make loan sharks blush. You responded by paying the freight and calling home to ask Mom and Dad for more cash.
This chart shows what a highly inelastic demand curve looks like. It's very steep, because big changes in price don't produce much change at all in the quantity demanded.
Now, if your demand were perfectly inelastic, that curve would be a straight line -- no matter what the price, you'd buy exactly the same amount. There are few items that are perfectly inelastic; after all, if they raise the price of textbooks to $10,000 a pop, your parents might decide that a bright future awaits you in air conditioning repair school. There are some, however: coffins, for example. They're pretty much one to a customer; you're not going to suddenly buy three just because they're on sale. Nor can you really do without in this age of lavish funerals and tight (although apparently not tight enough) government regulation. So your demand for coffins would be a vertical line described by the formula Q=1. Like this:
So that's an overview of Price Elasticity of Demand. You'll now know what the Economist is talking about. If you read the Economist. And if you don’t, you should.
Now Jane, I hear you say, you’ve just bored the hell out of me for fifteen minutes I’ll never get back, when I thought you were going to talk about something I really care about – like Corporate Average Fuel Efficiency. How about changing the topic to something fun and exciting like that?
Patience, my children. I am getting there.
Price elasticity turns out to be very important for discussing the debate over CAFÉ versus a gas tax. Here’s why: how effective CAFÉ is, compared to the gas tax, depends on how elastic the demand is. You wouldn’t think that demand for gasoline would be very elastic. But it turns out to be when you think about it not in terms of gasoline, but in terms of the Price Per Mile Traveled (PPMT).
If PPMT is not very elastic, than CAFÉ will work almost as well as a tax at reducing overall fuel consumption. This seems counterintuitive to many people, but let’s look at what happens to the PPMT when we institute CAFÉ versus a gas tax. With CAFÉ, the price of the car goes up (and its safety and performance go down, but that’s another argument). But the Price Per Mile Traveled Goes Down. Let’s compare a 3 mpg increase in fuel efficiency to a 30 cent increase in the gas tax:
As you can see, the price per mile traveled goes up with the gas tax, but down with the increase in fuel efficiency. Now, as we just learned, when the price of something goes down, the quantity consumed goes up. We’re used to thinking in terms of the price of gasoline, which hasn’t changed. But if we realize that the consumers are actually consuming mileage, not gas, then we can see that CAFÉ inevitably increases the mileage consumed. This is called the “rebound effect”
Now, how much mileage increases depends on – let’s not always see the same hands – yes, that’s right, price elasticity. I’ve thrown together some charts that show consumption functions for high, medium, and low elasticity, depending on the price per mile. (Anyone who cares to know my ham-fisted methodology may email and I will explain it. These numbers are NOT intended to be representative of any real world, actual demand for mileage; they’re just for illustration.)
As you can see, if demand is very elastic, a change in the gas tax produces a big decrease in consumption – while raising the fuel economy of the car they’re driving produces a big increase in consumption, so that there’s a huge difference in how much gas they use between taxing and making vehicles more fuel efficient, even if the overall cost to the consumer is the same.
Conversely, if elasticity is low, then it doesn’t make much difference which you choose; people won’t drive much more if mileage is cheaper; and they won’t drive much less if it’s more expensive. CAFÉ may actually make a better choice here.
So which is it?
Well, in the short run, demand is pretty inelastic; you’re not going to skip a trip to the grocery store because gas is too expensive. But over the medium and long term, it’s pretty elastic; people make travel and commuting decisions based on how much it will cost. The rebound effect eats between 20-30% of the gain in fuel efficiency.
Well, that’s not so bad, you might say.
Ah, but that’s not the full story. Congestion eats even more of the conservation – you don’t get that 27.5 mpg when you’re stuck in traffic with all the other people who decided to take a drive because it’s a nice day.
Cars are made less safe. There are two ways to increase fuel efficiency: decrease acceleration power, or decrease the weight of the vehicle. Both cause more accidents – and more deaths.
Cars stalled in traffic cause more pollution than cars on the open road.
Roads need more maintenance.
Etc.
So why do we have CAFÉ? Because it’s a hidden cost, that’s why. People say they’re in favor of CAFÉ because it’s easy. What they’re really saying is that they don’t want to tell people that they have to make hard choices; they’d rather add $3,000 to the price of their cars, and increase their risk of accidents, and impose all those other hidden costs, without telling them. This is the exact opposite of what economists are supposed to be for: open, transparent markets.
Unless, of course, you think the proles don’t know what’s good for them.
So let’s imagine that you have a small business. Perhaps you sell annuities to the many employees of the local fur-bearing trout farms. Let’s say that you recently inherited this business from your father, who started it during the great Fur-Bearing Trout Boom of the 60’s, when women everywhere were wrapping themselves head-to-toe in lustrous trout pelts, and the number of farms in the area quintupled.
For years, this has been a great business. You take in a lot of cash; you pay out a little money to the retired trout skinners and pelt-tanners. Your family’s fortunes wax along with those of the trout farms, which are growing like wildfire. Everything has been so good, in fact, that your father several times raised the promised annuity, to the general acclaim of all. Prosperity seems assured.
Then one day, perhaps a day much like today, you notice that some of the trout-skinners are getting a little long in the tooth. Not quite ready for the glue factory, perhaps, but certainly no longer spring chickens. It occurs to you that someday soon, they are going to expect to live off those annuities you’ve been selling.
As you walk among the green fields and gently burbling streams of the farms, you notice something else: there are a lot of old workers, but not so many young ones. When you gently query one of the farm owners about this, he explains that the pelt business isn’t what it used to be; many people no longer care for trout fur, and have switched to Jackalope Skin jackets, hats, and toaster cozies. Moreover, to stay competitive the farms have switched to machinery for many of the tasks that used to be done by hand The labor force isn’t growing anymore.
Back at the annuity building, you do a little calculating. While you’ve been coasting along briskly when there were a few retirees supported by a lot of workers, it looks like in about ten years there are going to be almost as many retirees as workers. The annuity business suddenly doesn’t look so profitable. A quick calculation indicates that over the next fifty years, you’re going to have to pay out $13 million more than you’re taking in.
If you haven’t guessed yet, I’m talking about Social Security. Now, let’s see where this goes.
In a panic, you ask your Chief Operating Officer and your CFO to give you plans to deal with this crisis.
Your COO, who we’ll call Al, goes first. He suggests paying down all of the debt you’ve accumulated, mostly in the form of loans from the Trout Valley Bank, which holds all the deposits for the trout workers. He also suggests offering more generous benefits to attract new customers and bring in more cash.
Your CFO points out that offering more benefits is hardly the recipe for solvency.
The COO retorts that people need the benefits, and anyway, the important thing is paying down your debt.
Your CFO points out that since the present value of your debt is less than a quarter of the present value of the annuities you owe payments on, it’s not mathematically possible for this to solve the crisis.
The COO stutters.
The CFO points out that the only thing paying down the debt is good for is lowering interest expenses a little, producing a trivial delay in the onset of the crisis, but making it easier to borrow money in the future. If there’s anyone to borrow money from, that is, since all the money for the loans comes from the trout skinners and pelt-tanners who will be living off their savings, not making new loans.
Your COO goes into the corner and sulks. However, the non-financial departments think that his idea sounds swell, since it doesn’t involve cutting benefits.
The CFO presents his idea: do a partial liquidation. Hand some money back to the customers both by reducing rates, and opening a mutual fund arm of the annuity business where part of their payments can be funneled. The mutual funds can channel money into productive investments, like buying Jackalope ranches, and by the time the future arrives, hopefully there will be enough money to pay off the annuity holders; at the very least, one hopes they’ll have something to live on, what with the Jackalope ranches.
The COO comes out of the corner to point out that if we give the money back to the customers, it will be even harder to pay them off when the time comes.
The CFO rejoinders that overhead expenses are out of control, largely because of your brother-in-law Tom, the sales manager, who lards every budget with gifts for his friends in the form of “investments” like, oh, say, light rail systems for their backyards. Cutting the budget will funnel money away from chump choo-choos into whatever more productive investments the people can make for themselves.
The COO points out that this will leave the firm incredibly over budget. Ands anyway, we can always do that later. Like, after the COO retires.
The CFO points out that it’s going to be hard to make productive investments after the bailiffs have carted away all the furniture and equipment.
The COO punches him.
Meanwhile, a guy from payroll asks why, since the firm is bankrupt, you don’t just say so and give people as much of their money back as is possible before it’s too late.
The COO and the CFO both punch him. Everyone else goes out for drinks.
Perhaps you can see now why the Bush plan is better, even though it’s inadequate. It at least tries to address the problem; the Gore plan to “fix” things by retiring a little 5% debt is like trying to save for your kid’s education by prepaying your mortgage. The Bush plan is partial, and didn’t stand up like a man and say “some of you aren’t going to get paid.” But at least the hope was that that 2% would ease things a bit for those who got the short end of the stick. Al Gore’s plan was to tell everyone everything was okay so that brother-in-law Tom wouldn’t have to give up his friends. (Would you be friends with him unless he paid you?)
Still a better plan would be the Chilean radical surgery approach: guarantee current benefits for those over 55 and move everyone else towards defined-contribution plans. Unfortunately, it may well be that you need a dictatorship to accomplish it. Anyway, hopefully you now understand a little about why I get so $#%! mad when Paul Krugman pretends that the Democrats have a better Social Security plan.
It’s not that he disagrees with me. It’s that it’s bad economics.
This is dreadful: a WaPo columnist looked up the email domains of people who sent her angry letters and sent copies of the letters to their employers. I mean it isn't illegal; it isn't even, strictly speaking, unethical. It's just in horrendously bad taste -- an adult temper tantrum.
Now, first of all, I want to say that although I do not possess Mr. Krugman's psychic abilities, I'm pretty sure that he knows that CAFE is a bad idea. Why? Because he's an economist, and he's not an idiot, although he plays one on paper. (Later tonight I'll be putting up a post, with pretty pictures, that shows why it doesn't work. I know -- oh, snore. Well, you don't have to read it, then.) So why this retarded column? Because he can, that's why.
Let's go to the tape. We open with Krugman's favorite (perhaps his only) lead: a marginally germane story that allows Krugman to make hysterical remarks about the Bush administration without sounding as idiotic as he would if he just burst out with them in the first paragraph:
I almost had a Joseph Welch moment on Wednesday. I've calmed down a bit since, but I'm still on the edge.
Joseph Welch represented the Army in the 1954 Army-McCarthy hearings. It was a time, like the present, when the nation faced a real external threat; alas, some people tried to use that threat to gain political advantage and suppress dissent. When Senator Joseph McCarthy tried to smear one more innocent victim, Welch burst out with a heartfelt soliloquy that earned him a place in the pantheon of liberty. It ended: "Have you no sense of decency, sir? At long last, have you left no sense of decency?"
But it wasn't a smear attack that set me off this time. It was Ari Fleischer's use of a press conference on the crisis in the Middle East to shill, once again, for the Bush energy plan.
Okay, Earth to Krugman: remember how stupid the conservatives made themselves sound when they made melodramatic public statements that equated Clinton's piece on the side with pedophilia, despotism, and High Treason? You don't sound any smarter just because you're a Democrat. Newt Gingrich was a professor too.
Let me say for starters that energy policy isn't central to this crisis — and to be fair to Mr. Fleischer, he didn't say that it was (he was responding to a question about oil prices). Even if the United States weren't dependent on imported oil, the Middle East would still be a strategically crucial region, and the Israeli-Palestinian conflict would still be a world nightmare.
But to the extent that oil independence would help — and it would, a bit, by reducing the leverage of Persian Gulf producers — the Bush administration has long since forfeited the moral high ground. It has done so by vigorously opposing any serious efforts at conservation, which would have to be the centerpiece of any real plan to reduce oil imports.
There are many ways to make this case; here are two more. Even at its peak, a decade or so after drilling began, oil production from the Arctic National Wildlife Refuge would reduce imports by no more than would a 3-mile-per-gallon increase in fuel efficiency — something easily achievable, were it not for opposition from special interest groups. Indeed, the Kerry-McCain fuel efficiency standards, which the administration opposed, would have saved three times as much oil as ANWR might produce. Or put it this way: Total world oil production is about 75 million barrels per day, of which the United States consumes almost 20; ANWR would produce, at maximum, a bit more than 1 million.
You know what's clever about this argument? As usual, it's what he leaves out. For example this: that oil production will be at its peak "a decade or so" after drilling begins. I'm going to quantify that and call it "10 years". Now, class, how long do you think it takes for the fuel efficiency increases to take full effect?
At least ten years, that's how long. All the cars currently on the road won't magically become more fuel efficient because congress passes a law. And because raising fuel economy makes cars more expensive, it actually delays the purchase of new cars.
And why mention that the way it's "easily achievable" is by making the cars less safe? You save fuel either by making them accelerate slower, or by making them smaller and lighter. Both things make the cars less safe. And not just because of all those SUV's on the road; small cars fare badly compared to larger cars in accidents, even when the other car is also small. There's less metal to absorb the shock, and because the car is lighter, it tends to get both forward and backward momentum, whipsawing its occupants into prime lawsuit material.
Yet a few months ago, Republican activists ran ads with side-by-side photos of Tom Daschle and Saddam Hussein, declaring that both men oppose drilling in ANWR — and Dick Cheney, when asked, stood behind those ads. Administration critics could, with rather more justification, run ads with side-by-side photos of George W. Bush and Saddam Hussein, declaring that both men oppose increased fuel efficiency standards. (Actually, I'm not aware that Iraq's ruler has expressed an opinion on either issue.) Of course, if such ads did run, there would be enormous outrage. After all, turnabout wouldn't be fair play because, well, just because.
How about because there's a war on, Mr. Krugman? Personally, I think the ad's ridiculous. But you aren't going to win any point comparing Sadaam Hussein to the man we're depending on to take him out. Because you know what? Most of us just don't care about a few thousand acres of mosquito-laden, caribou-less tundra. Sorry.
This isn't the first time the Bush administration has engaged in "hitchhiking," using a crisis to promote a pre-existing agenda that has nothing to do with that crisis. A year ago it was trying to promote drilling in the wildlife refuge as the answer to electricity shortages in California — a connection as far-fetched, if you think about it, as the alleged connection between arctic drilling and the war on terror. And the administration has shamelessly exploited Sept. 11 to cover its fiscal tracks, pretending — in flat contradiction of the facts — that the war on terror is the reason those huge projected surpluses have vanished, and that tax cuts have nothing to do with it.
Is there anything more pathetic than an economist pretending he can't add to score political points? This year's disappearing surplus wasn't even vaguely accounted for by the tax cut. Out years, yes, but the money that we're currently missing is due to other factors like -- why, like the recession bequeathed by He Whose Name Must Not Be Spoken, and The War on Terror. But those aren't fun causes. Let's look at the causes we like. Like when I blame the total economic illiteracy of Upper West Side liberals on our favorite New York Times columnist.
But this crisis is different, if only because it is so awful. The unfolding tragedy in the Middle East reduces me and many others to despair in a way that Sept. 11 never did.
Bush is still popular! Even though I've told people and told people about what an awful unprincipled liar he is! And how he wants to turn everyone in America into shackled slaves for his billionaire buddies, so they can sit on top of their enormous pile of money and cackle with glee at the suffering of the proles. But all those uneducated idiots seem to think about this stupid war in the Middle East!
Needless to say, I don't have the answer to that tragedy.
Well, that's a relief. One suspects his solution would involve Al Gore and an eight-day blatherthon.
Mr. Bush's speech yesterday gave some reason for hope: at least, for now, he has rejected the advice of sycophants who assure him that tough guys never get caught in quagmires. (Tom DeLay recently declared that if we'd had a leader like Mr. Bush, we would have won the Vietnam War.) But one thing I'm sure of is that this is no time for hitchhiking.
You mean, hitchhiking, like when a respected economist uses his reputation to lend credibility to spurious attacks on an administration he didn't vote for? Or more like, when a columnist launches those attacks by exploiting genuine crises like Social Security or the War in the Middle East, in which he apparently has no interest other than as bludgeons against the abovementioned Administration? Something like that?
The question is whether Mr. Fleischer and his colleagues understand this. At long last, have they left any sense of decency?
More to the point, how would Krugman recognize such a sense if he saw it?
It seems someone's been offering bounties of $50,000 for dead American soldiers in Afghanistan:
Maj. Iris Hurd said leaflets have been found in the last few weeks that offer $50,000 for a Westerner delivered dead and $100,000 for one who is alive.
The pamphlets are known as "shabnama," or "night letters," because they are distributed clandestinely, often at night. Hurd said they are sometimes slipped under people's doors.
The leaflets say that "if you support the coalition or the AIA, we will threaten your family with violence," she said. The AIA is the interim administration of Prime Minister Hamid Karzai, which took over after the coalition toppled the conservative Islamic Taliban militia late last year.
She did not show any of the pamphlets, but said allied forces had some in hand. She would not elaborate on who may have written them, or how they instructed Afghans to cash in on the rewards.
Hmmm. Now, if this is on the up and up, where could that money be coming from?
Steven Den Beste, William Quick, and now Andrew Olmsted (to name just a few) are blogging about the perils of blogdom's bacteria-like growth rates over the last several months, and the difficulty of getting noticed. I average somewhere around a thousand hits a day now, though my traffic is what I'd call a highly volatile commodity. That's oh, about a thousand more than I thought I'd get if I started this, so I'm content.
To new bloggers I'd say first read Andrew Olmsted's solid advice; find something that you know well, and talk about it. You don't have to be Den Beste and know everything (how does he do it?); you don't even have to be the most knowlegable person on any one thing -- Mindles Dreck knows more about finance, and Arnold Kling about economics, than I do -- they're professionals who've been at it longer. My core competency (I think) is that I can explain things to people who don't share my interest in, or knowlege about, the subject. So don't think that if you're not a hyperexpert on something you can't have great material. Tal G.'s been picked up because he's got the geography -- a front-row seat to the middle eastern conflict. Fritz Schrank knows how government works from an insider's perspective. UK Transport Guy just knows everything there is to know about -- transportation in the UK. So whatever it is you like to talk about, probably there's someone out there who wants to listen if you have something interesting to say.
Second, don't despair. I blogged for three weeks and got just about no traffic; quit for a while, and started up again. I still had no traffic. Then I got the one-two punch almost two months in: Our Fearless Leader linked me because I wrote a letter about Cornel West; and Samizdata liked my corporate tax piece and spread it around. My traffic has grown slowly ever since, all though there were some discontinuous jumps along the way. I don't publicize even to the extent of emailing authors of other blogs; I figure I'll get out there if it's meant to be. Just keep writing. You will not get anywhere unless you write regularly, especially when you're trying to build traffic. If you don't enjoy doing it just to see what clever things you've said to yourself, then blogging may not be for you.
Third, on emailing and asking for links: I don't mind it, but I don't link anyone just to link them. I do link things that strike my fancy, offer something I haven't heard before, or on which I have something to say. Unfortunately, there's no way to predict when the magic will happen. Anyone who emails me, and whose blog isn't raving nuts (there have been a few) gets added to a folder that I cruise periodically to look for newbies. I do try to link people who don't get read as much, or are new. But my email is reaching the overwhelming level -- not the Instapundit levels, but 30-50 a day makes it hard to respond to everyone. I have a 60-hour a week job, an active job search, and a furry creature that wants to be taken care of each evening. If I got an email from you and didn't mail back, it's not because I'm evil -- it's because I'm maxed out. The only way I can keep blogging is that I read six pages a minute and type 80+ WPM. So unfortunately, I can't link everyone who writes me, or even write a reasoned reply. But I do read it, and feel free to keep sending it. If you've written something you think I'd have something to say about, send the link along; I'll take a look. But like everyone else, I'm being crushed by the sheer weight of blogs out there; what used to take me a combined hour at wakeup, breakfast, lunch, and after dinner, would now take me all day if I tried to track all the good blogs. So the best advice I can give you is just to keep plugging.
I know I linked him yesterday, but he's chock full o'goodness: the Kolkata Libertarian has a really outstanding piece on bribery:
Bribery is the direct result of a closed economy. It springs up wherever transactions are non-transparent and the rule of law is neither defined nor enforced. It thrives when the total cost that people must incur to go the "legal" route, is greater than the cost they have to incur for making "extra-legal" arrangements. To "fix" the problem requires the understanding that this is a "generational" issue, one that cannot be wished away, even by politicians of great vision.
Via Slotman: OnlineJournal is alleging that there's a smoking gun scandal involving Taiwan and the Bush White House. Which makes me wonder -- no, not WWCD -- what it takes to be an "Online Contributing Editor" these days, since the piece reminds me of nothing so much as those badly mimeographed newsletters you used to see from groups like the South Street Coalition for Democratic Peace Initiatives and Quakers United to End World Hunger Now! (QUEWHN, pronounced "Que - When") back in my undergraduate days. There's the confused repetition mistaken for dramatic emphasis:
Carl Ford, as a "key player" in Cassidy and Associates, was paid from this secret slush fund, and is said to have played a "pivotal role," as Bush's appointed assistant secretary of defense for intelligence and research, in convincing Bush to allow the $4billion sale of sophisticated arms to Taiwan.
Carl Ford, as a "key player" in Cassidy and Associates, was directly involved (in addition to the covert money they received from the Taiwanese slush fund) in acknowledged, contracted PR work for Taiwan interests. Again, the one of the specific goals was to influence America to sell Taiwan $4 billion worth of sophisticated arms.
Carl Ford, a GW Bush appointee to a very influential position, while a "key player" for Cassidy and Associates, had already been involved in another lobbying scandal in Taiwan. This scandal included Cassidy's attempts to cover up the identities of those companies and lobbyists providing public-relations and lobbying services for Taiwan . . .
Carl Ford was a "key player" in the Washington PR firm, Cassidy and Associates, which contracted with Taiwanese organizations to represent Taiwan's interests in Washington. Cassidy and Associates also received money from the secret Taiwanese slush fund, the purpose of which was to covertly influence other countries' politics.
Cassidy and Associates received millions from this Taiwanese secret slush fund. Carl Ford, described as a "key player" at Cassidy, in turn donated millions of dollars to the GW Bush presidential campaign and to the Republican National Committee.
All of which adds up to the following points, using Newsletter technique #2: Accentuate the Obvious. 1) Carl Ford was a lobbyist for Taiwan. 2) Carl Ford was paid for lobbying. 3) The Taiwanese used money to do this. (I don't know how the editor is using the term "slush fund", but given that all the Taiwanese seem to have known about it, and it didn't buy anything illegal here, it can't be the commonly accepted one.") 4) Carl Ford, while lobbying, pushed initiatives that would benefit his clients. 5) Letters were drafted and lunches were bought. 6) Carl Ford later became Assistant Secretary of Defense. 7) Carl Ford was a "key player" at his firm. We are left to wonder whether he ever won any "Team Leadership Excellence" or "TQM Ninja" awards at his other jobs, or indeed was even made "Burger Boy Employee of the Month".
All of this said in a tone that implies that no one in the history of the world has ever been asked to bear such felonious perfidy. I can smell the ink and feel the purple smears infiltrating my fingertips. The source for every piece of information that's actual information, and not the Seattle WTO protestor echo chamber? According to the BBC:
Colonel Liu is thought to have fled Taiwan in September 2000 amid allegations he embezzled US$5.5m from the slush fund. He is still on the run.
The only other English language source, the Taipei Times, has more information and less hysteria:
Lee allegedly used the funds to strengthen Taiwan's diplomatic ties, pay for research in international affairs and send presents to his subordinates, the reports said. The reports also said funds went to the Taiwan Research Institute, a think tank founded by Lee.
They also don't seem to think it's a slush fund.
I won't elaborate the style used on the other Dark Minion, James Kelly, except to sum up the charges thusly: Kelly headed The Pacific Forum. The Taiwanese donated to it. DEATH TO THE CAPITALIST IMPERIALIST SLUGS WHO STOLE THE ELECTION. With this material, the online contributing editor produces this:
How bad is it going to be for America, thanks to these two Bush appointees' covert actions on behalf of the Taiwanese government? These Bush appointees, in the headlines of an important Taipei newspaper, are reported to be "tainted lobbyists." Tainted. Bush-appointed American officials are said to be tainted.
What will be the American political fall-out from these tainted Bush-appointed officials? Consider this: The current Taiwanese presidential senior advisor, Yao Chia-wen, who recently came to the Washington for two days of meetings with U.S. think tanks and congressional aides to find out what the fallout will be from this scandal, received in these meetings the message, "Fear what is to come." Think-tank scholars voiced concern that as new names are made public, those who speak out in favor of Taiwan may be suspected of having "sold out" as potential recipients of some of the NT$3.5 billion in money allegedly set aside in two secret slush funds intended to buy political favors overseas. The fears of the Washington congressional aids and think-tank personnel is that if anyone in any way represents Taiwan's agenda, they will become "radioactive" and a Washington pariah.
How will this impact the U.S.-Taiwan relations? Terribly. It already has. The revelations have damaged Taiwan-American relations, even forcing Taiwan to suspend some programs: "The exposures of such secret payments to key US politicians by the island's National Security Bureau (NSB) in the past week by Hong Kong and Taiwan media has damaged Taiwan's image and hurt its exchanges with the United States, according to government officials and analysts. 'The exposure of these secret funds of the NSB has created a big problem to our diplomatic work,' said Foreign Minister Eugene Chien yesterday. Taiwan's deputy representative to the US, Mr Tsai Ming-hsien, admitted that a number of semi-official and official exchange programmes between Taiwan and the US have been suspended."
And I thought I abused italics. How about this:
How bad is it going to be for Online Journal, thanks to this online contributing editor's semi-literate actions on behalf of the Anti-Bushies? This contributing online editor, in the words of an important (if woefully underappreciated and more importantly, undercompensated) weblogger, is reported to be "dumb as a bag of hammers." Dumb. An OnlineJournal Online Contributing Editor is said to be dumb.
What will be the fall-out from this dumb article?
How about canning the Online Contributing Editor for a blogger with a copy of Strunk and White? I could make a few suggestions. . .
Still, I must admit that the reparations lawsuits filed in federal court last week impressed me with their strategy. They aren't going after the government, but after the corporations - a bank, a railroad and an insurance company - that were enriched by the unpaid labors of slaves.
If private companies were doing the paying, then reparations would be more acceptable to many Americans. Granted, the lawsuits face all kinds of legal obstacles - statute-of-limitations problems, the difficulty of defining the class to be compensated, the argument that these companies did nothing illegal, since slavery was legal at the time.
A colleague of mine made a convincing argument that these and others companies should be made to pay up. The U.S. economy is like Enron, she said, a structure that in its reliance on slavery first and on the devaluing of black labor later is an economy built on business gimickry, accounting fraud and illusion. And at last the whole scam is being exposed.
"We are an incredible overhead that they never had to pay," she said. "And they owe us."
I'm still convinced that, with or without reparations, African Americans will have to make it on their own, just as most of the progress they've made so far has been accomplished on their own. Many of the challenges they face are as much about culture, self-image and attitude as they are about money.
But forcing these corporations to throw their history with slavery - and their books - open to the public could be revealing and even titillating. And, like Enron, they should be quaking in their boots.
Bankrupting companies with class action suits, 100 years later, for something that was legal at the time -- yessirree, that's a recipe for economic success. You know what would be even better -- if we could do this to people. Grandpa get taken for a ride by some slick talker? Who care's if he's dead -- sue his grandson! Justice knows no time limit.
Of course, it might be a little nerve wracking for those of us who can't be sure that Great-great grandpa didn't piss off someone, somewhere. You might even argue that it would discourage people from productive economic behavior, such as earning money or investing for the future, for fear that any assets they accumulated could be snatched at any time by a jury. Some lackwit without the vision to jump on the breast implant bandwagon might say that infinitely increasing the amount of unforseeable risk in our economy would be a total unmitigated disaster, but that's just sour grapes. What's important here is the dialogue, the communication.
I'm sorry, but the fact that a columnist at a widely circulated newspaper, no matter how poor in quality, could not only entertain such a wholly stupid notion for any longer than it takes to wonder how effective it would be to sue you for your ancestors' mistakes (something the columnist evidently did wonder about, as shown by the column's more intelligent lead paragraphs), but base an entire column around it, goes to show that there are some people who should not be taught to type until they prove they can add. It's the English major "Words are just the same as physical objects" idiocy that allows people with mediocre verbal skills and no intellectual curiousity to pass off fallacies that barely provide enough material for a bon mot as Deep Thought among others similarly afflicted. It's the parlor pinko sensibility that imagines that corporations have a gigantic money pit in the basement from which they dole only sparing rations to the proles, and that any regulation, lawsuit, or tax just forces them to take a little more money out of the pit, rather than the pockets of the shareholders, customers, and employees to whom all added costs eventually flow. The kind of mentality that gets angry when this is pointed out, as if one were only saying it because one hates the poor people to whom that money rightfully belongs.
In other words, it doesn't deserve the dignity of a response. But hell, I've got some stress to work out.
My mind begins working on the obvious question: what effect would this have on Social Security?
Critics will say that the budget's just a suggestion, a negotiating tool. I say faugh! Faugh!, I say, and not just because I enjoy saying it. If Paul Krugman can blame all our woes on the terrible effects of imaginary tax cuts, why should I hold back from attributing those selfsame woes to entirely imaginary spending? It's all about creating a dialogue.
Unlike Paul, however, I will explain my methodology. At least to those of you who can stay awake.
I first imagine that this spending continues forever. How can I do that, you cry, outraged? Simple, I reply; because government spending never, ever dies. The angry beneficiaries of each and every program are voters too. Far better to start another program that also doesn't do what we wanted than meddle with this one and get ourselves unelected. Don't take my word for it: go read Government's End, Jonathan Rauch's indescribably awesome book on why governments fail.
Now I make some projections.
Government programs are indexed for inflation. But since I was about to discount future payments for inflation, that washes out, kinda. Anyway, it's more than I want to deal with in a 5-minute spreadsheet excercise.
I now assign a growth rate of 3% to the program, for population and such. This is extremely conservative.
I then proceed to discount the future payments by 6%. How did I get 6%, you ask. I pulled it out of my head, that's where. Could be higher, could be lower, but sounds about right to me. That's more work than Paul Krugman did on his numbers, okay? Stop pushing me.
Want to know who's really responsible for the looming crisis in Social Security and Medicare? It's the Democratic Senate's $15,045,396,990,020.10 spending bill. That's a litte over $15 trillion, for those of you who don't like big figures -- twice Krugman's "tax cut" numbers, and enough to account for the entire 75-year unfunded liability in both Social Security and Medicare, with enough left over to redecorate the Middle East in Red, White, and Blue. Don't they care about those poor little old grannies? If they weren't so dead set on starving out those poor seniors so that their fat-cat trial lawyer buddies can herd them into pens and use them as plaintiffs in class action suits, there wouldn't be a Social Security crisis -- we'd all be rolling in clover.
I'm trying to get my subscription to the New York Sun (and may I suggest that my New York based readers do same?) but their web site doesn't offer such an option -- not even an email address to subscribe. It's so. . . 20th Century.
I know it's late (a whole day has passed, fer gosh sakes!) but I did want to comment on this ridiculous hyperbole:
Our heroes will penetrate your streets, your cities. You will not enjoy security and peace unless our people enjoy peace and freedom... This aggression is by an American decision, and American weapons. America now is the one providing cover for terrorism and supporting terrorism."
This just confirms the opinion I formed in college that the guys who spent all their time talking about it weren't the ones who were doing it. We don't need fine rhetoric about what we'll do to you, my friend, because it works like this: if you penetrate our streets, our cities, our libraries, our public restrooms, our Scientology seminars, etc. then we'll wipe yours off the map. Over and out.
A long, long time ago, in a galaxy far, far away, when Jane Galt was just another computer consultant in the vast swamp of the New York financial community, I was working on a project that involved duct-taping together the technology infrastructure of two firms that had merged. My firm had produced a new design; it had been signed off on; and yours truly was about to implement it, when wait! A technology manager whose job was about to go bye-bye saw a golden opportunity to save his career by putting himself in charge of the project. To that end, he fashioned an alternative proposal and put it forward.
Now, I am the first to admit that there may be many ways to solve a single design problem, and that many of the variables hinge on value judgments, hazy priority assessments, and aesthetic considerations. Too, I have made my fair share of boneheaded design moves, the stupidity of which, in retrospect, seemed blindingly obvious. So I feel that I am on solid ground when I say that this was the single worst design of anything that I have ever seen, and I include Pepsi Clear.
This fellow was an old mainframe chap, and he took one look at our distributed, high-availability, high-redundancy plan and shuddered. Instead he proposed an enormous NT 4.0 server, the largest then made, maxed out with every bit of memory and hard drive space that any company would sell you. Actually, he proposed two of them, using server mirroring software called Octopus. One server. Running all the file, print, and auxiliary services, excluding market data, for a user base of between 500-1000 users. It was expensive, slow, and it provided a lovely, large single point of failure for the entire firm.
Friends to whom I showed this design were awestruck by its stupidity. “It’s breathtakingly idiotic,” said one. “It has its own weird logic that makes me wonder if I’m missing something.”
“This man needs help,” said another. A third, my most trusted mentor, called me ten minutes after I emailed him the proposal.
“I hope you’re not letting this man near your servers,” he said.
We pointed out all the design flaws in a long letter, and ultimately I ended up in a meeting where we were supposed to discuss the merits, or lack thereof, of the proposal. I started by pointing out some of the more pressing concerns, like the way a bad disk sector could take down the single, enormous volume on which his design depended. And he began to lie.
He made technical claims for his system and its software that were not only untrue of this particular system, but unavailable in any Intel-based system anywhere. No matter what I said, he had a refutation. Which is easy, of course, if the board doesn’t know a NIC from a knicknack, and you have no compunctions about making up features that violate the laws of physics. I gave up when he claimed that the motherboard was hot-swappable. How do you answer that? “My system is not only faster and better than yours, but also shines your shoes and dispenses ice cold beer” would have been the only rational response, but I felt uncomfortable advancing such claims in the presence of other sentient beings.
And now I feel it all again: the tingling on the back of my neck; the icy chill in my veins; the helpless rage forming an aching knot in my stomach. That’s right, Paul Krugman is talking about Social Security.
Remember the "bring out your dead" scene in "Monty Python and the Holy Grail"? It's the one where the old man declares, "I'm not dead!" "Yes, he is," insists his younger companion, who persuades the undertaker to hit the old man over the head and cart him away.
Now you understand the Bush administration's policy toward Social Security.
Makes me feel kinda dumb for running the numbers, when all I really needed was a Blockbuster card.
Ordinarily, the annual trustees' report on Social Security is released at a morning press conference, and simultaneously posted on the Web; this gives reporters a chance to read the material and discuss it with outside experts before filing their articles. Last week, however, the first copies were made available late in the afternoon, leaving hardly any time for analysis. One wag joked that the information was being closely held to keep it out of the hands of terrorists.
But the real reason was surely to avoid too much attention to the report's unwelcome conclusion: that Social Security is in very good shape. True, the rest of the government is running big deficits, and borrowing heavily from the retirement fund — but Social Security isn't the source of that problem.
How does he do it? He knows exactly what went on in the minds of the Bush Administration without talking to a single person in it – knows to virtual certainty. Now I know how he performs his statistical wonders – he reads our innermost thoughts by remote control.
The introductory summary — which, unlike the report itself, is mainly a political document — does its best to make the worst of a good situation. But the bottom line is that the long-run sustainability of Social Security looks better than ever. The staff of the Social Security Administration, using conservative assumptions, now says that the system could operate without any changes at all — no cuts in benefits, no additional revenue — until 2041, three years longer than it projected last year.
I'm sure that 2041 sounds comfortably far off to Krugman; in all likelihood, he'll be dead. I, on the other hand, will be just entering my golden years when -- oops! -- there will only be enough money to pay 73% of current benefits.
I hope this satisfies readers who, when I criticize bogus arguments for privatizing Social Security, demand to hear my answer to the crisis. There isn't any crisis: the system looks good for 40 years, and with a bit of extra resources can survive indefinitely.
And this is where he says “the motherboard is hot-swappable and I don’t have to worry about electrostatic shock because this server won’t run on electricity” and my eyeballs begin to sizzle.
How in hell do you get that from this (or for the hard core numbers fans, this)?
While Federal law designates the Social Security and Medicare accounts as "trust funds," the accounts are not "trusts" in the private accounting sense in which funds of one party are held by a second party as a fiduciary. Rather, the Social Security and Medicare trust funds are financial accounts in the U.S. Treasury into which all income to these programs is credited and from which all benefits and administrative costs of the programs are paid. These accounts are established by Social Security and Medicare legislation. This legislation names the Secretary of the Treasury as the "Managing Trustee" with responsibility for overseeing the trust fund accounts. All revenues into the system not required to pay current expenses are used by the U.S. Treasury for general government expenses or to reduce the outstanding publicly held debt. In return, the Social Security and Medicare trust funds are issued special non-marketable U.S. Treasury bonds that by law carry an interest rate equal to the average market yield on all medium and long-term marketable Treasury securities. Interest on these bonds is paid through the issuance to the trust funds of additional special non-marketable U.S. Treasury bonds.
As financial accounts, these Federal trust funds have income, expenditures and assets. The 2002 Social Security Trustees Reports show the Social Security trust funds, for example, as having $1,213 billion in assets at the end of last year, and anticipated Social Security and Medicare surpluses over the next 10-15 years promise to further increase the assets in the trust funds by a substantial amount. These non-marketable U.S. Treasury securities are properly entered under "assets" on the financial accounting balance sheets of the Social Security system, and are available to the system to meet future obligations. It is this availability to meet future program obligations that results in this year’s Trustees Reports identifying 2041 as when the Social Security trust funds will be exhausted, even though under current law Social Security tax revenues are projected to fall short of expenditures beginning in 2017.
Unified Budget Viewpoint of Trust fund Surpluses
While the bonds held by the trust funds are assets from the vantage point of the Social Security and Medicare programs, from the viewpoint of the unified budget they are liabilities of the U.S. Treasury. No one doubts the U.S. Government will honor the bonds. But since the U.S. Treasury is the ultimate payer of the programs’ benefits and the trust fund assets are also debts of the U.S. Treasury, neither the interest paid on the bonds, nor their redemption, provides any net new income to the U.S. Treasury. When annual revenues from earmarked taxes for Social Security and Medicare begin to fall short of annual expenditures, such shortfalls inevitably must be made up by increased taxation, increased borrowing (i.e., the sale of more U.S. Treasury bonds to the public) and/or a reduction in other government expenditures. This fact is the basis for the view that trust fund assets have no "real" economic value. From a unified budget viewpoint, the trust fund surpluses are a budget accounting device and make no meaningful contribution to funding future Social Security or Medicare expenditures. They simply reflect the fact that in the past, surplus Social Security and Medicare revenues have been used by the U.S. Treasury to fund other government programs or to reduce outstanding Federal debt.
Actually, that's a trick question. I know where he got it: he cribbed it from two reports (found here and here) from the Center on Budget and Policy Priorities, which is, you’ll be shocked to hear, a liberal think tank opposed to Bush’s tax cuts. Paul Krugman’s column is a rehash of their talking points.
More specifically: The long-run actuarial shortfall of Social Security is less than half the revenue that will be lost due to last year's tax cut. The common perception that the tax cut was no big deal, but that Social Security faces a terrible crisis, is completely upside down. But the powerful forces that want to dismantle Social Security won't take yes for an answer; they insist that the system is doomed.
Those numbers are a little funny, given that the CPBB itself estimates the cost of the tax cut at $2.5 Trillion, and the shortfall at $4.9 trillion -- how does he get them? By projecting the "Bush tax cuts" out for 75 years. But wait a minute, I hear you say; those tax cuts expire in 2010. Well, yes, technically that's correct. But if we pretend that they don't, you can see that the Social Security crisis is really all Bush's fault. You do see, it don't you?
Never mind trying to imagine the accuracy of a tax revenue forecast for this year from 1927; Krugman is telling us that the current problem with Social Security is a tax cut that hasn’t been enacted yet.
It isn’t. This is the problem:
Chart C-Number of Workers per OASDI Beneficiary
Which is what’s causing this:
How do you call plain numbers “political”, except in the sense that the real world is getting in the way of your ideals? I’m sure Mr. Krugman would like to ignore that bit about outlays exceeding intake in 2017, 24 years earlier than the date that Krugman tells us we’ll be “just fine”, but it’s hardly a political statement; it’s a mathematical extrapolation from numbers we can guess relatively well, at least compared to tax revenues: the number of people in the labor force, and the number of retired people.
Let’s go over it one more time. There is no trust fund, any more than you can start a “trust fund” by writing yourself IOU’s due in 2017 and spending the hell out of all your income now. Come 2017, you're gonna have exactly the same annual income whether or not you take those IOU's out of the "lockbox". Now I'm sure that 2017 sounds comfortably far away. But remember how awfully far off the year 2000 used to sound? It is later than you think.
The system is broke the minute outlays begin exceeding intake; that’s when we have to cut spending, raise taxes, or start borrowing. In 2017. Actually, we’ll feel the pinch even before, as the Social Security Surplus that’s been masking our deficit disappears and we have to make hard choices about spending. Hard choices Krugman doesn’t want us to make – a lightbulb goes off -- that’s why he’s using Social Security to campaign against the tax cut now, even though he knows that restoring every bit of those taxes won’t save us.
2041 is the year when it becomes a total frigging catastrophe. Best summed up in this email I received from Mindles H. Dreck:
Look at the table on page 67 of the report.
I added at the bottom a line that indicates the percent of payrolls that the "balance" is deficient in the year the "trust fund" disappears:
Intermediate (2041) =4.5% Low Cost = NA High Cost (2029) = 15.4%
So, in those years, taxes or debt, of one sort or another, might have to be raised by 4.5% or 15.4% of total payrolls just to fund that year's retirees. And that deficit persists.
As Mindles points out, saying that we’ll be fine until 2041 is like saying that people who jump off the Empire State Building will be fine – until they hit the ground.
Krugman also conveniently leaves out Medicare, which itself has an unfunded liability of $8.9 trillion (unfunded liabilities are what we call "Promises we've made to give people money at some date in the future without setting aside the money now to cover those promises". Like, for example, when you promised little Johnny you'd send him to the best college he got into.) That unfunded liability is how much we're gonna owe Medicare benificiaries after we subtract the imaginary trust fund.
Notice Krugman likes to discuss Social Security and Medicare separately, never in the same column – that way he can blame the shortfalls in both programs on the Bush Tax Cut, with room left over for The Poor Condition of Our Public Parks and The Disgraceful Behavior of Young People Today. Now, Paul, you have to pick. Either the tax cut is responsible for the Medicare deficit, or it could cover Social Security. Even if the Evil Bush Administration makes the cut permanent and throws in a free week at the Palm Beach Hilton for all its billionaire buddies, it can’t be responsible for both.
No, no, no! Says Paul. It’s not the fault of demographics – it can’t be! Not my beloved welfare state! It must be the Bush Administration, eager to starve the old people so their rich friends can use the bodies as mulch on their diamond ranches.
Never mind the rhetoric about retirement security; the real reason for the attack on Social Security is ideology. Here's what Edward Fuelner, president of the Heritage Foundation, wrote to supporters: ". . . today's policies are a product of the Great Society of the 1960s, which grew out of the New Deal of the 1930s, which was an assault on founding principles articulated in the 18th century. . . . Connecting the historical dots is no small task." For Great Society, read Medicare; for New Deal, read Social Security. And the real task is to connect the contemporary dots.
For Heritage is the intellectual engine driving today's conservative movement. The foundation's Web site proudly quotes Karl Rove: "We stole from every publication we could; we stole several key staff persons; we want to steal more of your ideas." Indeed, before Elaine Chao became secretary of labor — and hence a trustee of Social Security — she was a fellow at Heritage. And the influence of Heritage spreads far and wide, from employees like Virginia Thomas (wife of the Supreme Court justice) to the stable of columnists featured on its opinion site TownHall.com, most notably Ann Coulter ("We need to execute John Walker in order to physically intimidate liberals, by making them realize that they can be killed too").
Honey, get the torches -- the freemasons are poisoning the wells!
And it won't surprise readers of my last column to hear that Heritage was founded with financial backing from Joseph Coors and Richard Mellon Scaife.
But I digress. The important thing is to understand what's really going on here. The ideological powers behind the current administration want to do away with Social Security — not to offer retirees a better deal, but because they are opposed to the program in principle. Unfortunately, that's an argument that won't work in the political arena; Social Security is very popular. So the strategy they have adopted is to declare that the program is already dead, or nearly so. If the facts say, on the contrary, that Social Security is very much alive, the administration doesn't want to hear about it. And it doesn't want you to hear about it, either.
The important thing is not to address our demographic crisis. It is certainly not to look at the actual numbers and try to fix things.
No, the important thing is to make sure that we all know that Joseph Coors and Richard Mellon Scaife and their friends in the Bush Administration are trying to kick the old people out of their condos and make them live on the street so that all the billionaires can use them as slave labor in their yacht factories. The ones where Johnnie Walker Lindh’s dead body will be hung on the wall as a visible reminder of what can happen if you cross the Bush Administration.
Hell, I don't have to tell anyone, Democrat or Republican. You can add -- go look at the report. Then look at what Krugman says about it. You tell me whether he's being up front or lying through his teeth.
I’m reminded of another story. Actually a quote. From my economics textbook: “Economic value (wealth) is created when resources are moved from lower-valued to higher valued uses.”
I don’t know about you, but I’m sure glad Paul Krugman’s moved from writing books on international monetary theory to this.
Interesting post on the gas tax shows that we're neck-and-neck with Saudi Arabia for top oil producer. Got to it from Lex, who has some suggestions of his own.
I should note that I think that a gas tax here that would really hit Saudi Arabia where it hurts would have to be massive, because of what I said before -- it's a world market. And because of this, we'd crush a lot of other people, like Norway, Mexico, and Venezuela, at the same time. I do think that the reverse applies, however; if the Arab nations wanted to hurt us, they could achieve it only by utterly destroying their economies. They don't make anything there. We can adjust to a short-term oil crisis; the pipeline is long, and it will take weeks for the shortage to hit. They'd have a hard time adjusting to a similar short term absence of food. (I'm not proposing starving them, although there would be a certain poetic justice in a "grain embargo"; the oil is where they get the money to buy the food). Plus in countries like Saudi Arabia, where the native population pretty much doesn't work (real work is done by imported foreigners), no oil revenue could mean revolution in short order.
I support a gas tax for slightly different reasons. First of all, I do think it would be a nice civic gesture for people to make; get out of that SUV and start walking. Second of all, I don't think that oil is a fully priced resource; when we buy a tank of gas we pay for the benefits it brings to us -- but someone else (everyone else, really) pays for the pollution they breathe in. I'm totally against emissions limits on cars; it's terrible economics to decrease the marginal cost of a mile traveled and expect to see anything but more mileage. Put in a correctly priced tax and the more fuel efficient vehicles will sell themselves -- without a net increase in mileage, because the marginal cost will still be higher overall than before. Plus emissions take forever to phase in. Environmental groups support CAFE for three reasons:
1) The costs are hidden, which makes it an easier sell than unpopular taxes (although at least Al Gore had the cojones to stand up for one) 2) Big corporations are easy targets for fundraising 3) They don't understand the economics
How come when regular countries let people summarily execute suspected dissidents, that's a human rights crime, but when the Palestinians do it, neither the UN nor any of the Human Rights groups can find a damn thing to say?
Michael Moore just found out the hard way why we can't make corporations use the same accounting for tax purposes that we do for financial statements: because earnings ain't the same thing as cash on hand. Think he'll learn anything about economics from this? Or think he'll find some way to blame it on a big corporation?
Don't think too hard: he already has. This is all really his publisher's fault. It wasn't Michael Moore's responsibility to read some boring old contract and plan his cash flow accordingly; it's his publisher's responsibility to keep him solvent.
And it's your responsibility not to laugh so hard that you fall out of your chair and give rise to a workman's comp claim.
A lot of people seem to be angry about the Alex Beam column on blogs. Personally, I just don't care. Of course, he doesn't make fun of me, so I'm sure that's easy to say -- but honestly, who cares what he thinks? I don't even think that he's particularly "threatened" or mean-spirited; I think he wrote the column because, well, making fun of other people is fun. Since I do a fair bit of it myself, I can hardly pass judgement. And at least this column is funny, unlike most of the "bloggers are losers" ones.
UPDATE: I just read the email he sent to James Lileks. It's rude, and I don't get it. I mean, I've only ever written one column (unless you count the gossip column and other sundries for my school paper), so perhaps I don't understand the finer points of journalism, but I wouldn't ever email anyone that way. What's the point? You're guaranteed a rude reply and 0 useful information. So now I've moved Beam from the "gadfly" category to the "bizarro" group.
On the plus side, it seems I may possibly have been mentioned by Our Most High Priest. I have heart palpitations. Self-referential echo chamber, Mr. Beam? It could turn into sonic death rays if you're not careful.
I've just read Paul Krugman's latest column on Social Security. His claims seemed a little . . . well, let's just say they don't jibe with any of the data I've ever seen on the issue. So I've pulled out the trustee report (on which the column is based) and am going through it. Very preliminary results seem to indicate that it's time for the powers that be to up his meds, because Krugman's finally broken with reality. Stand by for more.
Okay, so this is a little conspiracy-esque -- but is Krugman trying to run SS into the ground so we'll have to do some massive centralization and distribution? Because otherwise, I really don't understand this.
A preview of the report on what made the WTC towers fall and what could have been done. Seems the answer is: not much. Sprinkler pipes were cut; fireproofing isn't made to withstand a 586 mph impact. There's an argument for not clustering the stairways so tightly -- but putting stairs somewhere other than the core would mean substituting windowed offices for concrete caves, and has serious structural implications. The deadpan description is heart-rending:
The impact of the plane, which had been traveling as fast as 586 miles an hour, was so great that it gathered office material like a snowplow and apparently forced it toward the northeast corner of the building. Parts of the plane came to rest there and others punctured the far wall, soaring as far as six blocks to the north before hitting the ground near the intersection of Murray and Church Streets.
A fuel-fed fireball emerged from three sides of the tower and consumed roughly one-third of the estimated 10,000 gallons on the plane. Some of the rest flowed down the face of the building and into elevator shafts and stairwells. What remained burned ferociously, setting acres of office space afire as well as the plane's cargo.
The incredible energy generated by this blaze was estimated to be three to five gigawatts at its peak. A typical nuclear power plant generates about one gigawatt. All of that energy was converted to deadly heat that began weakening the steel.
But the tower did not fall immediately. Preliminary calculations by the engineering team have revealed that the tight spandrel connections, built to resist the wind, gave the building a remarkable ability to redistribute loads from severed columns to those that remained intact.
This rearrangement was so efficient, the calculations show, that stresses on columns no more than 20 feet from the hole punched in the tower's face were barely higher than what they were before the impact. Like a horse with a bum leg, the buildings, though wounded, still stood.
But the fires continued to burn. Black smoke poured from shattered windows on floor after floor, fresh oxygen sucked in from the gaping holes caused by the impacts. In the northeast corner of the south tower's 80th floor, where office furniture had been shoved by the plane, the fire burned so hot that a stream of molten metal began to pour over the side like a flaming waterfall.
The apparent source of this waterfall: molten aluminum from the jet's wings and fuselage, which had also piled up in that corner. Within minutes, portions of the 80th floor began to give way, as evidenced by horizontal lines of dust blowing out the side of the building. Seconds later, near the heavily damaged southeasterly portion of this same floor, close to where the aircraft had entered, exterior columns began to buckle.
Fifty-six minutes and 10 seconds after it was hit, the top of the south tower tilted horribly, to the east and then to the south, and initiated the collapse of the entire tower, floor upon floor.
Unfolding at a slower pace, the disaster at the north tower will require study before it can be explained in such detail.
Mindles Dreck demonstrates that the EU has got it just backwards about how to build an entity to rival the United States -- they think you build up the jargon and the pretty buildings, and the actual entity will just sort of follow from that. But he's funny.
The middle east is falling apart. Two of the world's three major monotheistic religions had a big holiday. Business scandals left and right.
So can someone tell me why my copy of Newsweek has The Big He on the cover? It's not like he's breaking news, guys . . . three months down the road, he'll still be pretty much the same ex-president he is today. Couldn't ya wait for a slow news week?
I know he's already been linked by Our Fearless Leader, so this is superfluous -- but damn, he deserves a link. This is a blogger in Israel reporting firsthand what's going on.
I started responding to the comment quoted below and it got a little out of hand -- far too large to fit in the little box. Luckily, I own the blog, so I can just post my response here. This comment came off of this post.
I got rid of my car and my life is much better. Of course, I live in a major metropolitan area that has public transportation, which helps--and I LOVE to walk everywhere. I don't own a television set. I haven't bought new clothes in a long time. My stereo is 18 years old. I earn six figures, and as my personal wealth has grown, I have found I rather like living with less. If I lost my job tomorrow I could live for three years without having to find another one.
Call me a loser, but I do think people can enjoy life with a few less of the gadgets, gear, and other crap they purchase. Plus, a massive, gas-guzzling SUV isn't necessary.
Sigh...if only we could learn to consume less of everything, a little contraction in our economy wouldn't hurt us. I am not saying we should live like cave people; however, are you saying we cannot TRY to consume less?
I know how the economy works, and for the most part I think it works to encourage greed and an insane amount of overconsumption. Just watch people at an "all you can eat buffet." Rarely do they portion just enough food for what they need; instead, they eat two to three more helpings than they need. This is our culture. Through marketing (modern psychological warfare), we have created a nation of neurotic, overconsuming, and fairly disgusting gluttons.
But, hey, let's not be honest with ourselves, that requires us to go against the lords of capitalism and all of their sychpohants and supporters in academia. After all, the real winners of the Cold War were the Chicago School economists.
Please pardon me, but my knowledge of the economy isn't dim, it's GRIM. I don't want a buccolic paradise, but I do think we can at least ask ourselves whether consuming less of everything is not only in our best interest, but also in the best interest of our progeny.
"A massive, gas guzzling SUV isn't necessary" -- to whom? People who don't enjoy life in the woods might make the same point about the public parks they subsidize with their tax dollars. Yet my hard core environmentalist friends think that the taxpayers who pay for the parks shouldn’t be allowed into them because they’re ruining the aesthetic. Personally, I think people can enjoy life without 99% of all music made, most foreign films, $8.00 cups of pot-sludge from Starbucks, and the Democratic Party, but I’m sure my neighbors are awfully glad no one’s appointed me Need Czar. For starters, no one would be allowed to leave their house until they’d read and passed a test on The Road to Serfdom. . .
You live in a major metropolitan area that has energy-guzzling public transport (unlike cars, the trains and buses roll whether or not someone's using them), traffic-inducing, highly polluting cabs to get you where you want when you’re in a hurry or need to go somewhere public transit doesn’t, an energy intensive system of lights to make the streets safe, an energy intensive sidewalk system. . . my energy guru alleges that metropolitan people don't use less energy per-capita; they use more, albeit in different forms.
People doubling up at the buffet aren't victims of advertising; they’re victims of billions of years of evolution, and a sedentary lifestyle. If advertising were as powerful as you seem to think, the near-total domination of said advertising with images of hyper-fit models should keep those people from gorging at the buffet.
We won’t be rid of overeating any time soon, any more than we’ll eradicate any other common human vice like, oh, say, sneering. Rich people in all whens and wheres are fat; hence the common stereotype. Now we've made food cheap enough, and lifestyles sedentary enough, to make everyone fat. Of course, this isn't good -- but try reading some literature from the turn of the century and see what ordinary people were living on. Their diets were quite meager, dull, and vitamin deficient. Some historical perspective is in order.
Besides which, I wasn't talking about living a simpler lifestyle, or trying to consume less; I was talking about unrealistic plans to convert to alternative energy sources that couldn't possibly produce adequate energy; or to cut US emissions standards with only the foggiest idea of what that would actually mean for the economy. You might not enjoy your metropolitan lifestyle so much if we converted it to wind and solar power; for starters, you'd really have to walk everywhere, because there wouldn't be enough power to run the transit system. Going to hike 10 or 20 miles crosstown to get to the doctor? I live in the most dense section of the most densely populated city in the country and while I walk to do most of my daily tasks, I'd find it hard to conduct my life if I had to walk the eight miles to get to work by 7:00 am, work until 7:00 pm, and walk home. Now tell the 80 year old ladies in my building to "put on the walking shoes, Grandma – it’s a long way to that doctor on 60th Street".
It's a gross misunderstanding of basic economics that Kyoto would only cut our incomes a little. I presume you make your living in technology. Kyoto would almost certainly cut your six figure income severely enough that you’d probably have to move to a cheaper suburban flat, for several reasons: it would slow GDP growth to near, or even below, the rate of growth in the labor force; it would lower productivity, which causes higher unemployment and higher interest rates (the stagflation of the 70's), which hit the tech sector particularly hard; and it would crush the tech industry by making technology investment unprofitable, not just because of the higher interest rates, but also because while you probably don’t realize it, all that infrastructure we install is hell on the power bills. Web hosting, for starters, would have to double, triple, octuple – who the hell knows? Enough to damp the fires of the Internet Revolution, anyway. Of course, my mother would say that we don’t need the Internet – we’d all be better off if we went back to doing things face to face.
Which goes to show that deciding which things we need and which ones are superfluous sounds great – when you’re doing the planning. But they’re not going to just poll Thomas – they’re going to ask the other 270 million people in the country too. And you’d be surprised at how much of the stuff you like the majority might consider superfluous. The internet, for example. Or they might decide that you don’t need the option of not working for 3 years if you lose your job. They might decide that it’s not in society’s best interest to have you taken out of the labor force, what with the looming demographic crisis and all, and seize your “excess” savings. Or they might decide that being single (I’m presuming, from your posts), you’d be more energy efficient in a barracks with other single men, leaving apartments for families who “need” it more. Start imagining all the things that neighbors who don’t particularly like you might find superfluous in your lifestyle, and you begin to see what a world of trouble you might be letting yourself in for by trying to decide what we need and what we don’t.
I think it’s fine that we ask ourselves what we need -- but that's not really what you're doing; you're asking what stuff other people have that you think they could do without. You say you're worried about our progeny -- so am I. But the most effective way that's been found to allocate scarce resources is the free market. I’m enthusiastically in favor of trying to tax negative externalities to cover their currently non-captured costs – or, where appropriate, conveying property rights that will have the same effect. Those external effects aren't captured precisely because of the communitarian principles that environmentalists espouse -- no one owns the air, so we all befoul it. We worry about companies dumping their pollutants into lakes, not the swimming pool at the Twin Oaks Country Club.
I'm sorry that you don't like the Chicago School, but the reason they "won" the Cold War is that their theories, at least those that were vindicated, describe what actually happens in the real world, instead of what we would like to happen. Blaming them for this is like blaming the Law of Gravity when I fall out of bed. You don't like economics? I don't like tuberculosis germs, but saying that I don't like them, or that they shouldn't exist, won't make me any less sick if I'm exposed to them. The economics of things we're certain about are as close as we get in social science to facts. Denying facts exist in order to put over a scheme is a recipe for disaster every time it's tried, whether you're trying to change Pi to 3 to make it easier to calculate, or implement rent controls to increase the supply of affordable housing. Even if we close our eyes really tight and wish as hard as hard can be, it's not going to happen.
We could implement Kyoto; it would make us much poorer than we are now for the forseeable future. It would not deal with the enormous issues of pollution in the developing world. Perhaps we should do it anyway (I don't think so, obviously, but I'm willing to listen to coherent arguments.) But what environmentalists want me to say is that these things aren't true; that we can have alternative energy without destroying the economy; that Kyoto won't make us work harder for less than we are now. They're mad because I say these things, as if my saying them or not made them any less true. And they choose to believe in alternative theories without evidence, by denying that evidence is possible or relevant. If that's the alternative to the Chicago School, I''ll stick with my alma mater.
A friend sent me these. I have no idea if they're valid, but if they are, we may all be needing them soon:
A few handy Arabic phrases translated to English -- in case you're ever kidnapped by terrorists.
AKBAR KHALI-KILI HAFTIR LOFTAN.= Thank you for showing me your marvelous gun.
FEKR GABUL CARDAN DAVAT RAEH GUSH DIVAR.= I am delighted to accept your kind invitation to lie down on the floor with my arms above my head and my legs apart.
SHOMAEH FIKR TAMOMEH GEH GOFTEK BANDE.= I agree with everything you have ever said or thought in your life.
AUTO ARRAREGH DVATEMAN MAMO SEPAHEH-HAST.= It is exceptionally kind of you to allow me to travel in the trunk of your car.
FASHAL-EH TUPEHMAN NA DEGAT MANO GOFTAM CHEESHAYEH MOHEMA RAJEBEH KESHAVAREHMAN.= If you will do me the kindness of not harming my genital appendages I will gladly reciprocate by betraying my country in public.
KHREL JEPAHEH MANEH VA JAYEII AMRKAHEY.= I will tell you the names and addresses of many American spies travelling as reporters.
BALLI, BALLI, BALLI!= Whatever you say!
MATERNIER GHERMEZ AHLIEH, GORBAN.= The red blindfold would be lovely, excellency.
TIKEH NUNEH BA OB KHRELEH BEZORG VA KHRUBE GOYAST INO BERGERAM.= The water-soaked bread crumbs are delicious, thank you. I must have the recipe.
BA BODENEH SHEERELL TEEGZ.= Truly, I would rather be a hostage to your greatly esteemed self than to spend a fortnight upon the person of Cheryl Tiegs.
Even those of us who are cooped up on this gorgeous day can get the pitch-by-pitch on Yankees Opening Dayhere, with automatic refresh every 45 seconds so you don't miss anything -- or get carpal tunnel from clicking the "refresh" button.
I want to go on record first as saying that I fully support the Palestinian's right to a state, and I think that both Israel and Jordan should kick in a little territory to make that happen.
That said, I don't understand how the Arab nations can get away with offering recognition of Israel as their contribution in the negotiation over Palestinian sovreignty.
Recognizing the other side's right to exist isn't a bargaining chip; it's the ticket to sit at the table, because it's not negotiable for the other side. "Well, friends, we didn't get the right to exist -- but we do have two free weekends at the Dubai Hilton when we purchase a ten day return trip ticket on Air Libya!" Imagine if we tried to negotiate with the Arab countries this way: "You want to talk about Israel, Prince Abdullah? Fine. Come sit at the negotiating table. Your first offer is not spiking the price of Arab oil on the world market. Our first offer is to stop calling Saudi Arabia 'Eastern Maine'."
Now, I'm sure that any geopolitical strategist would say I'm misguided or naive, but I think we could do a hell of a lot of good by telling all parties that the only way they can get a place at the table is by recognizing the right for both Palestinians and Israel to a secure, sustainable, self-governed state in the general area of Jerusalem. Negotiate the borders, the security, whatever -- but you don't get one word of say unless you first admit that both nations are there to stay. That will not be under discussion. Israel will agree to sit down under those terms. Arab nations that don't can abandon any hope of influencing the outcome. And if they don't abandon that hope -- if they try to act behind the scenes -- well, we've got a lot of ink. We can always put "Eastern Maine" back on the map.
"The best way to improve the image of Islam is for Muslims themselves to set a correct example of what Islam is about," said Islamic writer Fahmi Howeidi, an Egyptian whose moderate views have earned him wide respect in the Islamic world.
"But if we cannot do that, we should address the media in the West, which is primarily responsible for forming the image of Muslims and Islam," he said.
So, the best way to improve our image would be to, say, stop blowing up children at shopping malls. But since that's not practical, we should just pressure the Western media to pretend that we're not blowing up children at shopping malls, which is really pretty much the same thing.
