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.
