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I needed a new pair of 501’s because I noticed my old 501’s are developing a hole over the left pocket where my phone always settles plus they look beat up and faded because I’m not a fancy freeze your jeans type, so I went to Sears on my lunch break today. Sears has a surprisingly comprehensive selection of Levi’s, but they’re like milk at the grocery store: stocked at the far corner so you have to walk by everything else to get to them. On the way, I got distracted by the Men’s Perfume section. I’d recently developed an appreciation for perfume bottle design while buying perfume for Hillary, but boy, men’s perfume is really crazy. Did you know they totally have Ed Hardy perfume? Multiple flavors. There’s Antonio Banderas perfume. Like a half dozen rappers have perfumes that are big-time enough to be sold at Sears. And lots of this stuff is in a reasonable $15 to $30 range. I’ve got a sampler sized bottle of Incanto For Men that I got some random way and occasionally I’ll come across it while looking through my desk at work for something and sometimes I’ll put a little on for fun, and plus I’m interested in the bottle designs (and let’s face it, I enjoy buying shit) so I’m seriously considering buying one. Sears keeps sampler bottles out by most of them, so this seems like a not completely impossible thing, and right away I’m drawn to the most conservative bottles (e.g. Hugo Boss) and the most outlandish ones (the aforementioned Ed Hardy), but I’m simultaneously realizing that I need to be sophisticated with this decision, and there are so many choices and none of them seem quite right. Like, this is a decision that needs serious consideration, because I’m not picturing myself ever being a regular perfume wearer and I’m not imagining I’ll be using a large quantity when I do put some on, nothing is more annoying than dudes who walk into a room and you’re accosted by their man perfume. I swear sometimes on South Beach someone will drive by on a fucking moped and you can smell their perfume trailing behind them. But so anyway it’s a big commitment for me, and I want to give this some thought, but then the girl comes over and asks me if I need any help, and I look a little more and then go off looking for my jeans. (Of which, success.) I stop by again on the way back though, that’s how serious I am about this. And I finally decide to just jump in and try the first one I noticed walking up before. Something on the Ed Hardy end of the design spectrum but maybe a little more Gucci aesthetic. Can’t remember the name unfortunately. Anyway it turns out the sampler’s empty? So I go for the Hugo Boss and — no shit — empty again. I’m not sure, but looking at a couple more it seemed like maybe they were all empty, which is a total mystery … like, have they been sitting there so long they’ve all dried out? Does Sears believe in leaving empty unpacked bottles with TESTER written on them out on the shelves helps their sales somehow? And by the way here’s another weird thing: the shelves have the prices printed for each of the bottles, but they’re covered with a strip of plastic that’s got a little sticker that says LIFT HERE FOR PRICE, so you can see the prices but I guess the reasoning is you can’t scan the shelves and get a sense of what everything costs quite so easily?
Anyway, Steve and I totally did record a podcast this week, but we were sorry unprepared and the whole thing meandered something wicked, and the idea of trying to edit something even remotely coherent out of it has thus far been … well, let’s just say it’s not probably going to happen. Better podcast luck next week, when we WILL talk about the disappointments of the Obama administration. Tune in.
One guy’s not-so-optimistic opinion: “This economic crisis is like a cancer. … The governments don’t rule the world; Goldman Sacks rules the world. … Get prepared.”
Hey, did y’all catch NicFitKid’s comment on Friday?:
Why all the hand wringing over the debt? Debt can be managed, stop pitching softballs to Tea Baggers. Also, reducing government debt doesn’t increase employment, and the lack of jobs is what fuels fear and loathing in the current recession.
What you should be worried about is the brinksmanship in DC over the debt ceiling. If they fuck up that game of chicken, then we’re talking default and the downgrading of government bonds, so we end of having a harder time selling our debt on the market. Now that’s something worthy of charts and words.
In an unreleated swipe:
The Shuttle launched for the last time today. Shouldn’t you be dancing on its grave? Pissing on the NASA logo? C’mon, Alesh, gimme that old time anti-space program religion.
Haha, he’s right. I used to be such a fan of the Shuttle, and when I realized what a money sink it was, the whole thing turned sort of gross and detestable. It’d be like if the Prius turned out to have worse gas mileage than a Suburban, and also leeched some sort of chemical that made your children stupid.
But about the debt. Did you catch the Daily Show last night? John Stewart, in reference to the Republicans’ unrelentingness about reducing taxes, did the one about “well than why don’t we just reduce taxes to zero??” Old saw, but good point, right? But so then when DO we start worrying about the debt? We surely need to at SOME point, eh? Some point before we get to where Greece is? I mean, you scoff at the people protesting in the streets because they can’t wrap their heads around the fact that their government is out of money, and yeah their pay is being cut and their retirement age raised, but the only reason they still even have paychecks and retirement is because Germany is — reluctantly — writing checks.
So, not only is the US not at that point, but we’ll never get to that point. Mainly because we don’t have a Germany to bail us out if we need it. (Yes, China. But at least for now, China’s still a much smaller economy than the USA.) There comes a threshold to our debt that, if we reach it, Bad Shit will happen. And the truth is, nobody quite knows where that point is.
Now, I still agree that that point hasn’t arrived yet. That we need to keep borrowing money at least for the foreseeable future. That the Bad Shit which is in fact happening is at least marginally helped, not hurt, by our increased borrowing and spending. But at some point, yeah?, the opposite starts to be true. You would agree, wouldn’t you, that there is some amount of debt that would be too much for the USA? (Also, remember that while the government is not like a family, there are some aspects of national debt that do work exactly like credit card debt: while you’ve got it, you’ve got to pay interest on it, which interest is NOT INSIGNIFICANT (wanna take a guess? Go ahead, the answer is right here. That would buy a LOT of unmaned drones, brother). And also, you’re presumably going to at some point when the economy is all sunshine and roses going to pay off at least some of this debt, right? Yeah, your guy Clinton was the last guy to make a dent in it, but (a) it wasn’t that big of a dent, and (b) are you really so sure the whole thing wasn’t powered by a bubble?
But again, I agree that we need to be borrowing, spending, etc. I agree with friggin’ Krugman! All I’m saying is, in all this talk about the Moron Tea Baggers and Asshole Republicans, let’s remember that these people are genuinely worried (well, at least some of them are) about something that it is not THAT UNREASONABLE to worry about.
Oh right, the debt ceiling.
Whatever. They’re going to raise it. There’s a negotiation going on, and the Republicans are in a better negotiating position. (It’s like a game of chicken with two buses, but Obama’s bus has people on it that he cares about, and the Republican’s bus is empty and remote controlled?) You can be pissed off at the Republicans if you want, but all you’re pissed about is that they disagree with you and that they’re better at using their negotiating advantage when they’ve got it than your guys (MAN the Democrats are shitty at negotiations… remember when they won the Congress back towards the end of Bush’s presidency? Shameful shit). But overall, I wouldn’t worry about it. Everything’s going to be FINE.
Came across, just this morning, Daniel Indiviglio’s article about the US debt in The Atlantic. Turns out it’s really high, which you already knew. You may not have realized, however, that it amounts to almost $46,000 for each man, woman, and child in the USA. That’s higher than it’s ever been, natch, but Indiviglio pulled numbers from the Treasury, the Federal Reserve, and a couple of other places, and came up with this fairly terrifying, inflation-adujsted, graph:
The first spike is World War II, after which we gradually got our act in order, then we start to get cooking through the 1980s in Regan’s neat little yearly oscillations, turn things around under Clinton a little again, crank it up under George W. Bush, and it really starts to spike under Obama. Terrifying.
But AHA you say, what’s missing from this analysis is GDP. While inflation’s gone up during all this time, our actual production has also drastically increased, and if we factor for that, today’s debt probably seems much more historically reasonable. Exactly the thought I had. Here’s our GDP by year, at least since 1950 (from US Government Spending, a site that visualizes data from various government agencies):
Here I thought I was going to have to find all the relevant data and create a new chart that combined these two, but it turns out US Government spending has us covered on this one too:
So, yes, we have not yet reached the historical high of national debt per GDP. But we are dangerously close. Remember that during World War II, we had rationing, a draft, restrictions of civil liberties, and all sorts of things that helped the government mobilize the nation’s economic output for the war effort. What we have today, arguably, is 20+ years of an economy built on a series of bubbles, most recently a huge debt bubble. You’ll notice in the graph above that the debt levels off. But that leveling off is based on the Congressional Budget Office’s projections, which are quite a different animal from historical numbers. In fact, the peak on the graph comes in 2013, and the leveling off begins in 2014 or 15. Not encouraging.
None of which is to say that we’re doing the wrong thing by aggressively borrowing in the interest of fixing the economic mess. But I think that people like Paul Krugman, who for months has been writing a weekly screed about how idiotic our politicians are for giving lip service to prioritizing debt reduction higher relative to economic stimulus, should grapple with this reality a little bit. Acknowledge that while our debt is not technically at a historical high point, it is indeed very very high. And frame his argument for why we should be increasing it at an even steeper rate in terms that are proportional to the scope of the problem.
Directly, each charter city would allow millions of people to better their lives by integration with the world economy. While critics often belittle this achievement as mere “cream-skimming,” the sad truth is that much if not most of the world’s cream now curdles in backwards farms and dysfunctional slums. If the native entrepreneurs who built Hong Kong had been trapped in mainland China, most would have wasted their lives in dead-end jobs on Maoist communes or joined the Communist elite. Hong Kong gave them opportunities to use talents that otherwise would have gone to waste.
The case for charter cities as a effective way to fight third-world poverty (based on the example of Hong Kong). Interesting? From this list of “40 things I’ve learned” by Bryan Kaplan, which is actually mostly right-wing free-market dogma. (E.g., here is the republican strategy for reducing the size of government laid out as nakedly as you’re likely to find.)
Overthrow the banks? “If America can reform its banking sector, it has a fighting chance at a prosperous future. If it doesn’t, it doesn’t.” Umair Haque argues for the bottom-up ‘overthrow’ of the biggest banks. “Banks are highly leveraged institutions. Were a relatively small percentage of deposits to shift to, for example, community banks or credit unions, megabanks would find it very difficult indeed to sustain the profit margins or market power they currently enjoy.”
You might have missed it, but GM stock sale last week sealed the deal on a sea change in how our economy is going to work for huge companies going forward. When the bailouts of the financial industry were initiated, the outcry assumed that the taxpayers were “paying” to save the industry, and that the money was either mostly or totally gone. But in fact, many banks have repaid the money with interest, and while the government has not broken even on the deal, it is still possible that it will turn out to be profitable. We now see that the same may end up being true of GM, too: the sale of the government’s initial batch of GM stock went remarkably well — the company appears to have recovered, and if it continues to flourish it’s possible that the remaining stock will be sold at a sufficiently high price that we taxpayers will end up making money on the GM bailout, too.
This should make us uncomfortable. And the not unreasonable presumption that the government’s interventions in the management of GM had a role in the success should make us even less comfortable. Because these pieces of good news set an irresistible precedent for how to deal with future calamities.
Liberal and conservative economists so vary in their proposed remedies to problems that it’s it’s seldom possible to untangle economic facts their statements. But in the darkest days of the financial collapse, the one thing that all economists agreed on was that if you were going to bail out these huge companies, you had to make sure that no company was allowed to stay “too big to fail” going forward. Companies behave dangerously if they believe they have the safety net of a government bailout protecting them, but the safety net is unavoidable for huge companies. They’d have to be broken up into smaller companies, lest the whole process be repeated in the future.
But when the financial reform bill came along in July, too big to fail provisions were conspicuously absent. Why? Well, the whole bill just barely squeaked by Republican opposition. Measures to limit the sizes of companies were practically laughed out of the legislation by Senate Republicans, who instead proposed new bankruptcy procedures for large failing institutions. Republicans are fundamentally responsible for the absence of too big to fail provisions in the current legislation.
So consider these two facts: that the U.S. government now implicitly backs our largest corporations, and that when needed, government intervention may likely be good for both the taxpayer’s bottom line and for the companies involved. This, much more so than healthcare reform of anything else that has happened under the Obama administration so far, is classic Socialism. It’s richly ironic that Senate Republicans and the administration of George W. Bush, which began the whole process, are the ones fundamentally responsible.
Can you fix the budget? Sure, the Tea Party is full of batshit crazy and staggeringly stupid people. But the idea at its core — that the federal budget is a mess and we’ve been deficit spending like it’s crack — is pretty sound. So, ok smart guy, what would YOU cut to make it work? Don’t tell me, because your local New York Times digital department has put together a nifty little app that lets YOU play with the budget. You get all the different suggestions floating around, and you get to see the effects on the budget shortfall in 2015, and 2030. (It’d be even cooler if you could generate a unique URL to your solution for twitter, etc.)
Right now, a 7-year old girl in India is dying, and it’s because you’re buying a Toyota Prius. Read on to see why this is true, and what it has to do with the future of environmental policy for the planet.
Al Gore will go down in history as a pivotal figure in helping the human population realize that it’s wreaking havoc with the planet’s temperature, and helping set us on the path to correcting the problems. However, it is an intellectual fallacy to thing that because the man is right about the problem, he must also be correct about the proper solution. We have serious problems, and we need some major solutions. I could try to convince you that we should be glad that Al Gore isn’t setting world policy on this stuff, but that’s not really necessary, since there isn’t even a remote possibility of that happening. So I’ll instead try to convince you that you don’t need to worry quite as much as you have been about global warming.
But first a brief and semi-obvious point about politics. We don’t have a King of the World. Boy don’t we. We have a couple of hundred sovereign countries on this planet, and whatever happens has to deal with the millions of political realities that come into play as these countries try to work together. (And yes, game theory comes into play here — if China thinks the US is doing something about reducing carbon emissions, their incentive to reduce their own emissions is lessened. Etc, etc, etc.) So, sometimes it’s useful to talk about environmental policy as though you could snap your fingers and make anything World Law. But at some point in your discussion you need always to come back to political and economic reality.
Okay, so here’s the doomsday scenario that has been painted for us: the world is on the brink of massive environmental change that will cause myriad changes, both predictable and unpredictable, and be catastrophic for the human race. Furthermore, we may be on the edge of a Tipping Point™, wherein after a certain point it will be too late for us to do anything. Therefore, despite scientific uncertainty1 about the exact rate and effects of global warming, we need to Error on the Side of Caution, and take drastic steps to cut our carbon emissions and generally live in a much different way than we have been.
Now, I agree to some extent that this is all true. But increasingly, I think that it’s all going to work out. We’re going to be able to do what is necessary, which is not what Al Gore right now thinks is what is necessary. To get a whiff of what I’ve been smoking, you need to hold all of the following ideas in your head all at one time:
- It’s not the planet that needs saving. The world has been through major environmental upheaval over and over in its history, and generally everything comes back better than before eventually. What we’re talking about saving is the human race. Maybe. More likely, we’re talking about an outcome that would create massive problems for some percentage of the world’s population at some point in the future. Bad enough, but the distinction is worth remembering.
- Even the most grandiose solutions being bandied about, the ones that cost on the order of tens or hundreds of trillions of dollars, are not going to solve the problem. They reduce the rate of increase in temperatures — reversing those changes is farther off than what we’re talking about today.
- I love Malcolm Gladwell just like everyone else, but generally the concept of a tipping point is overstated when talking about most phenomena in the world, and this is likely the case with regard to the environment too.
- Scientists have a track record of overstating environmental emergencies, and overstating the extent to which these emergencies cannot be corrected once they’ve occurred. In my lifetime we’ve seen several supposedly-irreversible ecological disasters reversed after some human effort was expended towards fixing the causes. Bird populations were practically eradicated in the Everglades around 1990; today they’re restored and fine. Acid rain was a scourge on the US in the 80s; today its unheard of. Chernobyl today is a nature preserve where wild animals happily roam as they hadn’t for decades, because people have left it alone. The environment is self-correcting to a greater extent than we often realize.
- We are doing stuff about the environment. Political opinion worldwide is shifting (even in the US, which remember is the only nation in the world that didn’t sing the Kyoto Protocol), and “green technologies” are being developed and refined all the time. These two things feed each other — as people become more conscious of damage to the environment, they become more willing to adopt sustainable technologies. And as the demand for these technologies grows, they will become even more profitable, affordable, and ubiquitous. China is developing green tech, and it’s out of a pure profit motive — they know that they’ll be able to sell it to the Americans.
- In addition to this incremental improvement in pro-environment technology, there are bound to be technological sea-changes that make drastic improvements in ways we can’t envision right now. We can’t assume that they will make the problem disappear overnight (the way, for example, the horse manure problem was solved overnight), but we can expect that they’ll make significant improvements that are today unpredictable.
- If bad comes to worst, we have quick and dirty solutions to global warming that we can deploy. Yes people, it’s geo-engineering. The concept is simple: you pump sulfur dioxide or something into the atmosphere to shade some of the sun’s light from hitting the earth. It’s not pretty, but it works. Volcanic eruptions cause temporary global cooling, and there are things we could do to replicate those effects. It’s best not to talk about this stuff too much, because it undermines the impetus for the more substantial change that we need, but it’s good to know it’s there as an emergency brake.
- Yes, it’s terrible that global temperatures are rising. However, the catastrophic damage from this rise is still a pretty long way off. We’re talking something like 100 years. (Note that, even though the last decade has been .9 degrees warmer then the average temperature of the 20th century, the ocean hasn’t risen.)
- When it comes, the damage we’re talking about will boil down to economic damage, right? People being displaced, food shortages, etc. You can put this stuff in economic terms, and you need to put it into economic terms, so that you can compare the cost of the solution to the problem today with the cost of the solution to the problem in future money.
And this is where it gets complicated. The world is getting richer all the time, so that future money is a lot cheaper then today’s money. At least economically, a problem that can be fixed for $10 trillion today is not worth fixing if it can be fixed for $100 trillion in 100 years. The reason for that brings me back to the starving 7-year old in India and your Prius. We have massive problems in the world today. In fact, 16,000 children die every day of starvation. Millions of people die every year of easily preventable diseases like malaria. There are more slaves in the world today then at any other point in history. The list, I don’t have to tell you, goes on.
Money spent on some of these problems often goes a long way towards saving and improving the lives of real people living and dying today. So when we spend money on improving the environment of the future, we need to be aware of what we’re not using that money for right now. If you have an ounce of compassion in your body, you need to look at these opportunity costs with clear eyes. Is it better for you to buy a Prius, or to buy a Yaris and donate the difference to Oxfam? Is it better for the world to spend tens of trillions trying to reduce carbon emissions, or should we direct big chunks of that money towards fixing the very real problems that we have right now in the world today?
1 Yes, there is no scientific uncertainty about the fact that global warming exists, that it’s being caused by carbon emissions, and that human beings are causing it. Or rather, the uncertainty is among some fraction of one percent of scientists, who at this point are doing nothing but making a lavish living flying from one conservative asshole’s talk show to another and feeding the pathetic self-deception of ideological assholes. But make no mistake — there is vast uncertainty about the details, about the rate of change, and about the specific effects. ↩
Update: In today’s Wall Street Journal, Bjorn Lomborg touches on many of these same notes (with some interesting specific figures), which makes sense, since his Ted Talk from a few years ago is what started me thinking down this path.
Posted: Tuesday December 15, 2009 by Alesh Houdek · Permalink ·
Here’s a bizzaro idea — Invest in a human being. You: a rich person. Them: broke but very promising. The terms: You give them a big chunk up front for a percentage of their pay for the rest of their lives, maybe with a buy-out clause. This is perfectly reasonable as a thought experiment, but it’s also a slightly creepy real thing that actually happens, with actual contracts and numbers and I guess audits. Not related, but fun anyway: how to sell a dollar for more then a dollar, and what it means for politics.
Gizmodo is sad that Google just killed Garmin and any other maker of navigation software/hardware, and wonders what industry is next. This is nuts. Think of all the profitable industries that, e.g., widespread electric power must have killed. Plus, have you ever used a Garmin product? Not quite Microsoft-level faliure, but not exactly a company who’s design anyone is going to be missing.
The other day I asked if anyone could give me a single reason not to buy a motorcycle. See, my parents return to Miami in a couple of weeks to re-claim the car I’ve been sporadically using for the past half year. When this happened last year, I decided to try living with just a bicycle. And while that experiment worked out pretty well, I’m not just exactly 100% sure I want to go through again just quite yet.
But a car is just such a hassle, right? I used to be able to drive around with a copy of Autotrader and $3,000 for a day and end up with, usually, a perfectly impressive old BMW that’d last me 5 years or so (usually until some asshole hit me and destroyed it, which actually is preferable to the protracted and heartbreaking death my 1988 528e died), but it appears that that is no longer the way of the world. So the options are
- Bite the bullet, and get, maybe, a used Mini Cooper, which seem to be running $8,000 for a 2002 with maybe 80,000 miles.
- Do the bike thing again, and pocket the cash.
- OR, right, a motorcycle is an interesting compromise when you look at it this way, no?
Well, people did have some noteworthy downsides to the motorcycle. “You will die,” more then one person said. “In Miami there is a rainy season when it rains every day.” And thirdly, a motorcycle does not have a trunk.
You can see though how coming off a 6-month bicycle existence colors these considerations. E.g., I had no problem grocery shopping. But you have to give some consideration to the danger. Motorcycles account for 3% of vehicles registered in the US, but 13% of all vehicle fatalities. Motorcyclists are about 35 times more likely to die per mile driven then someone in a car. And here the comparison to a bicycle breaks down, because while cycling home late at night in the rain after a few beers turns out to be something that just does not happen, you can certainly picture that set of circumstances with a motorcycle. And, um, alcohol consumption correlates with a sharply increased risk of death, and (in I guess the unlikely event of a lack of death) with increased severity of injury. Also, anecdotally, Miami drivers are the worst in the entire universe, and even people who would and/or do drive motorcycles in other places are wary of doing it here.
All of which is some sobering stuff! But the response that I have for you is that I’m not signing up for a lifetime of 2-wheeled exclusivity. I’m looking for a way to get around for 6 months, and I’m still going to be on the bicycle more often than not, and I’m going to wear my helmet. Like your pal Dan Savage says, people take all kinds of risks to have different experiences, and why not live a little? (Plus, by this logic we should all be riding the bus — the difference between how safe a car is and how safe a motorcycle is is much smaller then the same difference between a car and the bus.) Think of the fun! And think of the money — not just from the initial purchase, but the laughably small amounts you’d be spending at the gas station. Also: you can park anywhere. And is there not the intangible yet undeniable prospect of being a total and complete badass?
Still, in some ways it’s the worst of both worlds. An examination of ebay motors suggests that while a decent 2-wheeled vehicle is cheaper then a 4-wheeled one, it’s not quite the order-of-magnitude difference you’ve been led to believe. Also while the mpg is drastically better, it again is not quite the difference between night and day: motorcycles get I hear 40-50 mpg highway, while the Mini gets 34. And the rain is a real thing — you don’t care if you get wet on a bike because you’re going to be sweaty anyway so you have to make provisions to change/shower or whatever. But get caught in the rain on a motorcycle, and you’re just plain soaked. Then again, that would be part of the aforementioned experiential thing, right? We are not made of sugar, and we do not melt, and whatever does not kill us makes us stronger. At least, until it really does kill us.
From an impressive new study: “We find that the teacher performance pay program was highly effective in improving student learning. At the end of two years of the program, students in incentive schools performed significantly better than those in comparison schools by 0.28 and 0.16 standard deviations (SD) in math and language tests respectively…”
You should be angry about how much text messages cost, even though it’s only 20 cents per. And now, a telling detail from an article about teen texting habits: when reality shows like American Idol do voting by SMS, the phone companies split the revenue with the TV network! Update: David Pogue.
NicFitKid asks, “Is your beef with the shuttle program, or with manned spaceflight in general?”
Well, I mostly think that both the space shuttle and
manned spaceflight the space program in general are super cool, but I do not trust my reasons, with what them (the reasons) hinging entirely too much on little-boy “wow” appeal. Meanwhile, when you look at the costs involved your mind really does reel (even putting aside “you could feed X hungry children” lines of argument, which strike me as naive).
Said reeling is particularly vivid as pertains to the space shuttle program; it was supposed to be a more-cost effective (reused vehicle = recycling) way to get to space, the costs end up averaging out to $1.3 billion per flight.
Same goes for just about everything NASA does, right? You wonder just where the money’s going, and can’t help but think that this could all be done a heck of a lot cheaper. And maybe it can, but probably not without making the program even less safe, and anyway, don’t the costs of all large-scale projects seem impossible to wrap head around? (Maybe not?: quick, how much would you guess that the Hoover Dam cost to build in today’s dollars? Here’s the answer, which I found surprisingly low.)
NASA’s budget over its 50-year history has averaged 1.23% of the federal budget, though it’s been under 1% since the early 1990’s. It’s .55% of the 2009 budget, or about $17.2 billion. In the 1960’s, while the Apollo program was being developed, it spiked to 5.5% of the budget, over $33 billion (these dollar figures are in 2007 dollars).
So, what have we gotten for this money, other than the undeniable fun of watching it all slowly, slowly unfold? Well, precious little actually. There are some scientifically useful things, e.g. the Hubble space telescope. And there is the list of advances that came about as by-products of getting stuff into space. Lots of useful stuff on that list, but it all could — and probably would — have been developed (and much cheaper) outside the context of a space program. Scientific experiments done in space mostly consist of testing the effects of weightlessness on various things. The results are rarely particularly interesting, and in any case almost completely useless to us here on earth.
One day, maybe, we’ll be a space-going civilization. The argument that we should be working towards that holds some water. Yet I wonder if the challenges of going into space wouldn’t be better tackled later, when advances from pure science and other scientific endeavors make them far easier to solve. We weigh the money it would cost to work this stuff out later not just against the money we’re spending now, but against all the missed opportunity cost of what would have otherwise been done with that money. If all we have to show for the difference is the entertainment value of the space program, then it seems difficult to justify rationally.
Update: See also The Economic Value of the Space Program.
Last year congress held hearings to the effect that oil price speculation has a lot to do with driving up prices. There is now legislation being passed to limit the practice.
Teach statistics: Arthur Benjamin argues that there is a fundamental re-orientation necessary in the way we teach math. Currently, the classes students take through middle and high school are like a ladder, each one building on the previous, with the ultimate apex being calculus (“the laws of nature are written in the language of calculus”). But for today’s world, what should be at that apex is statistics. Calculus is essential to certain branches of engineering and science, but statistics would be helpful in understanding our information culture for the average person on a day-to-day basis — a society would be improved by having a citizenship that is comfortable with the language of statistics. I love this idea.
FEMA is making plans to use foreclosed homes in Florida for people who get displaced by storm damage this hurricane season.
Maps showing economic downslump levels vs. economic stimulus levels by county. Looks like Florida made out pretty good.
Swiss Post Box is powered by technology from Seattle-based Earth Class Mail. The service emails multi-sided color images of incoming envelopes and parcels to their recipients as soon as the mail reaches the first sorting center nearest where it was collected by the post office. While the mail and parcels are held in an automated temporary cache, recipients decide which mail pieces they want to have opened and scanned to PDF inside an ultra-secure scanning center at the Post Office (where confidential documents for Swiss banks are also scanned), and which are to be delivered physically to the address on the envelope, redirected to another address, shredded, recycled or archived for safekeeping. Three-quarters of the mail ends up leaving that first sorting center bound straight for recycling, either after being scanned to PDF or discarded unopened by customer’s choice.
Also, as you may have heard, the United States Postal Service is royally fucked.
ebay and looting: Archeologists were freaked out when ebay first appeared that the democratization of the antique market would lead to an upsurge in looting. But actually, looting has decreased over the years. Why? Because the massive growth of the market has instead fueled a boon for the antique forgery industry. Not sure whether this is good, bad, or funny. (via)
“For the past year, the average sale price on Miami’s foreclosed homes has been falling by roughly 4 percent per month. The rate of decline hasn’t tailed off.”
Paul Krugman is ‘cautious’ about the economy, and provides some very good reasons why. But the fact that it’s now merely ‘cautious’ is what is really interesting, yes?
The thing that’s hanging over this economy, threatening to turn it into Great Depression Deux, is the term “bank run.” Simon Johnson explains that the FDIC makes an old-school bank run unlikely. But: “Sadly, it turns out we haven’t outgrown runs. Rather, we have learned since mid-2007 that other kinds of runs — let’s call them wholesale or professional investor runs — are not only possible but also increasingly likely in the United States.” (Tho keep in mind that Johnson is of a particularly pessimistic mind about the current crisis, and this feeds into that perspective.)
At the beginning of last week’s This American Life, Ira Glass suggests that many of us are resigned to not really understanding what’s going on with the financial sector. Then the NPR boys go straight into explaining it, starting in the simplest terms and working up to the global collapse scale. Required. One of the more interesting people in the show is Simon Johnson (a former International Monetary Fund bigshot who’s worked with many other countries fixing exactly this situation), who Terry Gross had an interview that is also very interesting. That should prepare you for the Baseline Scenario post from Johnson’s blog, and all the other jargon-heavy reports you’ll to be encountering.
Update: Spoilers (don’t read on if you’re going to listen to the programs): The amount of debt Americans hold, as a percentage of GDP, typically oscillates between 20 and 50%; at two points in the last century it’s hit 100%: in 1929 and in 2007. So all these people yelling about how banks should lend out the money the US government is giving them are exactly wrong — arguably it was our level of debt that, as much as anything, caused the current crisis.
Johnson believes that the solution is fairly obvious: nationalize the banks. You nationalize, clean up the mess, and re-privatize them. Apparently that’s what the IMF, with the USA’s blessing, has been helping/forcing governments with similar problems do for decades, and it works reasonably well. Also, the US government does it all the time, just on a smaller scale than would be presently required. But were it not for the “obvious” political problems, the IMF would advise us to do exactly that. There’s also the suggestion that — maybe — that’s exactly what the Obama administration quietly is preparing to do.
Lawrence Lessig presents a more fleshed out argument for public funding of Congressional elections at Google. Supports withholding money from elections for members who don’t support the plan … an interesting strategy.
“In business, we like to convert time to money, and the reverse. But in practice, time and money are different. We can get more money, save it, move it between accounts and use it on demand. These operations don’t apply easily to time. … You can’t earn an extra hour to use on a busy day.” — Reid Hastie’s article about meetings in the NY Times
About three years ago,* I advised everyone in Miami to sell their house, pocket the money, and wait a couple of years:
[F]ind a moment (and find it soon), to sell your house, put your stuff in storage and rent an apartment for a year (maybe two or three), then buy your house (or one similar) back, for a maybe $200,000 profit.
So, here we are, three years later. Neverminding for now that the housing market took the whole economy with it, let’s see what the smart money’s up to these days. I work up early this morning to cook up a graph for you people, with data from the trusty housingtracker.net:
I chopped the bottom half of the graph to make it more dramatic — the housing is in the tank. This graph actually understates the situation, because it’s showing asking prices, not sales prices. I should also say that during this period, housing inventory in the area went from 12,000 to 50,000.
Now, listen carefully: it’s time to go shopping. Remember the factors that led to the bubble? Idiotic interest-only mortgages, gross overbuilding, and what seemed like terrifying hurricane seasons as far as the eye could see. The picture today? (1) mortgage idiotics universally recognized and being dealt with to the tune of trillions of dollars from the federal government, (2) overbuilding spectacularly finished, and (3) relatively calm winds for the last two seasons. To boot, (4) an incoming president that everyone seems to think Can Fix Things.
Respectively, these factors mean: (1) lots of money for people to borrow to buy homes being injected straight into the economy’s mainline, not the least of which is near-zero interest rates, (2) there are more unocupied homes now then they will be for probably another decade, (3) people will begin moving to Miami in droves again, and (4) the economy is ultimately about mood and expectations, and both are in the process of getting a major boost.
So, what’s the smart money doing? Maybe not buying a house or condo today, but it’s starting to look around. It’s checking out the listings, and getting a feel for the market, and planning on buying something pretty damn soon. I’d say sometime in the next six months. I know the right edge of the graph still looks like a plunge, but the thing is that while the economic recovery will be slow and steady, the housing market will recover probably first with a sudden upward jerk in prices. And if you wait for that first jerk up, you’re going to be one of the droves of people entering the market, and you won’t get the really good deals. The time for those is now.
* Actually, check out this post from June 2005.
I’ve been griping about this for years: it costs cell-phone carriers effectively nothing to send text messages, yet they’re charging 10 or 20 cents a piece. Consider the size of an mp3 file vs. a text file: my This American Life downloads (which are of course efficient, low-quality files) are 27,700 kilobyte files, which comes to 470 kilobytes — or 470,000 bytes — per minute. How many bytes is a 160 character text message? I actually had to work this out, but you’d be correct to guess that in text messaging, one character still = one byte, so it’s 160 bytes.
I.e., one minute of audio costs phone companies several thousand times as much to transmit as a text message. Calling plans are of course totally arcane, but an average between pay as you go and the less expensive monthly plans seems to be about ten cents per minute of calling. So, they’re charging twice as much for the text message while it’s costing them 1/1,000th as much to send (this is actually a conservative estimate which assumes that the phone call uses a quarter of the bandwidth as the This American Life mp3). In other words, Highway 2B Robberiez.
So the obvious solution is to not send text messages? Well, not really. If we knew they cost 20 cents before, they’re obviously worth it to us to send. This is what happens in Europe: Nobody has a prepaid plan: you pay for the minutes you actually use. (In an added twist, only the person initiating the call is charged.) Text messages are charged some trivial amount, which makes a round of texts much cheaper then a short conversation.
So, I’m not sure we want a world where minutes on the phone are expensive and text messages are cheap. I guess what I’m saying is, look at your cell phone bill. If it makes sense for you to switch to a cheaper plan, do it. If you’re off-contract, consider a pre-paid plan. And if you’re sending and receiving an average of 5 text messages a day, consider whether that $30 per month is really worth it to you.
The American auto industry deserves to die so richly it makes me sputter. It’s pretty well exemplified by Bob Lutz, G.M.’s vice chairman, who’s been infamously quoted as saying, “…global warming is a total crock of shit. … Hybrids like the Prius make no economic sense.” It’s been just like with the housing bubble and the Iraq war, where a chorus of reasonable voices called out for the obvious correct action for years. Except that with the auto industry, we’ve been telling them for decades. Please build us better cars. Please not with the upsized SUVs. Oh, and, who killed the electric car again?
They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?
So, yeah, this is sure as hell an industry that does not deserve to be encouraged. Steve says let ‘em die. But Friedman is more cautious. He quotes the Wall Street Journal’s Paul Ingrassia, who wrote:
In return for any direct government aid, the board and the management [of GM, and any other U.S. automaker accepting a bailout] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.
That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits.
But you see where this starts to lead. Back to Friedman:
I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol.
Of course others have plenty of more drastic ideas, and those strict minimum-mileage requirements we’ve been talking about for years are just the tip of the iceberg. But you see it’s not as easy as “fix it and then make them run it better.” You can solve problems with banking with more regulation, because “innovation” in the banking industry is generally considered the source of trouble. In the auto industry, innovation is the way out, and you cannot use legislation to force innovation. Just doesn’t work. Might work for a few months or a year, but eventually you’ll be forcing the wrong kind of innovation, and digging yourself a deeper bailout hole for next time. Friedman even acknowledges this — sort of — by jokingly suggesting putting Steve Jobs in charge of GM for a year.
No my friends. The American auto industry has had ample opportunity to fix itself. Instead it has chosen to cruise on easy Lincoln Navigator profits (“take a Ford Expedition, add some sound insulation, raise the price by $10,000, and hold your breath”) and a powerful Michigan legislative delegation. It fought safety standards, it fought milage standards, and it churned out the same crap, clad in differently styled plastic, for decades. The legion of workers it employs are the only plausible argument for saving it, but ultimately you’d be doing them no favors. Bailing out an industry and then regulating it to “improve” really is straight Socialism. And even if Republicans are right that this is the time to throw everything they’ve ever stood for out the window, the problem remains that Socialism does not work. Good money after bad. Delaying the inevitable.
Sorry, but I’m with Steve on this one. These companies have been bailed out before. They’ve been warned. They had plenty of opportunity to fix their shit when they were flying high on those 100% SUV profits. And they staunchly refused. They need to survive on their own or die this time.
The Obama tax calculator. Frankly, this is what I like least, and find most cynical, about the Obama candidacy: “vote for me, and I’ll give you money.” This sort of thing exposes the weakness in the very idea of a popular democracy, and I wish that a candidate with Obama’s rational appeal (not to mention with Obama’s near-lock on winning) would resist engaging in that kind of pandering.
I’m not ready to talk about global warming yet, but in my research I came across a recent session of the House Committee on Energy and Commerce regarding oil prices. As a public service I watched all six and a half hours of this (not always riveting) meeting, and now am here to share with you the results, which as a fairly free-market-oriented fella I for one found rather shocking.
We’ve heard over and over that oil speculators do not have a significant effect on the price of oil — this has been repeated over and over in a “no reasonable person disagrees with this” tone by all the various political and economic talking heads I’ve seen over the past few months.
The premise of these hearings is presented rather early in the video. Roughly stated, it says that speculators, freed by loosening of restrictions on them passed in 2002, have caused the price of oil to rise to almost double of what it would be in a standard supply/demand market. Further, it says that with fairly straightforward regulations, these speculators would be dis-incentivized out of the market, and the price of oil would return to something on the order of $60 per barrel (as I type, it currently sits around $140 per barrel). It further claims that the current dramatic increase is unlikely to lead to increased explorations, because oil producers do not believe that the price reflects the proper value of oil, and believe that exploration based on the current value would turn out to be financially disadvantageous.
Just a quick explanation of the last bit before I launch into how that premise was argued. The other thing is that the earth is not really close to being “out of oil.” The problem on the supply side is that the easily accessible oil is running out. There’s plenty of oil still in the earth, but it’s either in politically inaccessible places (e.g. ANWR, Alaska, e.g. also big chunks of Russia) or in geological formations from which it is more expensive to extract (e.g. the tar sands of Canada). In other words, if oil companies really believed that $140 for a barrel of oil was the stable price, there’s plenty of oil they could find. There’s still much more at $200 per barrel, and so on.
So, my natural skepticism about the ability of regulations on speculators to fix matters melted away as the four panels that testified before the subcommittee in turn made their opening statements and then answered questions from the congresscritters. The first panel consists of four experts — high-level folks that either advise or study the oil industry — including Fadel Gheit, managing director and senior oil analyst at Oppenheimer & Co., and Edward Krapels, director of Energy Security Analysis. To a one they all agreed with the premises outlined above. The next panel consists of a few folks from industries that rely on oil (trucking, airlines, etc.), to provide their obligatory whining; it is skipable.
The third panel consisted of one dude — Walter Lukken, acting chairman of the Commodity Futures Trading Commission. This is the Bush-appointed guy in charge of overseeing the markets, speculators and all, and was notable mainly for how thinly his contempt for congress was veiled. This slimy little kid (looked no older then me) did everything short of telling the committee members to fuck themselves as they tried in vein to get useful information out of him. The final panel finally had some reasonable people who spoke in defense of speculation, but both unfortunately worked for agencies that directly benefit from the speculation — the market institutions themselves. The panel also had the day’s only university professor, Michael Greenberger of the U. of Maryland, who also agreed with the aforementioned premises.
There are some complications here — notably, oil speculation takes place not just on US markets but also on the ICE (Intercontinental Exchange) market, which while being housed in Atlanta is technically a British institution, making regulating it more difficult (but not as bad as it sounds). Overall, though, the subcommittee members — Democrat and Republican — seemed impressed that they had at their disposal a method to drastically reduce the price of gasoline. This hearing took place on June 23. Let’s see where they go with these findings.