Tammy Bruce: Economy/Economics Archives

Economy/Economics Archives

Angry Renters Against Mortgage Bailouts

You can put me in that category. And I know I'm not the only. There are, in fact, so many the folks at Freedom Works (led by Steve Forbes and Dick Armey) have set up a website where you Angry Renters can get organized and do something about renters and all taxpayers getting shafted in order to bail out the irresponsible who bought homes they could not afford. Whether you're an Angry Renter or an Angry Responsible Homeowner, check out their site and get organized. In the meantime, here's one of their videos I think you'll relate to it as much as I did.

Posted by Tammy · April 30, 2008 04:32 PM · Permalink · Comments (10)
Economy/Economics | The New American Revolution

And Now The Latest On "What's in the Trash"

Posted by Tammy · April 24, 2008 03:38 PM · Permalink · Comments (1)
Economy/Economics

Theories of Taxes

Maynard contemplates tax day (bumped from last year)

The picture above, in case you were wondering, is John Collier's artistic rendition of Lady Godiva. She graces our presence because her notorious ride was in fact a tax protest. Every now and then, at a domestic tax demonstration, there are rumors that a similarly-clad rider will appear. I don't know whether it ever really happens.

We live in a world where just about everything is taxed, sometimes overtly and sometimes with subtlety. Aside from being the source of government revenue, each tax is a little piece of social engineering, causing people to change their behavior to avoid paying. Sometimes this behavior modification is deliberate, such as the high cigarette taxes designed to discourage sales. Other times it's accidental, such as the "yacht tax" of a few years ago, which drove boat builders out of business.

Here are some fundamental tax types:

Consumption taxes, such as sales tax, which tax you for stuff you use
Production taxes, such as income tax, which tax you for your productivity
Property taxes, which tax you for stuff you own
Transfer taxes and fees, which tax you for transactions in which non-consumable goods change hands
Taxes on capital gains and investment income, which tax you on the growth of assets you hold
As the final insult, there's a death tax

Excessive taxes can suck the life out of an economy. Some types of taxes are more toxic than others. A strong economic argument can be made favoring the consumption tax over the alternatives. Taxing consumption rather than production encourages savings, which are an essential part of the foundation upon which a prosperous economy is built. Also, taxing consumption levels the playing field with respect to domestic production, since all goods are taxed at the same rate regardless of origin, instead of having domestic goods weighed down by built-in taxes. Unfortunately, it's politically awkward for an elected official to advocate rational tax policy, because the political opposition strives to make good ideas sound ugly. Lowering or (gasp!) eliminating capital gains and income taxes appears to be a sop to the rich, and indeed it will make the lives of the rich easier. Of course, the rich take care of themselves in any case; a simpler tax structure makes their job less inefficient, and also makes it easier for the less-than-rich to aspire to riches. But that's a hard message to get across in a world where the misery merchants reinforce a sense of individual helplessness.

The FairTax organization is promoting an ambitious plan to abolish the IRS and replace the existing tax structure with a national sales tax that will generate the same level of revenue. That sounds like a wonderful idea to me. Imagine an end to income taxes and record keeping and all the other intrusive nonsense we put up with in order to assure the government takes its "fair" share of the fruits of our labor. But you can see this movement, as great as it is, faces an uphill battle.

Let's talk about the history of income tax for a moment. Another April 15 disaster was the sinking of the Titanic in 1912. Immediately afterwards, the Sixteenth Amendment was ratified, authorizing the American government to levy a tax on income. And the rest, as they say, is history.

Income tax rates have gone up and down over the years. Here is an interesting historical chart. You'll see some high marginal rates in the early years, but these only applied to the very very very rich. When we got into WWII, the income level at which confiscatory rates cut in dropped precipitously, and they stayed pretty much in place until Ronald Reagan's tax cuts. The high rates didn't affect the average wage earner, but they created a firm barrier against becoming rich through a salary. This made for what amounted to a national wage cap. Getting rich required, among other things, some very creative accounting.

As a practical matter, between George Bush's inclination to spend money and the Democratic inclination to take money, I don't imminently expect any tax reforms that will do more good than harm. If any of you are in a position to conjure up Lady Godiva, now would be a good time.

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Posted by Maynard · April 15, 2008 12:30 AM · Permalink · Comments (13)
Big Government | Economy/Economics | Maynard Post | Money/Capitalism | Politics

McCain As Economic Chicken Little

He's already noted he doesn't know a lot about the economy, so maybe he should keep his mouth shut and not feed into the Fear Frenzy by saying we're in a recession. Especially when he admits he has no idea what a recession is.

McCain says he believes U.S. is in a recession

Sen. John McCain (R-Ariz.) said Monday that he believes the country is in a recession, adding that “these are very, very tough times in America.”

“Americans are hurting today,” McCain said at an Associated Press forum in Washington, D.C. “They’re hurting in the towns and cities across America. They’re sitting around the kitchen table, saying, ‘Are we going to be able to make our home loan mortgage payments? Are we going to be able to -- do I have to try to get a second job? Can I keep my job? Why was I laid off?’”

While McCain, the presumptive Republican presidential nominee, said he thinks the country is in a recession, he noted that he is more worried about helping people who are facing “enormous challenges,” rather than figuring out what the technical definition of a recession is.

Lovely. McCain may not understand that the economy relies on the frame of mind of the consumer. The more he runs around screaming about the sky supposedly falling (which it isn't). the more you may retreat, actually assisting in a self-fulfilling prophesy.

Related Link:

The definition of "recession."

Posted by Tammy · April 14, 2008 09:59 AM · Permalink · Comments (4)
Economy/Economics | Politics

Greenspan Endorses McCain

This was key to combat McCain's stupid comment that he didn't know much about the economy. Sheesh. This should nicely counteract that, and it's one of the endorsements that actually means a lot and sends a powerful message. Notice, however, the headline Reuters chose to run with--not one the emphasized the endorsement, but one that promotes what the Left wants most--recession.

More than 50 percent chance of U.S. recession: Greenspan

MADRID (Reuters) - There is more than a 50 percent chance the United States could go into recession, former Federal Reserve chairman Alan Greenspan told El Pais newspaper in an interview published on Sunday.

However, the U.S. has not yet entered recessionary state marked by sharp falls in orders, strong rises in unemployment and intensive weakening of the economy, he said.

"We would have to see signs of this intensification: there are some, but not many yet," he said. "Therefore ... I would not describe the situation we are in as a recession, although the chances that we'll have one are more than 50 percent."

Six graphs later they decide to share this with us:

Greenspan, the U.S. Fed chairman from 1987 to 2006, endorsed the Republican presidential candidate John McCain in the interview.

"I'm Republican and I support John McCain, who I know very well and who I respect a lot," he said.

You have to hand it to Greenspan, giving a recession a bit more than a 50% chance. If one happens he was right, if it doesn't he was right.

Posted by Tammy · April 7, 2008 01:27 PM · Permalink · Comments (1)
Economy/Economics | Politics

OPEC Is Right

Oil is at its highest right now, in part, due to a fire at one oil refinery, a single event which can have a lot a of impact when one of your problems is so few refineries. Not exactly a situation we should be in as the best and most powerful nation in the world. Another debacle we can place firmly at the feet of the Left and the cowardice of politicians who pander to those pygmies.

Oil climbs toward $107

Oil prices rose half a dollar to a one-week high near $107 a barrel on Monday, extending last week's late rebound after the dollar fell and a fire hit a U.S. refinery...

Gains were also fuelled by news of a fire at Exxon Mobil's 150,000 barrel per day Los Angeles-area refinery in Torrance, California, which forced the closure of a hydrotreater, raising concerns about summer gasoline supplies.

As oil prices resume climbing toward their March 17 record high of $111.80, OPEC officials have stuck to their familiar refrain over the well-supplied state of the market.

"Oil supply to the market is enough and high oil prices are not due to a shortage of crude but rather it is because of the decrease in the dollar's value, shortage of refinery capacity and some political tensions in the world," OPEC Secretary-General Abdullah al-Badri was quoted as saying by Iran's official IRNA news agency.

It's a rather pathetic and painful situation when you hear the truth from the Islamic beasts who run OPEC as opposed to our own government.

What Happens When You Put Food Into Cars

The price of food goes up because supply can't meet demand, much like oil. The only difference is, if the price of oil goes up, the price of gas goes up, and one can choose to use less gas, and use alternatives. When the price of food goes up there aren't any alternatives. The wealthy, of course, can pay more, but the less well off don't have as much flexibility.

One of the more dramatic headlines in the last couple of days has been the rising price of corn, a result of 'climate change' hysteria. It is the fault of a world so willing to goose-step into line with frantic and ridiculous leftists who worship Al Gore as they pander to his non-existent and yet implacable enemy.

Skyrocketing corn prices hit ethanol profits

The continuing surge in the price of corn, which is punishing households with higher food prices, is cutting the profits of American ethanol producers and playing havoc with an industry that was blamed for causing the grain shortage.

The price of a bushel of corn soared above $6 on the Chicago Mercantile Exchange last week, pushed higher by news that American farmers were planting less corn...Expensive corn is hurting the livestock industry, which in turn will raise the price of meat, Rich Feltes, senior vice-president of commodity research for MF Global, said. “Hog producers are liquidating sows, the farmers are operating in the red,” he said.

The skyrocketing cost of corn is rebounding on the ethanol industry, which is taking an ever larger proportion of the US corn harvest to manufacture road fuel.

Yeah, this man looks like he knows what's healthy for the rest of us.

This is what we get when the world engages in what Hilary Clinton most recently brought to our attention--Mythomania, a psychiatric term describing individuals who make up fantastical stories and convey then as if they really exist or have happened. You think Hillary's Bosnia airport story was bad? Al Gore and the Climate Change Hysterics are no better, the only reason they haven't been so handily exposed is because God and Nature don't have cameras and YouTube to defend the truth of their matter.

All this courtesy of the Leftists who insist the world will be better off if we find 'alternatives' to Big Oil. Yes, now at the expense of Starving People. Geniuses.

Clear-thinkers regularly decry the Fabulist agenda of Climate Change moonbats like Al Gore and his minions, as we point out not just the absurdity of their agenda but also its dangerousness. I suppose it's meant to be made more difficult as were told that "climate change" is murdering polar bears, puppies, kittens and doves, but I for one was even more astounded by the Time Magazine cover story from a couple of weeks ago that actually declared The Clean Energy Scam. Instead of pointing to Leftist Climate Change pygmies as they should, Time now manages to place all the blame on 'politicians and corporations.' In fact, at no point in their story about how biofuels are a dangerous problem, does Al Gore's name get mentioned once.

...Propelled by mounting anxieties over soaring oil costs and climate change, biofuels have become the vanguard of the green-tech revolution, the trendy way for politicians and corporations to show they're serious about finding alternative sources of energy and in the process slowing global warming. The U.S. quintupled its production of ethanol--ethyl alcohol, a fuel distilled from plant matter--in the past decade, and Washington has just mandated another fivefold increase in renewable fuels over the next decade.

But several new studies show the biofuel boom is doing exactly the opposite of what its proponents intended: it's dramatically accelerating global warming, imperiling the planet in the name of saving it. Corn ethanol, always environmentally suspect, turns out to be environmentally disastrous. Even cellulosic ethanol made from switchgrass, which has been promoted by eco-activists and eco-investors as well as by President Bush as the fuel of the future, looks less green than oil-derived gasoline.

Meanwhile, by diverting grain and oilseed crops from dinner plates to fuel tanks, biofuels are jacking up world food prices and endangering the hungry. The grain it takes to fill an SUV tank with ethanol could feed a person for a year. Harvests are being plucked to fuel our cars instead of ourselves. The U.N.'s World Food Program says it needs $500 million in additional funding and supplies, calling the rising costs for food nothing less than a global emergency. Soaring corn prices have sparked tortilla riots in Mexico City, and skyrocketing flour prices have destabilized Pakistan, which wasn't exactly tranquil when flour was affordable.

We can thank Al Gore for this, as well as leftist agitators, and yes, politicians on both sides of the aisle who do not have the vision or courage to reject the nature contradicted, increasingly silly, and regularly debunked claims of global climate catastrophe.

The real folly and disaster is that of mankind thinking it knows all, kmows better, and has more influence and power than Mother Nature herself. Eventually she reminds us, to our great peril.

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Elect An America Loving Conservative...

Sarkozy. France gets their Reagan.

And things get better. Just ask the French. (HT Hot Air).

France's jobless rate lowest since 1983

France's national statistics agency said Thursday that the country's jobless rate has fallen to 7.8 percent, its lowest level since 1983.The Insee statistics agency says the drop in the fourth quarter of 2007 was the lowest rate since the fourth quarter of 1983. It fell from 8.3 percent in the third quarter. Insee says the rate is even lower if only metropolitan France is counted, standing at 7.5 percent, or 2.1 million people.

Cutting jobs has been a priority of successive French governments, and President Nicolas Sarkozy has put it at the top of his list, too. But he told the daily newspaper Le Figaro that the economy needs reforming to create jobs and reduce deficits.

Posted by Tammy · March 6, 2008 09:02 AM · Permalink · Comments (1)
Economy/Economics | Internationalism

Things to Come?

Maynard contemplates the economy

Never make predictions. Especially about the future.
— Yogi Berra

The Economist is predicting a recession in America.

This wouldn't be surprising. There's an ebb and flow to the economy. Despite what the politicians tell us, there are always going to be down times.

Our immediate problem is that economic expansion is being slowed by reduced finances. This connects to housing bubble, which had gotten out of hand and is now starting to deflate. Many people got used to rising real estate prices, and they treated their houses like piggy banks that fill up automatically. When money was needed, another refinance would supply it. And loans became readily available for new buyers, even if they weren't well-positioned to pay them back. This is a wonderful state of affairs as long as housing prices continue to rise. Everyone is making money. The people are happy and the politicians claim credit. But when the party ends, the debts become burdensome.

The spike in oil prices doesn't help. The cost of energy is fundamental to everything. And with global thirst for oil growing in the developing world, a drop in American consumption may not push prices lower as it would have in the past.

Meanwhile, the dollar has declined sharply against other major currencies. This was inevitable, and it isn't entirely a bad thing. A weaker dollar renders America more competitive in the global markets. We'll export more and import less. America is suffering from a horrendous balance-of-payments deficit. In plain English, we've been leaking hundreds of billions of dollars into the world. Foreigners are financing our binge, while we've been consuming more than we produce. And now we've effectively stiffed those foreigners, since the dollars they're holding are worth less. Well, that's one way of reducing our debt load, but I can't say I'm happy about it.

America has been allowed to run a deficit because the dollar became the world's post-WWII reserve currency. All sorts of international transactions are conducted in dollars, even when the United States isn't involved. This allowed us credit that wasn't awarded to other currencies, because the world needed dollars. This is changing, as the dollar is no longer the only game in town. The world is transitioning away from the dollar and towards a basket of international currencies for global reserves.

In short, America will be compelled to move towards putting its financial house in order and restoring balance. However, we're talking about an area of economics that most people don't understand, and so the politicians get no credit for making hard choices. The people want the party to continue, and economic consequences be damned. Any politician that speaks of belt-tightening and productivity increases must be a mean-spirited union-busting killjoy, and probably a racist homophobic bedwetter to boot.

I'm not anticipating doomsday. I think we're okay. But it wouldn't be surprising if we get stuck with something of an economic hangover for a while. Of course, then the politicians will blame each other and propose hard-left responses. The misery merchants and would-be authoritarians will come forward with their usual stupid ideas. And that's my greatest concern: When we hit the rough spot, the "cure" will be vastly worse than the malady. We'll have to remember Ronald Reagan's words, from his first inaugural address: "In this present crisis, government is not the solution to our problem; government is the problem."

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Posted by Maynard · November 18, 2007 01:41 PM · Permalink · Comments (5)
Economy/Economics | Maynard Post

Greenspan says the war is about oil?

A gripe by Maynard

**Scroll after the jump for an update**

Okay, this is one of my pet peeves, and I'd like to straighten it out for good.

Fox is reporting that:

America's elder statesman of finance, Alan Greenspan, has shaken the White House by declaring that the prime motive for the war in Iraq was oil....

...it is his view on the motive for the 2003 Iraq invasion that is likely to provoke the most controversy. "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil," he says.

Is there something shocking or disreputable in this? Greenspan is stating an obvious truth that is acknowledged by all. No, he's not saying we went to war to steal oil, or anything of the like. But the fact that Iraq sits on or perilously near the lion's share of global oil reserves made Saddam Hussein's adventures a threat to the entire world. Saddam aspired to become the region's top military power, and his ruthless reputation would have effectively made him the world's oil czar. Instead, thanks to George Bush, this genocidal maniac finished his miserable life at the end of a rope. Anyone that doesn't see this as a good thing has a screw loose, morally speaking. (Feel free to question whether the war has been properly handled, or to express dismay at the troubled aftermath. These are important questions. But in asking them, never forget that Saddam was one of the biggest monsters on Earth.)

In the first Gulf War, President Bush Sr. was explicitly clear about the role oil played. In his speech of 9/11/90, Bush was quite candid:

Vital economic interests are at risk as well. Iraq itself controls some 10 percent of the world's proven oil reserves. Iraq plus Kuwait controls twice that. An Iraq permitted to swallow Kuwait would have the economic and military power, as well as the arrogance, to intimidate and coerce its neighbors — neighbors who control the lion's share of the world's remaining oil reserves. We cannot permit a resource so vital to be dominated by one so ruthless. And we won't (Applause.)

By the way, Fox also reports that...

Greenspan, a Republican whose 18-year tenure as head of the US Federal Reserve was widely admired, will also deliver a stinging critique of President George W. Bush’s economic policies.

He is certainly referring to deficits and earmarks and the wobbly dollar. Greenspan is one of those rare straight-shooters in the political arena, and he's garnered respect from both sides of the aisle.

Additional note from Tammy:

Greenspan has clarified his comments to the Bob Woodward in an article for Monday's Washington Post. Read the whole article. It really sheds light on a few things.

Greenspan: Ouster Of Hussein Crucial For Oil Security

In the interview, he clarified that sentence in his 531-page book, saying that while securing global oil supplies was "not the administration's motive," he had presented the White House with the case for why removing Hussein was important for the global economy.

On Monday, Oct. 24, 2005, President Bush nominated Ben S. Bernanke, chairman of the president's Council of Economic Advisers, to succeed Federal Reserve Chairman Alan Greenspan when he retires in January. Learn more about Bernanke's background and nomination.

"I was not saying that that's the administration's motive," Greenspan said in an interview Saturday, "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential." [...]

Though Greenspan's book is largely silent about Iraq, it is sharply critical of Bush and fellow Republicans on other matters, denouncing in particular what Greenspan calls the president's lack of fiscal discipline and the "dysfunctional government" he has presided over. In the interview, Greenspan said he had previously told Bush and Cheney of his critique. "They're not surprised by my conclusions," he said.

As for Iraq, Greenspan said that at the time of the invasion, he believed, like Bush, that Iraq had weapons of mass destruction "because Saddam was acting so guiltily trying to protect something." While he was "reasonably sure he did not have an atomic weapon," he added, "my view was that if we do nothing, eventually he would gain control of a weapon."

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Posted by Maynard · September 15, 2007 11:37 PM · Permalink · Comments (11)
Economy/Economics | Maynard Post | Military

Auto Strike?

A post by Maynard

Will the United Auto Workers strike in September when their contracts expire? It's a possibility. There's tension in the air, with the Big Three automakers trying to squeeze down costs so they won't go broke, and the unions inclined to resist concessions. This article notes:

The automakers insist they need major cost reductions, particularly in health care, to keep manufacturing jobs in the United States and return to profitability.

The three Detroit-based automakers, including Chrysler, which is being spun off by German parent DaimlerChrysler, lost more than $15 billion combined last year.

Some of the numbers are illuminating. First, there's the actual cost of union labor:

GM and Ford hourly labor costs — $73.26 and $70.51, respectively — are about $30 higher than those of their Japanese rivals operating US plants, according to data compiled by the automakers.

Wow, a $30 an hour wage gap puts you at a severe disadvantage, doesn't it? No wonder these guys are going broke! Hey, where do I get one of those $73 an hour jobs?

Health care and pensions are also a big issue, with the old-line companies committed to fork over billions to pay off old commitments. Certainly it's understandable that the retired workers expect to be paid as they were promised; however how many buyers are willing to pay an extra $1500 for their car in order to subsidize retired union workers?

The health-care issue looms especially large for GM, which last year spent $4.8 billion on insurance and medical care for its workers and retirees.

"Health care is the largest single competitive issue we face as a company," Tremblay, GM's vice-president of labor relations for North America, told reporters at a press conference. "I think it's impossible to ignore the issue."

She said about $3 billion of GM's annual health-care bill goes to cover the cost of insuring retirees and their dependents.

In the near future, you're going to see this private fiscal crisis ooze into the political arena in the form of a clamor for socialized medicine. With GM and Ford and Chrysler being pushed into bankruptcy, the unions and management will both agree that if only the government will take over health care, then the carmakers and the unions will be saved. Hillarycare will be touted as the cure for ailing businesses and industry. And they'll have a point: Instead of having individual companies go broke, we can have the entire country go broke. As Hillary says, we're all in this together.

By the way, as a personal matter, I strongly prefer to support domestic companies in my purchases. The last time I shopped for a car (in 1994), I bought a Saturn. Detroit had finally given me what I wanted: A competitive, reliable compact car. And if I buy another car in the future, I'll look for an American offering. But you can see why our self-inflicted wounds have given foreigners an edge.

Posted by Maynard · August 9, 2007 02:15 AM · Permalink · Comments (7)
Economy/Economics | Maynard Post

Corporate Tax Reform, Anyone?

A post by Maynard

You've heard Democrats advocating a tax hike on "the rich", who aren't (so they tell us) paying their "fair" share. The charge is a silly one, but it's also dangerous to refute. If elections are going to be decided by a class war, then it's not safe to stand against the masses.

The irony is that, under our progressive tax structure, the bulk of taxpayers pay little or no Federal income tax, and the top income earners pay the lion's share. The exact numbers vary depending upon how you analyze, but the big picture is clear. For example, here's a Congressional Budget analysis from 1999. Looking at the section labeled "Share of Total Individual Income Taxes", the lowest quintile (20%) of taxpayers are listed as paying negative 2% of Federal taxes (meaning these people get more refunds than they paid in), and the next 20% pay 1%. Meanwhile the high-earning 20% pay 79% of Federal income tax. And the trend over the recent era has been for the high-income-earners to shoulder an increasing share of the tax burden.

In light of this, it's a bit weird for the Democrats to rile up the big group that pays 0% in order to make them angry at the small group that pays 80%. But that's politics, and I won't pretend to be surprised.

So it's fun and games as usual in Washington, but meanwhile the foreigners are eating our lunch. Here's a frustrating article in The Economist about how our tax-cutting foreign rivals are drawing business away from America. America needs to examine its corporate tax policy, or our businesses —and thus our workers — will pay the price.

How much should the corporate tax rate be cut? Alan Auerbach of the University of California, Berkeley, says it would make sense for America to move more in line with other countries. Unfortunately, in the current political climate, even that idea seems outlandish. But Mr Hubbard, for one, thinks things would be different if voters realised who actually pays the tax. The evidence, he says, suggests that the burden of the corporate tax falls disproportionately on workers. For instance, a study by Kevin Hassett and Aparna Mathur of the American Enterprise Institute, looking at 72 countries over 22 years, suggests that a 1% increase in corporate tax rates results in a 0.8% reduction in manufacturing wage rates. Other studies paint a similar picture. If workers understood that corporate taxes are a toll on the common man, wouldn't they clamour for a rate cut?

These were facts that Ronald Reagan could understand and communicate to the people. I'm not sure who in the national spotlight is willing and able to carry the message today. George Bush has been a tax cutter, but he's also been a spender, and not a great communicator.

Posted by Maynard · August 7, 2007 02:26 AM · Permalink · Comments (4)
Economy/Economics | Maynard Post | Money/Capitalism

Carbon Offsets

A post by Maynard

Perhaps you've heard the Al Gores of the world justify their energy-intensive jet-set lifestyles by explaining how their carbon offsets render them carbon neutral. The idea is that CO2 creation should be balanced by CO2-absorbing activity such as planting trees. New York City is planning to plant a million trees in the next ten years to reduce carbon emissions.

I see the theory, but I'm skeptical about the practice. The fact is, we are burning fossil fuels much more quickly than the planet can create them. I don't see how we can plant trees fast enough to balance our fuel consumption. If this were possible, then the logical goal would be to stop burning oil and coal and gas, and transform the world into a wood-burning economy. That would truly be carbon neutral. It would also be impossible.

Another inconvenient fact is that planting trees doesn't necessarily fight global warming and may actually make things worse. The calculations are complex, but when you consider these questions, you have to take into account the change in surface color. A darker planet absorbs more of the Sun's heat energy, instead of bouncing it back into space. That's just as bad as adding greenhouse gas to the atmosphere.

As I've said before, I'm not going to dismiss concerns about climate change. The quest for sustainable energy sources is an important one, and I'd like to see us seriously grapple with it. But in my humble opinion, we're going to find answers in research laboratories and not at music festivals.

By the way, here's the website for Al Gore's environmentally-responsible investment company, Generation Investment Management (see also Wikipedia). I guess it's an upscale operation, because they don't seem to be soliciting investments from the common folk. Too bad; I actually might have been curious enough to break open my piggy bank and buy a share or two. (Hey, maybe one of you financial mavens out there can explain to me what this means.)

Posted by Maynard · July 11, 2007 02:40 AM · Permalink · Comments (15)
Economy/Economics | Environment | Maynard Post | Moronic Convergence | Science & Technology

Airbus Versus Boeing

A post by Maynard

The transatlantic competition for civilian aircraft has seesawed back and forth in the recent era. Introducing a new model is always a huge gamble, straining corporate resources to the breaking point in hopes of creating the right product at the right time. Airbus resolved to out-747 the aging 747 with the monstrous A380 Superjumbo; Boeing decided the world didn't need two new huge airplanes, so they instead poured their resources into the highly efficient mid-size 787 Dreamliner.

Who got it right? At the moment, the advantage has tilted to Boeing, with 677 orders for their new plane. Meanwhile, Airbus has been struggling, with the A380 two years behind schedule and orders for only 159 planes. They must sell at least 300 to break even; estimates about how many the world might eventually buy range from 350 to 1000.

Behind the scenes, the lawyers have been battling. Boeing accuses the European governments of subsidizing Airbus, in violation of trade agreements. Airbus claims that the Americans covertly subsidize Boeing through lucrative military contracts.

The A380 could theoretically hold 853 passengers if configured as a cattle car, although airlines will probably set it up to carry 525 in a 3-class configuration. The 787 will carry between 210 and 330. Both planes have a range of about 8,000 miles. The A380 employed modern, lighter materials, but the 787 is an even newer design. Customers will be getting the first airplanes in the next year — assuming nobody's schedule slips.

Posted by Maynard · July 9, 2007 03:54 AM · Permalink · Comments (2)
Economy/Economics | Maynard Post | Science & Technology

Bank Analyst: "America's Reliance on China Has Never Been Greater"

Every day reminds us how important the election of November 2008 will be. This frightening example of 'the new world order' and globalization illustrates how dangerous it is to do business with the devil.

Stormy US-China ties seen amid trade tensions

US-China ties are headed for turbulence as combative US lawmakers threaten Beijing with punitive trade sanctions that could draw the ire of Chinese leadership.

A week of high-level talks in Washington failed to end their biggest dispute, Chinas undervalued currency, opening the prospect of a trade war between the world's richest and the most rapidly growing nation, analysts said. The Pentagon warned Friday that cash-flush China was militarizing under an opaque budget and that Beijing's ballistic nuclear missiles could now strike the United States...

Anti-China trade bills being drafted in Congress "could ultimately disrupt bilateral trade flows, and more importantly, capital inflows from China," warned Bank of America strategist Joseph Quinlan.

"Americas financial sugar daddy" is China, because it has capital "for a nation that abhors savings, worships spending and is addicted to other peoples money."

"While this is a worrisome development in and of itself, even more worrisome is that the United States has decided to play hardball with China over trade at a time when Americas financial dependence on that nation has never been greater," Quinlan said...

Washington is also concerned China is spending its mountain of foreign reserves on its military. An annual Pentagon report on Friday said China could be "planning for pre-emptive military options in advance of regional crises."

Pizza and Gold

A meander by Maynard

This comment is inspired by the Drudge link to a New York restaurant offering $1000 pizza.

How am I supposed to react to a $1000 pizza? Should I condemn the excessive waste? Should I be happy and even proud to live in a land where there's enough wealth to support such nonsense? Maybe a little of both?

In forming a judgment, there's another question I ask: Did the action under scrutiny actually consume wealth, or did it merely transfer wealth? There's a big difference.

Let's say I've decided to waste a thousand dollars in a public demonstration of my (hah!) vast wealth and status. One way I might do this would be to burn a thousand dollars in currency; alternatively I might spend that thousand dollars on gasoline and then burn the gasoline. In the first case, I haven't really consumed anything, because the currency is merely a claim against goods and services. By burning currency, I've done nothing more than relinquish my personal claim. But by buying something and then destroying it, I would be consuming to no purpose.

So if I'm thinking about getting on my high horse and criticizing how others spend their personal wealth, I'll more readily condemn the consumption. Burning money is more like a quirky act of charity.

In the case of the pizza, I'd wonder whether anything like a thousand dollars worth of ingredients went into the meal (consumption), or whether it's just overpriced (charity).

Am I sounding a trifle socialistic, judging how other people spend their money? Aren't they allowed to do whatever they want with their own money in a free society? Yes, and I'm not telling anyone what they must do. But I'm entitled to an opinion. If an act strikes me as a form of gluttony, I'm free to say this.

In Dante's Divine Comedy, the fourth circle of hell is a place where Hoarders and Wasters battle endlessly. These two sins represent opposite sides of the same coin; that is, excessive focus on material goods. The misers hoard possessions, and the prodigals squander them. Hoarding and wasting, while not a matter for legal action, justify some amount of soul-searching.

An example that brings the Wasters to my mind is gold used as a food additive. Here are a few examples: One, two, and three. A Google search turns up lots more.

Although there are a few oddball claims to the contrary, it is generally understood that there is no dietary benefit to eating precious metals.

This reminds me of the strange tale of how Stan Jones, the Libertarian candidate for U.S. Senator from Montana in 2006, unintentionally dyed his skin blue by ingesting colloidal silver. The idea was to boost his immune system in anticipation of the global anarchy that was expected to result from the Y2K bug, which would render antibiotics unavailable. Maybe if not for his blue skin, Jones would have received more votes. But he got enough to do harm. If the 3% of the Montana electorate who voted for Jones had instead voted for the Republican candidate, it would be the Republicans and not the Democrats who now control the Senate.

Somewhere in the foregoing, there's an important lesson to be had. If you figure out what it is, please let me know.

« Close It

Posted by Maynard · March 29, 2007 10:05 PM · Permalink · Comments (3)
Cultural Commentary | Economy/Economics | Food/Drink | Maynard Post | Satire/Absurdity

Democrats Push Union-Empowering Bills

A post by Maynard

The unions are a powerful special interest that supports the Democrats, and it's not surprising that union-friendly legislation is starting to pop up. With Democrats at the helm, we will see more news like this FOXNews story.

Union power in America peaked at more than a third of the workforce fifty years ago, but has been in decline ever since. Basically, the unionized companies lost ground to non-union and foreign competition. In the recent era, the growth in union power has been due to unionized government jobs. This makes sense: Private companies go broke and the union jobs disappear, but as long as governments collect taxes, the public sector union jobs are safe. It would be a wonderful world if we could all work for the government, eh?

I wouldn't argue that unions are inherently good or bad, because that's a question of context. Historically, management has often abused employees (how many of you can tell personal stories of abuse at the hands of a sadistic boss?), so it's reasonable that employees should have a voice. But what is the right balance between union power and management power? Will more unionization strengthen the middle class, as the Democrats tell us? Or will it just strangle more industries and squeeze the taxpayers? And why is it that, when monopolies are generally frowned upon, a monopoly on labor is considered a good thing? Why is requiring an employer to hire employees from a single source more reasonable than requiring a factory to buy steel from a single source?

Perhaps the most awkward aspect of union labor is the lack of flexibility. The job categories are more rigidly assigned. The employees become worker ants, very limited in the scope of their task. It is difficult to discipline or fire a bad employee, because the union will back him up.

I'll give an example that I have personal knowledge of. The unions in the entertainment industry are legendary for their aggressive rigidity. Once, there were some visitors at a studio who were left in a waiting area for a few minutes. A monitor was blaring out an annoying test tone at high volume, so one of the people turned down the volume. This was a mistake. A union worker noticed, and an uproar ensued. The union people scattered to find the specialist who was authorized to change the volume of the monitor. This man, having been summoned, angrily rebuked the crowd. If anyone touched that monitor again, he promised to file a grievance. With that, he switched the volume all the way up and fled the scene.

Posted by Maynard · March 3, 2007 01:41 PM · Permalink · Comments (7)
Economy/Economics | Maynard Post | Politics

Does Raising the Minimum Wage Help People?

A post by Maynard

This note is inspired by an article noting how the minimum wage boost in Arizona is reducing the number of jobs for teenagers.

I have mixed feelings on the issue. On one hand, the minimum wage is so low that I don't see how anyone can survive on it. My gardening bill is so cheap that I feel obligated to send my gardener a significant Christmas check.

On the other hand, the minimum wage isn't necessarily intended to be a living wage. We should perhaps look at it as the lowest rung on the ladder; the gateway for teenagers and newcomers to enter the workforce and learn the ropes. I remember my earliest forays into short-term gainful employment. I wasn't worth much, nor did I need much. All in all, my low-paying situation was for the best. It couldn't have happened if anyone had been forced to pay me "real" money.

I visit my nearby Burger King and get a meal for under $5. Are the people there adequately compensated, I wonder? And yet, I'm drawn in by the low prices. If they charged $10 for the same meal and paid their people better, they'd get no business. But perhaps that would be a better world, if I was motivated to make my own sandwiches.

It's also worth noting that one small chain, In-'n'-Out Burger, is popular and successful, and yet is known to pay its people more than the competition. Indeed, it's said you can actually live on the In-'n'-Out wages. If you've ever been to one, you've noticed that their people are surprisingly dedicated, and the customers are loyal. And the food is still cheap.

Every now and then, a local jurisdiction passes another "living wage" law. This usually does something along the lines of requiring government contractors to pay their employees something like twice the minimum wage. Here's my reality-based scenario of what happens when a new law passes:

Posted by Maynard · February 12, 2007 02:42 AM · Permalink · Comments (7)
Economy/Economics | Maynard Post

Trade Deficit: Threat or Menace?

A post by Maynard

Some Americans have sounded the warning about our long-term trade deficit, as well as the broader current accounts deficit. The bottom line is we've been buying a lot more goods and services from foreigners than they buy from us. At this point, we're leaking something like a trillion dollars a year into the world, which amounts to 6 or 7 percent of our GDP. That's a big number!

Is this a problem? Some say it's not. Here, for example, are articles by Walter Williams and John Stossel telling us not to worry. You run a deficit with your grocer, don't you? Money flows to America not because we're debtors, but because everyone in the world wants to invest in us. This shows how much the world believes in us. That's the way free-market capitalism works, isn't it? If you object to that, you must be a socialist!

These people make a point, but I can't be so sanguine about it. Foreign ownership of America limits our independence. (Although on the flip side, it may be that the more foreigners own us, the more hesitant they will be to blow us up.)

I sense an unhealthy attitude forming in the minds of many Americans that the old ideals of saving and producing are obsolete. Modern wisdom would have it that all you need to do is buy a house. The real estate market will rise endlessly, so you refinance whenever you run low on cash. The borrowed money pays for imported baubles, thus going back to foreigners who in turn recycle it back into America for another round of refinancing. That's all well and good for the short haul. But at the end of the day, people who behave this way will eventually find themselves with no savings and no equity. They'll be broke and dependent upon Social Security and Medicare, both of which will also be broke.

Posted by Maynard · January 18, 2007 09:43 PM · Permalink · Comments (10)
Economy/Economics | Maynard Post

Anticipating Tomorrow's Budget Shortfalls

A post by Maynard

This article about the coming financial tsunami the nation faces is a must-read.

In a nutshell, the demographic shifts of an ageing population will, over the next generation, drive the cost of entitlement programs (mainly Medicare and Socialist Security) into the stratosphere. Paying for all this will require either drastic tax increases or drastic cutbacks in service.

In other words, if we don't make some fundamental changes, the path we're on will automatically push the nation into the hands of the big-government Leftists. The primary governmental function will be to take money from some people and give it to others.

The budget deficit isn't a topic that excites politicians these days, and the ones who sound the warnings are often accused of harboring sinister motives. You'll recall that, when George Bush recently suggested we try to stave off the looming bankruptcy of the Socialist Security program, the Democrats triumphantly shut down the discussion by accusing him of plotting to kill the elderly. I salute Bush for at least trying to open the discussion; however it must be acknowledged that his fiscal stewardship has been lousy. To be honest, Bill Clinton and the previous Republican Congress were more responsible, perhaps because each shot down the other's stupid plans.

I'd like to see the next round of leadership be less oblivious to matters of fiscal responsibility than the current administration. There are certainly individual Republican politicians who have sounded the warning. John McCain berates lawmakers for "spending money like a drunken sailor". Oklahoma's Senator Coburn rails against earmarks (which is the Congressional word for "boondoggle"). California's Arnold Schwarzenegger has been steadily beating the out-of-control state budget into line. Alan Greenspan has earned respect from both sides of the aisle. There are people out there who know there's a problem and have some understanding of how to address it. But it won't happen until the public makes it a priority.

Posted by Maynard · October 29, 2006 04:05 PM · Permalink · Comments (2)
Big Government | Economy/Economics | Maynard Post

Dollars, Euros, and World Reserve Currencies

A post by Maynard

According to Alan Greenspan, the dollar is now sharing the stage with the Euro. Most people won't appreciate what this means, but it's an important and ongoing event.

The dollar is the major world's reserve currency, meaning that it's held by national and international banks and used for countless international transactions. We got to this position because, as WWII ended, the dollar was the most stable and significant national currency, and thus it effectively became a global currency.

The world has changed a lot since the end of WWII, and America is no longer the only major power with a stable currency. The new currency of Europe, the Euro, is a growing challenge to the dollar.

Working against the dollar is the American balance of payments deficits. This means we're leaking dollars into the world, and effectively living beyond our means. We can get away with this because the world has been happy to accept dollars. But there's a limit. At some point, the world will hesitate to absorb an endless torrent of dollars. As a nation, we must restore financial balance.

Effectively this means we'll need to tighten our belts and consume less and save more. The politicians are aware of the problem, but it's not a thing that politicians speak of. Politicians prefer to tell us we need more, not less.

Enemies of the US would prefer to avoid dollars. For example, Iran would rather trade oil for Euros than dollars.

It's a big issue with countless details, but the bottom line is that the dollar is becoming less of the supreme currency. The dollar will continue to be important, but it will have to share the crown.

Ultimately, the US will have to put its financial house in order. Unfortunately, politics being as it is, we've put off doing anything about this, and we'll likely continue to do so until the problem becomes a major crisis and can no longer be ignored. When we change gears, we'll suffer some national economic pain, as is always the case when an economy re-orients. Naturally, when that happens, each of the political parties will blame the other, and all the rhetoric will be complete nonsense.

In other words, business as usual until the economic hangover we're headed for forces the politicians into action.

Posted by Maynard · October 26, 2006 11:20 PM · Permalink · Comments (1)
Economy/Economics | Maynard Post

That Sucking Sound? Billions of Dollars Sent to Mexico

It's not only our infrastructure they're destroying. As taxpayers pay for their medical care and food stamps, illegal aliens are sending billions of American dollars out of the country (5.2 billion dollars a year alone from Texas), removing what should remain as local wealth, meant to flow into and invigorate American cities where the work is produced. Combine this direct currency hi

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