Archive for the ‘economics’ Category
So how did we get here?
2008: the year the U.S. (global?) financial system collapsed. How on earth did we get here?
This simple slide show explains it nicely. This has been circulating the interwebs for awhile (hat tip to TWG for sharing it with me) but it’s still brutally funny. Funny but true.
You will probably have to view in full screen mode to read it. Or click through and download as a PDF. Enjoy!
Filed under economics : Comments (2) : Sep 24th, 2008
The real McCain/Obama tax plan
I’ve already posted this information a few times, but it never hurts to post it again. This is one of the biggest lies being spread by the McCain camp–that Obama will “raise your taxes”. The truth is that Obama is going to cut taxes for the vast majority of Americans, while raising the taxes for the wealthiest earners.
Filed under economics : Comments (2) : Sep 21st, 2008
U.S.S.A. : Insurance for millionaires
In September 2008, Republicans lost their claim that deregulation is good. The test results are in and they're conclusive.
Filed under economics, politics : Comments (1) : Sep 20th, 2008
Thank You, Boomers
Filed under economics, politics : Comments (0) : Sep 14th, 2008
U.S.S.A.
Filed under economics, politics : Comments (0) : Sep 14th, 2008
Drill Here Drill Now Pay Less!
The Republican energy strategy can be be summed up in one (chant-able) phrase: “Drill Here, Drill Now, Pay Less”. Wow, that sounds like a great plan. But will it work?
Sadly, no. Even if we decided to “drill here”, there would be a minimum of 5+ years before any of that oil hit the market. Rome was not built in a day, and nor is the infrastructure required to bring new oil wells online. (Here’s a great example–there are a finite number of drilling ships capable of tapping the oil reserves off-shore. And they’re all booked for the next 3 years.)
So “drill now” doesn’t really mean “now”. Bummer.
Then there’s the question of “pay less”. Any Econ-101 student can tell you that if you increase supply and demand remains constant, prices will decrease. In the case of oil, we have a few problems that must be dealt with before we can “pay less”:
- Demand. Baring total global economic collapse, demand will continue to increase in the foreseeable future. China, India, Russia, Brazil, and a host of smaller nations are developing rapidly. They will probably want some oil as well.
- Supply. The best estimates from the Energy Information Administration put our new production at somewhere around 250,000 barrels a day. That does not represent a significant addition to the 16,000,000 barrels already being produced every day. (It’s about 1.5%) It’s unlikely that the oil markets will be significantly moved by an extra 250,000 barrels/day.
- OPEC. Just yesterday, OPEC decided that oil prices had fallen too far since their high and cut production by 500,000 barrels/day. (Stop here, read that number again, and compare it with the number from point #2 above.) If we think that domestic drilling will give us leverage over the giant oil cartel known as OPEC we are severely disillusioned.
Here’s a pretty graph that ought to put things in perspective:
So, I’ve made the case that “drilling here, drilling now” won’t result in “paying less”. What should we do instead?
Decrease demand.
That same Econ-101 student would tell you that decreasing demand with a constant supply will also lower prices. By golly, that sounds pretty good. How do we decrease supply?
- Improve automobile efficiency. The rest of the world figured out how to do it–even the American auto makers sell efficient cars in Europe! It’s just disgraceful that we’re still driving cars that get 25 mpg (the same efficiency as a Ford Model T)
- Invest in public transportation. We ship trillions of dollars to the Middle East for oil every year and get nothing but oil (and the subsequent pollution) in return. Investments in public transportation would result in local manufacturing and service jobs and would provide options for American travelers.
- Raise the gas tax. We know that demand for gas will drop as prices go up–we’ve already seen it happen. Why not help things along and recoup some of the money ourselves instead of shipping it all to foreign oil producers? The money could then be wisely invested in public transportation. Wow!
- Study the rest of the world. We seem loathe to look outside our shores for lessons on how to do just about anything. Sadly, transportation is one area that we’ve fallen far far behind the rest of the world. We need leaders who are willing to learn from our global neighbors.
The great thing about decreasing demand is that it’s compatible with all energy options. We can continue to use oil. We can start to use more natural gas. Or renewables. Or hydrogen. Or nuclear. And OPEC or China or Russia or anyone else can’t do anything to stop us.
Filed under economics, energy, environment, politics : Comments (2) : Sep 11th, 2008
McCain vs. Obama : Taxes
Like all good Republicans, John McCain is promising to lower your taxes. Barack Obama, staging himself as a populist, also promises to lower the taxes of all but the very top income earners.
Let’s take a closer look at the details of each plan, using the analysis provided by the non-partisan Tax Policy Center.
Or, if you prefer pretty graphs, here is a comparative graph I put together using the numbers above. (Note that the scale is logarithmic for the purpose of easier comparison.)
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Both Obama and McCain will cut your taxes if you earn less than $227,000 a year.
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Obama will provide significantly higher tax relief for those earning less than $66,000 a year (i.e. the poor).
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McCain will provide significanly higher tax relief for those earning more than $227,000 (i.e. the rich).
It should be noted that during the last 8 years of the Bush administration (with Republicans controlling Congress for the first 6 of those years), taxes were cut significantly (especially for the rich) and as a consequence the defecit has soared to new heights. The national debt now stands at $9 trillion.
Republicans love to explain that cutting taxes will result in more jobs, a stronger economy, and more tax revenue. The contrast between the era of Clinton in the 1990s and the era of Bush in the 2000s should put this bogus argument to rest (but of course it won’t).
Take a look at the data above and draw your own conclusion.
Filed under economics, politics : Comments (3) : Sep 8th, 2008
Dear Media. . .
I have a simple request for the national media outlets to whom we entrust our public airwaves : DO YOUR JOB!
There’s a bit of a huffle-puff brewing around Washington right now as what to do about high oil & gas prices. John McCain and most of his Republican friends want to drill offshore, assuming that new supplies would drive prices down. Barack Obama and most of his Democratic friends want to reduce consumption, assuming that less demand would drive prices down.
The media, in their infinite wisdom, are presenting the two positions as an even debate. There’s just one problem : THEY DIDN’T DO THEIR HOMEWORK!
You see, a little-known agency called the Energy Information Agency (aka the official source of energy data for the U.S. government) released a report last year that concludes the following :
The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. [emphasis mine]
Had anyone at NBC, ABC, CBS, FOX, CNN, MSNBC, etc. etc. had access to, say, Google, they might have found the same report. Instead, they report both sides as though it’s just a matter of opinion. Paper or plastic? Red wine or white? Kittens or puppies.
There was a time when they practiced this thing called journalism. . . if my memory serves me, it involved actual research instead of simply replaying sound bites. Huh. What a concept.
Filed under economics, energy, politics : Comments (0) : Aug 7th, 2008
Highways vs. Transit
In my last post (which attracted a few great comments) I suggested that the automobile infrastructure might not be the optimal investment for the coming decade(s). Some might take this as an all-out attack on personal transportation–to be clear, it is not. (I wouldn’t even mind highways if we raised the gas tax enough to pay for them)
Here’s a great graph showing the comparison between what we spend on highways versus what we spend on transit. To anyone who bemoans building rail, bike trails, or mass transit projects, please keep this in perspective.
Today we have a pretty clear problem : we have a national transportation infrastructure built upon the assumption that gasoline can be produced and sold for a few dollars a gallon. Now that that assumption is no longer valid, there are two approaches we can take :
1) Start investing public tax dollars in non-automotive infrastructure (the highways still get all the gas tax they want).
2) Freak out, drill every inch of land (and ocean) in the U.S., and pour all available public funds into delaying the inevitable decline of the oil-based transportation.
You can guess which one I’m rooting for. Which do you prefer?
Filed under culture, economics, energy : Comments (3) : Jul 23rd, 2008
Gas prices up, miles driven down : let the market work!
As you may or may not know, gas prices have more than doubled in the last year. Ouch. Politicians and pundits love telling us how this is “problem” is going to get solved. As I’ve recently explained, supply-side economics are not going to change the price of oil. What’s left? Demand.
And, believe it or not, it’s already happening! The U.S. DoT issues a monthly report of highway miles driven. For two consecutive months, Americans are driving fewer miles than we did a year ago. That’s right, the invisible hand of the market is working! Huzzah!
This raises a very important point : We need to let the market work. This means we must not mess with the gas tax! (Unless we raise it, to accelerate the process of moving beyond oil).
Keep this in mind, as one of the two presidential candidates (hint : the old, white one) wants to slash the federal gas tax. Let me repeat it once more : The market is working! Hands off, Washington!
Filed under economics, energy, politics : Comments (2) : Jun 22nd, 2008
