Archive for the ‘economics’ Category

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 Now that that assumption is no longer valid, there are two approaches we can take :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

Dear Congress : Wind is good!

While I was checking my Google feed reader under the Energy section, I stumbled across a graph that looked a little too familiar. The colors and overall design instantly grabbed my attention. Was this a GE pitch?

Indeed, it was. GE Energy Financial Services is trying to politely explain to the U.S. Congress that it’s a good idea to offer incentives to build wind energy projects. (This is the same U.S. Congress who routinely gives out hundreds of billions of dollars in oil production incentives.) It seems that just as the U.S. was on the way to catching up with the rest of Europe in renewable energy production, the fightin’ 110th decided to yank away the credits.

GE’s position is simple : by creating thousands of new jobs and millions of dollars in new tax revenue, building wind projects makes financial sense–even if Congress must first pay out some incentives. The net gain from 2007 was $250 million. Not bad, considering that doesn’t count the environmental benefits of wind vs. coal, gas, etc.

I’m a libertarian and don’t like subsidies in principle, but this one seems to make sense. Unlike coal, oil, and other fossil fuels, wind has a very high ratio of jobs per megawatt. It’s probably one of the few subsidies that literally pays for itself. We would be completely foolish in taking a huge step backwards by repealling the production tax credits.

Oh, wait. Foolishness is what Congress does best.

Filed under economics, energy, environment, politics : Comments (0) : Jun 20th, 2008

Proof that we both need and want mass transit :

Gas Prices Send Surge of Riders to Mass Transit - New York Times via kwout

Filed under Milwaukee, economics, energy, environment, suburbs : Comments (0) : May 19th, 2008

Clinton, McCain share dillusion; Obama chooses reality

I saw this in the news :
(my commentary below)

Clinton Joins McCain in Criticizing Obama on Gas Tax | The Trail | washingtonpost.com via kwout

What planet are these people on? Are gas prices going to magically fall come fall? What about the winter heating oil? Or next summer?

Will India and China politely decline from growing their economies so we can enjoy $2.00 gas?

Is OPEC sitting on a giant oil field that they’re waiting to tap until oil gets really expensive?

These gas-tax-relief plans are built on pure fantasy–the fantasy that we can all keep driving our cars a few hundred miles a week and not change a thing. Those days are over. Gone. Not coming back. We have exactly two choices at this point : either embrace this change and start rapidly planning for a low-energy lifestyle, or invest our remaining national wealth in a vestigial enterprise that should have gone out with the 1970s.

For Clinton & McCain, it’s cheap gas or bust. For the sake of our country, I hope they don’t win.

Filed under economics, energy, politics : Comments (4) : Apr 28th, 2008

It’s happening

Over the past few years, esteemed blogs (such as tadfad.com) have espoused at great lengths why suburbs are not a wise investment for our nation in general. Now, as gas prices are on the way to $4/gallon and the credit markets are tightening up, home buyers seem to agree.

Home Prices Drop Most in Areas with Long Commute : NPR via kwout

The part that’s sad about this is that almost everyone is going to lose in the end. We’ve spent trillions of dollars building not only the suburban homes themselves, but all the infrastructure to support them. As these areas become less and less desirable (and hence, less valuable), much of this investment will simply go to zero. The negative effect to the U.S. economy will be significant.

Fortunately, there’s hope. In cities all across the U.S., there’s plenty of space to expand. After decades of suburban flight, many neighborhoods are living with low population density and ample opportunities for improvement. We’ll need to act wisely as we re-urbanize and ensure that low income families aren’t forced out to the fringes. Again, history is a wise tutor as most cities dealt with mixed income housing quite well prior to WWII.

The key to this equation will be wise investment. There will be enormous pressures on state and federal governments to prop up the suburbs with cheap loans and road building. We need the forethought to gradually close the book on the great suburban experiment and rediscover what city life can be.

[Side note : Anyone looking for an investment opportunity? Check out the Riverwest neighborhood in Milwaukee. ]

Filed under Milwaukee, culture, economics, energy, environment, suburbs : Comments (3) : Apr 23rd, 2008

Roundy’s does organic

Roundy’s is a supermarket megapology in the Midwest area (they own Pick N’ Save, Copps, and Rainbow Foods). They also sell store brand foods under the Roundy’s brand.

Imagine my surprise when I was cruising the organic dairy case (looking for my favorite Silk soymilk) and discovered that Roundy’s now offers organic milk. Huzzah!

This tells me a few things :

Organic is officially mainstream (+)
Organic appeals to people outside the lefty tree hugging crowd (+)
Organic is done on the industrial scale just like conventional (-)

So with two (+)’s and one (-), this is a good thing. I’m walking the organic line; some things I like to buy organic (like my Silk) while others I go conventional. Let’s hope that we all continue to realize that energy intensive farming is not a winning strategy and keep moving the needle.

Filed under Milwaukee, economics, energy, environment : Comments (5) : Apr 20th, 2008

Hot news : thevicenarian.com

Extra! Extra!

My blog empire is expanding. I have teamed up with a group of fellow vicenarians (aka 20-somethings) to write www.thevicenarian.com.

thevicenarian.com via kwout

The goal of this site is to write about all the important financial/economic/investment/social topics that my demographic needs to know about but is rarely taught in school. The goal is to help my fellow vicenarians navigate this critical period in life : the first career-type job, the first big paycheck, the first time dealing with things like 401(k)’s, Roth IRAs, and health insurance (eek!).

Check it out! Even if you’re not in your 20’s, you might find it useful. And of course I love it when you ad comments.

In addition, you’ll notice a new box on the right side of this page. It’s a handy Feedburner widget that will give you the latest headlines from thevicenarian. How convenient.

Filed under economics, work : Comments (0) : Feb 3rd, 2008

State of the Union 2008

Someone, please hand that man a calculator.

As far as I can tell, Bush’s final State of the Union address can be summed up thusly:

Cut taxes. Increase government spending & programs. Never leave Iraq. God bless America.

Not exactly the sort of message we’re looking for, and certainly not the sort of message you would expect from the party that once stood for fiscal conservatism. It’s pretty clear that those days are long past when Bush starts trumpeting his economic stimulus ~~boondoggle~~ plan that’s likely to do no good at great cost.