What you can do for your country

Captialism a Love Story

 

I don't need Michael Moore to tell me people are greedy. Capitalism is not greed. Greed is a lack of morals. Morals can't be regulated. Immoral behavior will always find the cracks in regulations, but moral people will not. "In Go...d we trust" and "Under god" are observations that our democracy works best if we come to the table equipped with a moral compass.

Clunkers, what have we learned....

I am a bit unsettled on the whole global warming thing, unsure of the facts, and unclear of mans impact on the whole thing.  I don't like big government, the bailouts, or Government intervention in free markets (except in case of safety and defense).  So, when Government decided to bailout GM etc, I thought a cash for clunkers type program might be the best of a bad situation.  Seeing what had worked in Germany in stabilizing their auto industry with a government rebate program, it struck me that if the political will was "Help GM" and "CO2 matters", then with that crap hand, the best play was subsidize demand directly (cash for clunkers) instead of a direct subsidy to supply (i.e. bailout GM).  I was wrong.

Here is what I think I have learned:

• The Government exhibited limited skill in forecasting demand for the program.  This is more unsettling given the government's parallel assertion that they know how to make health-care more efficient. They can screw up a $1B clunkers program, US Postal Service, VA hospitals, and Amtrak, but they will get health care right for sure.
• People have cash that they are willing to spend, given the right motivation. This suggests that the uncertainty of taxes, cap-trade, health care, economy, etc is halting demand, not lack of resources or productivity.
• The high demand for the program may have been a function of the uncertainty over the programs lifespan, i.e. just until November and no more than $1B.  Plus the need to clear lots for 2010 inventory.
• It appears the $4500 may have gone in part to inflating the market rate for cars.  Buyers have a hard time in this kind of market flux differentiating a good or bad deal.  Price information asymmetry favors sellers over buyers (in Katrina this was called price gouging, apparently legal with Government as investor).  Potential inflation on car prices makes sense as exhibited in the solar PV market.  In solar PV, the government has offered a 1/3 tax break on investment.  Shortly thereafter the wholesale cost of solar arrays went up.  This is explained in part by price elasticity of demand (via government subsidy) and constrained supply (Charge more than normal clearing price). 
• The sub-prime car market is being hurt.  This market is comprised of these that can't afford a new car.  They need a car to go to work, etc.  If they are unemployed, the car lets them search over a larger radius for work.  Since all the "Clunkers" are being destroyed, some 220K (perhaps in the end as many as 700K) cars are being removed from the second hand market.  Supply/demand says the cost of used cars should therefore go up.  
• The spare parts market is being constrained (Supply down).  Since the engine is destroyed in the clunkers program, the practice of conservation (Trying to reuse good parts) is disrupted.  Under the program, the engines need to be melted down and re-forged.  Perhaps a big energy waste.  With fewer second hand parts, again the lower tier buyer in the market will see prices go up having to buy new rather than used parts.
• The program is temporarily disruptive.  For new car dealers, there is a surge in demand leading to partial bumps in employment, but no long term persistence of jobs.  The supply chain of used and spare parts is temporarily harmed.  This kind of demand flux makes the life of small business more difficult as they try to balance uncertain demand with labor and cash flow challenges.  Why should a small business invest in an uncertain economic future?
• The claims of the program are uncertain.  Edmund's (car market experts) claimed the top sellers were SUV Cross overs and pickup trucks.  The government (not car market experts) claimed the best sellers were small sedans.  Someone is cooking the books (transparency anyone?), and its unclear why.  It may not serve the government's interest to suggest SUVs and pickup trucks are being bought, because those have less than perfect mileage.  Demand for SUVs and trucks makes sense in that people in more rural areas, with no other form of public transportation and in need of more robust vehicles, would be participants in the clunkers program.  The difference in Edmund's vs. Government numbers might be explained in defining car models.  Pickups and SUVs are defined in part by a wider range of engine models, so a F150 truck appears as 5-10 different vehicle variants.  A Honda accord appears as 1 or 2 variants.
• The biggest question is why do cars get a special subsidy and nothing else, maybe we all should have been given our $4,500 back and used it the way we saw best.

What should have been done

• I will state the obvious, the government should not have bailed out GM and there shouldn't have been a clunker program.  But, I will leave this option out because its not how the current government works.
• If the government were truly worried about CO2, they should have put the program in place indefinitely.  Or until a certain amount of CO2 savings were achieved.  By having an indefinite end point, we would not have had a disruptive perturbation (or a wonderful photo op).  The economy would have worked things out in a more natural manner and there would have been more price transparency.
• The amount of the subsidy probably should have been increased to bring more people into the market.  The balance of the money should have been taken away from promises to GM and Chrysler.
• Cars should have been disassembled rather than destroyed 
• To get the best price, buyers should otherwise wait until the program is over and car dealers are once again hungry
  
   

Put Oil Firms on Trial.....

Apparently, a "leading climate scientist" should put Oil Firms on trial for their unwillingness to submit to his believes.  As noted in the Guardian.....

"James Hansen, one of the world's leading climate scientists, will today call for the chief executives of large fossil fuel companies to be put on trial for high crimes against humanity and nature, accusing them of actively spreading doubt about global warming in the same way that tobacco companies blurred the links between smoking and cancer."

Mr. Hansen seems to have missed the class on Democracy when he was in school.  I guess he may also have missed the class on critical thinking.  As a famous senator said, "You are entitled to your own opinion, but you are not entitled to your own facts".

In the discourse of what to do about energy, CO2, the economy, etc I think it is fair for people and companies to express their opinion on various items.  I think it is fair for Mr. Hansen to express his opinion on what policies might be effective at dealing with the facts associated with his research on climate change.  I don't think he is entitled to accuse the Oil companies with lying (Blurring the links). 

One can "Blur the Links" when the counter argument is weak.  Yes CO2 is raising.  No, we are not sure why.  There are also Climate experts that think the rise may be caused by natural events.  Given that the world is a big place, with many influences, I guess it might be true that humans are not the only influence in the mix.  For example, cloud formation is not fully factored into the climate models (it is hard to do that calculation).  Could cloud formation have a positive impact on curtailing CO2 raise and warming, it seems to be part of an explanation for pack ice increasing on the south pole.  I am not an expert on this subject, but the facts make me pause before forming an opinion.

Certainly its not time to accuse people of lying.  It is perhaps time to strengthen arguments.  To simplify the explanation and provide pathways to an answer rather than vindictive.

Imus and Cosby

I have been traveling for the last few days.  In every airport, on those CNN TVs, they seem to be covering Imus.  Every politician seems to be jumping on the fire Imus bandwagon.  There has been perhaps 200+ hours of coverage and god knows how much print on how bad Imus is for making a racial Slur against the young women basketball players.

I have heard what he said.  I am not sure what he meant by his words.  I understand the word whore, but the rest doesn't even make sense to me.  I guess I am out of it.  I listened to Imus when I grew up.  He was pretty clean then.  Overtime of course the term "Shock Jock" has transformed.  It seems there is a lot of media that uses the same word Imus uttered.  I don't like them when ever they are uttered.  That is why I don't listen to that media.

I am troubled by the focus on Imus.  I worked with a black man in a company in the Midwest.  We built a good friendship over time, enough that we were comfortable talking about racism.  He said he grew up in Mississippi during the 50's and 60's, which led me to ask him what he felt about all the racism he experienced.  He said the Racism he saw in Mississippi was nothing compared to the quiet racism he has seen in the North East and Midwest.  He said the term "Nigger" just has a different meaning in Mississippi vs. other places.  He would rather be called a Nigger in Mississippi than one in New York,  and he would rather someone use the word Nigger, than let some quiet racism hide in the undercurrent.  I don't like words like these, but they are used and they have different meaning and intent.

The press, politicians, and politically correct seem more outraged at Imus's words, as if Imus were really a bigot.  Or as if the use of the word propagated racism.  I have know idea what Imus thinks, he is a comedian.  I don't listen to his diatribe.  I would not look to him as guide post to my ethics.

But, the Imus issue and the use of the word is using up 100s of hours of media time.  Should it?

I have heard Bill Cosby talk about his feelings about the challenges facing the African American community.  In what little I have been able to see, he has impressed me as a thoughtfully leader.  I am not sure he is right, he just has impressed me as thoughtful.  Having seen his shows, and the integrity of values transmitted in his work, I am interested in hearing more about his thoughts on how we all can work together to further eliminate barriers caused by racism.

But, Bill Cosby is not getting Imus's air time.  Not anywhere close.  The political correct crowd professes is horror and shame over Imus, but they take no action to hear more from Bill Cosby.

Are we better off listening to Imus replays or Cosby's insights?  In the end is it about erasing the word Nigger and Whore, or is it about changing minds.  We control what we want to hear, not Imus.

Barack Obama the Professor

Senator Obama made some mention that as a "Constitutional Professor", he thought that Bush did xyz wrong.  I can't recall all the related details.  I thought the point was irrelevant to begin with.  But, someone in the RNC or the press has tracked down that Senator Obama is listed as a Senior Lecture at the university mentioned.

Clearly there is a difference between a Professor (tenured research expert) and a Senior Lecture (teaches a syllabus).  But really, should anyone be criticizing the Senator for this discrepancy.  He was making a point that he has a foundation in constitutional law, so therefore can express some level of expertise.  It seems to me he has that ability simply being a senator and a lawyer.

The press and the RNC should find better things to do.  If we are going to parse every point this much, we are never going to make through this election cycle without destroying every single candidate and their ability to lead.

The Hunter

So Romney makes the comment that he has hunted all his life, not big game stuff, but little things like shooting varmints.  Now it seems the press needs him to explain the discrepancy in his hunting tally.  See, his campaign said he had only been hunting a couple of times.  Romney says it has been often.

My impression from the news is that news directors throughout the country have sent their folks out to every state game warden or associated division to get the total number of hunting licenses that Romney has gotten, so that they can verify the truth.

Is this for real?  Is it really that important how many times he has or has not hunted?  Is it really important to the gun lobby?  Maybe he is lying!  Thats the ticket. He is lying because how many times he has hunted is a true measure of the man, and he doesn't want to be caught as an unbeliever.

Does anyone really care about this detail?  Should we care?  What I care about is if he a good decision maker.  Does he have resolve to lead as an executive.  Based on his resume I am impressed:

• Successful venture capitalist
• Savior of the Olympics
• Successful Republican Governor in a Democratic leaning state
• Dropped everything to save an employees daughter when she was kidnapped, quarterbacked the effort to find her, and in fact did find her in a few short days
• Committed to his family
• A willingness to change his mind on major issues

Romney seems like a decent guy.  Why can't the press focus on his ideas rather than some dumb discrepancy over his past hunting.  I think in the end we will find its just a bunch of miscommunication between staffers.  If someone can really go to the hunting license bureau in every state and track down his past licenses of the last 20+ years, maybe we should put that system into the airports to catch terrorists.