Coyote Blog

Thanks to a commenter, the short story from Omni that was so reminiscent of the China traffic jam was “The Great Moveway Jam.”  The blog Cedar Posts and Barbwire Fences found it online:

Part One is Here

Part Two is Here

Long ago on this site, I wrote this:

More recently, progressives have turned their economic attention to lesser developed nations.  Progressives go nuts on the topic of Globalization.  Without tight security, G7 and IMF conferences have and would devolve into riots and destruction at the hands of progressives, as happened famously in Seattle.  Analyzing the Globalization movement is a bit hard, as rational discourse is not always a huge part of the “scene”, and what is said is not always logical or internally consistent.  The one thing I can make of this is that progressives intensely dislike the change that is occurring rapidly in third world economies, particularly since these changes are often driven by commerce and capitalists.

Progressives do not like American factories appearing in third world countries, paying locals wages progressives feel are too low, and disrupting agrarian economies with which progressives were more comfortable.  But these changes are all the sum of actions by individuals, so it is illustrative to think about what is going on in these countries at the individual level.

One morning, a rice farmer in southeast Asia might faces a choice.  He can continue a life of brutal, back-breaking labor from dawn to dusk for what is essentially subsistence earnings.  He can continue to see a large number of his children die young from malnutrition and disease.  He can continue a lifestyle so static, so devoid of opportunity for advancement, that it is nearly identical to the life led by his ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but certainly no longer than he worked in the field) for low pay (but certainly more than he was making subsistence farming) and take a shot at changing his life.  And you know what, many men (and women) in his position choose the Nike factory.  And progressives hate this.  They distrust this choice.  They distrust the change.  And, at its heart, that is what the opposition to globalization is all about – a deep seated conservatism that distrusts the decision-making of individuals and fears change, change that ironically might finally pull people out of untold generations of utter poverty.

Which is why I really enjoyed this article linked by Mark Perry:

“Years after activists accused Nike and other Western brands of running Third World sweatshops, the issue has taken a surprising turn. The path of discovery winds from coastal factory floors far into China’s interior, past women knee-deep in streams pounding laundry. It continues down a dusty village lane to a startling sight: arrays of gleaming three-story houses with balconies, balustrades and even Greek columns rising from rice paddies.

It turns out that factory workers — not the activists labeled “preachy” by one expert, and not the Nike executives so wounded by criticism — get the last laugh. Villagers who “went out,” as Chinese say, for what critics described as dead-end manufacturing jobs are sending money back and returning with savings, building houses and starting businesses.

Workers who stitched shoes for Nike and apparel for Columbia Sportswear, both based near Beaverton, Oregon, are fueling a wave of prosperity in rural China.

Update: I would have thought it unnecessary to add these provisos, but apparently per the comments it is necessary for some.  Of course people need to be treated as human beings.  Companies in some poor countries that are using the power of local government to actually enslave workers or to employ them in non-consensual ways are not organizations a good libertarian would ever defend, as our bedrock principle is to deal with other human beings without force or fraud.

My point is that we cannot apply our wealthy middle class values to the pay/benefits/workweek package being offered in poor countries.  To my mind it is immoral to try to deny poor people in poor companies jobs just because we rich people in the US would not consider taking such a job.  This arrogant and frankly clueless attitude forgets a critical question – what is their alternative?  We may think the Nike factory job sucks, and against the choices we have it probably does, but I would bet the subsistence rice farming job, with one’s family always one bad harvest away from starvation, would suck worse.  Of course we should aspire that everyone in the world can work in an air conditioned building for $40,000 a year while spending most of the day surfing the Internet and texting friends complaining that they are underpaid.  But you can’t tell these countries that the only ladder they can use to escape poverty doesn’t have any rungs in the first 20 feet.

So the head of the IOC declares the Olympics over, the flame is out, but there still seem to be people on the stage.  It seems that Canadians, so long without an overt sense of nationalism, have decided to use the stage to hold a pep rally for their country.   Can you imagine how unbelievably creepy, and probably scary, it would have been had the Chinese closed the Olympics in a similar China-uber-alles manner.  But since the Canadians are thought to be (mostly) harmless, I suppose its OK.

Postscript: Not 30 seconds before this started, I was lamenting the fact that Rush was not a musical act, with the silver lining that we had not seen William Shatner either, when lo and behold he rises onto the stage.

PPS: I thought the way they opened the show, with the clown fixing the broken torch, was much more consistent with the Canadian style, and more flattering in a sense than the goofy show at the end.  It is particularly funny, to me at least, to see that all the people who they have chosen so far to extol the virtues of Canada actually left the country for the US to make their fortune.  What are they selling, that Canada is a great place to be from?  They couldn’t have found someone like Jim Balsillie who actually mad his fortune and reputation, you know, in Canada.

PPPS:  OK, it was only the talking quasi-celebrities I thought was odd.  Who couldn’t love the giant inflatable beavers that followed?

I love it when Mark Perry rewrites trade stories

“U.S. Steel Unions Score American Consumers Dealt Yet Another Huge Victory Loss As China They Are Slammed With New Steel Tariffs Taxes”

One has to envy pity the insignificant amount of pull U.S. steel workers consumers and steel-using companies have. The majority of U.S.-China trade agitation is caused by imposes signifcant costs on this one relatively tiny huge part of the U.S. economy.

Via the Telegraph:

The American blogosphere is going increasingly “viral” about a proposal advanced at the recent meeting of the Davos Economic Forum by Craig Mundie, chief research and strategy officer for Microsoft, that an equivalent of a “driver’s licence” should be introduced for access to the web. This totalitarian call has been backed by articles and blogs in Time magazine and the New York Times.

As bloggers have not been slow to point out, the system being proposed is very similar to one that the government of Red China reluctantly abandoned as too repressive. It was inevitable that, sooner or later, the usual unholy alliance of government totalitarians and big business would attempt to end the democratic free-for-all that is the blogosphere. The United Nations is showing similar interest in moving to eliminate free speech.

I called this one back in 2005.  This isn’t the first attempt by the UN in particular to throttle free speech via licensing way back in 1985.

What is it about intellectuals that seem to, generation after generation, fall in love with totalitarian regimes because of their grand and triumphal projects?  Whether it was the trains running on time in Italy, or the Moscow subways, or now high-speed rail lines in China, western dupes constantly fall for the lure of the great pyramid without seeing the diversion of resources and loss of liberty that went into building it.  First it was Thomas Friedman, and now its Joel Epstein in the Huffpo, eulogizing China.    These are the same folks who tried, disastrously, to emulate Mussolini’s “forward-thinking” economic regime in the National Industrial Recovery Act.    These are the same folks who wanted to emulate MITI’s management of the Japanese economy (which drove them right into a 20-year recession).  These are the same folks who oohed and ahhed over the multi-billion dollar Beijing Olympics venues while ignoring the air that was unbreathable.  These are the same folks who actually believed the one Cuban health clinic in Sicko actually represented the standard of care received by average citizens.  To outsiders, the costs of these triumphal programs are often not visible, at least not until years or decades later when the rubes have moved on to new man crushes.

Epstein, like Friedman, seems to think that the US is somehow being left behind by China because its government builds much more stuff.  We are “asleep.”  Well, I have a big clue for him.  Most of the great progress in this country was built when the government was asleep.  The railroads, the steel industry, the auto industry, the computer industry  -  all were built by individuals when the government was at best uninvolved and at worst fighting their progress at every step.

Epstein in particular thinks we need to build more trains.  This is exactly the kind of gauzy non-fact-based wishful thinking that makes me extremely pleased that Epstein in fact does not have the dictatorial powers he longs for.   High speed rail is a terrible investment, a black hole for pouring away money, that has little net impact on efficiency or pollution.   But rail is a powerful example because it demonstrates exactly how this bias for high-profile triumphal projects causes people to miss the obvious.

Which is this:  The US rail system, unlike nearly every other system in the world, was built (mostly) by private individuals with private capital.  It is operated privately, and runs without taxpayer subsidies.    And, it is by far the greatest rail system in the world.  It has by far the cheapest rates in the world (1/2 of China’s, 1/8 of Germany’s).  But here is the real key:  it is almost all freight.

As a percentage, far more freight moves in the US by rail (vs. truck) than almost any other country in the world.  Europe is not even close.

(source)

You see, passenger rail is sexy and pretty and visible.  You can build grand stations and entertain visiting dignitaries on your high-speed trains.  This is why statist governments have invested so much in passenger rail — not to be more efficient, but to awe their citizens and foreign observers.

But there is little efficiency improvement in moving passengers by rail vs. other modes.   Most of the energy consumed goes into hauling not the passengers themselves, but the weight of increasingly plush rail cars.  Trains have to be really, really full all the time to make an energy savings for high-speed rail vs. cars or even planes, and they seldom are full.  I had a lovely trip on the high speed rail last summer between London and Paris and back through the Chunnel — especially nice because my son and I had the rail car entirely to ourselves both ways.

The real efficiency comes from moving freight.  More of the total energy budget is used moving the actual freight rather than the cars themselves.  Freight is far more efficient to move by rail than by road, but only the US moves a substantial amount of its freight by rail.    One reasons for this is that freight and high-speed passenger traffic have a variety of problems sharing the same rails, so systems that are optimized for one tend to struggle serving the other.

Freight is boring and un-sexy.  Its not a government function in the US.  So intellectuals tend to ignore it, even though it is the far more important, from and energy and environmental standpoint, portion of transport to put on the rails.  In fact, the US would actually probably have even a higher rail modal percentage if the US government had not enforced a regulatory regime (until the Staggers Act) that favored trucks over rail.   If the government really had been asleep the last century, we would be further along.

The US has not been “asleep”  — at least the private individuals who drive progress have not.  We have had huge revolutions in transportation over the last decades during the same period that European nations were sinking billions of dollars into pretty high-speed passenger rails systems for wealthy business travelers.   One such revolution has been containerization, invented here in the US and quickly spreading around the world.  Containerization has revolutionized shipping, speeding schedules and reducing costs (and all the while every improvement step was fought by the US and certain local governments).  To the extent American businesses are not investing today, it has more to do with regime uncertainty, not knowing what new taxes or restrictions are coming next from Congress, than any lack of vision.

I would argue that the US has the world’s largest commitment to rail where it really matters.  But that is what private actors do, make investments that actually make sense rather than just gain one prestige (anyone know the most recent company Warren Buffet has bought?)  The greens should be demanding that the world emulate us, rather than the other way around.  But the lure of shiny bullet trains and grand passenger concourses will always cause folks like Epstein to swoon.

Update #2: The author Joel Epstein emailed me a response to this post.  I will give it to you in its entirety:  “You should get out of the country more often.”  Wow, he played the provincial American card on me.  Except that I have been to about 20 countries, from Singapore to Argentina to Hungary.  Besides, I really don’t understand what the hell he means by this in the context of my post, except as a bid for some sort of intellectual superiority.   Anyone else understand?

Postscript

Boring, but environmentally friendly and cost-effective:

Sexy, but environmentally useless (at best) and tremendously costly:

So, explain to me what drives these guys investment thinking.  Can it be anything but triumphalism?

Update: Energy use comparison of passenger modes. Note how close rail transit and cars, both at average occupancies, are in this analysis.  The differences in freight are much larger:

One of the great appeals of catastrophic anthropogenic global warming theory in certain sectors is the fact that what it takes to fight the imagined threat  (reduced trade, reduced economic growth, government controls on the economy, populist hammering of energy companies, micro-controls on individual decision-making) are exactly the things the socialists wanted to do before their schtick became tired.  Global warming has become the back-door to state control, combining some exaggerated science with a lot of folks’ uninformed desire to “do the right thing”, to create a new vector for old objectives.

Today, 56 newspapers  are all allowing some global warming activist to take over their newspapers to run the same panicky plea.   Bruce McQuain picks up the story:

In reality, I’ve come to understand this isn’t about “climate change”, this is about the politics of income redistribution. I’ve spoken of it in the past. This has been a goal of the third-world debating club, also known as the UN, since it has come into existence. The IPCC is just a convenient vehicle on which to base their claims and put them forward to the industrialized countries for fulfillment. The underlying “science”, like a wet paper box, is coming apart at the seams. And not a single mention in the editorial. But it becomes clear, the further you get into it, that it is about what I contend it is about:

Social justice demands that the industrialised world digs deep into its pockets and pledges cash to help poorer countries adapt to climate change, and clean technologies to enable them to grow economically without growing their emissions. The architecture of a future treaty must also be pinned down – with rigorous multilateral monitoring, fair rewards for protecting forests, and the credible assessment of “exported emissions” so that the burden can eventually be more equitably shared between those who produce polluting products and those who consume them. And fairness requires that the burden placed on individual developed countries should take into account their ability to bear it; for instance newer EU members, often much poorer than “old Europe”, must not suffer more than their richer partners.

If you were playing buzz word bingo with this paragraph you’d be at the prize table right now picking one out. It hits all of the favorite themes of income redistributionists. And its blatancy should scare you. This is about your wallet, your money and the rest of the world making a claim on it. This is the third world’s dream come true.

I have to object somewhat to his last line.  This is the third world leader’s dream come true, as I think most adults understand from past experience that aid like this gets siphoned off by the ruling regime.  What the Third World’s people really need is what Southeast Asia and India and China have – real private investment making for real economic growth (to be fair, I think Bruce would accept this correction).

I thought this bit was hilarious:

It is in that spirit that 56 newspapers from around the world have united behind this editorial. If we, with such different national and political perspectives, can agree on what must be done then surely our leaders can too.

Apparently we are supposed to be dazzled that 56 institutions that all, in unison, blindly cling to the same 150-year-old failed business model, hoping that some other group can be prevailed upon to bail them out, would actually think alike about some issue.  Amazing!

One of the points I make in my climate lectures – global warming panic has sucked the life out of environmental concerns that matter.  Illustration – US sewage plants still making massive untreated dumps.

I know this might sound retro to some readers. But we need to finish what the early 1970s environmental pollution control laws set out to do: clean up all the sources of air and water pollution. The environmental movement has run out of steam and gotten distracted. Get back to the basics.

Agreed.  Another point I often make – we don’t know how to keep growing China without creating CO2, but we do know how to grow China without making the air in cities like Beijing breathable.  Instead of talking to them about CO2 capture, what about air pollution 101 type things like ash bags and exhaust scrubbing?

And while I am on the topic, do we have to keep destroying the Amazon just to clear land to grow more plants for ethanol that in the end does nothing to abate CO2 emissions?

I am sick and tired of so many people treating the economic growth of India and China like it is bad news.  The astounding numbers of people emerging from almost unimaginable poverty is fabulous news, and perhaps one of the ten greatest events in all of world history.  Too many people — from neo-Malthusians to global warming alarmists to cold warriors looking for the next enemy to trade protectionists — treat these countries’ emerging wealth like it is some sort of disaster.

From Henry Payne:

Rent-seeking is the new venture capital model, Kleiner Perkins managing partner Ray Lane explained to an electric car-conference here Wednesday.

In an extraordinary speech, Lane laid out how market socialism can guarantee profits for politically connected VC firms like Kleiner — far more preferable to the old model of “throwing a dart at a dart board,” as Lane has put it. While Silicon Valley-based Kleiner made its reputation as a financier of tech startups like Netscape, Lane confided that they are inherently risky ventures in uncertain, fast-moving markets.

By contrast, Lane expressed admiration for communist governments like China and market-socialist economies like France where government determines new markets, thus providing a more certain investment climate for rent-seekers. With Kleiner partner Al Gore lobbying for federal mandates from wind to electric cars, Kleiner would be assured of a return on otherwise risky investments like Fisker Automotive, a California electric car company.

Forget all the BS political posturing about the consumer — the fact is that in the vast majority of its actions, the government is anti-consumer.  How else can one explain Administration officials criticizing China for selling goods to the US below cost.  “We’re sorry, consumers, that you have been burdened with product choices that have had their prices subsidized by the Chinese.   We’re working hard to fix this and make sure prices go back up where they should be.”

Licensing, trade law, anti-trust, even consumer products laws — its all become protection of politically connected corporations against smaller and upstart rivals.  Just look at how Mattel, whose sloppy due diligence forced a number of toy recalls last year, became the big winner of the new “consumer” law these recalls spawned.

Google voice is one of the more exciting communication products I have seen in years.  I have a phone number for free, I can have that number ring multiple different numbers while retaining a single voice mail — with a free transcription service.  Awesome.

So, of course, the FCC is probably going to kill it.  They will find some way to justify it on nominally consumer grounds, but they are really just doing AT&T a favor.  The argument is that Google voice blocks calls to certain high-access rural areas.  So what?  Heck, I use it mostly to receive calls but if I made calls, do I really want my phone bill to go up by four or five times just so I can call some phone numbers I am never going to call.

From Daniel Griswold in the Washington Times:

President Obama and the other Group of 20 leaders delivered their obligatory warning against protectionism at last week’s summit in Pittsburgh. But at home the U.S. president continues to conduct his own trade war, not only against imports from China and other developing countries, but against the most vulnerable of American consumers.

America’s highest remaining trade barriers are aimed at products mostly grown and made by poor people abroad and disproportionately consumed by poor people at home. While industrial goods and luxury products typically enter under low or zero tariffs, the U.S. government imposes duties of 30 percent or more on food and lower-end clothing and shoes – staple goods that loom large in the budgets of poor families….

The tariff the president imposed on Chinese tires earlier this month was heavily biased against low-income American families. The affected tires typically cost $50 to $60 each, as compared with the unaffected tires that sell for $200 each. The result of the tariff will be an increase in lower-end tire prices of 20 percent to 30 percent. Low-income families struggling to keep their cars on the road will be forced to postpone replacing old and worn tires, putting their families at greater risk….

A few liberal Democrats still care, too. Edward Gresser of the Democratic Leadership Council has done more than anyone to expose the unfair, anti-poor bias of the U.S. tariff code.

In his 2007 book “Freedom From Want: American Liberalism and the Global Economy,” he calculated that a single mother earning $15,000 a year as a maid in a hotel will forfeit about a week’s worth of her annual pay to the U.S. tariff system, while the hotel’s $100,000-a-year manager will give up only two or three hours of pay.

A question has been going around on legal blogs — “Does a Federal Mandate Requiring the Purchase of Health Insurance Exceed Congress’ Powers Under the Commerce Clause?”

My answer is:  Nowadays (not in the original intent) is there anything the Feds can do that exceeds current interpretations of the commerce clause?  In Raich, the Supreme Court decided that a product (marijuana) that was grown in state for personal consumption, like tomatoes in your own garden, and was used legally under state law, can still be regulated under the commerce clause.    As Clarence Thomas wrote in dissent:

Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything and the Federal Government is no longer one of limited and enumerated powers

No kidding.

Unfortunately the theory that this personal use in California could somehow affect marijuana pricing in other states (by growing their own, they reduced demand for out of state weed which might affect prices in Arizona — again similar to an argument that growing your own tomatoes might affect prices in another state) won the day in the Court.   With the Supreme Court accempting this “butterfly effect” argument  (because truly the demand of one person in a national market is like a butterfly flapping its wings in China and affecting a hurricane in the Gulf of Mexico), anything falls under the commerce clause.

“I can make a firm pledge….no family making less than $250,000 will see any form of tax increase…..not any of your taxes”-Barack Obama, September 12, 2008

Oops, well, so much for that, as Obama imposes a 35% tax on Chinese tires, requiring higher prices be paid by the majority of Americans.  This is a broad-based tax aimed at supporting one narrow American industry, as a payoff to the United Steel Workers who have been sad that the UAW has been getting all the political gravy of late.

Suppose the Chinese government is massively subsidizing tire exports — that they are taking Chinese taxpayer money and directly applying it to tire exports to reduce prices in the US.  What should our response be?  Mine would be:  Thanks, suckers.  If the Chinese really want to tax their people to subsidize lower US consumer prices, why in the world would we want to stop them?

Oh, and remember that Obama pledge to be all lovey-dovey with the rest of the world instead of that nasty confrontational Bush administration?  Well, forget that too:

HONG KONG — Just two days after the United States slapped Chinese tire imports with hefty tariffs, Beijing has hit back by saying it would launch an anti-dumping investigation into automobile and chicken products from the U.S.

[...]

The “protectionist” policy that seems to have triggered the Chinese tit-for-tat investigation was an order signed on Friday by President Barack Obama that imposes a 35% tariff on tires imported from China on top of the existing import duty of 4%.

Can anyone say, “Smoot-Hawley.”  I am sure happy we all learned from the one unequivocal lesson that every economist, left-right-Keynsian-monetarist, took away from the Great Depression — that starting an international trade war is the best way to exacerbate a recession.  Obama has  done just about the only thing everyone agrees shouldn’t be done in response to a major economic downturn.

Update: More good analysis here

Postscript: I wrote this hypothetical post from the Chinese perspective a couple of years ago:  From “Panda Blog:”

Our Chinese government continues to pursue a policy of export promotion, patting itself on the back for its trade surplus in manufactured goods with the United States.  The Chinese government does so through a number of avenues, including:

• Limiting yuan convertibility, and keeping the yuan’s value artificially low
• Imposing strict capital controls that limit dollar reinvestment to low-yield securities like US government T-bills
• Selling exports below cost and well below domestic prices (what the Americans call “dumping”) and subsidizing products for export

It is important to note that each and every one of these government interventions subsidizes US citizens and consumers at the expense of Chinese citizens and consumers.  A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called “dumping” represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields on our nearly $1 trillion in foreign exchange.   Every single step China takes to promote exports is in effect a subsidy of American consumers by Chinese citizens.

This policy of raping the domestic market in pursuit of exports and trade surpluses was one that Japan followed in the seventies and eighties.  It sacrificed its own consumers, protecting local producers in the domestic market while subsidizing exports.  Japanese consumers had to live with some of the highest prices in the world, so that Americans could get some of the lowest prices on those same goods.  Japanese customers endured limited product choices and a horrendously outdated retail sector that were all protected by government regulation, all in the name of creating trade surpluses.  And surpluses they did create.  Japan achieved massive trade surpluses with the US, and built the largest accumulation of foreign exchange (mostly dollars) in the world.  And what did this get them?  Fifteen years of recession, from which the country is only now emerging, while the US economy happily continued to grow and create wealth in astonishing proportions, seemingly unaware that is was supposed to have been “defeated” by Japan.

We at Panda Blog believe it is insane for our Chinese government to continue to chase the chimera of ever-growing foreign exchange and trade surpluses.  These achieved nothing lasting for Japan and they will achieve nothing for China.  In fact, the only thing that amazes us more than China’s subsidize-Americans strategy is that the Americans seem to complain about it so much.  They complain about their trade deficits, which are nothing more than a reflection of their incredible wealth.  They complain about the yuan exchange rate, which is set today to give discounts to Americans and price premiums to Chinese.  They complain about China buying their government bonds, which does nothing more than reduce the costs of their Congress’s insane deficit spending.  They even complain about dumping, which is nothing more than a direct subsidy by China of lower prices for American consumers.

And, incredibly, the Americans complain that it is they that run a security risk with their current trade deficit with China!  This claim is so crazy, we at Panda Blog have come to the conclusion that it must be the result of a misdirection campaign by CIA-controlled American media.  After all, the fact that China exports more to the US than the US does to China means that by definition, more of China’s economic production is dependent on the well-being of the American economy than vice-versa.  And, with nearly a trillion dollars in foreign exchange invested heavily in US government bonds, it is China that has the most riding on the continued stability of the American government, rather than the reverse.  American commentators invent scenarios where the Chinese could hurt the American economy, which we could, but only at the cost of hurting ourselves worse.  Mutual Assured Destruction is alive and well, but today it is not just a feature of nuclear strategy but a fact of the global economy.

In case you weren’t sure what progressives were after:

The outgoing leader of Greenpeace has issued a call for the suppression of economic growth in the U.S. and Western nations. Under questioning by BBC reporter Stephen Sackur on the August 5, 2009 “Hardtalk” program, Gerd Leipold, the retiring leader of Greenpeace, said “the lifestyle of the rich in the world is not a sustainable model.

Excerpt from NotEvilJustWrong.com: “Leipold told the BBC that there is an urgent need for the suppression of economic growth in the United States and around the world. He said annual growth rates of 3 percent to 8 percent cannot continue without serious consequences for the climate.”

“We will definitely have to move to a different concept of growth. … The lifestyle of the rich in the world is not a sustainable model,” Leipold told the BBC.

“If you take the lifestyle, its cost on the environment, and you multiply it with the billions of people and an increasing world population, you come up with numbers which are truly scary,” Leipold explained.

Left unexplained by Leipold is how environmental conditions in the US have improved substantially over the last 100 years, not just coincident with but because of economic growth and growing wealth.   Our country looked like China 100 years ago, but growing wealth gave us the ability not only to produce, but to produce much more cleanly.   On virtually every metric you can name, the US is cleaner than it was even 30 years ago.  On many key metrics, like water quality and sulfur dioxide production, we are cleaner even than Europe and certainly cleaner than most Third World nations.

By the way, if you really want to tick someone off at Greenpeace, you should observe that the person most responsible for saving the whales was not anyone at Greenpeace, but was John D. Rockefeller.  Greenpeace may have saved a few by jumping their boat in front of some Japanese or Russian harpoons, but Rockefeller made whaling unprofitable.

Which brings us full circle to the “growth killing the planet” issue.  I made fun of this static view of man and technology here when  I wrote a hypothetical 1870 post on the Peak Whale Theory

As the US Population reaches toward the astronomical total of 40 million persons, we are reaching the limits of the number of people this earth can support.    If one were to extrapolate current population growth rates, this country in a hundred years could have over 250 million people in it!  Now of course, that figure is impossible – the farmland of this country couldn’t possibly support even half this number.  But it is interesting to consider the environmental consequences.

Take the issue of transportation.  Currently there are over 11 million horses in this country, the feeding and care of which constitute a significant part of our economy.  A population of 250 million would imply the need for nearly 70 million horses in this country, and this is even before one considers the fact that “horse intensity”, or the average number of horses per family, has been increasing steadily over the last several decades.  It is not unreasonable, therefore, to assume that so many people might need 100 million horses to fulfill all their transportation needs.  There is just no way this admittedly bountiful nation could support 100 million horses.  The disposal of their manure alone would create an environmental problem of unprecedented magnitude.

Or, take the case of illuminant.  As the population grows, the demand for illuminant should grow at least as quickly.  However, whale catches and therefore whale oil supply has leveled off of late, such that many are talking about the “peak whale” phenomena, which refers to the theory that whale oil production may have already passed its peak.  250 million people would use up the entire supply of the world’s whales four or five times over, leaving none for poorer nations of the world.

Post title from here (lyrics here)

Though I disagree with McArdle on the magnitude of potential warming, I think her assessment of Waxman-Markey is dead on:

But the real question, I think, is whether the low cost is a feature or a bug.  The only way a bill is going to have an impact is if it causes real financial pain to American households–enough to get them to change their behavior.  Waxman-Markey obviously is not going to do that.  And indeed, the projections of its effect on global warming are entirely negligible.

So the reason to get this mad about Waxman-Markey is either that you think it provides a framework for future action, or that you think it will persuade China and India to get on board.  The latter is, I think, entirely wishful thinking on the part of American environmentalists.  China is not going to let its citizens languish in subsistence farming because 30 years from now, some computer models say there will be some not-well-specified bad effects from high temperatures. Nor is India.  Global warming isn’t even high on the list of environmental concerns they’ll want to attack as they get rich; local air pollution is far more pressing.  Thinking that we’re somehow going to lead them by example is like thinking that poor rural teens are going to buy electric cars because Ed Begley jr. has one.

No, I think the argument has to rest on the notion that Waxman-Markey gives us a framework to advance.  And it might.  But then again, Europe’s much-vaunted system has had multiple spectacular failures, and the only reductions it has actually achieved seem to come largely from controversial offsets with large auditing problems.

Because in a public company, I might have to, out of fiduciary responsibility, accede to this:

China plans to require that all personal computers sold in the country as of July 1 be shipped with software that blocks access to certain Web sites, a move that could give government censors unprecedented control over how Chinese users access the Internet.

Running a private company, I can tell them to take a hike.  As I did last week, when I was offered a large piece of new business but refused it because it required that I drug test all my employees.

I am very glad to hear this from someone other than, uh, me:

China bashing during the past decade is reminiscent of the Japan bashing that occurred during the 1980s. It turned out that Japan’s substantial export surplus with the US, its extensive accumulation of US Treasury bonds, and its purchases of assets in the US did not hurt the United States, but were for the most part foolish actions on the part of the Japanese government and businesses. I believe that similar conclusions will be reached about the parallel Chinese practices.

I have been saying this for years, that the Chinese trade and exchange rate policies everyone wanted to bash were doing nothing but helping us and hurting the Chinese people.  I wrote a hypothetical post from the Chinese persepective nearly 3 years ago:

Our Chinese government continues to pursue a policy of export promotion, patting itself on the back for its trade surplus in manufactured goods with the United States.  The Chinese government does so through a number of avenues, including:

• Limiting yuan convertibility, and keeping the yuan’s value artificially low
• Imposing strict capital controls that limit dollar reinvestment to low-yield securities like US government T-bills
• Selling exports below cost and well below domestic prices (what the Americans call “dumping”) and subsidizing products for export

It is important to note that each and every one of these government interventions subsidizes US citizens and consumers at the expense of Chinese citizens and consumers.  A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called “dumping” represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields on our nearly $1 trillion in foreign exchange.   Every single step China takes to promote exports is in effect a subsidy of American consumers by Chinese citizens.

This policy of raping the domestic market in pursuit of exports and trade surpluses was one that Japan followed in the seventies and eighties.  It sacrificed its own consumers, protecting local producers in the domestic market while subsidizing exports.  Japanese consumers had to live with some of the highest prices in the world, so that Americans could get some of the lowest prices on those same goods.  Japanese customers endured limited product choices and a horrendously outdated retail sector that were all protected by government regulation, all in the name of creating trade surpluses.  And surpluses they did create.  Japan achieved massive trade surpluses with the US, and built the largest accumulation of foreign exchange (mostly dollars) in the world.  And what did this get them?  Fifteen years of recession, from which the country is only now emerging, while the US economy happily continued to grow and create wealth in astonishing proportions, seemingly unaware that is was supposed to have been “defeated” by Japan.

We at Panda Blog believe it is insane for our Chinese government to continue to chase the chimera of ever-growing foreign exchange and trade surpluses.  These achieved nothing lasting for Japan and they will achieve nothing for China.  In fact, the only thing that amazes us more than China’s subsidize-Americans strategy is that the Americans seem to complain about it so much.  They complain about their trade deficits, which are nothing more than a reflection of their incredible wealth.  They complain about the yuan exchange rate, which is set today to give discounts to Americans and price premiums to Chinese.  They complain about China buying their government bonds, which does nothing more than reduce the costs of their Congress’s insane deficit spending.  They even complain about dumping, which is nothing more than a direct subsidy by China of lower prices for American consumers.

And, incredibly, the Americans complain that it is they that run a security risk with their current trade deficit with China!  This claim is so crazy, we at Panda Blog have come to the conclusion that it must be the result of a misdirection campaign by CIA-controlled American media.  After all, the fact that China exports more to the US than the US does to China means that by definition, more of China’s economic production is dependent on the well-being of the American economy than vice-versa.  And, with nearly a trillion dollars in foreign exchange invested heavily in US government bonds, it is China that has the most riding on the continued stability of the American government, rather than the reverse.  American commentators invent scenarios where the Chinese could hurt the American economy, which we could, but only at the cost of hurting ourselves worse.  Mutual Assured Destruction is alive and well, but today it is not just a feature of nuclear strategy but a fact of the global economy.

I concluded in another post

Napoleon said to never interrupt an enemy when he was making a mistake.   I don’t consider China an enemy, but it just flabbergasts me that the Chinese taxpayers and consumers see fit to subsidize lower prices for our consumers, and we feel the need to stop them.

More here

I think everyone was blown away by the Olympic opening ceremony last year in Beijing.  I usually yawn at such events, but this one was spectacular.  I enjoyed it, even though I knew in my heart I was watching the modern version of “Triumph of the Will.”  I would have enjoyed it much less if I had been paying for it, and probably even less if I was organizing the show in London four years hence and expected to top such an event.

Well, it appears that it was not just the opening ceremony that was a one-off propaganda push, but the entire rebuilding of the city center (via the Sports Economist)

Reporting from Beijing — “Empty,” says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline.

“Beautiful building, but not a single tenant.

“Completely empty.

“Empty.”

So goes the refrain as his finger skips from building to building, each flashier than the next, and few of them more than barely occupied.

…The government spent $43 billion for the Olympics, nearly three times as much as any other host city. But many of the venues proved too big, too expensive and more photogenic than practical.

…The National Stadium, known as the Bird’s Nest, has only one event scheduled for this year: a performance of the opera “Turandot” on Aug. 8, the one-year anniversary of the Olympic opening ceremony. China’s leading soccer club backed out of a deal to play there, saying it would be an embarrassment to use a 91,000-seat stadium for games that ordinarily attract only 10,000 spectators.

The venue, which costs $9 million a year to maintain, is expected to be turned into a shopping mall in several years, its owners announced last month.

A baseball stadium that opened last spring with an exhibition game between the Dodgers and the San Diego Padres, is being demolished. Its owner says it also will use the land for a shopping mall.

As mentioned in the updates to this earlier post, the Obama transition web site has, at least temporarily, purged out all the real content they had up about specific programs and legislative goals.  So, as a public service, I will help fill this information gap by re-posting an article I wrote about 9 months ago on the “Patriot Employer Act” sponsored by Barack Obama and likely a kernel for early 2009 legislative action:

Posted 2/13/2008:

It turns out, according to Barack Obama, (who hales from the party that doesn’t believe in questioning anyone’s patriotism) that I am not a “Patriot Employer.” This is from the text of Senate Bill S. 1945 of which he is a co-sponsor (My snark is interspersed in italics): Patriot Employers are to be given tax breaks over unpatriotic employers (I presume this means that their tax rates will be raised less in an Obama presidency than those of other folks) with “patriot employers” defined as such:

(b) Patriot Employer- For purposes of subsection (a), the term`Patriot employer’ means, with respect to any taxable year, any taxpayer which-

`(1) maintains its headquarters in the United States if the taxpayer has ever been headquartered in the United States,

OK, I guess I can comply with this. Though I am not sure the best way to begin an Obama “kindler gentler foreign policy” is to tell the nations of the world that we will be taxing their company’s income in the US at a higher rate than our own companies.

`(2) pays at least 60 percent of each employee’s health care premiums,

So the #1 determinant of patriotism is not commitment to individual rights but paying 60% of employee health care costs. I guess I am so unpatriotic

And, just from a practical standpoint, 90% of my employees are seasonal, hired for about 4 months of the year. To be patriotic, I have to pay their health care costs all year long? Also, since most of my employees are retired, they are on Medicare or an employee retirement medical plan. If they pay $0 in premiums and I pay $0 of that, do I get credit for 60%? Maybe the government can mandate a solution for zero divided by zero, like they did for the value of pi years ago

`(3) has in effect, and operates in accordance with, a policy requiring neutrality in employee organizing drives,

I presume neutrality means that in a hypothetical union drive, I do not express my opinion (and likely opposition) to said unionization drive? I am told that this also entails allowing card checks rather than hidden ballot voting. In other words, patriotism is being defined here as 1) giving up your free speech rights and 2) opposing hidden ballot voting. Uh, right. Besides, if a union organized our company, as unlikely as that would be, I would probably have to do a Francisco d’Anconia on the place.

`(4) if such taxpayer employs at least 50 employees on average during the taxable year-

`(A) maintains or increases the number of full-time workers in the United States relative to the number of full-time workers outside of the United States,

In other words, we don’t want American companies growing overseas. This could also be called the “give up international market share act.” This implies that it is unpatriotic for US-based Exxon to explore for oil in Asia and that it is more patriotic to let the Chinese national oil company do it. This implies that it is more patriotic for Coke to lose market share in Germany than to gain it. This means that it is more patriotic for Mattel to buy its toys in China from Chinese companies rather than run the factories themselves (and thereby be accountable themselves for product quality and working conditions).

This is beyond stupid. We LIKE to see US companies doing well overseas. If we have to import our raw materials, we feel more comfortable if it is US companies doing the extraction. Don’t we? In the name of patriotism, do we really want to root for our domestic companies to fail in international markets?

`(B) compensates each employee of the taxpayer at an hourly rate (or equivalent thereof) not less than an amount equal to the Federal poverty level for a family of three for the calendar year in which the taxable year begins divided by 2,080,

90% of my workers are retired. They work for me to supplement their income, to live our in nature, and to stay busy. They need me to pay them based on the poverty line for a family of three, why? I will tell you right now that if I had to raise wages this much, most of my employees would quit. Many of them force me to give them fewer hours so they can stay under the social security limits for income. I discussed what rising minimum wages often force me to do here, but just as an illustration, a $1 an hour across the board wage increase would easily wipe out all the money I make in a year and put me into a loss position. In which case the lowered tax rate would not do me much good anyway.

`(C) provides either-

`(i) a defined contribution plan which for any plan year-

`(I) requires the employer to make nonelective contributions of at least 5 percent of compensation for each employee who is not a highly compensated employee, or

`(II) requires the employer to make matching contributions of 100 percent of the elective contributions of each employee who is not a highly compensated employee to the extent such contributions do not exceed the percentage specified by the plan (not less than 5 percent) of the employee’s compensation, or

`(ii) a defined benefit plan which for any plan year requires the employer to make contributions on behalf of each employee who is not a highly compensated employee in an amount which will provide an accrued benefit under the plan for the plan year which is not less than 5 percent of the employee’s compensation, and

Uh, I am not sure why it is unpatriotic for an employee to save for themselves, but I think 401k plans are a nice benefit. I would certainly offer one except for one tiny fact – ALL MY EMPLOYEES ARE ALREADY RETIRED!! They are over 65. They are drawing down on their retirement, not contributing to it.

This is at the heart of the problem with all US labor law. Folks up in Illinois write laws with a picture of a steel mill in mind, and forget that employment and employees have infinite variations in circumstances and goals.

So I am unpatriotic, huh. But if forcing companies to contribute to emplee retirement plans is patriotic, why is hiring folks once they are retired to give them extra income in retirement unpatriotic? In fact, maybe I could argue that 100% of the wages I pay go to retirement spending

`(D) provides full differential salary and insurance benefits for all National Guard and Reserve employees who are called for active duty, and

In other words, we of the government are not going to pay our employees (ie reservists on active duty) what they are worth and are not going to give them benefits, so to be patriotic you need to do it for us. We in Congress are not really very patriotic and don’t support the troops, so you need to do it for us.

All kidding aside, I would do this in my company if it was applicable, but I really resent being piously told to do so by several Senators who don’t really model this behavior themselves.

`(5) if such taxpayer employs less than 50 employees on average during the taxable year, either-…

blah, blah. Basically the same stuff repeated, though slightly less onerous.

Since when did patriotism equate to “rolling over to the latest AFL-CIO wish list?”

I am seeing an increasing number of articles of late about differential inflation rates, and how changes in income inequality may be overstated by using a single inflation rate for rich and poor.  The argument goes that lower income folks who spend a relatively high share of income on goods that Wal-Mart and China have made cheap are experiencing a lower inflation rate than wealthier folks who have seen huge price increases at their favorite Four Seasons resort.  Mark Perry has two interesting articles along these lines.

I am starting to discover that I am an exception in the blogosphere, which seems to turn its collective noses up at the Olympics.  Well, my family loves to watch the Olympics together, and it is a real event in our house these two weeks.

Anyway, I was watching Bob Costas interview President Bush last night, and he asked a question I would paraphrase as "how is the US going to exercise influence on China given China’s increasing strength and all the problems we have in the US."

Now, I am the first one to criticize the US and its government on any number of dimensions, but when one pulls back to an international view, one has to have some perspective.  What are these overwhelming problems we face when compared to the struggle for freedom and/or economic sufficiency in much of the world?  The US media has developed a bedrock assumption that the US is some kind of wasteland in need of total overhaul, when in fact we are the example all the world emulates.  Just look at the images from China — sure there are a lot of unique cultural differences, but in many ways you see a people trying to be like us.

We have rising oil prices and falling housing prices.  Mortgages are defaulting and stocks have been falling of late.  The dollar is in the tank.  But at the end of the day, the world still sees the US as the safest and most productive place to invest its money:

Its odd to me that from time to time we go through periods of angst (e.g. the late 1980s panic that the Japanese were "buying up America") about this effect, but we should instead be assured by this vote of confidence from the rest of the world.  One might argue that folks are simply buying US assets today because they are cheap, and certainly the dollar’s fall makes US assets relatively less expensive.  But assets are cheap in Russia and Nigeria and Venezuela too, and you don’t see the world rushing to invest a few trillion dollars in those locales. 

Postscript:  This foreign ownership of US assets also makes the world a more stable place.  I am always stunned when people argue that Chinese ownership of a trillion dollars of US debt securities gives them power over us.  Huh?  Since when does holding someone’s debt give you power?  I don’t think Countrywide Mortgage is feeling too powerful today.  The fact is that holding our debt and owning US assets gives China (and other nations) a huge shared interest in our stbility and continued prosperity.

I have often argued that environmental cleanliness and wealth tend to follow a U-shaped curve.  Early industrialization tends to make air and water quality worse, but increases in wealth and technology over time tend to lead to an improved environment.  For example, nearly every air and water quality metric in the US has improved substantially over the last 40 years. 

To this end, I saw this chart in another context (Dr. Pielke was discussing the effect of land-use on regional climate changes) but I thought it was an interesting one to illustrate this point, and perhaps start to convince all those 20-somethings of the Obama generation that the world is not, in fact, spiraling ever downwards into economic decay.  This is a map of leaf area, bascially an index of forestation, for the Eastern US over the last 400 years.  Note the trend reversal since 1920.

I have argued for a while that trying to slam a halt to China’s development as part of some misguided environmental effort may in fact achieve the opposite effect, locking China into the low-point of the U-shaped curve just at the point when increasing wealth may be pushing them to start cleaning up.

Christian Boda, via Q&O, discusses inflation rates in the context of income (in)equality issues.  He offers this bit of information:

Inflation differentials between the rich and poor dramatically change
our view of the evolution of inequality in America. Inflation of the
richest 10 percent of American households has been 6 percentage points
higher than that of the poorest 10 percent over the period 1994 – 2005.
This means that real inequality in America, if you measure it
correctly, has been roughly unchanged.

This actually makes a ton of sense – Walmart helps hold down food and clothing costs for average folks while the rich pay ever increasing rates to stay at the Ritz at Laguna Niguel.  He argues that as a result, globalization and the growth of low-cost manufacturing in China tends to help rather than hurt the poor.

It also helps to answer a question I had yesterday — why do metrics of median wage growth adjusted for inflation tend to look unexciting, while at the same time other metrics show the poor doing so much better materially.  This notion of a graduated inflation rate by income class would go a long way to explaining these paradoxes.  In short, we may be applying the wrong inflation rate to metrics of wage growth of various income groups in assessing their well-being (not to mention the usual failing of missing individual migration between income groups).