Touring Damascus

My hotel is a very charming old-fashioned place near the city center of Damascus. Here's a picture of the lobby, snagged from their website. The room is small by stylish, only $50 per night, and within walking distance (albeit a fairly long walk) to the Souk al-Hamidiya, the main souk of old Damascus.

My friend took me on a long walking tour of the old city. We went to the Omayyad Mosque. The site was originally an Aramic temple, then a Roman temple to Jupiter, then became a Christian church. When Kaleed Ben Al Waleed conquered Damascus, he turned parts of it into a Mosque, and for a while Christians and Muslims both used it, staying to different sides. Eventually it became just a mosque, but not just a mosque--a very special one. It containst the tomb of Salah al-Din, the great warrior who died in Damascus at the end of the 12th century after beating hell out of the Crusaders.

The Mosque also contains the tomb of John the Baptist...that is, the tomb of his head. Muslims consider him a prophet, and there was a great crowd around his tomb, with only about three of us being non-Muslim.

Most interestingly, the Mosque also contains the tomb of another head, that of Husayn, Mohammed's grandson, who was killed in a dispute over the Caliphate that led to the Sunni/Shiite split. His head was buried here as a sign of strength, and is an insult to Shiites (who, to add another layer to the intrigue, are mostly Persian (Iranian), while Syria is, of course, Arabic. Although Syria is predominantly Sunni, as is the Mosque, it is a place of pilgrimage for Shiites, who come to pay homage.

But not far away, in the old city, there are also numerous churches, including Greek Orthodox and Armenian orthodox. Damascus was a Christian city before Muslims conquered it, and still has a large Christian population that worships openly. And unlike most Middle Eastern states, a person's identity card does not list their religion.

Human Ingenuity

The Dubai Museum had an example of a traditional summer house, a wood frame construction covered with palm leaves. It looked very cozy--a nice place to spend a hot summer (and I think the hot days are the reason people come out in such numbers in the evening).

But what intrigued me most was the windtower. Built above the main room, or sometimes a bedroom, it was a four-sided tower that was open on each side, but had burlap stretched diagonally across. This created a little triangle on each side that directed any wind there was down into the room below, and allowed them to catch any wind that came, from whichever direction.

A simple but brilliant idea, the kind that always makes me marvel at human ingenuity.

Damascus

Coming into Damascus from the airport I was at first dismayed as we passed a large number of extremely ugly block apartment buildings, all in a uniform dismal gray. This is, technically, a socialist country, and that sight certainly seemed to confirm it. Worst of all, more are being built.

But my hotel is in the city center, the old city, and it's beautiful. That is, if you like old style buildings, in various states of repair, from nearly falling down to elegantly renovated, which I do. I had a nice walk with my friend, Maher, earlier, and after dinner took a long walk around myself. This district has what I like in a city--lots of people out walking in the evening, browsing in shops, buying ice cream cones, having a late dinner, or just sitting in a sidewalk cafe drinking tea. As dark as it is, it feels safe, safer than I ever felt in San Francisco after dark. I hope that's not just an illusion, and of course it could be this particular district.

Syria is culturally and politically fascinating. It's technically a secular and socialist state, governed by the Baath party, an Arabic nationalist and socialist party, originally with a hefty dose of Marxism, which accounts for it secularism. But its nationalized industries are faltering badly, and it's trying to shift to a more market economy. Unfortunately the government doesn't dare shut down its money-losing businesses because it fears throwing so many people out of jobs. But its secularism makes it a more liberal culture than you would expect. While many, it seems most, women wear headscarves, very few wear the full hijab, and many do not wear even the scarf. Many of the younger women in particular are dressed very stylishly, verging on provocatively. Stores, like the Bennetons I passed, have window displays with mannequins in short sundresses or bikinis. This ain't Saudi Arabia by a long shot.

And when I sat down to write this, I found this page in the recent history on the computer, about gays in Damascus. Not exactly an open topic, it appears, but not too deeply hidden either.

My Inner Economist Screams

This morning at the Dubai airport I was at first delighted to see that they had free internet...for about 2 seconds, before my inner economist hollered at me. And then I thought, there will be an undersupply/overdemand. And sure enough, I had to wait in line. But it's not just that the free-ness created more demand; it also caused people to linger longer, further delaying other would-be users.

That was the overdemand side. The undersupply came in the form of non-working terminals--the first three I tried to access! (Of course I got to them first, they were the first to open up because no one lingered at them.) The grubby little storefront internet cafes near the Gold Souk in Dubai, which were not free (although at 85 cents an hour it was almost like free to an American) were in better operating condition--all their terminals worked. Of course they were doing a booming business, and a down terminal meant a loss of revenue.

The only surprising thing about the event was that I actually bought in to the idea of free internet service for a moment. I guess my inner economist was still drowsy.

And now I sit in an internet cafe that is right beside my nicely old-fashioned hotel in the old city district of Damascus, again blogging effortlessly at a pittance per hour. The concept of government providing for the public good is so compelling, but it just turns out so often that greedy individuals just manage to provide it so much better. "Invisible hand" indeed.

The Territorial Corporation

A friend of mine questions whether Dubai is properly a state. He thinks it's more like a corporation with territory. I think he's right.

Dubai is essentially owned by a single family, and they don't quite seem to run it as a traditional principality is run. They do run it like a corporation in some respects, investing heavily in an effort to draw in more and more business.

Typically, governments don't invest well. They lack the pricing incentive, not being able to know what the real value--market demand--is for their investments. And they're careless about balancing costs and benefits, as well as balancing the books, because it's not their own money they're spending, but the public's money. But if you do run your government as a privately held corporation are you able to read the bottom line better? Does the Dubai government have a better ability than most to analyze the costs of their "public" spending, since most of it is coming from their own coffers, i.e., their oil revenues?

Essentially I'm over here looking for a research question that will justify returning several times over the next few years. I'm not sure political scientists have written much on Dubai yet--few of them are economically minded, and hyper-capitalist places like Dubai, particularly with it's huge environment-altering island projects, is most political scientists' worst nightmare. But moral outrage doesn't lead to understanding, and I think it's an interesting question.

I would hope that the answer is "no, they don't invest more wisely than democratic governments," because I'm libertarian enough to not want to find anything good about a non-democratic government. But, again, it's about understanding, not my own moral values.

Side note: At the Dubai airport I noticed there were two Air Emirates planes leaving for Auckland, NZ only 5 minutes apart. Does that signify a lot of Kiwi businessmen in Dubai?

The Cost of Blogging in Dubai

The neighborhood around the Gold Souk in Dubai is one big souk (market) itself, with the ground floor of nearly all buildings given over to shops. There are probably thousands of shops, with attendant workers and others providing services to them, and a lot of these people living in the apartments above the shops. It's the kind of place "nice" tourists come for a couple hours to shop, then run away to the Hilton Hotel. But I'm staying here, and my little hotel (which seems to cater mostly to Africans) doesn't have internet for guests. But in a neighborhood like this, where so many of the workers are immigrants, an internet cafe is a certainty, and sure enough there are at least three I've found within a few blocks of my hotel.

The cost is 3 Dirhams an hour--about 83 cents. That's affordable blogging indeed.

Economic Musings from Dubai

There's probably few places quite like Dubai to make you muse about economics. Today I bought a real for sure fake Rolex watch. It's odd to have someone approach you and ask if you want to buy a fake watch; it's an honest kind of graft. I followed him around the corner and into an alley to his shop in the Gold Souk, where he told me the fake watches were upstairs. I followed him upstairs, where he pulled out a key and opened a secret drawer in the wall. So it seems that while they are pretty open about selling fake watches, they want to keep the goods hidden from the authorities.

But what made me ponder was that I was willing to pay more for a fake Rolex than for a fake Tag Heuer (if I'm going to have a fake status symbol, I want only the best). My first thought was that with both buyer and seller agreeing the watch was not real, intellectual property rights weren't really being violated, but then when I realized I was willing to pay more for a fake Rolex, I realized that the brand name did have an important value in the deal. I don't think they were selling fake Timexes, after all.

But having wandered around the 21st century Mall of the Emirates, complete with indoor ski slope and a WalMart like store, Carrefors, which has 53 checkoutlines, I began to wonder about the longterm viability of the old-style souks. I haggled with a guy in the Souk over some silk and wool scarves, and got him down to 700 Dirham (from a start of 1500) before I walked out. Because 700 Dirham is still 195 dollars, which meant about $50 per scarf, and I was standing there thinking WalMart would probably sell them for $10 each. When the price you pay after 1/2 hour of haggling is more than you would pay in the U.S., what's the long range outlook?

Of course I'm a bad bargainer, being from the U.S. where we only bargain over houses and cars. I wonder why the barganing culture is so strong someplaces, and not others. But of course we have bargaining of a sort--a disorganized collective sort of bargaining, where if none of us buy a particular good, they eventually drop the price to a point that tempts some of us.

So who benefits from direct bargaining, buyers or sellers? I think buyers must, most often, for two reasons. First, imperfect knowledge results in imperfect markets, with advantage going to the party with more knowledge. Unless you've been bargaining a lot in the same area, you won't have good information about normal local prices, and of course the sellers do a good job of acting angry, as though you're taking advantage of them and stealing food from their children. Second, they haven't acted to change the system by advertising their prices up front and sticking to those prices, which they could if low enough to undercut their competitors.

But I don't think there's any bargaining in the Mall of the Emirates, so are people here accustomed to comfortably living in a split system, or will standardized pricing eventually drive out bargaining?

Why Wal Mart Makes Millions and I Don't

Shopping at Wal Mart this morning, I noticed the following sign by the checkout counter.

Keep All Your Money! Wal Mart will cash your tax rebate check for free.

Why carry all that cash? Let us put it on a Wal Mart gift card.

Clever clever. And as they say, caveat emptor.

One Million Jobs Lost to NAFTA

From my forthcoming policy brief for the Institute for Social Policy and Understanding.

Barack Obama recently claimed that NAFTA has cost America 1 million jobs[i]. Although the accuracy of this claim has been disputed,[ii] let’s take it at face value, and consider what it means. With more than 146 million jobs in the U.S. economy, 1 million jobs would be approximately 2/3 of 1 percent of all jobs. In April 2008 the unemployment rate was 5%, with roughly 7 million people unemployed out. Another 1 million unemployed would increase the unemployment rate to around 5.7%—still below the last 30 years’ average unemployment rate of 6.1%. But even that is an exaggeration, because that assumes all 1 million jobs were lost in one year. Instead, the 1 million jobs would be spread across the past 14 years, which works out to an average of less than 72,000 jobs per year, or less than 5/100ths of 1% of the U.S. job market. And those 72,000 jobs per year that are alleged to have been destroyed by NAFTA must be set against the net increase of 1.75 million jobs per year since 1994, when NAFTA went into effect. If 1,000,000 jobs have indeed been lost to NAFTA—and again it’s worth pointing out that the claim has been disputed and is, frankly, quite dubious—the negative impact on the U.S. is at best, very small.

The conclusion is, even as the supply of labor has increased by nearly half (since 1980), the percentage of unemployed workers has declined.

[i] Tapper, Jake. 2008. http“Obama Knocks Clinton, But Wouldn’t Ax NAFTA.” ABC News. Feb. 24.
[ii] Robertson, Lori. 2008. “More NAFTA Nonsense.” Annenberg Political Fact Check. March 3.

Countdown to Syria

I leave for Syria in a week. It's a typical American disease to be an adult who's never traveled abroad, but I'm glad I'm finally getting the cure. If I can find an internet cafe in Damascus--and surely there is one--I'll post a couple comments while I'm there. Otherwise, this blog will be pretty silent until mid-June. I'm going to do the indoor skiing in Dubai, and visit the monasteries of Mar Mousa and Maalula in Syria, and if I can work it out I'll visit Petra in Jordan.

And from now on when I encourage students to study abroad, I can do so with a little more integrity. And of course I'll be able to say such pretentious things as, "When I was sipping kahua arabea in the Souk Al-Hamidieh in Damascus..."

Barack's Blunder

Why did Barack Obama respond to Bush's speech to the Knesset? He is angry that Bush said,

Some seem to believe we should negotiate with terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along. We have heard this foolish delusion before...We have an obligation to call this what it is – the false comfort of appeasement, which has been repeatedly discredited by history (text of speech is here).

Because Obama is the only candidate who has suggested talking with Iranian president Mahmoud Amadinejad, he has claimed that this was an attack on him, even though Bush didn't mention anyone by name, or even link it to the presidential campaign.

Assuming he's right, it would be very bad form for a president to use a speech to another country's government as a direct campaign speech. But if this was a swipe at Obama, it was a very indirect one--it could just as easily have been directed at all of those who believe the U.S. is responsible for Muslim anger at us. I know a few of those people myself.

So it's strange that Obama jumped up to take credit for being the target of Bush's critique. The speech was barely covered by the U.S. media, and the first most of us heard about it was when Obama cried foul. There's no way this makes Obama look good--he is creating the linkage between him and appeasement in the public's mind by making a big deal of what would have passed almost unnoticed if he'd kept quiet.

If others had tried to make the linkage, Obama should have just agreed with Bush that appeasement is bad, but said he agreed with Winston Churchill that "talk, talk, is better than shoot, shoot." Better to be associated with Churchill than Chamberlain, but Obama blew it.

California Supreme Court Defends Equality for All

The California Supreme Court has overturned a state law banning same-sex marriage, ruling that the law violates the state constitution. According to the Court's opinion, "an individual's sexual orientation -- like a person's race or gender -- does not constitute a legitimate basis upon which to deny or withhold legal rights." Amen to that. As Thomas Jefferson said, "it neither picks my pocket nor breaks my leg" if gay couples get married. (Not that Tom would have gone along with this in his time, but that's the great thing about good principles--you just can't keep them limited to only the things you like.)

Because there's no federal constitutional issue at stake here, the case can't be appealed any higher. The only way to overturn this now is to amend the state constitution. A legislative amendment to the Constitution requires approval by 2/3 of each legislative house--an unlikely proposition, I think. A citizen initiative amendment can be put on the ballot if petitioners gather signatures from registered voters equal to 8% of the votes cast in the previous gubernatorial election, and only a simple majority to pass. Getting an amendment to overturn this ruling on the ballot probably wouldn't be too hard, and given that Proposition 22-the statutory initiative that banned same-sex marriage--received 61% of the vote bodes ill for keeping this ruling in place.

However, by the time an initiative can get on the ballot and be passed, there will probably be thousands of same-sex marriages in California, and then you do run into some serious issues--can a marriage authorized by the state be undone by the state against the wishes of the married couple? Will a majority of Californians be willing to do so? Let us hope not--let us just agree to grant all people the dignity of marrying the person they love. It was in California, after all, that my gay friend, Bill, came up to me during my wedding reception and said, "I want my wedding to be just like this." I'm still hoping he gets his wish.

This Ain't No Stinkin' Recession!

The offical Bureau of Economic Analysis figures show the U.S. economy grew at n annual rate of 0.6% during the first quarter, so despite expectations, we're not in a recession--at least not yet. 0.6% is pretty anemic, and perhaps next quarter we'll get to negative growth. Of course it takes two consecutive quarters of negative growth to meet the technical definition of a recession, but most folks don't care about those economical technicalities anyway. We all know the real truth about the desperate straits the U.S. economy is in, right?

Well today I was working with some Bureau of Labor Statistics data on job growth (for a policy brief on free trade that I am writing), and I noticed a curious thing. First, since 1983--25 years ago--the U.S. labor force has grown by almost 1/2, from 100 million to 146 people in 2007. 1983 is significant because we had a significant recession in '83-'83--the one purposely caused by Paul Volcker to stamp out inflation (it worked, too, it's just too bad most of those folks without jobs didn't understand what they were sacrificing for). The unemployment rate hit 9.7% in '82, and stayed at 9.6% in '83. Today the unemployment rate is 5%.

That's quite a difference, but that's not what caught my attention The amazing thing is that despite the 46% increase in the size of the labor force, there were more people out of work in 1982 and '83 than there are now! 10.7 million people were out of work then, and right now it's 7.6 million people. We've increased the labor force by half, and reduced the total number of unemployed people by 30%.

Even if we do have a real recession, it won't rival the big one 25 years ago. We don't recognize just how little it hurts right now.

Signs of the Republican Apocalypse

The Republicans lost another traditionally safe congressional seat yesterday. According to news reports, this makes three losses of safe seats in a row. This bodes ill for John McCain this fall. The odds are that Republicans will regain these seats within the next few elections; given how thoroughly most congressional districts have been partisanly gerrymandered, it’s rare for the opposition to hold such a seat for more than two or three terms. But that won’t be any help to McCain, as trends like this do tend to play out as election losses for the incumbent party. Still, campaigns matter, and with Obama appearing to have a safe lead over Clinton, the important question of whether a black candidate can get enough of the middle class white vote remains.

Strange Days on the Supreme Court

4 member of the Supreme Court had to recuse themselves from a case this week because of conflicts of interest. Because at least 6 justices must hear a case, the Court couldn’t rule. The unusual situation occurred because the lawsuit involved 33 different companies, who are trying to stop a lawsuit on behalf of all South Africans charging them with having supported the apartheid government. Apparently it’s the first time in a quarter-century this has happened.

It seems to me that if the justices would put their money in a blind trust, we wouldn’t have the necessity of such recusals. What are the odds they’re carefully picking and choosing their own stocks anyway?

Still, at least they followed the proper procedure (actually, federal law, which mandates recusal if they own stock) and recused themselves. The Court’s reputation is still recovering from the damage caused by Scalia’s refusal to recuse himself in the Cheney case.

The Court's inability to rule means the case will go forward, to the dismay of the Bush administration, which had asked the Court to block the case because it

“is causing present injury to important interests of the United States and the Republic of South Africa.”

That sounds to me like they're putting politics above the law, but certainly I'd never expect this administration to do that. (/tongue-in-cheek)

Poverty Is Good for the Environment

At least that's what the asshats at the National Geographic Society seem to think.

The National Geographic Society surveyed 1000 consumers in each of 14 countries about their houses, use of energy, transportation, and purchases of food and other goods. The most environmentally sound of the 14? Brazil, India, and China. If that doesn't sound warning bells, you haven't been paying much attention. But here's how they scored so well, as reported by the Houston Chronicle.

"Brazil ranked high, for example, because its average home is small, has no heating or air-conditioning, and tends to use on-demand water heaters."

OK, on-demand hot water heaters are ok. I plan to install one myself. But they score high because they don't have heating and air-conditioning?! No air-conditioning in Brazil? The Equator runs through Brazil! The average summer high in Rio de Janeiro is in the mid 80s (Fahrenheit)--if the sun is shining on your house, that can boost your indoor temperature into the high 90s. Does National Geographic think Brazialians have made the choice to go without AC?

And Brazil also scores high because they have small houses. How small? 83% of Brazilian houses have 3 rooms or less. I have my doubts that's what most Brazialins see as their ideal.

And how did China score so high?

China scored well on transportation for low use of cars and more walking or biking than most countries. It had negative ranking for use of coal in home heating.

Ah, those wise Chinese consumers, thoughtfully forgoing the use of cars and choosing to walk or ride bikes.

This is a tremendously stupid report, because all it really does is give fodder to anti-environmentalists, by explicitly equating poverty with environmental sustainability. Nobody wants to be impoverished, so if people think diminishing our standard of living is what's necessary to save the environment, only the handful of fanatical true-believers will decide it's worthwhile to care about the environment.

The truth is, we can't destroy the Earth. We can wipe out any number of species, and in the long run the Earth will repopulate with animal life. Environmentalism ultimately is about the sustainability of human life on Earth, and the great majority of humans aren't going to accept a dramatic decrease in their living standards in the present to prevent a potential calamity in the future--there's a crucial discount factor involved in such decisions that is often ignored. As the National Geographic Society itself notes in its report:

Findings show that consumers in countries with emerging economies aspire to higher material standards of living and believe people in all countries should have the same living standards as those in the wealthiest countries.

No shit. But apparently the National Geographic Society thinks we'd all be better off if they remain impoverished.

I wonder how the Board Members of the National Geographic Society rank?

And, in my never ending pursuit of media bashing, here's the best snippet from the Houston Chronicle article:

"The goal was not to rank countries, but to assess consumer behavior in different locations, Garcia stressed.

Brazil ranked high, for example...."

I guess that's what happens when you're writing to a deadline.

Friedrich Hayek's Birthday

Cafe Hayek notes that yesterday was Friedrich Hayek's birthday. He would have been a 109..

I guess there's little point in wishing him a happy birthday. But I do want to honor him by taking note of the date. his Road to Serfdom, while not entirely convincing, influenced me greatly, and The Constitution of Liberty is a great work. Hayek's the one who taught me that the world is a dynamic place, and that's good.

The single most influential idea of his that has stuck with me is that all institutions are the product of human action, but not human design. That is, institutions evolve piecemeal, and can't properly be said to have been designed by anyone. That dovetails nicely with Edmunde Burke's conservatism, although Hayek explicitly disdained a conservatism that simply tried to stop change and development, and ultimately resulted in me occasionally calling myself a Burkean liberal--which may or may not make any sense at all.

Thank you Dr. Hayek.

An Economist Supports the Gas-Tax Holiday

George Mason economist Bryan Caplan supports the temporary suspension of the gas-tax. Imagine my surprise. But here are his reasons;

1. "the tax holiday is a relatively cheap symbolic gesture that makes truly bad policies less likely." I.e., no price controls, windfall profits taxes, rationing, etc.

2. "even a 'giveaway' to the oil industry sets a positive course for the future. During the last crisis, the industry was a scapegoat for scarcity." That is, a gas-tax holiday is better than whipping up an anti-business frenzy.

So, notably, he doesn't support the gas-tax on its own terms, just as a clever political move that prevents even more stupid actions.

But I disagree with him, for two reasons. First, Hillary Clinton is proposing to use the windfall profts tax to ensure that businesses pay the tax, not consumers. So the windfall profits tax idea is on the table. Second, she is trying to make the oil industry the scapegoat, and point the finger at them.

I think the gas-tax suspension, while not a huge issue in its own right, will actually make more anti-free market actions more, rather than less likely, because it misdirects people from the real issue of scarcity, and encourages them to think that big bad business is the whole problem, and that there are easy political solutions.

When the gas-tax holiday fails to increase supplies and bring down prices to under $3 gallon, people will just demand the next stage of government intervention. With due respect to Caplan, he's a fine economist, but not a great political scientist.

Hillary's Snake-Oil Economics

Whether or not Clinton would have gotten much of the economist vote anyway is debatable, but she's certainly thrown it away now.

"I'm not going to put my lot in with economists."

Of course economists are a pretty small demographic, and you can always pick up votes in the U.S. by being anti-intellectual (cough, George Bush, cough).

But it's not the pandering that bothers me. It's the pretense that economists would make people's lives worse, and that ignoring economic advice is the best way to help people. Because it's material well-being that she's talking about, and that's what economics is about--understanding how we can enhance humanity's material well-being. To wholly ignore economists when that is the question is no different than to ignore physicians when the subject is one's physical health, and to "put your lot in" with witchdoctors, herbalists, and faith-healers.

It's snake-oil economics, and it makes me angry because she will continue to blithely assume she cares more about people than economists do, while she actually harms them more than any reputable economist ever would.

She should take the time to look at Adam Smith, who showed us that free markets are for the benefit of consumers, not businessmen, or Alfred Marshall, who clearly saw that studying economics was the path to improving people's lives. As Todd Buchholz quotes Marshall in New Ideas from Dead Economists:

From metaphysics I went to Ethics, and thought that the justification of the existing condition of society was not easy. A friend, who had read a great deal of what are now called the Moral Sciences, constantly said, "Ah! If you understood Political Economy you would not say that. So I read Mill's Political Economy and got much excited about it. [Then] I visited the poorest quarters of several cities and walked through one street after another, looking at the faces of the poorest people. Next, I resolved to make as thorough a study as I could of Political Economy."

I began studying political science because I thought that was the science of human well-being. Later I realized it is actually the science of human conflict, and important and interesting in it's own right, but only when it is securely intertwined with economics--when it is political economy--can it honestly be about the well-being of humanity.

If only Hillary, or any of our presidential candidates, understood that.

Tragedy of the Commons Symposium Fully Funded

Way back on March 21 I wrote that I was submitting a $10,000 proposal to fund a 40th Anniversary retrospective on Garret Hardin's "Tragedy of the Commons." Today I finally--a month and a half later--received word that I would get the funding. Phew, I had almost given up hope.

So on November 21, 2008, the Adrian College Policy Institute will host the Symposium. Among the panelists will be commons expert Elinor Ostrom, of Indiana University's Workshop in Political Theory and Policy Analysis, Mathematician J. Marty Anderies of Arizona State University's School of Human Evolution and Social Change, Oberlin College Political Scientist Harlan Wilson, and Grand Valley State University biologist (and friend of the late Garrett Hardin) Carl Bajema.

Information about the Symposium is available at the Policy Institute website.

Solvable Problems--Plug-in Cars and Electricity Demands

The Wall Street Journal has an article about the effect of plug-in cars on electric utilities. As the use of plug-in electric cars grows, it could cause excess demand during already high usage times if people plug the cars in during the day. This could cause utilities to have to buy more power at high peak-time pricing, or even build more power plants--an expensive proposition fraught with political problems. If they plug them in at night, when demand is low, they'll simply sell more power and make more money.

The solution is economically simple, although politically difficult; just allow the utilities to use congestion pricing. Just as they have to pay more for energy they buy during peak times, they should be allowed to charge more during peak times. If electric use cost more during the day than at night, people would be more likely to plug their cars in at night. For those who want to keep utilities regulated, rather than allowing a full free-market, those different prices could still be regulated, so utilities don't "rip off" people during the day.

One upside on this--most people won't be plugging in their cars during the peak morning demand, as they'll want to have them "re-fueled" in time to drive to work in the morning.

The bigger problem is whether people plug them in as soon as they come home from work, during the next biggest utility demand period. It would be better for people to plug them in just before they go to bed, but then how many are likely to forget and in the morning find their car isn't juiced up? (Blogger raises his hand.) And that detail is why most people will want to plug in as soon as they come home, so a solution oriented toward that specific time period, say 5-8 p.m., is probably what's most needed.

Toledo's Stepford Trash Bins

One of the great questions of the 20th century was, "Was there something special about Germany?" That is, could Naziism and the genocide have happened anywhere else? I don't know about that extreme case, but potential fascists (of the kinder, gentler, Italian-type variety, I suppose) are found everywhere. Case in point: Toledo, OH.

Toledo's trying out a new automated trash pickup program, with special trash bins that are mechanically picked up by the truck (rather than a human having to jump out and pick them up). Evidently, some people are painting their addresses on the bins, but the bins don't actually belong to either the people using them or to the city, but are the property of the trash company. And since this is a pilot program, if the city doesn't follow through, they'll have to pay the trash company for the defaced bins, so they're asking people not to paint on them.

OK, all well and good. A standard public information campaign, which is entirely legitimate. But then this:

One of the pluses of this program is the look of uniformity these identical containers brings to the city. Spray-painted addresses closely [resemble] graffit and [detract] from that uniform appearance.

Oh, god forbid our trash bins don't all look the same! We should all be nervous anytime public officials want to enforce aesthetic uniformity. Next thing you know, someone might find it amusing to paint a smily face on their trash bin, or some other such symbol of anarchic rebellion.

Maybe we can just cover up the defaced bins by putting black shirts on them.

Obama Appointed CEO of General Motors

OK, not really, but he seems to be convinced he's a better businessman than anyone in Detroit, as he criticizes them for the "mistake" of building SUVs instead of more fuel-efficient compact cars."

"I think it was a mistake for them not to plan earlier, and now we're seeing a huge growth in fuel-efficient cars that is benefiting the Japanese automakers and Detroit is getting pounded some more."

OK, except for two things:

1. The Big Three (GM, Ford, Chrysler) haven't been able to hold onto market share in compact cars. Toyota, Honda and Nissan have consistently built cars that are less expensive and better quality. Although the Big Three's quality has dramatically improved, they haven't been able to price their cars competitively without losing money on each unit sold.
2. Every year for the past three decades, truck models (SUVs, pickups, minivans) have outsold car models in the U.S.

So you're an auto exec, you know high gas prices will be coming--sometime--but right now you can sell far more trucks than cars, and make a profit on each truck, while you lose money on most cars. What do you do?

Obviously Obama didn't say this to Detroit 10 years ago--he's so smart that he can see what's wrong now that it's actually happening.

Granted, a number of people have been saying for years that the Big Three need to get more competitive in fuel-efficient cars. But they're not the ones who have had to try to keep the company in business. Staying in business today takes priority over being in business 10 years from now, because the first is a prerequisite for the second.

And does anyone really think the Detroit automakers haven't looked ahead and known this was coming? Does anyone think they really needed Barack Obama to point it out to them? After all, they have a little more at stake than their critics do, so they just might have spent a little time thinking about it. Yes, once again they're behind their Japanese competition, but they have been investing in alternative fuel vehicles, hybrids, etc.

In a nutshell, they were in a tough spot. They could successfully compete in a market that they probably knew was somewhat limited in its duration, but could not (yet) succesfully compete in the market that will probably dominate in the future. They've made plenty of mistakes along the way, as any industry analyst can point out, but their options were never as simple as Obama seems to think.

Odd, isn't it, how people who've spent their whole life in politics, who've never had to meet the bottom line, who've never had to worry about containing costs, increasing efficiency, keeping up with a changing market, always feel qualified to tell us how things should be run?

F for Failing to Show Up

In my American Government class I gave two students an F and another a D because they skipped class too many times. They don't think it's fair.

My definition of fair is: the same rules apply to everyone, they're not enforced arbitrarily or capriciously, and they don't create unrealistic demands. My attendance requirements fit that definition.

One student claimed he didn't realize I took the attendance requirement that seriously. My perspective, although I didn't say so to him, is that learning that it was may be the most important lesson of the term for him. Next time he sees a written rule, he should be less inclined to think it doesn't apply to him.

Here's a confession: I failed a class as an undergrad because I missed too many classes. I had a good excuse, I had mono, but I never let the professor know that. So it was my fault, and I (grudgingly) took responsibility for it. In this case I'm dealing with a student who doesn't want to accept responsibility for his actions, but needs to do so, just as I did. In fact I would have benefited from a hard kick in the ass earlier than that, like so many adolescents.

There's a strange paradox here: students don't want an attendance requirement, because they think they're adults and should be treated as adults, but failing to attend classes is evidence that they aren't yet mature enough to be treated as adults. I've learned the best way to become adult-like is to have people making adult-like demands of you--otherwise you have no incentive to do so.

Each of these three students dramatically underestimated how many times they missed class (7, 10, and 10, out of 28 class meetings, and each thought they missed about half that). But, out of the 45 students I had this term, those are 3 of only 4 or 5 for whom I have trouble attaching a face to the name.

I've received emails from them for 3 days straight, and it's really dragging me down. I hate dealing with this kind of business, and I have to keep reminding me that (a) it's a very small proportion of my students, and (b) it's our entitlement culture that leads them to think they deserve at least a C, despite not fulfilling class requirements, and it's that culture I'm battling, more than it is the students.

We All Hate Bush

President Bush's disapproval rating fell to a new low--71%. It's not really surprising. People think there's a recession (there's not, barely), and the war that nearly everyone thinks he lied to get us into still isn't going spectacularly well. Plus, we're 7 1/2 years into his presidency, and we never like our president much at this point.

Personally, I'm still bitter about his steel tariffs. One of the few things I'd hope a Republican would get right, and he bungled that, too.

Profits or Market Share?

The oddest thing about living in Michigan is the way the big three automakers grip everyone's attention. It's a rare day that both of Detroit's newspapers don't have a front-page, above -the-fold article about the auto industry (and around here, the phrase "the auto industry" means only GM, Ford, and Chrysler).

But oddest of all is the way the journalists who write about them focus so obsessively on market share. For two years now there's been a sort of death-watch as Toyota comes ever close to selling more vehicles throughout the world than GM. But apparently it's not just the journalists--it appears that the auto industry execs themselves have been more concerned about market share than actually making money on each unit sold. They seem to have convinced themselves that if they just sell more vehicles, they'll end up in the black--a strange idea, particularly at GM, which takes a loss on almost every vehicle it sells.

But an article today (sorry, I can't find it in the online edition, so no link, at least for now) suggests that Chrysler's new owners are focused on being smaller, rather than bigger, and looking for non-traditional ways of being more profitable. Such as building minivans for VW in Canada, and trucks for Nissan in Mexico, and having Nissan build a small car for Chrysler. Apparently this is happening because Chrysler's new owners, Cerberus, isn't familiar with the auto industry.

And a little child shall lead them, it seems.

It's amazing that after two decades of full-bore competition from "foreign" cars, auto execs still don't get the basics of how to run a business.