Because I Can

Two and a half years ago, I pondered the following:

Because the only way to cut consumption significantly, short of a move and/or a lifestyle change, is to drive more efficient vehicles, gasoline demand is said to be “price inelastic”. One of the determinants of price inelasticity is the time it takes to change prices. Numbers never mean anything without a frame of reference, and so our frame of reference would be the time to act on changing consumption of gas. Coming up with a new route, carpooling, spending less time driving around, knowing where we're going in the first place, and never driving at rush hour are ways we can adjust the quantity we demand, but as we see, it takes a little while (a week to a month sometimes) for us to adjust these short term measures, especially when some of them, like carpooling or changing your work hours, are harder to change back if the mere gas spike falls.

What if gas prices never again stabilize below $2.00 a gallon? Suppose the new standard price is $2.09? Well, decisions about which new cars to buy will change a bit; rather than anticipate an average price of $1.20 or whatever it was then, we'll realistically expect gas to stay at $2.09, and thus buy more fuel efficient cars. That's not to say everyone will necessarily get a smaller car, as is the case in Britain. But if fuel prices do not decline, automakers will have greater incentive to redesign models with greater fuel efficiency.

The most hillarious line - what if gas prices never stabilize below $2.00 a gallon? We are now starting $3.50 gas in the face, and it'll go up. Price up equals quantity demanded down! Congress doesn't trust the market, but we're already seeing a response.

"Consumer preference is shifting, and we're shifting with it," said Mark LaNeve, GM's vice president of North American sales. Sales of GM's midsize Chevrolet Malibu shot up 40 percent, but the long popular Chevrolet TrailBlazer SUV saw sales dip 73 percent.

Ford Motor Co. said its SUV sales were down 36 percent in April compared with the same month last year. Car sales were down only 1 percent, buoyed by sales of the Ford Focus small car, which saw a 44 percent jump in sales. The Focus gets 24 miles per gallon in the city and 33 on the highway. By comparison, Ford's largest SUV, the Expedition, gets 12 miles per gallon in the city and 18 on the highway, according to federal statistics.

Well who would have thought. Small car good, big car bad. The Focus gets double the gas milage of an Expedition. And that's Ford's biggest SUV now. Remember the Excursion? The one that was bigger than the Suburban? Well, it's dead. Forever.

Now, the last time gas was less than $1.50 a gallon was before the Iraq War. It's about 5 years after that, and at a point where people are transitioning to replacing their old cars. Over the next year in the US, expect a few changes:

• Demand will drop more substantially for gas in the US as more Americans buy smaller, more fuel efficient cars. Prices will continue to rise, though, because the Chinese and Indians will pay more.
• More states will pass laws that have graduated drivers licenses, so teenagers will not drive until they are 17 or 18. This will reduce the number of cars driven by these kids, also reducing demand for fuel. The great thing about this is that teenagers can't vote until they're 18, and it can be excused as a desire for greater public safety.
• People will make grocery lists and visit the express lanes less frequently. It will be less worthwhile to make a trip to the store just for milk.
• Fewer fatalities on the roads, as more people carpool, people use alternate transportation for vacations, and the most dangerous drivers, teenagers and the elderly (who are often on fixed incomes) drive less.

Now let's set the baseline for gas at $3 per gallon, to be optimistic. If you're driving an SUV that gets 15 MPG overall and you drive 20000 miles per year, replacing it with a Ford Escape Hybrid that gets 30 MPG overall, you will save $2000 a year on fuel, and your savings will be greater as the price of fuel goes up. You will save, then, $10,000 on fuel over a five year period on an Escape Hybrid vs a regular SUV, making it a worthwhile move. When you compare smaller cars, you'll notice that a Ford Focus could go for around $16,000 and gets about 27 MPG, while a Toyota Prius gets around 50 MPG. That will save you about $1000 per year, but that may not make up for the price difference in the Prius. The Corolla is even more fuel efficient, making the Prius less desirable, although still potentially worthwhile.

Labels: Department of Big Surprises, Economic Stuff, Politics

Often my political opinions would be categorized as conservative in the US. That doesn't match my stance on immigration, the legal drinking age, "faith-based initiatives", etc. I'm also apathetic on the war in Iraq, because it's a mess now, but it wasn't exactly Disneyland under Saddam Hussein either. But I don't call myself a conservative, maybe a lower-case L libertarian or something. Conservative and Liberal are relative terms, which make them, like most other labels in American politics, worthless. If it's very easy to read too much into a label, it's probably a terrible label.

What is conservative? Is George W. Bush conservative? He oversaw a huge expansion of government, including a new entitlement program. If he's a conservative, is Ronald Reagan a liberal? If cutting taxes made Bush a conservative, and thus Clinton a liberal, was Bush Sr. a liberal? And was JFK a conservative? If supporting free trade is conservative, is George W Bush a liberal for supporting steel tarriffs? I could go on forever, but I don't want to.

Then there's the abortion debate. Pro-Life and Pro-Choice are propagandist labels; Pro-Abortion or Anti-Abortion would be more accurate. Think about it - how many of those who are Pro-Life truly oppose all taking of life from others, including war, capital punishment, the FDA, mandatory indefinite life support, and other sources. For that matter, though, how many people who call themselves Pro-Choice support school choice, freedom from closed or union shops, free trade, eliminating the FDA, assisted suicide, and other libertarian positions? Again, there are people in both camps - but those are not the only ones who bear those labels.

Further, the opposite of Pro-Life is not Pro-Death or Anti-Life, but Pro-Choice. Isn't this odd? You have to choose whether you live or get to choose something. Why can't people just say pro-abortion and anti-abortion? That's all it is. Not much to read into that. For that matter, why can't we just use our coordinates on the political compass? As they write

There's abundant evidence for the need of it. The old one-dimensional categories of 'right' and 'left', established for the seating arrangement of the French National Assembly of 1789, are overly simplistic for today's complex political landscape. For example, who are the 'conservatives' in today's Russia? Are they the unreconstructed Stalinists, or the reformers who have adopted the right-wing views of conservatives like Margaret Thatcher?

I'm (7.75,-0.36).

Labels: Losers, Politics

Decided that it was necessary to make a bizarre ad hominem attack on the name Fred. I don't know what's more bizarre - the fact that she thought to write this, or that the Post's standards are so low they would publish such drivel. This is the kind of thing I expect to see in the Sports pages, but not the serious news. I mean, really, the Washington Post published this:

In the swampy soup of hopefuls for the 2008 presidential election, there is
a man with a funny name. (No, not that one.)

We're thinking of the one named Fred (Thompson).

Say it out loud. Do it. Fred. Fred. In the South, Fray-ud.

Fur-red-duh.

It has the tonal quality of something being dropped on the floor, something
heavy and damp-ish.

Waterlogged paper towel.

Fred.

This lady also seems to borrow from the poetic stylings of Bill Plaschke. But it doesn't stop being awful right there.

There has never before been a major presidential candidate named Fred. There
were two Alfreds, in 1928 and 1936. But Alfred, being all British and Batman-y,
is not the same.

Wow, so you did research. This is where she goes on her rant about how Fred sounds like it should end in Rogers or Flintstone. Just for fun, here are all of the Presidential first names:

George
John
Thomas
James
James (2)
John (2)
Andrew
Martin
William
John (3)
James (3)
Zachary
Millard
Franklin
James (4)
Abraham
Andrew (2)
Ulysses
Rutherford
James (5)
Chester
Grover
Benjamin
William (2)
Theodore
William (3)
Woodrow
Warren
Calvin
Herbert
Franklin (2)
Harry
Dwight
John (4)
Lyndon
Richard
Gerald (Gerry)
Jimmy
Ronald
George (2)
Bill
George (3)

There has also never been a president named Joseph, David, Jacob, Matthew, Mark, Luke, Paul, Noah, or Adam. Rutherford and Jimmy sound more presidential though. Idiot.

Then there's this bit:

But is it, Dr. Smith, a sexy name?

Silence.

"I would not say that. The name Fred does not suggest blatant sexuality at
all."

This from a chick named Monica. Monica. Sorry, it's been a couple of years, but go ahead and click here for a reminder of what comes to mind when you think Monica (picture is clean, SFW, etc). Sorry Ms. Hesse, we can't all have names that conjure up dirty images.

Wag of the finger to Monica Hesse and the Post. But that still doesn't answer, why is Monica talking about what's in a name? Clearly, she had a deadline and some writer's block. Or maybe this is really the Onion. I don't know, but wow.

Labels: FJM Style rip, Politics, Tip/Wag

Ann Coulter made the following remarks about John Edwards:

“I was going to have a few comments on the other Democratic presidential candidate John Edwards, but it turns out you have to go into rehab if you use the word ‘faggot,’ so I — so kind of an impasse, can’t really talk about Edwards.”

Later adding:

“C’mon, it was a joke. I would never insult gays by suggesting that they are like John Edwards. That would be mean.”

Ann Coulter is not in the least bit politically correct or out of character. This isn't even that funny either. Consider, though, this line from the Edwards campaign:

“John was singled out for a personal attack because the Republican establishment knows he poses the greatest threat to their power,” said his campaign manager, David E. Bonior. “Since they have nothing real to use against him, Coulter’s resorting to the classic right-wing strategy of riling up hate to smear a progressive champion.”

Here you have John Edwards, who lost his home state of North Carolina in 2004, asserting that he is the greatest threat to power to the Republican party. That is much funnier.

Labels: Other News Items, Politics

Ok, here's the gag: the state of Virginia is proposing an apology for slavery. Yeah, slavery's bad, mmm-kay. This 140 years after slavery was abolished by the 13th amendment to the Constitution. "We're sorry that people we've never met but are related to enslaved people you've never met but are related to."

But then it gets really funny. A delegate in the General Assembly said no. And he didn't just say no, he said a few more words. Frank Hargrove, R-Hanover, said this, as stated in the Times-Dispatch:

Regarding slavery, Hargrove said "black citizens should get over it" and that
asking the state to apologize for slavery is akin to asking Jews to apologize
for killing Christ.

Hargrove did not add that he felt that importing and enslaving Africans was necessary to salvation, so we might have to ask if that one's a fair assumption. Or perhaps he meant that the abolition of slavery was similar to Christ's resurrection.

Nonetheless, these remarks scared the governor, Tim Kaine. Kaine immediately was frightened that this would lead everyone to think that such a person was typical of Virginians. Granted, the only people who will think that are the people who think that Fred Phelps is a legitimate Christian leader, and they're just a bunch of idiots anyway. But whatever.

The stupid resolution, the crazy delegate, and the paranoid governor. Once again in Richmond, the Circus is in town early.

Labels: Other News Items, Politics

As we all know, most soft drinks in the US are made with corn syrup and high fructose corn syrup. Corn syrup, though, has negative effects that exceed that even of your basic granulated sugar.

Another major use for corn, of course, is in ethanol fuel. Ethanol, a corn-based alcohol, is such a major component of fuel that we can expect ethanol and grain prices to climb quite a bit as the need for more corn will grow rather quickly.

High fructose corn syrup is used in soft drinks for the same reason that oil-based gasoline is still used in automobiles: it's cheap. Thanks to tariffs imposed to protect the US sugar industry, it is cheaper than sugar in the US. So it seems simple enough: once there is more demand for ethanol, even if we do nothing, it will be more profitable to use sugar more often because the soaring demand for corn will raise its price, making sugar relatively cheaper; even if corn syrup were more still a little cheaper, soft drink makers would be more apt to selling drinks with sugar because they would be a bit healthier for consumers.

The difficulty, of course, lies in the politics of this whole issue. Politicians do not want to disappoint the sugar lobby, and the corn lobby would have it in their interest to make sure that sugar remained expensive enough that people still used high fructose corn syrup. Fortunately for the marginally health conscious (the truly health conscious would drink juice, milk, tea and water), all that needs to be done is to explain to the American public that foreign sugar means cheaper fuel, because Americans love cheaper fuel. This fixation on cheap gas, which led to nostalgia for gas price fixes of the 1970s, can be used to promote freer markets, potentially quite soon.

Labels: Economic Stuff, Politics

This past Thursday, Milton Friedman died at the age of 94. It is particularly interesting that this story, then, would come up in the AP that Charlie Rangel wants to re-instate the draft.

Asked on CBS' "Face the Nation" if he was still serious about the proposal for a universal draft he raised a couple of years ago, he said, "You bet your life. Underscore serious."

"If we're going to challenge Iran and challenge North Korea and then, as some people have asked, to send more troops to Iraq, we can't do that without a draft," he said.

The article goes on.

Rangel, who opposed the 2003 invasion of Iraq, also said he did not think the United States would have invaded Iraq if the children of members of Congress were sent to fight. He has said the U.S. fighting force is comprised disproportionately of people from low-income families and minorities.

"I don't see how anyone can support the war and not support the draft. I think to do so is hypocritical," he said.

Congressman Rangel, you don't support the war, but you do support the draft. So what does that say about you?

Now economics tell a different tale of how this works.

This is a supply and demand graph for military labor. Economics treat goods as subject to supply and demand, even labor. What this shows is that the military is currently paying W1, and that is why the government is willing to pay for L2 but only getting L1 of labor. This model, of course, applies to the all-volunteer army. A draft army does not work this way, because soliders do not have a choice about joining the military.

So if you ask an economist how to increase troop levels, the answer is to pay the troops more. Let us examine the equilibrium wage of We. At this price, more troops are willing to serve, but the government is not willing to pay as many. This means that not only can troop levels increase voluntarily, but also the government will be more careful in the use of military force.

Rangle, though, makes the argument that Congressmen do not care about the money, only their own children, and that the element of fear is a vital deterrent of war. If that is the case, Rangle should advocate an all-draft army to increase the level of fear involved in the military as well as reduce the wages a little more. There are a few problems with this, not the least of which is that living in fear runs opposite to living in a free society. Not only that, but insisting on such tactics would reduce type I errors of unnecessary war and increase type II errors of unpreparadness and reluctance to fight when it is absolutely necessary.

This does not even go into the fact that his argument is flat out wrong. In the first place, Congressmen whose children go overseas can and likely will get preferential treatment - heck, when Al Gore was in Vietnam, he was a military photographer with a bodyguard - so there goes the congressman's fear. Then there's just the unpopularity of the draft; it is not coincidental that the 18-year-old right to vote was followed shortly thereafter by the all-volunteer army. Studies of the electorate have shown that politicians generally do what voters want, and according to this article in the Washington Post 70% of the public opposes the draft. Further, supply and demand are not complete or perfect models, but they are accurate, at least enough so that one could determine that increasing military salaries by at least 50% will drastically increase numbers in the service.

The relevance to Milton Friedman is extroardinary. In a debate with General William Westmorland (ht: Don Boudreaux) about the draft, Westmorland said to Friedman that he didn't want an army of mercenaries. Friedman had him right where he wanted him.

Mr. Friedman interrupted, "General, would you rather command an army of slaves?"

Mr. Westmoreland replied, "I don't like to hear our patriotic draftees referred to as slaves."

Mr. Friedman then retorted, "I don't like to hear our patriotic volunteers referred to as mercenaries. If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher."

Labels: Economic Stuff, Politics

Down by about 8200 votes currently but likely on his way out, George Allen ruined his campaign by failing to be courteous, basically. So, in a choose your own adventure novel, let's go ahead and see what could have been.

"My friends, we're gonna run this campaign on positive, constructive ideas, and it's important that we motivate and inspire people for something.

"This fellow here over here with th-the yellow shirt, um, hey son, what's your name?"

Loop until "the name" = "correct"{

[SD Sidarth gives him a name to go by]
[Allen says = the name, asking if he got it right]
[Sidarth corrects him]}

[Allen writes this down]

"[Allen says the name correctly], he's with my opponent. He's following us around everywhere. And it's just great; we're going to places all over Virginia, and he's having it on film and it's great to have you here. You show it to your opponent, because he's never been there and probably will never come, so it's good for you to see what it's like out here in the real world. Rather than living inside the beltway, his [sic] opponent right now is actually with a bunch of Hollywood movie moguls. (pause for laughter) We care about fact, not fiction. So welcome, let's give a welcome to, uh [name] here. Welcome to America and the real world of Virginia."

That would have been clever. The words "Welcome to America" just reinforce the idea that Webb and the Democrats just don't represent the state effectively. Being a bit more personable, Allen could have even gotten in a discussion with the guy and found out that he's a student at UVA, where Allen got his bachelor's and law degree. Fact of the matter is, it all came down to Allen failing the most basic test of common courtesy - asking someone their name. That would have meant George Allen would have won, no problems.

But noooooooo. Somebody couldn't remember basic rules of 4-year-old manners. Instead, this is what we got:

"My friends, we're gonna run this campaign on positive, constructive ideas, and it's important that we motivate and inspire people for something."

"This fellow here over here with th-the yellow shirt - Macaca or whatever his name is, he's with my opponent. He's following us around everywhere. And it's just great; we're going to places all over Virginia, and he's having it on film and it's great to have you here. You show it to your opponent, because he's never been there and probably will never come, so it's good for you to see what it's like out here in the real world. Rather than livin' inside the beltway, his [sic] opponent right now is actually with a bunch of Hollywood movie moguls. We care about fact, not fiction. So welcome, let's give a welcome to, uh Macaca here. Welcome to America and the real world of Virginia."

Just like this movie tells you how to lose a guy in 10 days, that speech tells you how to lose a double digit victory and shot at running for the presidency. Stupid.

Labels: Politics

Before one can make conclusions about data, one must grasp the meaning of the inferential statistics that point to that conclusion. Before that, one must grasp what those inferential statistics are testing, namely the descriptive statistics. Before that, one must obtain the data. And before that, one must have a method of obtaining a sample from the population.

This is why one of the first stories statistics students are told is the 1948 Presidential election. This election had more significance than keeping Earl Warren from becoming Vice President and thus making him available for the Supreme Court. What was more important was that the polls absolutely blew it. The public opinion polls of the time were all leaning towards Dewey, so much so that the infamous "Dewey Defeats Truman" headline was printed up before the results were even made final, and before it was proven wrong.

How did the pollsters blow it? Well it's quite simple: they took a biased sample. They were conducting several telephone polls, and at the time people who owned telephones were generally wealthier, thus more likely to vote Republican. Since then, controlling for party affiliation (Republican, Democrat, Independent, Other) and other concepts to draw a sample from the whole population has made polling more reliable. Also, as the telephone became more commonplace (basically within the next decade), it became a more reliable source of data.

Ever since Caller ID became popular, though, polling by phone has always struck me as odd. Pollsters, like other telemarketers, show up as unavailable. My parents don't answer telemarketers or survey calls, so understandably more calls have to be made. What becomes especially curious, then, is whether there are any particular demographics which people with Caller ID belong to. Further, whether Caller ID becomes a call screening object or not varies from person to person. My thoughts:

1) The elderly would have a greater representation in these polls because they are more likely to answer every phone call, not to mention that they are likely retired and at home.

2) Perhaps there is a correlation between intelligence and Caller ID use patterns; given the expected value of a call labeled "unavailable" is some guy trying to sell you something, it's probably best that one does not answer the phone on such calls.

3) Polling places would put themselves in an interesting situation if they identified themselves as polling organizations. Because of the high volumes of calls required because of Caller ID, picking up the phone and participating could in effect become a method of voluntary response. So we assume this does not happen, and the call is simply filed under "unavailable."

4) Since cell phone numbers are not in the phone book, those numbers will not be reached. This will essentially exclude college students as well as other young people who have cell phones but no land line phone.

5) Effects 1 and 4 may likely cancel, depending on voter tendencies.

6) Since the internet is not a good place to conduct a poll, perhaps a gas station or a supermarket would be more suitable. Yet even this could be complicated. In Richmond, VA, the grocery store with the highest market share is closed on Sunday and does not sell alcohol. Polling would have to occur at several grocery store locations in order to get an accurate read of the population.

7) Major League Baseball's ratings have gone down by at least one of the following: either the advent of Caller ID (and baseball fans all use their caller IDs to block annoyances), or Fox taking over broadcasting the postseason.

Labels: Politics

Or so he would want you to think.

Sen. John McCain said something "behind closed doors" that someone wrote down. And because he's someone that apparently people care about, that got reported. I don't have that problem, personally, because I can't get people to read something I write on the internet, much less care about anything I say privately.

But since his closed-door comments are kind of funny, as he remarks the following.

“One of the things I would do if I were President would be to sit the Shiites
and the Sunnis down and say, ‘Stop the bullshit,’” said Mr. McCain, according to
Shirley Cloyes DioGuardi, an invitee, and two other guests.

Why didn't anyone else think of that? I mean really. We have these Muslim-majority countries, many of which tend one way or another to be vastly Sunni or Shiite by majority. These two particular groups have a history of not getting along, going back to when the groups were first formed. All over whether or not the Prophet had a hereditary successor! Honestly, just because this is a debate that's raged for over a millenium, it's obvious that a call to "stop the bullshit" would definitlely take care of things.

John McCain, having established his wisdom, now provides for us a domestic application of his plan for ensuring domestic tranquility.

He cautioned against ghettoizing immigrants, which he noted has brought about
disastrous results in France, and criticized elements in his own party as
“nativist” before lambasting the punditry of Rush Limbaugh, Lou Dobbs and
Michael Savage for helping to “fuel the problem,” according to two of the
sources.

What is the problem? According to McCain, it is not illegal immigration, unless he has secret information telling him that Limbaugh, Dobbs, and Savage are secretly sneaking Mexicans across the border to take over the town of Rio Linda, CA.

The problem is with "ghettoizing," which is to imply that Mexicans are being forced to the ghetto, which invokes the first law of wisdom: when in doubt, make comparisons to Nazi Germany. It is clear to this brilliant man that the fact that France's socialist setup and near-impossible hiring conditions, not to mention its double-digit employment for the nation as a whole, are not the cause of this. McCain, uninterested in such a silly concept such as whether or not a nation has the right to sovereignly declare who may immigrate into that country, is addressing the real issue: anti-Mexicanism.

In drawing the comparison with France, McCain knows better than to think that the 20% and higher unemployment rate among young Muslim males in France is the cause of unemployment, because that would not translate to the American situation in which Mexicans cross the border specifically for employment, often staying because they find what they want. The fact that the US has an unemployment rate nationally of under 5% is clearly irrelevant to the ability of these immigrants to obtain jobs. What McCain knows is that the problem in France is nothing more than people hating Muslims simply because they are Muslims, and that does not satisfy the traditional definition of being French. The problem clearly translates, as logic would dictate, that Americans do not care about legal or illegal immigration, but are more interested in the definition of American as defined by the societal dictates of what it is to be American. Such arguments that the definition of being French is far more narrow than the definition of being American are silly, as both countries are very similar because their flags are red, white, and blue and they both had a revolution in the late 18th century. This clearly trumps any notion that American national identity is more broadly defined just because of a greater religious and ethnic diversity in non-segregated segments of society.

McCain gets picked on a lot in this respect, but he is no different from any other politician. Politicians in general do not set out to create schemes which will cause economic harm, restrict freedom, or fail to solve their objective. They are successful in these things, though, because they are too busy acting in accorance to what rhetoric would help them most to get re-elected, because that is what the people want. Yet at the same time, they have to think differently from the supposed "common sense," because they are the great minds that run Washington, and after all, they have to come up with such brilliant thoughts that the common folk (or "the masses," as Karl Marx so eloquently described those individuals who are not in some position of great power or stature) cannot understand, and need them. That is how Congressmen sleep at night.

Labels: Politics

Ok, so that isn't news, but the idea of a national statute on "price gouging" is. According to the AP

Worried about the political heat from high gasoline prices, the House is preparing to vote on a bill that would impose criminal and civil penalties on any energy company caught price gouging.

The legislation, offered by Rep. Heather Wilson, R-N.M., calls for penalties of up to $150 million for refiners and other wholesalers and $2 million for retailers.

The reason they are worried about the political heat is that people get upset over price changes in cheap things. There's no political heat in house gouging with housing bubbles. But gas, a relatively cheap liquid is different, as it is the only variable cost in owning and driving an automobile. And consuming less means a change in behavior. So let's see, how does AP represent the argument that the market causes changing prices?

Rex W. Tillerson, chairman and CEO of Exxon Mobil Corp., defended the company's record profits and high gas prices in an interview on NBC's "Today" show Wednesday.

"Obviously, the truth is we do not get together and manipulate prices, that would be illegal," he said, adding that there have been several past investigations of price collusion in the oil industry and none of them have found any evidence of collusion.

"The profit we earn is what the market gives us ... the price is set on the open market."

Of course, the CEO of Exxon, despised because he's successful. But there was a gem that I found in this piece, no diamond, but a ruby at least.

"Nationally there is no common definition of price gouging," Arizona Attorney General Terry Goddard told a Senate hearing in November. He said some states have laws that apply only to emergencies, while others allow up to 20 percent price increases.

No common definition. Because Price Gouging is held to the standard of "I know it when I see it." Because Price Gouging is a subjective, normative term. That's like mandating fairness; it cannot be done, except subjectively. Fairness from subjective standards, of course, always leads to unfairness.

The government, of course, takes no role in accepting that new regulation regarding the production and processing of gasoline (MTBE regulations) played a role, because only people that read the whole article know that, and these congressmen have to be re-elected, after all!

Labels: Politics

It turns out that the President may very well be one to blame for recent gas price spikes. Look at this, from the link on Drudge.

As if rising prices weren't enough, the tanks have run dry at some Philadelphia-area service stations in the last few days as the refining industry stumbles through a change in the formulation of gasoline.

Oil refiners are phasing out a petrochemical that makes gasoline burn cleaner but which also has been found to contaminate groundwater. Refiners are switching to corn-based ethanol.

The changeover is creating supply-chain bottlenecks because much work must be done at fuel terminals and service stations to handle ethanol.

Ok, contaminates groundwater. So the oil companies are doing this because they care about us and the environment. Right? Well,

The conversion to ethanol was prompted by the federal Energy Policy Act of 2005, which left refiners vulnerable to groundwater contamination suits and mandated greater use of renewable fuels. The use of ethanol forced gasoline retailers to clean their tanks, remove all water from them and install extremely fine filters on their pumps.

You see, it's all George Bush's fault. If he wasn't such a coward, he would veto something. But seriously, this article is good as it actually explores causes and effects of the rise of gas prices. And who would have though that environmental regulation could be expensive (other than every intellectually honest economist ever)! Here's what has to be done:

Ethanol is a solvent that picks up any gunk in tanks and readily blends with water. Those properties could ruin a 9,000-gallon tank of gasoline at a huge cost to a retailer.

It costs up to $1,500 to clean tanks, said Kevin S. Kan, president and chief executive officer of American Auto Wash Inc. in Malvern, which operates 18 stations in the region, including 13 BPs that have converted to the ethanol blend.

Ethanol is logistically more complicated than the petrochemical it replaced - MTBE, or methyl tertiary butyl ether. Refiners could blend MTBE into gasoline at the refinery and send the finished gasoline through pipelines to terminals.

But ethanol must be blended into gasoline at the terminal because it would mix with water if it were sent through pipelines, ruining the fuel. So, fuel terminals have to go through a similar process of cleaning tanks to store ethanol before it is blended.

They must also install blending equipment.

Yep. People who have had basic econ (Econ 103 at GMU) know that prices are a means of spreading information. There was a sharp decrease in supply, and the rising prices are designed to minimize the effects of that; you'll probably be more careful with your gas at $3 per gallon.

Now that we know the true cause of the rise in gas prices, what does that tell us about Congress when we see this:

During a news conference Tuesday, Schumer said he expects there will be hearings on the matter in Congress and possible sanctions. He believes the four major oil producers, such as Exxon-Mobile, have a monopoly on oil production. Mergers that created just four major oil producers should be broken up, he added.

Now, one can certainly make the argument that MTBE was causing a problem, particularly in the high amounts in which it was used (which was incidentally due to another environmental regulation). But if that's the case, then the cost of higher gas prices is one that must be taken on, as it is a response to a supply shock. Perhaps someone should look into why the government doesn't warn consumers of the costs of regulation, no matter how safe it makes us.

And as some Philadelphia gas tanks run dry, it is obvious that there are multiple gas tanks in Philadelphia, so consumers will just have to go to another one (because E means extra 10 miles). But this is not a shortage; there is still gas to be bought. If it's too expensive, carpool, or use public transport if available. You can even walk or bicycle, which gives you exercise too. If that's not worth it, then you're still as best of as you could driving and paying a lot for gas; your consumer surplus just shrank.

Labels: Economic Stuff, Politics

Just for kicks I went over to MichaelMoore.com, as I haven't done in a while. The lines about Cheney and the birdshot incident were all over the page, but that didn't catch my eye. No, it takes real stupidity to get me to notice.

And I saw that in the headline "What if Jesus is Burning These Baptist Churches?" I though I would find some support for Moore's headline. But no. I found this:

"It's definitely arson," state fire marshal spokesman Ragan Ingram said Sunday.

Since Ragan Ingram is not significant enough to have his own page on Wikipedia, I conclude there is not much of a conspiracy theory surrounding him. Which leads me to the following conclusions conclusions:

1) Moore has his own conspiracy about Ingram.

2) Reading an entire article is as difficult for this man as running.

3) He does not like Baptists.

4) I wasted my time going to his site.

Labels: Politics

Well, Drudge is headlining that all-around jerkface and former KGB agent Vladmir Pootin' (he had the Moscow baked beans special every day for 50 years) is cutting off oil to Ukraine. As the Telegraph Reports,

Russia took Europe to the brink of a winter energy crisis yesterday when it
carried out a Cold War-style threat and halted gas deliveries to Ukraine, the
main conduit for exports to the West.

With a quarter of its gas supplied by
Russia, Europe is facing serious disruption and price rises for as long as the
dispute rumbles on.

So that is a loss of 25% of heating oil to Europe, meaning that Europeans will pay a premium to get their remaining sources to give them more, and many will have to do either with less or without. The US supposedly had a bit of saving grace from Venezuelan President Hugo Chavez, who offered cheap oil. We wanted it, because the average consumer cares very little about whether or not a President borders on being dictatorial, and Americans have a specific emotional attachment and economic ignorance when it comes to oil.

So here are a few things to consider. First, I'd like to give a hat tip to Russell Roberts of Cafe Hayek for pointing this out about a month ago. Now of interest, the CIA World Factbook gives information on many aspects of the country, including per captia GDP. In the US, this was $40,100 per person in 2004. In Europe, Austria's was $31,300 in 2004, France's was $28,700 in 2004, Italy $27,700, Belgium $30,600, and Germany at $28,700.

We could then say that Chavez may be more benevolent to send his oil to Europe, since they have a greater supply crisis and that America's poor people are actually reasonably well-off. The difficulty with that is, though, is in transportation; it would take a bit more fuel to get a tanker from Venezuela to Portugal than to Delaware. The quality of mercy lying therein would require calculation and data that I can't get my hands on.

But what makes people so cynical of Chavez? Does he look better than Putin by comparison? Well consider the following, from that original Cafe Hayek post:

Yes, the people of Venezuela are lucky to have him. He's selling oil at a
40% discount to people in a country whose per-capita
income is over SIX TIMES that of Venezuela's. That's a man who really
knows how to take care of the little guy.

Venezuela's per capita income was about $5,800 in 2004. Is it really more compassionate to sell to the US or even Europe at depressed prices? Or rather, it is better to sell at the going market rate and distribute the rest of the money to the people of Venezuela, and invest money in the nation's infrastucture and economy so that they can bring down the nation's unemployment rate (17.1% in 2004).

Here's another twist, though. In some oil-rich countries, the wealth from oil does not offer a cure-all to poverty. Look at the Middle East. Suppose Chavez believes he cannot help but be a dictatorial ruler, and therefore wants to pass on a consumer surplus to the US, who would have the abilities to do good for his country. Well then, should he really be helping the poor, who would be less apt to use their consumer surplus for charitable contribution as opposed to the economy at large?

The evidence points to Chavez being one of two things, a reputational entrepreneur or an self-aware, yet bungling philanthropist. I would give him credit for being smarter than that, so I think the reputational entrepreneur point is the most likely.

Labels: Politics

A story linked from Drudge revealed that New York Transit workers are striking, and that there is legal action taken against them. A New York Court has even issued a fine against them. The story reports:

A judge promptly slapped the union with a $1 million-a-day fine. State Justice
Theodore Jones leveled the sanction against the Transport Workers Union for
violating a state law that bars public employees from going on strike.

Now, a million dollars is a lot of money, if you are a single individual. If you're the government, it's one of those little squares of toilet paper, and that's if you get it on sale. So for the union, which is multiple people, it's a little more. How much?

The heavy penalty could force the union off the picket lines and back on the
job. Its 33,000 members are already facing individual fines of two days' pay for
every day they are on strike.

In case you are useless enough to not be able to do simple division, here's the easy way to think about it:

33,000 x $30.30 = $999,900

and

$100 / 33,000 = $1 /330 < $0.01

which tells you that each union member was fined $30.30 per day for striking, because unions get money from their members. The union workers were already being fined 2 days pay for each day of striking. A little bit of detective work (called reading the article) reveals:

MTA workers typically earn from $35,000 as a starting salary to about $55,000
annually.

Let's assume $35,000 for 50 weeks, which give us $700 per week, which is $140 per day. This means union workers are already being fined $280 per day for striking by the MTA (not to mention not getting paid $140), and this article would have us believe that $420 won't stop them, but $450.30 will.

It's not the fine, but the fact that the court would not ignore state law against transit strikes that is discouraging the unions. Strikes are actually useless tactics, whereas they cost the individual members far more than the protested party, who can easily close up, and cut down on electrical and other expenses, as well as not pay striking workers. The only power that a strike possibly has is to gain public support, which is easy when it does not affect them. When people are affected, though, they don't like strikes, and that is why transit strikes are counterproductive, and why in London, transit strikes only last one day.

Why would people do something like that, then? If transit strikes are so bad, why bother? Call it what you will. Clifford Geertz term would be "deep play," but I wouldn't label this as such, since it is such a rare incident and not really part of a cultural force. I think it's human nature.

Economists often state that voting is irrational since the expected impact is 0 whereas the expected cost is time and other activities (and being registered to vote means being eligible for jury duty). In attempting to resolve the economic implications with observed results, I would argue that anger breeds irrationality, particularly in small acts of irrationality. Examples of this include one-day strikes, mass voter turnout in the 2004 US Presidential election, and young children throwing temper tanturms when they can't get the candy bar in the checkout line. This is essentially an act of negative reciprocity, which will end when they come to their senses.

Labels: Politics