Hiatus

By way of explanation. I haven’t posted in nearly a week, and I’m not feeling particularly inclined to comment online about anything, yet. This is in part due to disinterest; in part I’m planning on folding anyway when I move to the new job (it is, first, not in the US and, second, not teaching Economics – or at all – but rather in research. So doing this will not complement my work).

I was going to keep it up until the end of Semester, but I don’t find much of interest, these days. Or of interest with a contribution for me to make. Railing against terrible writing in newspapers gets ordinary, quickly.

Globalisation in BusinessWeek

BusinessWeek has two bloody interesting pieces up on various aspects of globalisation, one American and one Chinese.

First, NAFTA!

… the regional fears Nafta inspired in 1992 have gone global in 2008. In addition to Mexico, most of the world’s dynamic emerging markets, including China, India, and Brazil, have become strong players in the global economic arena. Americans worry about competition from overseas companies and workers from other lands emigrating to the U.S., especially with the economy faltering amid falling home prices, tottering financial markets, and shaky consumer confidence.

The case for freer trade and open markets is overwhelming. Economic evidence and economic history alike support the view that freer trade over time invigorates economic growth by encouraging the spread of new commercial ideas, new technologies, and new ways of organizing everyday life. Consumers enjoy lower prices and greater choice. Competition from overseas rivals encourages corporate efficiency and innovation.

Which is say (in one’s best Mitch Hedberg voice) they’re for it. Diminishing the power of the article somewhat are things like, “give Joe Sixpack credit”. I’m sorry – what?

I imagine, however that, as we move farther into this lunatic’s game called the election, we’re to see a lot more of this. From pols, from pundits, from media generally, from academics. You name it. Expect heat, though – not light.

The Chinese-centred article is similarly bound up in the new world of globalisation.

… many of China’s manufacturers — including Shan Hsing — are undergoing the kind of restructuring that tore through America’s heartland a generation ago. The U.S. housing market, which generated demand for everything from Chinese-made bedroom sets to bathroom fixtures, has plummeted. A new Chinese labor law that took effect on Jan. 1 has significantly raised costs in an already tight labor market. Soaring commodity and energy prices, as well as Beijing’s cancellation of preferential policies for exporters, have hammered manufacturers. The appreciation of the Chinese currency has shrunk already razor-thin margins, pushed thousands of manufacturers to the edge of bankruptcy, and threatened China’s role as the preeminent exporter of low-priced goods.

So new labour laws in China are driving up costs, sending owners to India and God knows where else – this isn’t new. When was Naomi Klein’s No Logo first published? She detailed the Baby-Huey-like migration of multinationals from one Export Processing Zone to the next. Sonia Gandhi was on about this in India 2 years ago.

Chinese policymakers so far profess little concern. The closures are mainly hitting lower-value, labor-intensive exporters that pollute heavily and use energy inefficiently. Beijing now wants cleaner industries that produce higher-quality items for the local market, from cars and planes to biotech products and software.

That emphasis not only helps boost domestic consumption — a key national goal — but also reduces frictions internationally from the ever-swelling trade surplus. “We are not abandoning the [exporters],” said Guangdong Governor Huang Huahua on Mar. 8. “[But] selling domestically is good for the country, good for the collective, and good for the people.”

From an international-macro perspective, this is good news. Slower production/manufacturing means more unemployment in China, which means more pressure from the bottom to do something about government from the top. Who knows? Perhaps China will move even faster to democracy, devolution – all the things we like to think we have. One can only hope.

Export restrictions the way of the future, question mark

The known exacerbator of Peak Oil is the decline in exports (i.e. not only is less oil being pumped out of the ground, but even less of that is being let out of the country, after domestic use). E.g. the Export Land Model (pic is from the Oil Drum)

So to the Financial Times. They put up an interesting article today concerning much the same thing about, in this instance, rice:

Rice prices jumped 30 per cent to an all-time high on Thursday, raising fears of fresh outbreaks of social unrest across Asia where the grain is a staple food for more than 2.5bn people.

The increase came after Egypt, a leading exporter, imposed a formal ban on selling rice abroad to keep local prices down, and the Philippines announced plans for a major purchase of the grain in the international market to boost supplies. Global rice stocks are at their lowest since 1976.

…

The Egyptian export ban formalises a previously poorly enforced curb and follows similar restrictions imposed by Vietnam and India, the world’s second- and third-largest exporters. Cambodia, a small seller, also on Thursday announced an export ban.

These foreign sales restrictions have removed about a third of the rice traded in the international market.

The immediate price effects of course are about as “no” as brainers get. This is an interesting phenomenon to watch, though going forward. Will it expand into other sectors of the agriculture economy? It ought to scatter no end of eggshells beneath international relations.

If the days of tit-for-tat diplomacy (referring to tariffs) were to return, we really ought to ask ourselves, country by country: what can we threaten to withhold in retaliation? Some countries, currently wealthy and powerful, may not much like their answer.

World Made By Hand

New Book!

In the best-seller The Long Emergency, James Howard Kunstler explored how the terminal decline of oil production had the potential to put industrial civilization out of business. With World Made By Hand Kunstler makes an imaginative leap into the future, a few decades hence, and shows us what life may be like after these coming catastrophes—the end of oil, climate change, global pandemics, and resource wars—converge. For the townspeople of Union Grove, New York, the future is not what they thought it would be. Transportation is slow and dangerous, so food is grown locally at great expense of time and energy. And the outside world is largely unknown. There may be a president and he may be in Minneapolis now, but people aren’t sure. As the heat of summer intensifies, the residents struggle with the new way of life in a world of abandoned highways and empty houses, horses working the fields and rivers replenished with fish. A captivating, utterly realistic novel, World Made by Hand takes speculative fiction beyond the apocalypse and shows what happens when life gets extremely local.

Full disclosures: first, I like James Howard Kunstler. I like the way he thinks and I agree with a great deal of what he says. We also share the same middle name (although I should be bloody amazed if it was for the same reason). Second, his publishers sent me a review copy of the book. Which is to say, I’m kindly disposed towards it, him and them in turn.

That said, it’s an excellent book. Alan Weisman, whose review also graces the dust-jacket, describes the book wonderfully as provocatively convincing. Kunstler’s world made by hand is post-oil, which is to say agrarian post-science. It reminded me a lot of the Tripods (except far better-written, and without aliens), the Drowned World (except far easier to read), and the like. We are without oil, cars, plastic, electricity, TV, medicine – you name it.

A couple of great things about the book, and then I’ll stop.

One, in a world where we tend to be beset by the trials and heroisms of pre-catastrophe story-telling, I love having a book that is post-catastrophe.

Two, Kunstler never really deals with the catastrophe. We are let in, with vague detail, on what happened: increasing demand for peak oil, an attack, etc. We simply know that oil disappeared. With it went science, government, modernity. We are back to eating what we can grow and catch, trading whatever we can move up and down rivers.

Similarly we also never are told about the world. The next town is outside of one’s world. We aren’t made to read about what happened, exactly, to DC, or New York, or Canada. It’s just not within the world about which we’re reading. This is just one period in one town, as it makes a transition from occupying a dead world (this would be where the resemblances above come in) to re-crafting their own. The point at which a community lets go of electricity, of (big G) Government, of living in a past of food and clothing that just doesn’t exist, and won’t come back.

This includes, by the by, steam and coal, which are notably absent from Kunstler’s world, but more curiously so than problematically. We are allowed to believe that (a) perhaps they do have technology elsewhere, and/or (b) the technology died with the people in the big cities.

Anyway. Very cool book. One of those weird ones that really moves at a non-frenetic pace, yet manages to move a lot of events through the story.

“The endgame of biofuels is price parity between food BTUs and energy BTUs”

This quote comes from a comment beneath a story on Grist, Biodiesel in the dumps – original source (for me) of this article from the Atlanta Journal Constitution.

Biodistillers nationwide now realize that their industry’s survival depends on the vagaries of world trade. Cheaper soy and palm oil from Asia, Africa and Latin America increasingly replace domestically grown soy oil. Environmentally conscious Europe takes most of the U.S.-produced fuel.

Globalization of the American biodiesel industry, though, wouldn’t be possible without lucrative assistance — a $1-per-gallon tax break — from Washington. Alterra and other biodiesel producers receive the excise tax credit for each gallon of alternative fuel that is mixed with regular diesel.

And, since most of the biodiesel is shipped overseas, Congress essentially subsidizes the price European drivers pay for fuel.

“And we’re not really lessening our dependence on foreign fuel supplies,” said Mark Ash, an economist with the U.S. Department of Agriculture.

…

The blame falls mainly on the skyrocketing price of soybean oil used in 80 percent of the nation’s biodiesel production. Soy oil cost 22 cents per pound when Johnson broke ground in Plains. Wednesday, a pound cost 56.4 cents.

It takes 7.7 pounds of soy oil — or $4.34 — to produce a gallon of biodiesel, according to the Food and Agricultural Policy Research Institute. Add overhead and other processing costs (about 70 cents per gallon), federal and state taxes (54 cents) and subtract the dollar tax credit and a gallon of biodiesel could sell for $4.58 at the pump.

Regular diesel sold for $3.86 a gallon Wednesday in Atlanta.

“How’re you going to sell it at that price?” asked Davis Cosey, who owns an idled biodiesel factory in Perry. “The industry’s horrible. It’s in the ditch.”

Farmers aren’t doing producers any favors. In 2006, more than 75 million acres of soybeans were planted in the United States. Last year, only 64 million acres were planted, according to the USDA. Congress’ ethanol mandate — 37 billion gallons annually by 2022 — fueled the switch from beans to corn. In addition, rapidly developing China and India boosted soybean demand, and prices.

Interesting article (“Only federal subsidies keep the industry afloat” – one for the small-government-ers), if including odd lines like

“The American public, with rare exception, is 100 percent price-sensitive,” Johnson said. “They will not pay a penny more to go green.”

I kind of follow the argument – but 100% price sensitive? Dude, we’re all 100% price sensitive. It’s how sensitive we are that defines our markets (and in this “Johnson” is mistaken – of course we will pay more to go green. We just aren’t stupid enough to call something as daft as crop-grown biofuels shipped half-way ’round the bloody world and back “green”).

So US biodiesel manufacturers are importing soy and palm oil (the latter a truly horrible product, vis, the environment) in order to make biodiesel that is shipped to Europe because the market here is too small – meanwhile only surviving thanks to subsidies (meaning your tax dollars are subsidising European motorists).

Stop me when you can’t take the stupidity any longer.

So this would be where the comment came from. Personally I don’t fancy their chances, however much I agree with their sentiment. For a start food BTUs aren’t at all close to being adequately priced – but, then, neither are things like biofuels, oil shale, etc. Maybe one day. One day when we stop IV-subsidies to wasteful industries and make agriculture compete like everyone else.

Punk economics!

This is great. I forget how I even came upon this one (safe to say, though, that I was looking up something punk): Thompson S. (2001). Market failure: Punk economics early and late. College Literature 28(2) 48-65:

Punks and punk businesses have, at best, a conflicted relationship with commodification and capitalism, around which aggregates of anxiety coalesce in material form as punk `zines (fanzines), songs, liner notes, and activism launched against what punks perceive as the encroaching realm of capitalism. What I propose is that, after 1979, both in response to the initial “sell out” of punk’s late 70s English scene and in order to preserve control over their field of production, punks adopted economic strategies for resisting capitalism. In fact, the attempt to oppose commercial music in economic terms became crucial to the definition of punk in 1979 and has remained so through the present.

However, punk has failed and continues to fail, even on a relatively small scale, to overturn the dominant mode of economic production that is proffered it-the commercial practices of the major record labels. Punks are unable to absent themselves from commodification and small-scale capitalism; but, in their attempts to resist these economic forms, they fail commercially, which is a sort of punk success after all. In their continual effort and failure to establish a zone of exchange that is qualitatively different from late capitalist commodity exchange, punks testify to the need and desire for such a zone and refuse to abandon the possibility of creating one.

You know you want to. You know you can’t resist.

“How many people does climate change kill, and what proportion is the United Kingdom responsible for?”

Originally from the Guardian.

In April last year, a group of environmentalists shut down the energy company E.ON’s coal-fired power station in Ratcliffe-on-Soar, in the English Midlands. The goal: to reduce carbon dioxide (CO2) emissions and, in their words, “save lives”. On February 25, 2008, Judge Morris Cooper presented a 20-page ruling accepting that there was an “urgent need for drastic action”, but convicted the protestors of aggravated trespass, saying their defence — that their crime was necessary to save lives — could not be substantiated.

In the trial, for which I was an expert witness, crucial questions were: how many people does climate change kill, and what proportion is the United Kingdom responsible for? I was surprised to discover that nobody knows. Scientists such as me are involved in programmes to measure CO2 emissions, air temperatures, sea-ice loss and the much more complex impacts on birds, rainforest trees and coral reefs. We know that climate change-related events are killing people, yet there is no comprehensive global monitoring program to document the lives lost due to climate change. There is no official climate-change body count.

The author, Simon Lewis, is, at least, kind enough to offer a concession, that “Admittedly, the impact of climate change on human health and mortality is difficult to quantify.” No kidding.

Lewis’ position is a little at odds with that of George Monbiot, but I suffer a Health Economist’s prejudice: I will take quantification of any and every outcome I can. Even if it means we go about comparing victims of climate change to victims of queues in airports.

Ted Rall

You can buy securities for $100!

Something more new for when I have to teach Monetary Policy.

The U.S. government lowered the minimum amount for buying Treasury securities to $100 from $1,000 in a plan to broaden the market to more individuals.

Treasury bills, notes, bonds and inflation-protected securities will be available to purchase in $100 increments beginning next month, the Treasury Department said yesterday in a statement.

“The new, lower minimum Treasury amount will put marketable securities within reach of more savers and investors in the United States and around the world,” Anthony Ryan, the assistant Treasury secretary for financial markets, said in the statement.

This is probably way too little, too late, but at least it is. One of the big, big differencees between Reagan’s debt and that of this government is that Reagan at least borrowed money from American households – meaning that, yes, American household wealth appreciated as budget deficits expanded.

Now? People eat their seed corn, tapping into home equity for cars and flat-screen TVs. No more govenrment savings, no more household savings. It will be interesting to see what sort of capacity ordinary households have to take advantage of this.

Bush not coexisting peacefully with fish after all

That would be one of the earlier foolish things he said (as President, anyway: “I know the human being and fish can coexist peacefully“). Who knew he could be insincere about the environment? That’s right – we did!

From the same paper that brought us the details of Cheney’s miserable hate-on for all things living, comes yet more critique of Bush directly:

With little-noticed procedural and policy moves over several years, Bush administration officials have made it substantially more difficult to designate domestic animals and plants for protection under the Endangered Species Act.

Presidents George H.W. Bush and Bill Clinton added an average of 58 and 62 species to the list each year, respectively.

One consequence is that the current administration has the most emergency listings, which are issued when a species is on the very brink of extinction.

That graph is a little skewed – there is no reason why the listings under Clinton are optimal, for example – but it paints a pretty stark picture about the priorities of this President.

Does anything so perfectly characterise this administration than not doing their job until the last possibly moment, wherein a shit job has to be done very quickly and, usually, ineffectively? I wonder where in the editorial machine of the Washington Post this environmentalist streak lies, too.

The article is a good read. The procedural, anti-scientific barriers to, well, science; the lawsuits, the open criticism of a department run by sycophantic political placements. Everything we’ve come to expect over the last 8 years, basically.

These are the reasons why arguments that Government should not be given charge of more things are so wildly off the mark – this administration is not evidence of the fallability of (big G) Government – it’s merely an embarrassment for the American voter, and a damn good reason to pay more attention to whom we elect.

By all means, wander about with asinine debates over 3am phone calls, but why not run with that idea across the board? How soon with the EPA be restored under each candidate? How soon will the judicial system be re-centred? Which candidate will actually install a government, rather than a set of politcal excuse-making and maneuvering?

Sadly, there is an Economics of all of this. Do Bush or Cheney actually believe that a lizard is a lizard is a lizard? That the exctinction of a weird type of condor is irrelevant if there are still pigeons in every city? To some extent, yeah. All Bush does is clear brush on a fake farm. Cheney hunts birds raised in cages that can barely fly. This isn’t the Sierra Club.

The reasons why this administration seems not to care about the environment are the same as applied to the energy sector; to roads; to schools. It isn’t the environment, the clean water, the good schools: they’re your environment; your clean water; your New Orleans.

The US is ruled by an aristocracy (and this includes many Democrats) whether the people admit to it or not. We are “governed” by a class of people who can purchase their own environment, their own water, their own roads and schools. They simply do not ever have to conceive of needing the things that we consider to be public goods, because they are not the public: they are the private.

It is just another form of tribalism, really. Why would most Americans really not care all that much about improving the roads in Dhaka, for example? Because we’ll never have to use them, and we’re not Bangladeshi. They’re just not our people, not our concern. Sadly, this attitude is not far beneath the surface of most of the politicians here in the last 10 years or so. Hence my argument that the best candidate is the one least interested in politics and most interested in government: Government benefits everyone; Politics is a zero-sum game.