Democrats Call for Fuel-Efficient Cars

Democrats Call for Fuel-Efficient Cars.

In their weekly radio address, Democrats on Saturday called for a new direction in energy policy, away from gas-guzzling automobiles and reliance on foreign oil.

“America deserves more fuel efficient cars,” Sen. Maria Cantwell of Washington said. But she added “the only way consumers are going to get more out of a tank of gas is if the president and his party help deliver votes in a narrowly divided Congress.”

It’s widely expected the Senate will approve some sort of increase in auto fuel economy as part of an energy bill it hopes to finish in the coming weeks.

The Senate bill would require automakers to increase the fuel economy of new cars, SUVs and pickups beginning in 2020 to a fleet average of 35 miles per gallon. It currently is 27.5 mpg for cars and 22.2 mpg for SUVs and small trucks.

But a group of senators close to the auto industry _ both Democrats and Republicans _ argue that carmakers can’t meet that steep of an increase, especially for SUVS and small trucks. They will try to get approval this week for a more modest boost in the federal requirement to 36 mpg for cars and 30 mpg for SUVs and pickups by 2025.

Bush has said he opposes Congress setting any new arbitrary numerical fuel economy standard.

Cantwell said Democrats want to “take our energy policy in a new direction.”

“America’s strength lies in our ability to invent new and better ways of doing things,” she said. “The challenge we face now is transforming America’s energy policy _ one that is well over 50 years old and too reliant of fossil fuels _ to one that will make America a global leader again in energy technology and get us off our over-dependence on foreign oil.”

Some time during the last semester, I brought to the attention of my students a report by the Civil Society Institute, updating a previous survey, in which they found that, since 2005, the number of cars available in the US that reached 40 miles-per-gallon or more had fallen from 5 to only 2. In Europe meanwhile, the number of such cars available had increased from 86 to 113. I’m not sure how many of my students believed those could possibly be real numbers, but they were and are.

Given what I read currently, I can’t see that changing anytime soon. Congress can barely bring themselves to discuss, let alone have success with, 35 miles-per-gallon, while Europe is pushing through 50 and higher.

We think it’s all conspiracies and Who Killed the Electric Car?, when the truth is far more pedestrian and idiotic. Here we’re simply more into the government-subsidised SUV, in which we ride one-per-idiot-machine on the highways.

Some other time I’ll go into things like car-pooling as a fairly fool-proof approach to an existing circumstance, but my dinner is nearly ready.

The Saturday Cartoons

This has zero to do with economics. One of the greatest discoveries I’ve made on Crooks and Liars has been the blog of Bob Geiger.

More importantly, the fact that every Saturday he posts the Saturday editorial cartoons.

The future of aircraft: Plastics

From the International Herald Tribune:

Facing mounting public pressure to become more fuel efficient and reduce greenhouse gas emissions, the airlines are seeking to replace older jets in their fleets with lighter-weight, less-polluting planes. Increasingly, that means jets that replace traditional aluminum components with plastic-based composites that can significantly reduce the weight of an aircraft.

Aircraft makers, eager for orders, are responding with new designs that make more and more use of these composite materials – much as automakers, sporting goods manufacturers and others have profited handsomely from the revolutionary properties of plastics.

Neat! Aeroplanes that are lighter and more fuel-efficient can’t hurt. Aeroplanes that are built with less shit that needs to be mined out of the ground can’t hurt, either. However, when it comes to our beverages I do know that aluminium cans (Americans: don’t be afraid of vowels. Vowels are your friends) go ‘around’ more than plastic bottles. I wonder if it’s the same for Aircraft? I also know plastics are as petro-chemical as anything else. And a composite plastic, especially one purpose-built for aircraft (so that, say, tail sections don’t come off mid-flight) is unlikely to be all that re-usable.

The article also stated that

…composites can simplify the production process because they allow for the creation of larger, more integrated parts. According to Boeing, this could eventually help speed up its assembly lines by as much as 40 percent. And since composite sections are cast into precise molds, they do not, like aluminum, have to be cut and shaped from sheets of bulk material, which eliminates a lot of waste.

But bigger sections, specially molded, also means that dings, etc. need more expensive repairs, no? And, like cars, replacement rather than panel-beating (allowing for the fact that we’re comparing cars and aeroplanes, and I know very little about either).

To the extent that I’m an economist, this is what we do – we’re walking ‘other hands’. If we’d been around at the time, people would be so busy stoning us to death they’d never even think Socrates was obnoxious. But I read a lot of arguments that all have ‘other hands’. I’m welcome, I know, to start my own newspaper and do my own research. These flipsides just strike me as interesting comparisons worth making, to see just how great a gain we’re making. I think the last line of the article said volumes.

“There is no going back,” said Wheeldon of BGC Partners. “Plastic has finally made its mark in the big toys.”

You Thatcherites by name, lend an ear, lend an ear

John Howard reclaims the upper ground. According to…John Howard.

John Howard has declared there has been a change in the political air, with Kevin Rudd taking “two torpedoes” in recent days on the crunch issue of economic management.

Those were “social equity” and “productivity”. The former came on the heels of a survey of incomes:

New figures have shaken the widely held contention that the Howard Government is lavishing middle Australia with welfare while the genuinely needy go without.

I’ll need to get second opinions on how widely-held that contention was. I hadn’t thought so. I always figured our tax structure was like many these days – landing on the middle-class, light on the Very Wealthy.

The survey by the ABS found that

The average household pays total taxes of $360 a week, but gets back $375 in both cash benefits and government services, such as health and education. Tax raised from the corporate sector covers the difference.

I reckon this means if you have kids. If you don’t have children, Costello really doesn’t stay up worrying about you, offer you cash or do much about the services you require.

The productivity we’ve seen here, already. It was the news that IR restructuring easily spanning the Keating years has not-surprisingly paid off. I honestly can’t see how either of these are torpedoes for Kevin Rudd: after 16 years of expansion I’m surprised low-income households aren’t doing better still, and the labour productivity can’t seriously be new information. But then I don’t read crappy Murdoch papers or watch Today Tonight. I’m not even close to an average voter.

The remainder of the interview given by the Prime Minister was standard pre-election fare. I suspect:

State Labor governments are borrowing money for their spending, ergo you can’t trust Labor (no mention of what they’re spending on, whether the Federal government should have been taking a share of it instead of trying to steal control of the water, or even whether the projects are things we want and are happy to pay for).

State governments are Labor, and if you elect Labor you’ll have wall-to-wall Labor. Howard should just point out how ass-headed the Libs got when they controlled both houses of Parliament. That might help his point.

Howard’s is the “battler’s government”. This never goes away. The trick is that we never bother discussing who the battlers are, or against which they’re battling (old monarchist white rural landowners, battling to be magically returned to the 1950s – good luck with that). We think he means poor people, lower working class, etc. John Howard will use asylum seekers to win an election, and he’d probably hold Jack Lang down, beat him to death with a dispossessed Indigenous man while chocking him with carbon emissions. His ‘battler’ cry really does send me spare.

Unemployment is wonderfully low, and Howard can make it go lower. Apparently he can make the Non-Accelerating Inflation Rate of Unemployment disappear. This goes into the same category, for me, as his promises of no interest rate hikes last time around. If you have an Economics degree you’ll laugh, but most people don’t have economics degrees.

If you’re a young family with children you can’t afford not to stick with the Liberals.

If you have a mortgage you can’t afford not to stick with the Liberals.

How, you wonder, do those last two work? A decade of wedge politics, scaremongering, weaselly-worded snideness in politics has clearly Rovean-delineated (that’s Karl, not McManus) sub-sections of our electorate exactly as nervous and ill-informed as John Howard and Channel Nine can make them.

Obviously Howard has things like the Australian with him – so when he calls something a torpedo, the Australian calls is a torpedo, instead of “hey, that’s funny. Didn’t you blow several billions dollars for years and years on submarines that could barely keep from sinking?”

I also noted interest rates weren’t mentioned. I suspect the Prime Minister doesn’t fancy his chances at all on that one. When they go up, it will no doubt be all the more evidence of how well the Howard Great Economic Leap Forward is going, although at the moment I don’t easily see the spin he’ll give those mortgage-holders. Mind you, with all those budget surpluses behind him he won’t have to – there’s more than money enough for some kind of electoral bribe, I’m sure.

The “Greening” of New York City

From the June edition of The Brooklyn Rail (a recent discovery):

Much of official New York’s present-day confidence rests on a tidy but triumphant narrative of its recent political past. It goes like this:

In the 60s, the city began to live beyond its means, offering generous wage and benefit packages to unionized workers, and spending too much on welfare and other public services. Its coffers drained, the city by the early 70s had turned to the short-term bond market to cover everyday expenses. Sensing trouble, Wall Street cut the city off. The Feds’ reaction to the city’s pleas for help produced the now iconic Daily News headline, “Ford to City: Drop Dead.” The banker Felix Rohatyn and other civic-minded business leaders stepped to help the city put out the fire now known as the Fiscal Crisis of ’75. Working through independent, state-sanctioned bodies like the Municipal Assistance Corporation (MAC) and the Emergency Financial Control Board (EFCB), Rohatyn and company dramatically cut social spending and reined in the unions. As a result, the city started to get back on its feet.

The article is nomically a review of a recent book, From Welfare State to Real Estate: Regime Change in New York City, 1974 to the Present, by Kim Moody. The book’s specific contribution to the ’story’ of New York City is to delve a little more deeply into the structure of the city’s income and expenditure during that period, to demonstrate that, in fact, the city’s cash problem was more a result of serious tax-payers buggering off to Long Island, etc., while something like 40% of the real estate in the city had come in free of property taxes.

There is still not an argument that the conventional narrative was so wrong as to be a banker’s coup. The unions as well as federal, state and city entities still did nut out the solution to the crisis, but there is no denying the ‘crisis’, such as it was, served a recognisable coterie very well indeed.

Richard Wells (author of the Brooklyn Rail piece) proceeds from this point into discussion of the future, specifically Bloomberg’s PLaNYC (I think I have that right). He notes the lopsidedness of New York’s renaissance (short version: good for Manhattan, bad for the Bronx and Queens). He notes that PLaNYC is mostly the same story: sustainability is market-based, city-sweetened and underwritten. I’ve written elsewhere about the dual nature of congestion charges, although I still like them – hopefully the plan doesn’t go for too much privatisation of the enterprise, though.

Similarly the housing issue. Bloomberg’s plan is administrative, i.e. simplify and streamline the process by which developers can develop, rather than structural, providing better links between boroughs, doing something about the varicose vein of the Lincoln Tunnel, and so forth. Inclusion of affordable units in new developments appears to be voluntary also, rather than compulsory, which makes one question the strength of the city’s commitment.

Wells’ critique of PLaNYC is welfarist. Which is fine, but he is talking about New York. As he points out himself,

What is it that makes New York City truly exceptional these days, asks Moody at the start of his analysis? Not its leading position in the parade of global cities, but rather its poverty rate, which at 22% is twice that of the nation. In Manhattan, the top 20% of earners make more than 52 times what the bottom 20% makes, more than five times the national rate. How often do we hear that New York is home to poorest county in the United States, the Bronx?

I don’t see that changing. Manhattan costs a fortune, and great (and every greater) swathes of it are for properly rich people. Housing previously held for essential servicepeople (teachers, nurses, cops) are no longer so reserved. Yet this is New York: people still wake up to clean streets and shelves filled with cheap food and shiny goods. It doesn’t seem to matter the sort of restaurant to which you go, the kitchen is probably staffed by Mexicans (and South Americans).

Manhattan is a rich borough serviced by people earning very little and living in other boroughs. That isn’t going to change, and property owners are making far too much to allow the city to provide the means for workers to live elsewhere and comfortably commute. I keep getting told that new train-lines out into Pennsylvania are coming, but I’m not holding my breath (it’d be the best thing to happen, frankly, but that’s just because I’m from Sydney). Essentially though, Bloomberg’s 25-year vision for New York, at the street level, really isn’t all that different from the last 25 years.

And the police make it hard wherever I may go/And I ain’t got no home in this world anymore

Two stories catching the eye just now:

In Australia, the rapidly-expanding reverse mortgage sector is probably another disaster in the making.

In the US, reverse mortgages promoted by Washington lawmakers, specifically:

Support and encouragement for the use of Reverse Mortgages is coming from Washington DC. The Centers for Medicare and Medicaid recently gave the National Council on Aging a financial grant to promote the use of reverse mortgages to pay for long-term care and long-term care insurance.

The Department of Housing and Urban Development (HUD) is offering a 2 percent discount on closing costs for reverse mortgages that are taken out to buy long-term care insurance.

The SMH story points out something that I actually didn’t know – that no repayments are one of the keys to the reverse mortgage:

In a recent review of reverse mortgage providers, ASIC found five cases of misleading advertisements that made claims suggesting reverse mortgages did not need to be repaid. The statements used in the advertisements included “there are no repayments”, “no loan repayments ever” and “no need to make repayments!!”.

That is, no periodic repayments. The loan is paid out when you die or move to a nursing home. But pay a little and pay often is, as I always understood it, the rule to borrowing money (or saving, or writing a thesis). Take that rule away, and

As no repayments are made until these triggers, the interest compounds and the debt builds quickly. According to the consumer lobby group Choice, a couple who borrow $100,000 secured against their $500,000 house, paying 10 per cent interest, will owe $755,000 in 20 years.

Hence the warning: this is rather a problem, if your’re spending your house on retirement, and end up with nothing left for a nursing home (not recommended in Australia, but probably not recommended anywhere). It strikes me as more pernicious in the US, where the government is actively just trying to save money.

Lenders make a committment not to come after you if the loan ends up greater than the value of the house (making it a little like life insurance, I guess, gambling-wise). But one wonders how long that will last, particularly if we start living longer than the banks realise they’ve made a bad bet. A Congress whoreish enough to pass the recent Bankruptcy bill is clearly not one to be trusted to work for the common good, so much as the private campaign-contributing good. In any event, if you have to sell your house to pay for care, so be it – it’s a cruel world. But I would say financial prudence says sell that house, put the money in a financial asset that serves the intended purpose, and move forth.

Perhaps I’m just conservative and old-fashioned, but surely you will get more money than handing over decades of compound interest to a bank? Reverse mortgages strike me as trying to have your house and sell it too. I just can’t see that working for long. Particularly when the parties involved (banks, agents, the government) clearly have their own, far shorter-term agenda behind getting you to sign.