Friday, December 23, 2005

Should We Be Bugged About Not Drilling in ANWR?

My first reaction was “yes we should be bugged”. I am a strong supporter of development of ANWR resources. A small list of reasons why I support ANWR…
* More access to a variety of sources.
* Maintain the level of output of older wells in Prudue Bay. The synergy of the industry is that if the pipeline is not maintained then all oil drilling in the north of Alaska may cease.
* A vast majority of Alaskans want this development. This includes all but one of the Native Alaskan Tribes in favor of it.
* Jobs and economic growth for the USA and Alaska.
* It will take 10 years before the oil can be brought to market, so delaying this exploration longer is senseless. We need to start test wells now to see the amount and who will bring this oil to market.

Going back to the blog, it is interesting that lkiesling used his students to study this issue. And for any decision, knowing what the amount is crucial. Environmentalists keep saying it is too small to worry about, but block any attempt to explore and see what can be produced.

In "Topic Three" George Will lambastes the environmentalists.

I can understand why lkiesling criticizes the "attaching unrelated pet things to big, crucial bills", but if he understood why the people of Alaska and Senator Stevens gets so mad that the rest of the states act like environmentalist on this issue then he may see that since the other side resorts to filibusters then Alaska is just trying to use every possible way to put their needs into the bills of Congress.

So here's my policy proposal: privatize ANWR. Better yet, have the federal government grant the title to the land to a joint venture of the Nature Conservancy and the residents of the area, and let them figure it out. Then if it's worth it to drill, let the firms interested in drilling make them purchase offers. That will satisfy those worried about income distribution effects of "big oil" being able to buy their way in. Establish the property right on the other side. But if we believe Coase, establishing the property right and reducing the transaction costs will end up with the optimal combination of drilling and caribou migration.

As my last post points out, lkiesling does not understand Alaska property rights. But I have thought about if the "State of Alaska" could divide these property rights between different factions and let "Coase" theory work out the best possible results. Although a basic bid process open to all is what I think would be best.

I have been reluctant to say "give" environmentalists the drilling rights, but knew that once that was done then the oil situation would be solved. Why reward bad behavior? One group that I joked about getting the rights would be the Jews of Israel. This arose because the President of Iran said the Jews could settle in Alaska. You know 19 million acres for 6 million Jews.

Another interesting group that we could give the rights to is African Americans. There has been much written that they never received their 40 acres and a mule. I looked at the numbers and we would have to add more than the 19 million acres of ANWR to get the 3.5 million slaves *40 acres. It may have referred to only the male’s head of household and as such would be less than the 3.5 million. Not that I give credence to reparations, but something to ponder.

VI. The Civil War and Reconstruction

Shallow gas coalbed methane/Property Rights

I will try to show one where well defined property rights and a bidding process could result in better outcomes for all.

Let us go to the great state of Alaska. First the State of Alaska owns all the subsurface mineral rights and only leases these rights out to developers (or groups that show commitment to developing the resources).

So what happened was that the State was approached by Jack Ekstrom, of Evergreen Resources and secured the mineral rights for around 300,000 acres around/in Matsu Valley. Once the surface rights owners (land owners) found out about this they were upset that some outside interest could come in and take something they felt was theirs. Although they had little to stand on that all deeds spell out that they don't own the subsurface rights and the State clearly makes this clear also. This is one reason that the PDF(Permanent Dividend Fund) was created.

What came next was all of the horror stories about contamination, disruption in transporting, noise and commotion of the drilling apparatus, etc. And this led for the need for regulations and more regulations. This was partly due to most of the regulations pertained to deep oil wells. Scandals and back dealing was surmised. So instead of the market allowing voices to be heard, it went first to the legislative and executive branches by getting regulations to prevent what could happen. Also there was much outcry about the State buying back the leases and voiding the contract on some lands. And this then led to the judicial by trying to block the deals.

The Commons has a post on the "Coasean transactions".

Also of note "Science and Economics Work Together Toward Environmental Improvement"
I'll let the full story speak for itself--but I like the last line: "If you don't even have incentives, how can you get people to look after the environment?"

So let us back up. When the state saw there was interest in developing coalbed methane wells, they should have opened up the whole process to everyone that wanted to be involved. While the state has the interest in developing its resources, it should realize that if the market thinks it is a good venture then it will happen through various mechanisms. The state should be less concerned if a lease will actually be used or not, but more concerned that the open market can make these decisions.

As the State has concerns about transactions costs, they could look at ways of getting the bidders together in the most efficient ways (internet-does ebay work as a model?). When dealing with one bidder (Evergreen Resources) the transactions costs were low. But just because something is more difficult does not give excuse to not do it (KELO?).

The exact amount I am not sure of the leases but I remember that it was close to $1/acre/year. What is the value to a farmer not to have the wells on his farm? What would be the value to an environmentalist to not have the wells in sensitive wildlife areas? Now of course since the people that own the surface rights would also own the leases, the Coase theory could hold true.

Evergreen Resources would now either buy up subsurface rights on lands that had no bid or decide to what level they wanted to bid based on the research that had been done already. Instead of one interest in the process to determine where was the best choices to drill, we would have all interests at the bargaining table (environmentalists, farmers, land owners, speculators, investors, NGO's, other government agencies, cooperatives and Native Corporations).

The choices to where to drill now becomes easier for Evergreen. Instead of a single map of best places to drill with the threat of retaliation by the land owners, they face two maps overlaid with value to not drill and value to drill. Of course if ER discovers a hot spot (high probability of profitable reserves) then they would go to the owners of the lease and negotiates a deal that benefits both parties.

Links of note:
Alaska’s latest development stir

Tuesday, December 20, 2005

The GDP Myth, Why "growth" isn't always a good thing

This is a continuation of the GPI discussions. The first document (If the GDP is up, Why is America down? (PDF)), by Redefining Progress, is a total summation of what other pages contained, so I am only taking notes on points of interest.
The most remarkable point in the first article is that Clinton sent his Economic Advisors on the road to trumpet how well the economy was doing.
Another random point is that instead of measuring tangible items the use of money to measure utility was used. So by definition the price we pay for an item is at least the amount of utility we will derive from the consumption of such an item or service.
This statement is interesting: "[W]e adjusted the GPI for the extent to which the whole population actually shared in the increase." Which could mean that an estimation of the population that benefited as a percent times the adjusted GDP.
Other documents alluded to natural resources being depleted, but this one spells out that non-renewable resource extraction is also a negative entry for GPI. Oil and other minerals is like money in a mattress that does no one any good.

The title link above talks about how US citizens are fat. But the level of GDP growth does not mean that people will get fat. But this is interesting:
C. Everett Koop, the Surgeon General in the Reagan Administration, has said that some 70 percent of the nation's medical bill stems from preventable illnesses - that is, ones that are mainly lifestyle induced.

This shows me that yes we have some problems with moral hazards and the fact that we are not creating the incentives/responsibility of citizens to manage their own health.

One aspect that I have not talked about is that a growing GDP may mean a changing economy more than an expanding economy. What I mean by that is that just as we transferred to an industrial economy from an agricultural now we will change into economies that will actually use fewer resources per dollar of GDP. Just as people move up the hierarchical needs over time we will move up to self-realization phases. What do gyms produce? In a simple way it is the spending of calories that we have too many of.

The last link is by Thom Hartman at: Democracy - Not "The Free Market" - Will Save America's Middle Class by Thom Hartmann.
In actual fact, there is no such thing as a "free market." Markets are the creation of government.

No completely wrong, there were markets (at least trade) before there was governments and even monetary units. Markets are only the extension of trade between individuals to create a place for trading between consumers and producers or more broadly as sellers and buyers.
Thom tries to say that governments create the markets but they only are the facilitators of the markets. By creating a framework allows the markets to work more efficiently.
He has brought up that the middle class is shrinking but he never mentions what he thinks what the definition of middle class is. If middle class is the people that are in the 40-60% of the population as ranked by income then it never changes except as the whole population increases or decreases. I guess he is refering to manual labor (blue collar). But do we really want to have manual labor as the majority of jobs, wouldn't it be better to get to the next level of human development and expand the use of our minds and leave manual stuff to machines and robots?
When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.

Actually this shows that Thom does not know the benefits of free trade and the fact that 99.9 percent of economists disagree with him. The worldwide depression lasted longer and deeper because of the projectionist policies of the time. So every country wanted to expand exports but continued to hurt the import side until no one had the foreign currency to buy for imports.

Monday, December 19, 2005

GPI (Genuine Progress Indicator) Part Four

Although I think it would be beneficial to look at a variety of different measurements including this one, but the raw data and the variables of their study I could not find. I just found a PDF of up to year 2000 for the study, but again no data to verify the results and see what biases are used in the calculations.

Since they have measured GPI as distinct from GDP it does not need to be set even to one date, but I still wonder if having a homemaker is so good then why isn't the GPI higher than GDP in the 50's and 60's. You know, in the good old days.

Specifically, the GPI reveals that much of what economists now consider economic growth, as measured by GDP, is really one of three things: 1) fixing blunders and social decay from the past; 2) borrowing resources from the future; or 3) shifting functions from the community and household realm to that of the monetized economy. The GPI strongly suggests that the costs of the nation's current economic trajectory have begun to outweigh the benefits, leading to growth that is actually uneconomic.

Since free trade is creative destruction it would be natural that some people would see blunders but they are second guessing. Borrowing is just the same as a home loan is a long term investment that you borrow from the future. When tasks are switched to the monetized economy just means that the marginal utility derived from paying for the services is greater than the next best possible use of the money.

If the mood of the public is any barometer at all, then it would seem that the GPI comes much closer than the GDP to the economy that Americans actually experience in their daily lives. It begins to explain why people feel increasingly gloomy despite official claims of economic progress and growth.

Of course no proof of this. And maybe this is the Left Wing Media that constantly bombards us with bad economic news but don't present the possitive news.

It is interesting that in Less Developed Countries since the wage rates are lower, then a lot of services we normally do ourselves in the USA is monetized by even people in what we consider the middle class.

This will be a repeat of most but let me again go over what they consider additions and subtractions for the GPI.
GPI subtracts crime and family breakup. Again these resources would count at present time but in the long run would degrade the GDP. We could also count crime as just a redistribution of wealth and should be counted in GPI. LOL.

If GDP does not count household and volunteer work, how can this not make GPI higher than GDP especially in the 50's and 60's? I would not count housework done by self but I would count the value to society of raising children and caring for enfirmed family members. Because there is more value in a family member doing these services than a stranger doing it. As far as routine house task not counted, I assume that the marginal utility derived from outsourcing is not enough to pay for these consumers and some even derive utility from cleaning their own home.

While severe income inequality is a concern, what degree of inequality makes it a concern? As mentioned in other posts, some inequality is desired, for inspiration to strive for success. A better gage is not equalizing outputs but that people have opportunities to raise obove the demographic they were born into. As we can see most rich people that I read about in the news earned it in their lives and not from inheritance. Just think of the richest man in the world (Bill Gates). What was he born with compared to what he has now?

Resource depletion is not counted in GDP but how is this to be measured. I know that many measures of the pollution level in the USA are much better now than 50 years ago. Does the GPI correctly show improved water and air quality?

GDP does not count leasure time as commutes are increasing and they are eluding to the fact work hours are increasing. But unlike most economists, I believe that work does provide utility and not merely a negative utility when consumed. Some of the free time is tied to the demographic makeup of the work force.

Defensive purchases are the purchases when something bad happens like accidents. While yes this is more or less redistribution of resources in the short term they are a drag on the GDP in the long run. So measured.


The GDP confuses the value provided by major consumer purchases (e.g., home appliances) with the amounts Americans spend to buy them. This hides the loss in well-being that results when products are made to wear out quickly. To overcome this, the GPI treats the money spent on capital items as a cost, and the value of the service they provide year after year as a benefit. This applies both to private capital items and to public infrastructure, such as highways.

More crapola, products are not made to wear out quickly. Selling electronics for years I know that the number of products that last a long time is good. How do the authors propose to measure the value of the services provided by durables and infrastructure? But since a purchase shows that it will provide at least that amount of utility then measuring it that way seems reasonble and no need to adjust this measurement.

Borrowed money in the long run can be a drag on future GDP depending on if the borrowed money was used for investments or consumption. But in one way if the rest of the world wants to provide us with a long term credit card at below world market rates, would we not take advantage to such generosity?

Next will be "The GDP Myth Why "growth" isn't always a good thing".

G.D.P. R.I.P.


Sunday, December 18, 2005

Blair: globalisation comes from the bottom up

Topic One
When I have a chance to see Blair speak, I always consider him a brilliant person even if he is more liberal than me. In the above link he has again shown how globalization is not to be feared, but gives consumers more choices and better quality goods and services. Individuals will be the driving force in liberalization. The ironic fact is that it would be better for the poor of the world to have access to global markets than to have aid by about 3 to 1.

Topic Two
Alan Krueger: Civil Liberties and Terrorism
The belief that suicide bombers [murdercide] are poor, uneducated, disaffected or disturbed is contradicted by science. Marc Sageman, a forensic psychiatrist at the Foreign Policy Research Institute, found in a study of 400 Al Qaeda members that three quarters of his sample came from the upper or middle class. Moreover, he noted, “the vast majority—90 percent— came from caring, intact families. Sixty-three percent had gone to college, as compared with the 5–6 percent that’s usual for the third world. These are the best and brightest of their societies in many ways.” Nor were they sans employment and familial duties. “Far from having no family or job responsibilities, 73 percent were married and the vast majority had children. . . . Three quarters were professionals or semiprofessionals. They are engineers, architects and civil engineers, mostly scientists. Very few humanities are represented, and quite surprisingly very few had any background in religion.” ...

[A] necessary condition for suicide is habituation to the fear about the pain involved in the act. How do terrorist organizations infuse this condition in their recruits? One way is through psychological reinforcement. ...[T]he celebration and commemoration of suicide bombings that began in the 1980s changed a culture into one that idolizes martyrdom and its hero. Today murderciders appear in posters like star athletes. Another method of control is “group dynamics.” Says Sageman: “The prospective terrorists joined the jihad through preexisting social bonds with people who were already terrorists or had decided to join as a group. In 65 percent of the cases, preexisting friendship bonds played an important role in this process.” Those personal connections help to override the natural inclination to avoid self immolation. “The suicide bombers in Spain are another perfect example. Seven terrorists sharing an apartment and one saying, ‘Tonight we’re all going to go, guys.’ You can’t betray your friends, and so you go along. Individually, they probably would not have done it.”

One method to attenuate murdercide, then, is to target dangerous groups that influence individuals, such as Al Qaeda. Another method, says Princeton University economist Alan B. Krueger, is to increase the civil liberties of the countries that breed terrorist groups. In an analysis of State Department data on terrorism, Krueger discovered that “countries like Saudi Arabia and Bahrain, which have spawned relatively many terrorists, are economically well off yet lacking in civil liberties. Poor countries with a tradition of protecting civil liberties are unlikely to spawn suicide terrorists. Evidently, the freedom to assemble and protest peacefully without interference from the government goes a long way to providing an alternative to terrorism.” ...

It was so good I had to include the whole text provided. But to sum up terrorists are not the downtrodden, strong psychological reinforcement is necessary for recruitment, and last increasing civil liberties is the most important fact for reducing terrorism (Democratic Peace). It was also surprising that people in the Humanities were few in number as well as any in a background in Religion. Actually studying humanities and religion appears to reduce the chances of terrorism. Something to think about.

Topic Three
Fake Drilling
A quarter of a century of this tactic applied to ANWR is about 24 years too many. If geologists were to decide that there were only three thimbles of oil beneath area 1002, there would still be something to be said for going down to get them, just to prove that this nation cannot be forever paralyzed by people wielding environmentalism as a cover for collectivism.

I agree with George Will's presentation of collectivism. His ideas seem close to reality, in that no matter what proposal is raised about any source of energy, one or more environmentalist groups have to oppose it. So its like the leaders of environmentalism pretend to be looking for alternative sources of energy but love to point out any problems, no matter how trivial. Similar to the Kennedy's opposing wind mills in the Atlantic 20miles from the coast.
But while ANWR is 24 years overdue, I disagree that we would want to extract 3 thimbles of oil. Mostly on the basis that test wells need to be drilled and from there we could get a better understanding of what oil is available. If as little as environmentalist try to say then yes we could decide then.

The World/Those Crazy French

He managed to snatch victory in the 2000 election and he won more easily than expected in 2004. But as far as History is concerned, the legislative ballot taking place in Baghdad today [Saturday] is without a doubt more important for Bush than the two previous ones.

Illogical that this could be more important even in history than winning the election twice. I can see that probably more words will be written about the Iraqi election and the outcome.

But if he has suddenly confessed, it was only to avoid future regrets. George Bush is only "taking responsibility" in order to regain control. He even went so far as to consult the Democratic opposition in Congress, something he had never done since the beginning of the Iraq War.

Now to say Bush has never consulted with the Democratic party is such a nonsensical statement.

Indeed, the cowboy from Texas doesn't enjoy the war that much anymore, and would like to bring the GI's home; and he isn't afraid to say so. But he knows it will be long, and even France in no longer in any hurry to see American soldiers go home, leaving Iraq in total chaos.

So now the crazy French labeled Bush (never liked cowboys, even Reagen) and knows what Bush likes but are unwilling to help out when even its in their best interest. Just as James Buchanan said today that no matter how we got ourselves here, we need to support the President and find ways to help the process instead of being an obstacle to progress.

Links of interest:
Memri TV

Iraq Holds Bush's Biggest Election

Saturday, December 17, 2005

"What's wrong with the GDP?"/GPI (Genuine Progress Indicator) Part 3

By the way of Israeli.
This will be some repeating of the points we covered in GPI One and GPI Part Deuce, but we will finally look at GPI indicator.

Since the GDP records every monetary transaction as positive, the costs of social decay and natural disasters are tallied as economic advance. Crime adds billions of dollars to the GDP due to the need for locks and other security measures, increased police protection, property damage, and medical costs. Divorce adds billions of dollars more through lawyer's fees, the need to establish second households and so forth. Hurricane Andrew was a disaster for Southern Florida. But the GDP recorded it as a boon to the economy of well over $15 billion...
The GDP also adds the cost of prisons, social work, drug abuse and psychological counseling that arise from the neglect of the non-market realm.

This again goes back the broken window posit that even though resources are diverted to these problems which increases in local level of GDP growth, but it diverts resources that could have better allocated to more productive uses. Crime, prisons, drug abuse and all counseling take potential productive members of society out of the work force even if just for temporary times. So while GDP may increase in the short run by lowering savings and increasing consumption, it limits the potential for long term growth.

The crucial functions of childcare, elder care, other home-based tasks, and volunteer work in the community go completely unreckoned in the GDP because no money changes hands. As the non-market economy declines, and its functions shift to the monetized service sector, the GDP portrays this process as economic advance.

This underestimates the GDP level. But the problem with measuring such non monetary transactions would be how to calculate the value to society. Would the benefits be calculated as the replacement to have someone with those skills do the task, or the wage scale of the person doing such work? For example in "Desperate Housewife's" TV show, the wife was staying home and taking care of the children, but the roles changed when the husband lost his job. Since the wife earned more income than the husband would the value be just what someone to replace them in the various tasks or the opportunity costs and thusly different between the husband and wife.

The GDP violates basic accounting principles and common sense by treating the depletion of natural capital as income, rather than as the depreciation of an asset. The Bush Administration made this point in the 1992 report of the Council on Environmental Quality. "Accounting systems used to estimate GDP" the report said, "do not reflect depletion or degradation of the natural resources used to produce goods and services." As a result, the more the nation depletes its natural resources, the more the GDP goes up.

Let me break this down into non-renewable natural capital and renewable. As far as renewable resources, there is several harvesting techniques that will still maintain the resource base. One technique is to harvest so that the base produces the most volume on a yearly basis, but most environmentalists do not like this. Well defined property rights are important to maintain the capital for the long term.

The GDP does not record depletion of the resource base and it also does not count the amount of the resource base. Not to get too far ahead, the GPI also does not count the amount of natural capital. So we could say that GDP and GPI underestimates the levels of both measures. It is also true that it does count as a negative when 6 million acres burn nationwide in forest fires or over 4 million in Alaska alone. Another thing to consider is that if we do not use the resources resposibly that are provided to us, then how do we increase the well being of its citizens?

And this goes along with non-renewable resources also that not using the resource benefits no one. Some environmentalist say that we should save all resources for later generations, but of course it is selective on what resources to not exploit. No one says not to mine gold, silver, platinum, etc. If we do not use the resources now, what is to say that future generations will need it anyway. In the future what we save may be meaningless in the future. Now the question becomes what is the resource depletion that makes the most sense. One way an economist would answer this is that the value of resources in today's dollars if extracted at the maximum non damaging extraction would be compared to the future price adjusted for the expected interest rate. More clearly the question would be if you had the potential to extract $1 million now or in one year it would be valued at $1.05 million but the interest rate was 4%. Thus it would be better to extract the resource in the future, but if the interest rate was 6% it would be better to extract the resource now and put it into the going rate of interest.

Superfund clean-up of toxic sites is slated to cost hundreds of billions of dollars over the next thirty years, which gets added to the GDP. Since the GDP first added the economic activity that generated that waste, it creates the illusion that pollution is a double benefit for the economy. This is how the Exxon Valdez oil spill led to an increase in the GDP.

But again these resources are diverted to more useful endeavors. The money that Exxon pays (that they should) out could have been better used for reinvestment and further enhancing the capital base. Can anyone say that a country that experiences many natural or man made disasters have long term growth?

By ignoring the distribution of income, the GDP hides the fact that a rising tide does not lift all boats. From 1973 to 1993, while GDP rose by over 50 percent, wages suffered a decline of almost 14 percent. Meanwhile, during the 1980s alone, the top 5 percent of households increased their real income by almost 20 percent. Yet the GDP presents this enormous gain at the top as a bounty to all.

This site does not give the raw data to confirm or see how GDP rose by 50 percent when wages (whose wages) declined by 14% and still have the top 5% real income increase by 20%. In a free economic society, who is to decide when someone makes too much? While yes inequal distribution of income may be of concern, what is too much concentration and is it possible to be too egalitarian? When all people are equal then why stive for excellence? Why compete if the worst you will be is equal to all others? Thus what level of equality is best and what scale is used?

I feel that a better gauge is mobility of individuals into other income brackets. If you look at some of our most wealthy individuals you will see that most did not come from wealthy families but made it on their own. I guess the best example is Bill Gates went from humble begginings to being the richest man in the world.

In recent years, consumers and government alike have increased their spending by borrowing from abroad. This raises the GDP temporarily, but the need to repay this debt becomes a growing burden on our national economy. To the extent that Americans borrow for consumption rather than for capital investment, they are living beyond their means and incurring a debt that eventually must be repaid. This downside of borrowing from abroad is completely ignored in the GDP.

One aspect that I think people forget is that for every dollar of debt is a dollar of assets of someone else. Thus consumer debt could be considered either corporate assets or consumer assets (money balances). A large percentage of consumers have home mortgages but is this bad to have a chance to make present consumption with future earnings?
I have been strugling to come up with an easy answer to this besides the market will eventually solve this dilemna. No government/organization wants to suddenly and without warning to change the location of their large investments and holdings. Because in the short term, no one is there to purchase all your holdings and as soon as the prices of what you hold starts to fall others in the market will start to increase purchases. Even if China wanted to dump (sell in a fire sale) their holdings in the US, the prices would drop and China would loose lots of money. Secondly other
Asian countries, or other parts of the world do not have to follow China's lead when the prices drop. If you have enough power to influence prices, then you want price stability.
A very good report is Global Current Account Imbalances: Hard Landing or Soft Landing. While I would love to cover this whole article, let me just say that in one way I was wrong. I had heard all the gnashing of teeth about the Current Account deficit at the 6% of GDP or 600 million. But with an economy of over 11 trillion this is a trivial amount. We could pay it off in 6 months at 1% per month. But the true number is U.S. indebtedness to non-residents which is about 25% of GDP accumulated as of 2003 or in other words 250% of exports. (While this is substantial it is not as much as the Federal Debt so foreigners are paying some of the debt they are not paying for all.) This last figure would mean we would take 2 1/2 years of zero imports to pay this back.

Sorry but again it looks as if it would be better to create another post to discuss the benefits of GPI as an index next time.

Links of note:
Browse International Employment Data from the BLS
Civilian Participation Rate
Trinity College
(PDF)GPI of USA 1950-1999

Friday, December 16, 2005

Santa's Terrorist/How the Left is WACKY

The link above at is where I first saw the reference to an interview between Sam Seder and PHILLIPS the interviewer.
The full CNN Transcript starts with the introduction of:
Merry Christmas or happy holidays, a Christmas tree or a holiday tree, Which should it be? It depends on whom you ask. We've seen controversy, most notably prompted by the White House. It sent out cards, this card as a matter of fact, wishing a holiday season of hope and happiness. No mention of Christmas.

Some thoughts now on the subject. Sam Seder hosts the show "Majority Report" on Air America Radio. Bob Knight is the director of the Culture and Family Institute, it's affiliated with the Christian conservative organization, Concerned Women for America.

So why is the interview of any importance for someone that works for Air America? Just to show how the liberal left is so wacky that they can say such derogatory and hateful speech but says nothing as long as it is attacking what they feel is conservative (political) religions.

SEDER: Listen, as far as the war on Christmas goes, I feel like we should be waging a war on Christmas. I mean, I believe that Christmas, it's almost proven that Christmas has nuclear weapons, can be an imminent threat to this country, that they have operative ties with terrorists and I believe that we should sacrifice thousands of American lives in pursuit of this war on Christmas. And hundreds of billions of dollars of taxpayer money.

PHILLIPS: Is it a war on Christmas, a war Christians, a war on over-political correctness or just a lot of people with way too much time on their hands?

SEDER: I would say probably, if I was to be serious about it, too much time on their hands, but I'd like to get back to the operational ties between Santa Claus and al Qaeda.

PHILLIPS: I don't think that exists. Bob? Help me out here.

SEDER: We have intelligence, we have intelligence.

PHILLIPS: You have intel. Where exactly does your intel come from?

SEDER: Well, we have tortured an elf and it's actually how we got the same information from Al Libbi. It's exactly the same way the Bush administration got this info about the operational ties between al Qaeda and Saddam.

PHILLIPS: Okay, Bob Knight, Sam is tying in now the lack of information regarding weapons of mass destruction and somehow moving that into Santa Claus. Help me out here. What's going on? Is this a war on Christians, a war on Christmas? Is this too much political correctness?

So do you get that he is equating Christmas with terrorists with WMD, and that we should kill and the military sacrifice to wage this war. So instead of talking about wording in what people say when they meet, Seder has to show such hatred to equat Santa Claus and al Qaeda. But "Christmas" is not presented by Santa Claus. While they are both part of our customs, Christmas is to represent the birth of Jesus Christ. So "Merry Christmas" is not a Santa Claus phrase.
Then Seder has to bring in issues of torture and Libby to this debate, about saying a phrase at a holiday.

The next section is just drabble and argueing about other hollidays and even winter soltice as a holiday. Next Seder becomes outraged:
KNIGHT: OK. You know, when the Nazis moved into Austria in 1936...

SEDER: Oh, that's offensive, Bob, to raise Nazis. KNIGHT: They immediately removed from the schools. You can read about it in...
SEDER: Kyra, that's offensive.

KNIGHT: ...that we're moving toward that kind of attitude in this country.

SEDER: The Puritans also outlawed Christmas. The founding fathers of this country would fine you in Massachusetts if you celebrated Christmas in the beginning. So don't talk about Nazis, Bob. I think that's really inappropriate.

Why do you have to bring hate to this Christmas and holiday season? That's so sad, Bob.

KNIGHT: Well, let's go to the Soviet Union then too. They had grandfather frost.

Well, it's the truth. You ought to read the book yourself, and maybe you'll change your mind.

SEDER: It's just sad that you have to raise Nazis when you're talking about Christmas and the holiday season. And we all know that Christmas actually, Tannenbaum, it's a German holiday. Bob, I'm really, really disappointed in you.

KNIGHT: I'm sorry to disappoint you, but if you can't understand the force of history...

SEDER: To bring up Nazis, Bob.

KNIGHT: I'm not calling you a Nazi.

SEDER: Oh, who you calling Nazi? Who are you calling a Nazi, sir?

KNIGHT: I'm not.

PHILLIPS: Gentlemen, we got to let it there. We could probably...

SEDER: You are, sir.

PHILLIPS: Sam Seder...

SEDER: I'm offended.

So it was ok to bring up terrorists and war and again equating these with saying Merry Christmas". But it was not ok to say Nazi. Talk about double standard. One way to think about this would be that if we carried out his war that we should kill people that say "Merry Christmas" and willingly sacrifice soldiers to carry out this war.

So what does the left say about this:
From ProgressNow kudos:
a great (and very funny) exchange on CNN yesterday, thanks to Air America's Sam Seder:

From Bob thinks that the bogus (and offensive term in context of what is happening in Iraq) "War on Christmas " is an attack on people of faith. Knight also thinks that using the phrase " Happy Holidays," is offensive. Seder wondered how Bob would even get on TV if it wasn't for his claim that faith is being "cleansed" from the public square. You know Bob was in trouble in the segment when he brought up the Nazis. I'd like to find out how much money Jerry Falwell and his buddies have raked in since this started. Oh, and FOX is having a Holiday party.
I guess the crooks have never heard of an intellectual war. I guess I wonder if Seder would not have been on TV if he did was not willing to debate such topics. I wonder how much money all the liberals have grafted since this started? (Chewbacca defense).
So the left thinks it was ok to mention an actual war where people die and terrorism where innocent lives are taken. But it is not ok to even mention the word Nazi.

From AmericaBlog:
I know officially AMERICAblog ♥ Anderson Cooper, and we want to marry Dan Savage (after we knock off his husband), but we just might have to make room in our hearts for Sam Seder of Air America. His "war on Christmas" riff on CNN today will go down as a classic.

Seder, an avowed Christ-killer I believe, was debating one of the men at the Concerned Women for America, Robert Knight, who is one of the biggest nastiest homophobes on the planet.

So a love fest with all the lefties and a classic for me also. Just call people names when you don't want to discuss the issues (Ad Hominem).

From atrios
Sam Seder did a pretty good job on CNN today giving this issue the degree of respect it deserves:

So if it deserves such little respect then why do the interview unless Seder wanted air time that he accused Knight.

Lastly, even though I put little emphasis on what people that have no control (power) in our society, I wanted to show how the left has no will to hall monitor themselves. Total people that commented on the web blogs is atrios=433, americablog=63, crooks=517, progress=0, and total 1013. Over 1000 people commented on a non important issue to their causes or indentity.

Instead of opening up another post, I thought I wanted to add Al Franken to my list of Wackies. Sometimes You Feel Like a Nut... (41 comments )
Why on God's green earth don't the Peter Paul people make a dark chocolate Almond Joy? It makes absolutely no sense.

Now I complained about this on the air, and the Peter Paul people sent me their dark chocolate Almond Joy, except all the coconut was chocolate. That's not what I want. I want an Almond Joy that's just like a Mounds except with an Almond. That's what I want.

I have no problem with consumers voicing their opinion in the market and even on the air as to what they want. But is the best that Al can come up with to complain about? The evil corporations have no obligation to fulfill his desires and whims. I know that the USA is the root of all evil but if the biggest desire is to have a specific candy bar made for you, then maybe we don't have it so bad here, and corporations do provide a great deal of benefits for our society. As bad as it is here in the USA, I don't see too many migrating away.

Sam Seder and the War on Christmas
america blog.
war on christmas
Air Amercia
Concerned Women for America

Wednesday, December 14, 2005

The most interesting conversations on Thom Hartman's Blog

Below is some of the more interesting dicsussions on Thom Hartman's board. This is more for me keeping track of important information that I put on there and/or others that may have similar or even different points of view from mine.
"The Terrorism of Operation Iraqi Freedom, Cambodia and Beyond" started off pretty bad for sunny since he had to revert to the four letter words. I tried to smoke out if he was a believer in communism like Noam Chomsky his buddy similar to the way he said the relationship was. But I had plenty of fun by putting Mao songs all along and having a terrorist attack reported each day. Sunny tried to paint the USA as the evil empire again and again but in the end I wrote about and not refuted that 20 deaths by the US was suppose to eqaul 60,000 deaths in Yugoslovia. I also learned that Hindus are the ones that first developed our numbering system. Sunny tried to split words by saying we should thank the Muslims for the numbers thing. But when I proved that it was the Hindus that invented it he still held that they gave us the numbers. So learned that he will say something then later claim that is not what he said since he only implied what he said and not those exact words.

India was my first long thread. I first learned that not all on the board want to learn about the world but to spout hate for the USA. I first tried talking to Kate and explore some interesting facts of India. Once I said India was a democracy then the fireworks bagan with sunny showing a disdain for democracy, but having little knowledge of even what I was talking about. Then he presents the McDonald's Peace formula that I disproved in more than one way but even in the end insisted that this theory was right even when then author disproved his own theory. I then had an encounter with Ren for the first time. His great contribution was to question when I said "what the conversation to center around." After showing his own mistakes on a couple of other threads then he no longer bothered me. One time I corrected his grammer and reposted it. Ha,Ha. But in the end it was interesting exploring the statistics on the "Democratic Peace" theory.

GDP Up 4.2% in Third Quarter started out with positive news on GDP which led to a discussion by me on stock indices are not a good gage of the economy. Then a few liberals jumped in to say that GDP is a bad measure of the economy and said that GPI indicator is better. This inspired me to write and continue to for posts on this blog about GPI. And the last entry was of more good news presented by myself.

Staged has some of the same stuff as Staged.
The best one of staging by the media is zombietime. Even Dr. Rummel thought it was such a good example he said he wanted to use it also.

China=Democratic Communism
We often hear how bad the USA is and how we are the incarnation of evil, but I say let us look at one of the last few communist countries and see what information is available on this subject. This thread tries to show some of the atrocities that the Chinese have and are continueing to perpetuate on their people.

Link from Sunny.
I put both links here to make sure the link was saved, according to the web site:
Please don't link to these images from bulletin boards, which has led to their previous withdrawal.
Send bad links to info[at]

A quick perusal of these ghastly pictures show more deaths from terrorists bombs. Of course any death by explosions is bad. And some were of little girls blown up or lost limbs.

Monday, December 12, 2005

Bush Speech and the Resistance want us to stay.

This is a repeat from DailyKos diary.
But more recent news:
Poll: Broad Optimism in Iraq, But Also Deep Divisions Among Groups.
Specifically, 26 percent of Iraqis say U.S. and other coalition forces should "leave now" and another 19 percent say they should go after the government chosen in this week's election takes office; that adds to 45 percent. Roughly the other half says coalition forces should remain until security is restored (31 percent), until Iraqi security forces can operate independently (16 percent), or longer (5 percent).

So 71% of Iraqis want coalition forces to stay for now. Hat tip Loganthor.

A former cabinet minister has formed a political front to represent the demands of an umbrella group of fighters in Iraq demanding a timetable for US troop withdrawal.

Yes a vast majority of Iraqis and a vast majority of Americans want withdrawal of troops but even the resistance do not want us to leave now...
While yes McCellen passed out excerpted copies of the speech, he did not give the full speech as far as I see and AP wrote it as it did happen with quotes signifying that he said the exact phrases.

It does look as if the president did stay on the speech text. I would have loved if he would have stumbled on his words or change the speech around and make some changes. Thusly he would get the word out first and then say no I meant this...

In this paragraph by AP:

"The terrorists can kill the innocent, but they cannot stop the advance of freedom," he said in a speech that was to be attended by 750 soldiers and airmen. "They will fail."

In the original speech version he probable mentioned it more than once but in the speech these two phrases above were 23 paragraphs apart.

And now for something completely different...

Iraqi front demands US withdrawal:

A former cabinet minister has formed a political front to represent the demands of an umbrella group of fighters in Iraq demanding a timetable for US troop withdrawal.

Yes a vast majority of Iraqis and a vast majority of Americans want withdrawal of troops but even the resistance do not want us to leave now...

Al-Samarrai said that a group of Iraqi fighters he is representing, wants US occupation troops to leave in no less than one year and no more than three years.

Just as a poll of Iraqis recently showed most wanted US troop withdrawal but only 12% wanted immediate withdrawal. Thusly 88% of Iraqis wanted us to stay for at least the time being.

The US has been beefing up the civilian forces (40,000 in recent raids) but has anyone asked the question as to who will defend the sovereignty of Iraqi air, sea and land? As of 2000 Iran had a standing army of +500k.

Saturday, December 10, 2005

Mugabe: No crisis, UN envoy lying/Mugabe King of the Losers

President Robert Mugabe has accused the United Nations' most senior aid official of lying about the severity of Zimbabwe's humanitarian crisis and said many other African countries were worse off than his.

This is the most funny thing I think I have heard an African leader say. Yes, at least my country is not as bad as other despot ruled countries. But it is hard to beat this:
Zimbabwe police and recruits used bulldozers and sledgehammers to demolish shacks, homes, market stalls and small business in poor areas across the country during what was dubbed Operation Murambatsvina, or Drive Out Trash.

The operation that began in May and was declared over in July left more than 700,000 homeless or without livelihoods, or both, according to UN estimates, that the government has rejected as an exaggeration.

Now after destroying peasants homes what will he allow relief organizations to do to solve the problems he created:
During talks with Egeland, Mugabe refused a UN aid offer of tents to shelter the hundreds of thousands of victims of the urban demolition campaign, saying he would only accept assistance to build permanent housing.

Now what shall the UN do for the situation...
Egeland ended his mission to Harare and Bulawayo on Wednesday warning that "the humanitarian situation in Zimbabwe is very serious".

"The prospects are worrying. The need for international assistance is big and growing. The people of Zimbabwe are suffering under several big problems," he told a news conference in Johannesburg.

But unless the aide is channeled directly to the people in need through NGO's and not the Zimbabwe government we should not send relief. This is because in the end it will only hurt the people we want to help.

And I can never understand the opposition. If they think they are safe from this tyrant they are dreaming. If Mugabe is willing to destroy the houses of 700,000 people that opposed him, what else do you think he would do if given the chance. I personally would flee the country just as the boat people did.

Links of note:
How the Loss of Property Rights Caused Zimbabwe's Collapse

Above link went bad, probably GlobalisationInstitute changed their website so old links do not work now, but the following two links (2nd PDF) were what they were linking to:
How the Loss of Property Rights Caused Zimbabwe's Collapse by Craig Richardson

Report as PDF


Friday, December 09, 2005

China and the Kelo Decision

Hat tip to Kate.
Chinese Police Kill Villagers During Two-Day Land Protest

DONGZHOU, China, Dec. 8 -- Paramilitary police and anti-riot units opened fire with pistols and automatic rifles Tuesday night and Wednesday night on farmers and fishermen who had attacked them with gasoline bombs and explosive charges, according to residents of this small coastal village.

The sustained volleys of gunfire, unprecedented in a wave of peasant uprisings over the last two years in China, killed between 10 and 20 villagers and injured more, according to the residents. The count was uncertain, they said, because a number of villagers could not be located after the confrontations.

The tough response by black-clad riot troops and People's Armed Police in camouflage fatigues deviated sharply from previous government tactics against the spreading unrest in Chinese villages and industrial suburbs. As far as is known, authorities put down all previous riots using truncheons and tear gas, but without firearms.

This time, according to a witness, police responded to villagers throwing explosives by firing "very rapid bursts of gunfire" over a period of several hours both nights. Some villagers reported seeing police carrying AK-47 assault rifles, one of the Chinese military's standard-issue weapons. There were no reports of violence Thursday night.

The villagers were protesting land confiscations in Dongzhou, a community of 10,000 residents 14 miles southeast of Shanwei city, in Guangdong province near Hong Kong. In their confrontation with authorities, they also stepped up their tactics by using homemade bombs and explosive charges that local fishermen normally use to stun fish in the adjacent South China Sea. In previous riot reports, attacks against police were limited to throwing stones and bricks or setting fire to official vehicles.

The Communist Party and the city administration of Shanwei, which has jurisdiction over Dongzhou, held all-day meetings Thursday on the violence, officials said. A spokesman for the city government, however, refused to discuss what happened in the village and declined to give his name. He said only that local authorities were taking the crisis seriously.

There also was no public response from the Guangdong provincial Communist Party and government, which have faced several long-running and violent confrontations involving land confiscations over the last year. The government-censored press and television have not reported on the violence in Dongzhou.

Police set up a roadblock at the edge of the village, stopping most vehicles from entering or leaving, and white Public Security vehicles patrolled the main road linking Dongzhou with Shanwei. Pedestrians and motorcycles were allowed to pass in and out of the village, however, and buses waited for passengers just outside the checkpoint.

About 700 yards away on the main street, approximately 100 villagers glared Thursday afternoon at a force of about 300 riot police who wore helmets and carried shields and batons. An officer using an electric loudspeaker repeatedly urged residents to leave.

"This has nothing to do with you," he called out. "Return to your houses."

The long-simmering conflict in Dongzhou arose over disputed confiscations and what farmers here said were inadequate compensation payments. Authorities exercising the equivalent of eminent domain seized farmers' fields to build a wind-driven electric generating plant on a hillside overlooking the village. The plant would be part of a $700 million electricity development project to supply the growing power needs of Shanwei and surrounding towns and villages.

Villagers, contacted by telephone, complained that the compensation was inadequate. Moreover, they charged, the power plant would also spoil fishing in Baisha Lake, a tidal inlet just below the hill, on which villagers rely heavily for food.

The confrontation was typical of the tension between the drive for economic development in China -- which has a growth rate of 9 percent a year-- and farmers' desire to retain the land that they regard as security for their families. Land disputes have been a prime reason for popular explosions of violence, which the Public Security Ministry estimates involved 3.76 million people in 74,000 incidents during 2004.

The pressure is particularly acute here in Guangdong province and the Pearl River Delta where, during the last two decades of economic liberalization, factories and dormitories have steadily replaced rice paddies, corn fields and fruit orchards that used to flourish in the warm, wet climate.

For most of this year, Dongzhou villagers have been protesting on and off against the power plant project, originally scheduled to be finished in 2007 but now delayed.

The villagers interviewed, who asked not to be named for fear of retribution, said the current round of violence was set off when authorities arrested three village leaders who had gone to the hillside plant site Tuesday afternoon to lodge a complaint. Before long, they said, several thousand people gathered on the hilltop to demand their release.

They were dispersed by volleys of tear gas fired by police, residents said. Shortly afterward, authorities dispatched between 400 and 500 more riot police into the village as reinforcements, the residents said. That contingent was met by several thousand angry villagers, they added, and police again resorted to tear gas at about dusk. This time, however, some villagers responded by pelting police with the explosives, according to witnesses, and the police unloosed sustained pistol and automatic-weapons fire over the subsequent three hours.

A similar confrontation occurred Wednesday evening on the main street in the village, leading to more attacks with gasoline bombs and several more hours of shooting, the villagers said. "The police kept on shooting until they drove away all the villagers," said a witness.

In the absence of official information from the government or Dongzhou hospital, reports flew from family to family of villagers killed, bodies burned and relatives unable to retrieve their slain loved ones left lying in the street. Some said 20 villagers were killed each night; others said the total was 14.

"I saw the bodies lying there," said one witness to the violence on Tuesday night. "The family members were afraid to go and get them."

One villager said his younger brother, Liu Yudui, 26, was hit by two rounds, one in the heart and one in the abdomen, after he stepped outside to see what was going on. "He died before we could get him to the hospital," the brother said.


Sorry again for posting the whole article. But with so much good information I did't want to just paste and cut into smaller passages that get harder to see the whole message.

While there is no accurate number of deaths, this does show brute force for people defending their property rights. Even though it is just a little piece of land, these people feel it is their land and are willing to die for their freedom. These are from people that have been indoctrinated that all property belongs to the state.

It is interesting that it appears every group seemed to participate in the protest. Of course the farmers, but also the 3 leaders went to try and settle the disputes peacefully but were arrested for freedom of speech. Also the way the police said "This has nothing to do with you," he called out. "Return to your houses." seemed to imply beyond just the farmers but also everyone was there to support the property rights of the farmers.

Now you are probably wondering why I mentioned Kelo in the title.
I see some similarities between the Chinese incident and Kelo. A small group of people stood up for property rights (10,000 in a small city in China and a smaller final group of 4 in the USA-many settled for the market rates offered). And both tried to deal with authorities and used freedom of speech to get their messages out.

But what system solved the problems faced when the rights of some conflict with the rights of others? While I still support the notion that the Kelo decision was 100% wrong in many levels and ways, the end results show how the results can end in a peaceful and more productive way. A strong liberal democracy with well-defined property rights can give the best economic results. The perfect outcome in the eyes of an economist is to have everyone better off or at least not make anyone less well off. The Kelo decision did not result in a perfect economic solution. Several holdouts did not settle with the amounts offered.

Now I do not have the exact history of the Kelo decision, but a quick breakdown was the local city planning commissions and then to the city council and the state supreme court and all the way to the US supreme courts. The Chinese Peasants felt they had no choice but to resort to violence in self-defense, especially after the 3 leaders were held in custody.

The end result was at least 14 people died many citizens were injured in China. In the USA there was some protests and a small (digital) forest was used in writing about Kelo, but no injuries that I know of and no deaths.

Which system would you like to live under?

The Corrution Trap

By way of EconLog, The Corruption Trap, they discuss the World Bank study of Democratization and clientism Why are young democracies badly governed?.

The study was above my level of understanding of statistics, but the gist of the argument is that politicians have a credibility gap. They have little record of being able to deliver public goods in the form of campaign promises and as such voters have little faith in the politicians. The end result is that politicians campaign to narrow groups that their needs can be easily fufilled.

EconLog believes it is not credibility gap but the corruption itself that is perpetuated. I would assume places such as India substantiates that claim as not being a young democracy but still held back by unbridled corruption.

Thursday, December 08, 2005

Ahmadinejad: Remove Israel to Europe/Remove Palestine to Iran-Better

Mahmoud Ahmadinejad has continually shown what type of character he is and lastly he has stated:
Speaking on Thursday in Makka, Saudi Arabia, where he was attending a summit of the Organisation of the Islamic Conference, he said that if Germany and Austria believed that Jews were massacred during World War II, a state of Israel should be established on their soil.

Ahmadinejad, who said in October that Israel must be "wiped off the map, was being interviewed on Al-Alam, an Iranian state satellite channel. According to a translation of his comments given to AFP, he said: "You believe the Jews were oppressed, why should the Palestinian Muslims have to pay the price?

He goes on in more detail but let me just conclude that if he is so generous with other peoples assets, why not he give land in Iran to the Palestinians?

Country -Sq Miles--Population
Iran 1,648,000-----66,622,704
Germany 357,021-----83,251,851
Occupied Palestinian Territory6,220---3,389,578

So Iran has less people and more land area but is unwilling to actually help out the Palestinians. Just like any socialism it is best to have others provide public goods than themselves.

Links of note:
Iran's president questions Holocaust

Sorry keep finding interesting points on this post.
Ahmadinejad concluded his remarks by reiterating Iran's proposal that the Israeli-Palestinian conflict be resolved via a referendum of all the inhabitants of Israel, Gaza and the West Bank as well as Palestinian refugees in neighboring countries.

"Whatever they decide will be accepted by all humanity. This is a clear democratic solution which is based on international principles," he said.

This may be democracy but not liberal democracy with rule of law not rule by the mob. He wants the rule of the majority (Palestinians-even outside territories) to rule over the minority Israelis.

Pact Signed for Prototype of Coal Plant/LWM at it again!

MONTREAL, Dec. 6 - Under pressure from other industrialized countries at talks here on global warming, the Bush administration announced on Tuesday that it had signed an agreement with a coalition of energy companies to build a prototype coal-burning power plant with no emissions.

So instead of saying "Coal plant will have zero emissions (No Pollution)", the LWM starts out with "prototype" and proceed to say this agreement is because of outside pressure. If someone had found the cure for Aids, wouldn't this be shouted from the rooftops. I believe this could be just as big as development as that, of course assuming that CO2 is a big threat that is threatening the world.

The project, called FutureGen, has been in planning stages since 2003. But the Energy Department said here that a formal agreement had been signed under which companies would contribute $250 million of a cost estimated at $1 billion.

This is the only other mention of the of the Zero Emitting Coal-burning power plant. Even this tries to imply that (as the NYT's spells out explicitly later) it was in the planning stages and was revealed to sway public opinion during the talks in Montreal.

Caption: Protestors in a plaza outside climate talks in Montreal urged passersby to take action to save the Arctic and its inhabitants.

So instead of showing what the plant would look like or a picture of Bush, they instead show protesters which has nothing to do with Zero Emissions Coal Power Plants.
The rest of the article is below...
Environmental advocates at the talks criticized the announcement, saying it was intended to distract from continuing efforts by the American delegation to block discussion of new international commitments to cut emissions of carbon dioxide and other heat-trapping gases that scientists link to global warming.

"You are watching 163 nations do an elaborate dance to try to make progress when the United States is sitting in the middle of the road trying to obstruct," said Alden Meyer, a representative of the Union of Concerned Scientists, a group that has long criticized the Bush administration's climate approach.

"It's getting to be like Charlie Brown with Lucy holding that football," he said. "Every time, at the last minute, the U.S. pulls it away."

The talks here are just one chapter in an international effort to rein in heat-trapping smokestack and tailpipe gases that began in Toronto in 1988 at a conference on the changing atmosphere. Ever since then, climate scientists, with widening consensus, have linked a global warming trend to increasing levels of those gases in the atmosphere.

The linkage led to the United Nations Framework Convention on Climate Change in 1992, but that treaty had no binding limits on emissions. And while parties pledged to avoid "dangerous" human influence with the climate, they sidestepped defining "dangerous." The Kyoto Protocol, which took effect this year, is an addendum to that pact with binding targets but limited participation.

While more than 150 countries have ratified the protocol, only about three dozen industrialized ones are subject to the binding terms.

The world's biggest emitter, the United States, has not ratified it. And the fast-growing giants of the developing world, China and India, continue to insist that they will not accept cuts in emissions.

Also circulating at the talks were copies of a letter sent to President Bush on Monday by two dozen senators, including two Republicans, urging the administration to change its tactics.

"The United States should, at a minimum, refrain from blocking or obstructing such discussions amongst parties to the convention, since that would be inconsistent with its ongoing treaty obligations," said the letter, signed by Senators Jeff Bingaman, Democrat of New Mexico; Olympia J. Snowe, Republican of Maine; Lincoln Chafee, Republican of Rhode Island; and 21 colleagues.

Administration officials here declined to respond directly, instead referring reporters to a statement made at the talks on Dec. 2 by Harlan L. Watson, the lead climate negotiator for the United States.

Mr. Watson said the United States opposed any new negotiations under the 1992 treaty. "We believe that it is best to address this complex issue through a range of programs and technology initiatives," he said.

What can I say? Instead of hailing this as an accomplishment of engineering, they talk about environmental criticisms.
Hat tip to CommonsBlog.
Good comments and a link to FutureGen -
Tomorrow's Pollution-Free Power Plant
The initiative is a response to President Bush's directive to draw upon the best scientific research to address the issue of global climate change. The production of hydrogen will support the President's call to create a hydrogen economy and fuel pollution free vehicles; and the use of coal will help ensure America's energy security by developing technologies that utilize a plentiful domestic resource.

And no where does it mention Hydrogen generation in the NYT's article. I wonder why???

Tuesday, December 06, 2005

GDP/GPI Part Deuce-Wiki crticism of GDP

By way of Israeli
we visit the issues of GDP as an indicator of standard of living. I hope that I don't bore anyone with multiple repeating of points over these 3-4 posts on this issue.
The major disadvantage of using GDP as an indicator of standard of living is that it is not, strictly speaking, a measure of standard of living. GDP is intended to be a measure of particular types of economic activity within a country. Nothing about the definition of GDP suggests that it is necessarily a measure of standard of living. For instance, in an extreme example, a country that exported 100 per cent of its production would still have a high GDP, but a very poor standard of living.

The argument in favor of using GDP is not that it is a good indicator of standard of living, but rather that (all other things being equal) standard of living tends to increase when GDP per capita increases. This makes GDP a proxy for standard of living, rather than a direct measure of it.

First let me show the components of GDP:
GDP=C(private consumption)+G(government)+I(investment)+X(exports)-M(imports)

I see measures of standard of living more than nothing. The above formula shows investments by firms and consumption of goods and services and durable goods and houses and government investments in education and infrastructure and law enforcement and security of national interests.

But GDP is not meant to be an indicator of standard of living but to measure the relative strength of an economy. If GPI becomes a better indicator, that will have to be decided later.

And again back to the issue of a country that exports 100% of its GDP (barter and self-production for food assumed), just as if 100% of GDP goes toward investment, this would indicate a 100% savings rate. So while consumption is low during this time frame and standard of living would be implied to be low, future consumption would be greater than the present would have been. Without getting into all the formulas, this is because the currency of the country in question would rise in value as the central bank holds excess reserves of other currencies.

GDP doesn't take into account the black economy, where the money spent isn't registered, and the non-monetary economy, where no money comes into play at all, resulting in inaccurate or abnormally low GDP figures. For example, in countries with major business transactions occurring informally, portions of local economy are not easily registered. Bartering may be more prominent than the use of money, even extending to services (I helped you build your house ten years ago, so now you help me).

This just shows that we may be understating the level of GDP. While we look at the criticisms of GDP, we should keep track of the negative and positive effects on GDP. While it would be nearly impossible to count all underground economy, the federal government should look at incentives that make the underground economy over inflated One aspect that promotes the underground economy (my theory) is too high of a marginal tax rate. And whether money is involved or not does not make a difference, just as if I slip a few dollars to the neighbor boy to mow the lawn.

Having libertarian tendencies, I would like to see more of the "black market" included into the market. That is legalizing drugs and other vices. Instead of wasting vast amounts of resources trying to stop victimless crimes, it would be better to include it into the GDP and thusly tax and regulate as other industries that sells "sins".

Very often different calculations of GDP are confused among each other. For cross-border comparisons one should especially regard whether it is calculated by purchasing power parity method or current exchange rate method.

This is not really a criticism but more of a caution when comparing between more than one country. PPP takes into the fact that less developed countries have lower relative price levels than developed countries.

Quality of life is determined by many other things than physical goods (economic or not).
In 'poor' countries, it may just be that everything is cheap, except for a few western goodies. So one may have little money, but if everything is cheap that evens out nicely. Thus, the standard of living may be quite reasonable, it's just that there are, say, fewer TV-sets, meaning people have to share them (which may actually increase the quality of life in a social sense).

This is good way to view PPP. But if these facts were true then people in rich countries would not purchase the western goodies and that people would share TV-sets if it truly increased the quality of life. I know that I love to watch TV in my underwear while scratching my *****. If I had to share the TV, I don't believe I would have that pleasure. From an earlier post I showed how that reaching $13,000 PPP income per year would provide the highest total utility derived from money.

If many products are of low quality in terms of durability then people will have to (unnecessarily) buy them again and again, thus boosting GDP without increasing their satisfaction. (On the other hand, if products were very durable then that would hamper innovation because people would be less inclined to buy new products, giving producers less of an incentive to develop them.) Similarly, if many products are of low quality in terms of usability and people don't know beforehand which products are the best choice for them, then they will either have to make do with an inferior product or buy again and again until they find something more satisfying. Furthermore, if products have a short life-span in the market (e.g. because of fast innovation or fashion) then this process starts all over again when people need a replacement. Note that in a capitalist society these factors working together can easily cause a very high GDP combined with low customer satisfaction.

The original wiki entry seemed to be written by 2 people. The first part was written by an economist, and starting with this thread by a left wing radical. This passage is like the consumers are forced to buy inferior products and have no knowledge of the quality. Consumers do not have perfect knowledge but this creates opportunities for business to help consumers to make decisions. The rise of branding is one aspect that consumers can use to determine if a product is of quality.

In the USA, there are vast amounts of information for the consumer. Books, magazines and newspapers are one example as well as friends and relatives. We also have consumer protection laws and a legal system to protect the rights of consumers including class action lawsuits. Retailers also realize that to retain customers that they need to help customers on the service side of the problems.

GDP doesn't measure the sustainability of growth. A country may achieve a temporary high GDP by over-exploiting natural resources or by misallocating investment. Oil rich states can sustain high GDPs without industrializing, but this high level will not be sustainable past the point that the oil runs out. Economies experiencing a housing bubble or a low private saving rate tend to grow faster due to higher consumption, at the expense of reduced pensions in future.

Under a free markets the sustainability is factored into the prices of a commodity. We do not worry about running out of any raw material besides oil. Why is this? We don't confine the extraction of gold, silver, uranium, nitrogen, phosphorous, etc.

It is nearly impossible for an oil exporting country to industrialize because of the Dutch disease. A few things contribute to this problem. First internally, the industry that is growing and earning the most money (oil) bids away resources from the other sectors and thus raising the costs for the industries. And since it bids away capital it also raises the interest rates. This leads to not as many projects that were profitable are no longer profitable at a higher interest rate. Externally, as more oil is exported and not a corresponding import amount of volume will increase the value of domestic currency. This will result in tradable goods becoming more expensive for foreign countries and the domestic market not being able to compete with cheap foreign tradables. So there really is no simple solution. This actually would work better under some social engineering. Hopefully the gains from oil are used to develop intellectual property and the development of human intelligence.

The next sentence on housing bubble and savings rate is completely wrong. Higher consumtion does not grow an economy. It may over-inflate it for a while but will not grow the economy. Investments and productivity gains are what causes an economy (GDP) to grow. Thus low savings rates whether caused by a housing bubble or any other bubble (wealth effect) only moves spending from those that lend to those that are spending, because for every dollar of debt is a dollar of assets for someone else. So yes some people are tapping into the equity and having low savings rates that reduce what is put into their retirement funds. This is a reason that I feel that many people will get a rude awakening when they are ready to retire. But no one forced them to overspend their assets of income.

GDP counts work that produces no net change. For instance, a hurricane destroying thousands of homes would not be counted by GDP, but the rebuilding of those homes would be. A good recent example would be the aftermath of 2005 Katrina hurricane, which is poised to become the most expensive hurricane in history. GDP would capture the rebuilding activity and suggest a rising living standard, but we're only working toward restoring what was lost for the most part. Therefore, GDP growth would over-estimate the increase in the standard of living. See Negative externalities.

This refers to the broken window phenomena. That if the window was not broke out, then that money would have been spent on something else. First I would say the replacement would be better (safer, newer) than the original though not the full value. Secondly there is some negative feedback that hurts the GDP in the longer run. First Katrina created a large number of unemployed though did not affect the rate nationwide. Secondly the resources were not put in the most efficient location, instead of being able to be used for further growth and development we are using resources to replace existing assets. While yes the hurricane overestimates the true value of GDP, but it also will have negative feedback to the GDP. There are also some other factors if people work more by taking time off to volunteer to help rebuild (Habitat for Humanity), which would not be counted in GDP. "See negative externalities" just show that not an economist wrote this and the author did not explain why thinks this is an externality.

As a measure of actual sale prices, GDP does not capture the economic surplus between the price paid and subjective value received.

Consumer surplus underestimates GDP by the amount consumers were willing to pay above the going price of goods and services as shown in the triangle ABK below and above link.

the annual growth of real GDP is adjusted by using the "GDP deflator", which tends to underestimate the objective differences in the quality of manufactured output over time. (The deflator is explicitly based on subjective experience when measuring such things as the consumer benefit received from computer-power improvements since the early 1980s). Therefore the GDP figure may underestimate the degree to which improving technology and quality-level are increasing the real standard of living.

All I can say is yes it underestimates GDP. Recently the left talked about the fact that the Model T had more MPG than the present current fleet of Ford vehicles. But let me just ask you. Which vehicle would you choose and you could not sell it and had to use it?

Some economists such as Herman Daly consider GDP to be a poor measure even of material well being, especially in developed countries. They argue that GDP only measures production and consumption, not however the level of utility people gain from producing and consuming. This idea is expressed in the theory of uneconomic growth, which states that GDP growth above a certain "economic limit" actually decreases material well being. An extreme example of this is a major war. Historically, GDP growth was often boosted in wartime while material living standards fell considerably.

Yes, from the study of Democratic Peace and Happiness shows that marginal utility decreases its growth after $13000 PPP. But wealth never becomes a negative marginal utility and thus well being is still rising and there is no "economic limit". If all else fails just give your money away like Bill Gates!

This is one aspect I can agree with Marx, that providing as meaningful as possible to as many citizens as possible. The USA is actually places a lot of emphasis on full employment while the EU does not. Sorry but can we say, "French Riots".

The phrase on major war has no place in this paragraph but is an example of the Hurricane effects. The weapons of war are "used up" and produce no benefit to society including low levels of investment. There tends to be an increase in research for the war and may help consumers later on, but many resources that could have been used for expanding GDP are expelled in lost lives and raw materials.

GDP {ALSO}does not take inequality into account.

Yes but there are other measures for this and do want everyone to have equal results? Another question on equality is what is the chance of upward mobility? Just because there is inequality, does this mean it is bad and is it because of choices made?

Well this is enough for now. Next time I will discuss GPI and what it measures (I hope). I may add some more to this thread also.

Links of note:
The e-commerce investment gap: Europe-USA eight year comparisons
Measuring Real Investment
Financial Bubbles-Clinton
Investment dearth, not savings glut
Thailand, Ghana and the Military “Coup Trap”

Saturday, December 03, 2005

GDP and GPI (Genuine Progress Indicator)? I

I visit and blog quit often on ThomHartman's blog with link above to what I want to talk about today. This will probably take more than one entry to cover all the theories in total. First I will address some of the issues of one commentator before the theory of GPI is brought up. To set the stage for this discussion, risingtide had brought up the fact that GDP had increased 4.2% annualized rate. Kate had said we were picking out single numbers and I talked about that GDP was important and that DJIA is not a very good indicator of the economy. I also made some good predictions on what direction the DJIA, Nasdaq and S&P would be the close on the next day. I got 4 out 4 predictions correct...
johnandersonUsing the GDP as some sort of measure of success is meaningless. It doesn't measure a societies standard of living anymore than the high numbers of a stock market measure the wealth of individuals in a society. Particularly when you've altered the way inflation is calculated to make it look like we don't have any and you haven't bothered to make any calculations for debt.

Just like any good Democrat, they have to add so many theories together that you end up fighting multiple layers of inconsistent ideas with no basis on facts. We will discuss the measures of GDP, but for now let me start with the second point. Stock market indices do not measure the wealth of some individuals. As some do not own stocks and own only tangible assets like real estate, and of course some do not own any stock. But over 50% of Americans own some stock according to Stock ownership is up.
While jon does not provide any calculations for debt also, debt is just one side of the ledger and for every debt there is a corresponding credit to someone. He also talks about the fact that inflation indicators have changed. I talked about such a fact recently on Bernanke goes before banking panel. As the chart on that post shows sometimes the core rate is above and sometimes below the standard CPI. So now those gas prices have fallen the CPI is above the Core CPI but of course we will not hear this.

GDP growth during Clinton's full eight years averaged 3.5 percent per year. Under Clinton the debt rose more slowly and GDP rose faster than under Bush. The result is that the ratio of debt to GDP went down an average of 3.89 percent per year during the Clinton years, but has gone up an average of 0.94 percent per year during the Bush years. That's bad.

Now that he has criticized the GDP he goes on to quote some statistics (no links) to show how the economy was better under Clinton than Bush. I will not go into the long discussion as to the fact that the economy was already headed for a serious recession and that 9-11 had such a huge effect on our economy that can not be easily dismissed.

GDP basically measures particular types of economic activity. Nothing about the GDP serves as a measure of standard of living. A typical example would be a country that exports 100 per cent of its production would end up with very a high GDP, but a very poor standard of living. Or, saying Bill Gates made a billion dollars so we are all now rich. It doesn't measure purchasing power.

Sorry again GDP measures will be later. But if we look at a country that exported 100 of its production would actually be in good shape. I guess in this example that food and water was secured by barter or self grown and gathered. These exports created excess cash reserves in the central bank or the banking system of foreign currencies. These large amounts of savings can be used for investment either domestically or internationally. Just as present savings allows greater consumption in the future this also will result in the standard of living of this nation will increase significantly. Sounds good, but I tend to be an optimist. You knew that the evil Bill Gates had to be brought up. I hope to talk later about inequality of income.

Bush's trade deficit has been produced an environment where U.S. exports have dipped dramatically relative to imports. Bad when you're borrowing money from your Communist Chinese pals.

The number of jobs in the economy increased 2.38 percent per year under Clinton, but it has decreased 0.17 percent per year under Bush even with $550 Billion in tax give always to his golfing buddies which was suppose to create 100 million new jobs. Median household income has fallen an average of 1.15 percent per year under Bush. It rose an average of 1.65 percent per year under Clinton.

Sorry I am still analyzing the International Transactions. Politicians often refer to the current account balance and talk about it being too high with somewhere over $600 billion dollars. But this is only about 5.5% of GDP. If this were the only number to look at, it would mean that US would only have to put aside 1% of GDP for 6 months to pay it off. Again he wants us to know that the economic numbers were better under Clinton, but of course we won't discuss the fact that congress controls the budget process and not the president.

That's enough for now.

Links of note:
News Release: U.S. International Transactions
The Decline in the U.S. Current-Account Balance Since 1991
Balance on Current Account
Global Current Account Imbalances: Hard Landing or Soft Landing1
Balance of Payments (International Transactions)