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why is gas at $4 a gallon? June 23, 2008

Posted by KG in econ, environment, foreign policy, international, politics.
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robert reich’s blog:

Conspiracy theories abound, but the soaring price of crude oil (today around $137 a barrel) is related to four more mundane forces:

(1) growing demand from developing nations, especially China and India. This is the main reason for the price rise over the last six years.

(2) the dropping dollar. As it drops, because of our trade imbalance and overall indebtedness to the rest of the world as well as our slowing economy, everything we buy from abroad — including much of the oil we import — costs more; everything we sell to foreigners — including much of the oil we produce — costs less to them. I attribute half of oil’s price rise since January to this.

(3) Global investors (including, perhaps, your own pension fund) are anxious about the American economy, and looking to hedge their bets against future declines. Oil is one of the commodities that looks like a good bet. Hence, there’s speculation in oil futures. This isn’t a nefarious plot. It’s the way the market works. A bit of a speculative bubble is forming, so beware. I attribute a big part of oil’s price rise over the last few weeks to this.

(4) Instability in the Middle East. Israel’s recent bellicose statements about Iran have generated fears about the continuing capacity and willingness of Middle Eastern oil producers to generate oil (about a third of world oil production). OPEC refuses to produce more. Some of oil’s price rise over the last week is attributable to this.

In other words, a perfect storm. Given the US recession and slowing of European economies, I expect oil to fall to around $125 a barrel but then be pushed up by speculators and the falling dollar to around $135 over the next several weeks. Wall Street investment houses are talking about $150 by July but that’s their way of stoking more speculation (in which they have a financial interest).

Bottom line: The days of cheap energy are over, folks. Gas may go down to $3.50 a gallon by this time next year, but you’d be wise to trade in your SUV for an economy car. And you’d be wise to avoid building that new addition to your home and put the money instead into better insulation.

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act April 23, 2008

Posted by KG in design, econ, environment, food, health, news, science, tech.
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“act” – from the nytimes magazine green issue:

WALK THE WALK: In many parts of the country, walking has become as quaint a pastime as spinning yarn or playing the bagpipes. Between 1977 and 1995, the number of daily walking trips taken by adults declined by 40 percent — while more than a quarter of all car trips are now shorter than a mile. Those under-a-mile journeys fall into the zone that new urbanists call “walkshed”: the area a person can reasonably cover on foot. People whose walksheds teem with shops and restaurants have more reason to walk than those whose don’t, so it was only a matter of time before someone tried to quantify a neighborhood’s pedestrian-friendliness. Last summer, a trio of Seattle software developers started walkscore.com, which calculates the number of potential destinations within walking distance of any given address and then produces a rating. If your neighborhood scores 90 or above, you can easily live there without a car; if it scores under 25, you’ll be driving to the backyard. More than a million addresses were searched in the site’s first month. Matt Lerner, one of the site’s developers, knew the concept had arrived when a condo in Seattle hung out a gigantic banner that said “Walk Score 100.” “People react really negatively to phrases like ‘density,’ ” he says, “but they react really positively to phrases like ‘walkability.’ ”Walk Score’s popularity may be a sign that walking is making a comeback, fueled by both rising gas prices and widening waistlines.

BEYOND WASTE: Zero waste, a state of eco-utopia far beyond ordinary sustainability, raises the notion of planetary stewardship to a sweeping level: instead of using, we should reuse; instead of dumping, we should compost. A number of municipalities, including Seattle and Boulder, Colo., have made zero waste a guiding ambition. The daunting challenge is that so many consumer products are neither recyclable nor compostable. Worse, they’re made with highly toxic chemicals. Reducing the impact of these products may depend less on finding better ways to dispose of them and more on discovering how to remake them — or on no longer making them at all. A number of green certifications exist for “healthier” consumer products, but for the past three years, a small firm in Virginia known as MBDC has been awarding a “Cradle to Cradle” certification, or “C2C,” to certain items that satisfy a rigorous philosophy espoused by its founders, the green architect William McDonough and the environmental chemist Michael Braungart. The duo have long held that, as McDonough recently put it, “waste is basically stupid.” Theirs is a business-friendly credo. Corporate growth isn’t in itself problematic; nor should sustainability mean getting by with less. Rather, the firm endorses rethinking the way products are designed and manufactured. To get a C2C seal of approval, a product needs to be made from components that are either “technical nutrients” (which can be recycled or repurposed) or biological nutrients (which can degrade naturally, like compost). “Instead of saying zero waste, we say let’s just eliminate the concept of waste,” says Jay Bolus, an environmental engineer who is in charge of the MBDC certification process. C2C has mainly been a business-to-business endeavor, and only a few of the 100 products that have won MBDC certification — Herman Miller chairs, United States Postal Service envelopes — are familiar to consumers. But C2C is expanding, and next year, according to Bolus, there should be 400 or 500 products with the logo. To McDonough, his certification is a point of entry into the world that he’s imagining. “It honors intention,” he says. “And I think that’s really important, given that we have to redesign nearly everything.”

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the age of nonpolarity April 23, 2008

Posted by KG in econ, foreign policy, international, iraq war, legal, politics, terrorism.
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“the age of nonpolarity” by richard haass:

But even if great-power rivals have not emerged, unipolarity has ended. Three explanations for its demise stand out. The first is historical. States develop; they get better at generating and piecing together the human, financial, and technological resources that lead to productivity and prosperity. The same holds for corporations and other organizations. The rise of these new powers cannot be stopped. The result is an ever larger number of actors able to exert influence regionally or globally.

A second cause is U.S. policy. To paraphrase Walt Kelly’s Pogo, the post-World War II comic hero, we have met the explanation and it is us. By both what it has done and what it has failed to do, the United States has accelerated the emergence of alternative power centers in the world and has weakened its own position relative to them. U.S. energy policy (or the lack thereof) is a driving force behind the end of unipolarity. Since the first oil shocks of the 1970s, U.S. consumption of oil has grown by approximately 20 percent, and, more important, U.S. imports of petroleum products have more than doubled in volume and nearly doubled as a percentage of consumption. This growth in demand for foreign oil has helped drive up the world price of oil from just over $20 a barrel to over $100 a barrel in less than a decade. The result is an enormous transfer of wealth and leverage to those states with energy reserves. In short, U.S. energy policy has helped bring about the emergence of oil and gas producers as major power centers.

U.S. economic policy has played a role as well. President Lyndon Johnson was widely criticized for simultaneously fighting a war in Vietnam and increasing domestic spending. President Bush has fought costly wars in Afghanistan and Iraq, allowed discretionary spending to increase by an annual rate of eight percent, and cut taxes. As a result, the United States’ fiscal position declined from a surplus of over $100 billion in 2001 to an estimated deficit of approximately $250 billion in 2007. Perhaps more relevant is the ballooning current account deficit, which is now more than six percent of GDP. This places downward pressure on the dollar, stimulates inflation, and contributes to the accumulation of wealth and power elsewhere in the world. Poor regulation of the U.S. mortgage market and and the credit crisis it has spawned have exacerbated these problems.

who’s bitter? April 22, 2008

Posted by KG in comedy, econ, news, politics, religion.
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jonathan chait in the new republic:

But nobody’s challenging the validity of caring more about your religion, or even your right to hunt, than your income. The objection is whether it makes sense to vote on that basis. There are, after all, stark differences between the two parties on economic matters. Republicans do want to make working-class voters pay a higher proportion of the tax burden, restrain popular social programs, erode the value of the minimum wage, and so on.

Democrats, on the other hand, have no plans to keep anybody from attending church or hunting. A few years ago, their gun-control agenda revolved around issues like safety locks, banning assault weapons, and other restrictions carefully designed to have virtually no impact on hunters or average gun owners. Now Democrats have abandoned even those meager steps. The GOP’s appeal on those “issues” rests on cultural pandering rather than any concrete legislative program.

Now, it’s true that many working-class whites also vote on social issues that do have some political relevance, like abortion or gay marriage. It’s certainly not irrational on its face to vote your values over your wallet. (Democratic billionaires do it, too.) On the other hand, conservatives routinely express their fury that a majority of Jews stubbornly flout their own “self-interest”–defined as low tax rates and a maximally hawkish Middle East policy–to vote Democratic. The process of trying to persuade others to reconsider the nature of their self-interest is not some Marxist exercise or an accusation of false consciousness. It’s what we call “democracy.”

Sorry, did that sound condescending?

nudge April 22, 2008

Posted by KG in econ, interviews, neuroscience, politics, psychology, science.
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freakonomics q&a with richard thaler and cass sunstein about their new book:

Q: You talk about heuristics and decision-making biases which influence most people’s thinking. Which heuristic or bias has taken you for a ride? Are we as a society more or less vulnerable to heuristics than we were 20 years ago and why?

CASS: The one that has most gotten to me is the availability heuristic, which means that people assess probabilities by asking whether examples easily come to mind.

For about two years after 9/11, I was scared to fly, even though I knew, from my own work, that the risks were really low. And after a bad incident with Chinese food (I have a severe shrimp allergy, and the vegetarian dish contained shrimp), I have been ridiculously nervous about shrimp hiding somewhere in Chinese food.

Fortunately, I am also subject to optimistic bias — with respect to just about everything — and so I now fly contentedly and eat Chinese food happily if sometimes a bit warily.

I don’t know if our society is more vulnerable to bad heuristics and errors than it was 20 years ago. Certainly there’s a lot of vulnerability to those things, but the same as been true for a very long time.

Q: Is there a situation where it would be imperative to shove instead of nudge. How would you, as a libertarian paternalist, justify such a situation?

A: When children and third parties are at risk, mandates and shoves may be OK. We are not opposed to mandatory vaccination laws, in part because those who don’t get vaccinated endanger others.

Many antipollution laws are fine too. A full answer here would point to the costs of bargaining: when people can’t contract their way to a sensible outcome, because of collective action problems and a lack of information, the argument for a mandate gets stronger.

Shoves that aren’t that big an intrusion, such as mandatory seatbelt laws, are OK too, if they can be shown to save a lot of lives. But generally, we like freedom of choice.

sachs on npr April 10, 2008

Posted by AP in books, econ, international.
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from forum, on npr:

Jeffrey Sachs may be the only economics professor who has his own MTV video — documenting his trip to Africa with Angelina Jolie — and he continues to be a leading voice promoting solutions to global poverty and environmental crises. He joins us to talk about his book, “Common Wealth: Economics for a Crowded Planet.” Sachs is director of the Earth Institute at Columbia University and special adviser to United Nations Secretary General Ban Ki-Moon on the Millennium Development Goals.

migration = development March 31, 2008

Posted by AP in econ, immigration, international.
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the center for global devlopment publishes a paper that suggests a new measure for wealth. (link from mr). i haven’t read the actual paper yet, but the following passage is from the abstract. something to think about the next time you vote on immigration laws:

migration is one of the most important sources of poverty reduction for a large portion of the developing world. If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.

3L for “free” March 24, 2008

Posted by AP in econ, legal, news.
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the new york times reports that:

Concerned by the low numbers of law students choosing careers in public service, Harvard Law School plans to waive tuition for third-year students who pledge to spend five years working either for nonprofit organizations or the government.

The program, to be announced Tuesday, would save students more than $40,000 in tuition…

what the article does not mention is whether students must serve their five years immediately following graduation/passing the bar. i assume it does, but also think that the scheme would make more sense without a time limit. why not allow recent graduates to make partner first, then transition into public interest work?

economically, foregoing five years’ salary at Whiteman & Douche LLP for a $40k waiver is a pretty dumb decision – think of the compound interest you’d be missing out on. by the time burnout from corporate law firms sets in, however, slower-paced public interest work may become more appealing.

supreme court inc. March 23, 2008

Posted by KG in 2008 Elections, econ, legal, news, politics.
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supreme-court-inc.jpg

“supreme court inc.”:

The origins of the business community’s campaign to transform the Supreme Court can be traced back precisely to Aug. 23, 1971. That was the day when Lewis F. Powell Jr., a corporate lawyer in Richmond, Va., wrote a memo to his friend Eugene B. Snydor, then the head of the education committee of the U.S. Chamber of Commerce. In the memo, Powell expressed his concern that the American economic system was “under broad attack.” He identified several aggressors: the New Left, the liberal media, rebellious students on college campuses and, most important, Ralph Nader. Earlier that year, Nader founded Public Citizen to advocate for consumer rights, bring antitrust actions when the Justice Department did not and sue federal agencies when they failed to adopt health and safety regulations.

If there is an anti-Nader — a crusading lawyer passionately devoted to the pro-business cause — it is Theodore Olson. One of the most influential Supreme Court advocates and a former solicitor general under President George W. Bush, Olson is best known for his winning argument before the Supreme Court in Bush v. Gore in 2000. But Olson has devoted most of his energies in private practice to changing the legal and political climate for American business. According to his peers in the elite Supreme Court bar, he more than anyone else is responsible for transforming the approach to one of the most important legal concerns of the American business community: punitive damages awarded to the victims of corporate negligence.

(more…)

link roundup March 19, 2008

Posted by KG in 2008 Elections, books, econ, environment, news, politics, race, religion, science, sex, tech.
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1) the human side of ralph nader (make sure you change the bookmark to chapter 1)

2) hillary’s “experience”

3) fred krupp, president of the environmental defense fund, talks about “his new book and his thoughts on harnessing the great forces of capitalism to save the world from catastrophe.” – direct real audio link & airtalk archive link (scroll to 3/14)

4) andrew sullivan ponders prostitution – 1 & 2

5) ezra klein on wright vs. falwell

6) TED talks (richard dawkins, larry brilliant, bill clinton, the google guys, and more)