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Sunday, June 26, 2011

The Chevy Volt

Joe Nocera, one of my favorite financial writers, wrote a great piece for the Times this morning on the Chevy Volt, check it out.

As someone who wants to be really green, but fails often, I was excited by what he wrote about the Volt and then let down.  Look, just by living in NYC I am one of the most carbon-friendly people in the country, but when I leave the city, I drive long distances--in rental cars.

1)  NYC rental cars rarely have fuel efficient vehicles.  Everyone asks for them, and they're always sold out.  I've only ever managed to get  prius twice.  The new Obama gas regs have helped a lot, I use a lot less fuel on these nine hour trips, but its still cruddy that I want to use such a vehicle and cannot.  Why they don't have more cars in their fleet?  I don't know.  I've asked.  Sometimes its supply problems, sometimes its having a variety of small-to-midsize cars.  I don't know.  Garages are crowded, and they're filled with Kias and other crap cars.

2)  The Volt sounds great.  We may have to leave the city sometime soon.  Anywhere else but NYC we're going to have to buy a car.  It is unlikely that I'll be able to afford a Volt.  Not yet, but there again.  I am exceedingly likely (if I remain on the East Coast) to take drives of three hundred miles or more.  The Volt turns into a regular car after the first 100 miles.  I suppose its still fuel efficient at that point, but it still sort of sucks.

Anyway, food for thought.  Hopefully Michael Lind's fracking dream doesn't nip this in the bud.

Wednesday, June 22, 2011

Freakonomics - The Warren Buffet Podcast - Growing Up Middle Class

So I'm listening to the Freakonomics podcast on Warren Buffet.  Now as you know, I am not a huge fan of Freakonomics.  They are mostly libertarian in their philosophy, and while they discuss some interesting subjects.  I must say, PlanetMoney does a better job of A) reporting, B) explaining and C) supporting.

Anyway, the subject for their May 11th podcast was Peter Buffet, the youngest son of the zillionaire.  I want to make clear, I have nothing against the Buffets, at all.

The podcast spends the first 10 minutes talking about how "normal" the youngest (50 years old) Buffet is.  That's great, that's really great.  Peter didn't know what his parents did until he was 25.  That's not normal.  That's privileged.

This is another reason why Ravingleftatic exists.  Income inequality breeds contempt for the poor among the arseholes of the ruling class, among the nice guys, it breeds honest negligence or disinterest.

There is one, fundamental aspect that is failing in this podcast.  People who don't realize how wealthy they are have had their needs completely taken care of for their entire lives.  I grew up hearing from my parents, "no we can't afford that," or "wait till Christmas," or "your father lost his job" or "your mother lost her job," or "we're saving that for your college fund."  It was much worse for my wife, who grew up the eldest daughter of an electrician in rural Canada.  50-60% of all the fights between spouses is over money, and when money isn't an issue...well, its not that things are hunky dory in the house, no news is good news.  But, as anyone from the poor and middle class knows, money is ALWAYS an issue.  And it causes stress.  This is stress that pervades our entire existence, shortens our lives, makes us fat, tired, gives us heart conditions and diabetes, and generally kills us sooner.  Peter Buffet never had to worry like that.

My wife still harbors this idea that we will someday not have to work, and she works herself into great fits of anxiety over the idea that we will always struggle.  But that is the case for the middle class.  We're one serious trauma away from poverty and all its depredations.  And its swim swim swim against the current, just to keep from floating downstream.  This is what's wrong with this country, this planet, this economy.

The single most offensive statement:  "I would much rather have invested in myself, taken the time, grown my own life, with all the mistakes and all the successes, and everything else that I can say is mine, as opposed to have a pile of money that essentially belonged to someone else."

Well fuck you PB.  The rest of us want the money.  Now Peter Buffet is a philanthropist, so that's good, and he's using his money to help poor women in foreign countries.  So, again, not against Peter Buffet.  I'm railing against the uncritical attitude that Freakonomics took here.  I will be working until the day that I die.  Struggling to make ends meet for myself, my wife, (god willing--my children).  And, I don't even mind that so much as I mind the fact that PB is making money selling a self help book telling people to follow their dream.  If there's one thing, one thing, I could tell my younger self:  Money will matter more than anything other personal goal you set or milestone you meet.  You may not think so now, but that's because your parents are supporting you.  You may not think you need anything, but there will be people who count on you.  Responsibilies will come to you whether or not you seek them.  And you will need money to meet those obligations. Invest in your career now, or regret it the rest of your life. 

I don't know that I would have listened to me. 

But bottom line it, Warren Buffet paid for his kid's college, allowed him to study music.  Music!  Which an NPR podcast from a week later said was not worth a college education, because you'll never make enough money to pay off the start up debt.  But its good to know that extremely wealthy people will carry on the great intellectual traditions of our society, because they'll be the only ones who can afford to do so. 

Mama, don't let your babies grow up to be in the humanities.

Monday, June 13, 2011

CNN - On the Middle Class, The Uber Rich, Income Inequality

So, CNN has been running some front page articles on the demise of the middle class.  This is the reason Ravingleftatic exists!  All those other pesky issues are just side shows.  Yes, Ravingleftatic wants justice for all races, Ravingleftatic wants to eliminate torture and genocide, yes Ravingleftic wants gays to have the right to marry, yes Ravingleftatic wants religious freedom, but Ravingleftatic exists for this:  To eliminate or reduce the rising income inequality between the classes, to deny the aristocracy and the noble class and to promote fiscal equality among democratic peoples.

Which is not to say I don't believe rich people can't be rich.  But a Gilded Age, or the New Gilded Age as people are calling it is a sign of a rotting democracy.  In my old job I'd read about the excess of corporate malfeasance, parties with mountains of cocaine, hookers, secret caves, mansions, and black jack tournaments, ice sculptures, and shell companies, tax shelters and shady investment vehicles.  This is the realm of fiction, that these things actually happened was a travesty almost too much to bear.  But...I'm getting a bit ahead of myself.

The first article is the rising cost of a college education.  Now CNN articles in general are snapshots.  There is very little actual data, though it does include the following nifty chart.  Even so, the snapshot is nonetheless horrifiying.  One of the seminal liberal papers, the Philip Agre paper on "What is Convservatism and What is Wrong With It" makes a point of saying that conservatism is the last vestige of the old feudal social order.  This article highlights one aspect of that truth.  Education for all is liberalizing.  In the feudal societies, only the rich were educated, and only the priesthood.  Keeping the poor superstitious and fearful was one of the main jobs of the aristocracy.  What are fears about The Global Warming Hoax, and Birtherism but base superstitions?  So when it becomes clear that upper education is being choked off for even the middle class this ought to be cause for real concern.  And it is, however, there are some political upsides.  When I was in school, everyone was in school, my own sister used to say, "everyone has a college degree, it's not worth anything anymore."  The argument was ridiculous, but it cast doubt on the efficacy of higher education.  This was a very effective means for "the Haves" to discourage college participation.  So now, perhaps the scale will tilt forward again, particularly with unemployment so high and the facts about employment so clearly favoring those with a four year degree.

One thing to say, Obama has already done a hell of a lot more for the middle class than any conservative president has ever done.  Including the overhaul of the student loan program, which among other things forgave some student loan debt and allowed for increased college subsidies.  Still, it's not enough, and the root of the problem remains.  Income, Income Income.  The minimum wage is the smallest part of the problem.  I took economics, I understand the effect of price floors and ceilings, but something has to be done.  There is this conceit that exorbitant salaries are required to lure the best talent at the top branches.  But is that really true?  I mean, the "best talent" caused the economic meltdown to begin with.  I know, an over simplified analysis, but at the most basic level, it remains nonetheless true. 

There was one thing from this article I wanted to note, and to correct:

"Economists speculate that one reason unemployment is so high is because the American workforce lacks the skills needed to fill the jobs that are open. As a result, companies may shift these jobs overseas, where wages are often cheaper"

Ok, first off, lazy reporting.  What economists, and why are you sourcing mere speculation?  Second, I keep up on this sort of thing, so I know already who CNN is referring to (Narayana Kocherlakota), and its been debunked.  There are some economists, Chicago School, of course, who insist that the real reason for the high unemployment is because American workers aren't trained for the jobs that American companies require.  The counter argument is simple, "Job openings have plunged in every major sector, while the number of workers forced into part-time employment in almost all industries has soared. Unemployment has surged in every major occupational category." P. Krugman, continuing, "percentage citing problems with labor quality is now at an all-time low, reflecting the reality that these days even highly skilled workers are desperate for employment," citing the NFIB.  Third, and last, there is a weird logical leap between the first sentence and the second, namely that since companies can't find workers in America, they're going overseas where labor is cheaper?  I think the author spliced two valid ideas here, incorrectly.  Outsourcing is a common enough problem, but it occurs when wages are too high, and usually occurs with unskilled labor.  So outsourcing the help desk is a good example.  Sending those jobs to India saves the company money, but they're not doing it because the labor pool is too small.  Now, a small wage pool drives up prices, but with 10% unemployment, a small wage pool is NOT our problem.  What the author should have stressed is that companies, with all time low demand, are searching to cut costs to improve margins, and searching the bottom of the barrel for the cheapest way to get product to market.  Which of course, dilutes everything, because no one here can afford to buy the product, and so it goes.

Moving on.  Another article "How the Middle Class Became the Underclass."  Go CNN.  Or actually go Annalyn Censky, who happened to pen all three of these articles.  There isn't much in this February article that I hadn't read already, but its good that someone in the mainstream media keeps bringing this subject up.  This isn't free market capitalism, its the height of market inefficiency, with billions of dollars wasted, sitting in trust funds or in various investment vehicles where it isn't getting spent or creating further value.  This needs to be highlighted, studies need to be ran on the loss of economic growth from this stagnation.  And more articles about the opulence of the top 1% need to be written and sensationalized.  People need to be more angry.  And they need to know.  This isn't capitalism, this is feudalism.  Which brings up one of the most important points in the piece, the decline of unions.  Private workers are mad at public workers, because the private unions are almost non-existent, and so workers in government are better paid.  This is a myth which has also been debunked--the truth?  There aren't any valid statistics to support a claim either way.  Federal workers are more educated, more federal jobs are white collar, and the government has contracted out many low-skilled jobs, further skewing the average.  One thing is for sure, Federal workers get better benefits -- duh!  That's the point of collective bargaining!  One other thing I think needs to be said in defense of federal workers.  There is a strict hiring procedure, a strict raise and payment procedure which is difficult to game, and often very stagnant, making it harder to rise in the ranks, or get raises in the public sphere.

The article also attacks globalization as a part of the reason for the rise, namely, the exploitation of new wage pools and untapped markets.  Anytime a new pool is tapped, the market makes adjustments, and those adjustments take generations to reach anything approaching "efficient."  For example, after 50 years of cheap Chinese labor, demands for higher wages are finally being met.  And so they move the factories to India.  The sad fact is that the creation of the middle class was ultimately countenanced by the Black Death, and the commensurate labor shortage.  Still, even if it takes generations many of these bumps will get ironed out.  At the cost of millions of lives crushed in meaningless poverty.  This is the reason the government needs to be an actor in this drama.  Lives are at stake and a nation's duty is to the welfare of all of its people.  And then there are the aristocrats who fight tooth and claw to turn back the clock.  Anyway, I rave.

Another thing the article points out, "In 2000, the Commodity Futures Modernization Act also weakened the government's oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector. "  This is a good thing to know.  It was the last in a series of "reforms" made by the last four presidents.  In financial history, you should learn the name of the CFMA, and its often overlooked.

The last article bothers me.  Not because its point, I agree with it. "How the Rich Became the Uber Rich" but because of its tendency to place blame equally on both sides of the aisle.  There' one offs, simple lines like "The idea of deregulation gained momentum through several decades of policy put forth by lawmakers on both sides of the aisle and the Federal Reserve."  Or, in the previous article, "A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed," while this is essentially true, I find it oversimplifies in an effort to be judicious in placing blame.  Why be judicious?  The Gramm-Leach-Bliley Act was proposed by three Republicans, and passed mere months before GWB became president!  Not only was Clinton barely acquitted of impeachment eight months before, he was the lamest of lame ducks!  Dennis Hastert was the leader of the Republican majority elected in 1998, Trent Lott lead by 55 seats in the Senate!  Obama will also get blamed for extending the Bush taxcuts, and from a Ravingleftatic, that's completely valid, Obama capitulated.  But from the right, it's sheer hypocracy, those taxcuts were forced on us, again, by a new Republican house!

At anyrate, props to my girl Annalyn Censky.

Thursday, June 9, 2011

Michael Lind - Fracking

So my buddy Michael Lind is again making the case for a resurgence in fossil fuels.  And I must say he's beginning to convince me.  I'm not won yet baby, I need more sweet talking.  I must say--he almost sounds like he's shilling for the Natural Gas Industry.  I hope not, one political betrayal at a time.  On the topic of WeinerGate (the first gate since Watergate which is truly awesome and appropriate.  Don't we all seek a weinergate after all?)  I might try that one on my wife soon as foreplay.  Sigh.  Ok.  Briefly, I really don't care about what goes on in a politician's bedroom.  None of them, whether or not he's a Republican or a Democrat.  It's the policies that matter, the men, are just men.

On to Fracking.  As you know, Lind is a fan of cars, driving, gas and energy.  He says that the use of "shale" gas, which was previously unrecoverable is six times as much as oil, cleaner and with modern technology easy to refine and produce.  He says that we could be witnessing the rebirth of the fossil fuel energy industry.

"If gas hydrates as well as shale gas, tight oil, oil sands and other unconventional sources can be tapped at reasonable cost, then the global energy picture looks radically different than it did only a few years ago. Suddenly it appears that there may be enough accessible hydrocarbons to power industrial civilization for centuries, if not millennia, to come."

Wow, how exciting!  He then goes on to say how all the reasons for sustainable energy are now irrelevant.  1)  Peak Oil is no longer an issue.  No imminent energy crisis. 2)  No political blackmail.  Shale gas, tight oil, gas hydrates are everywhere!  Wheee!  3)  The effect on the environment is no big deal, Natural Gas is clean, drink up!

This is where he loses me:

"The scenarios with the most catastrophic outcomes of global warming are low probability outcomes [Huh?  says who?]-- a fact that explains why the world’s governments in practice treat reducing CO2 emissions as a low priority, despite paying lip service to it [if by lip service you mean broadly denouncing global warming as a hoax, then yes] . But even if the worst outcomes were likely, the rational response would not be a conversion to wind and solar power but a massive build-out of nuclear power. Nuclear energy already provides around 13-14 percent of the world’s electricity and nearly 3 percent of global final energy consumption, while wind, solar and geothermal power combined account for less than one percent of global final energy consumption." 

Phew, boy am I glad that Lind is here to be rational for all of us.  There's a reason wind, solar and geothermal use less than 1% and Lind knows it.  Governments need to get on board and ask for them, governments are the major purchasers of energy resources afterall.  And then he whitewashes the nuclear disaster in Japan.

"The disasters at Chernobyl and Fukushima have dramatized the real but limited and localized dangers of nuclear energy."

A radiation plume spanning the entire Pacific ocean is a localized disaster?  The problem isn't that nuclear energy is unsafe, it's perfectly safe in controlled environments.  The problem is what to do with the waste, which will be radioactive for centuries, and when it all goes to shit (unlikely, but possible) a few of these "localized" disasters in different parts of the world could make the entire planet unlivable.  Or at least, hopefully medical science will keep up with the rising rate of cancer and will develope Battlestar Gallactica like radiation pills.

But I was serious, Lind really does make a convincing argument for Natural Gas, though his arguments consist almost entirely on debunking "alarmist" "Green" studies about the dangers of NG.  His most convincing arguments are political ones.  Namely that to develop sustainable energy will require an enormous governmental cost--which is true.  Wind/Solar had a tremendous boost in the Roaring Two-Thousandsees, when investment banks were using green companies as tax shelters for millions of dollars, but now that the investment banks are gone, and the economy is still staggering, the cost of propping up green energy to the levels needed to power our communities, might well prove too much.  Not when Natural Gas is knocking at the door with a plate of brownies.

Even so, he has a very dismissive, non fact-substantiated view of Green Energy:

"Eventually civilization may well run out of natural gas and other fossil fuels that are recoverable at a reasonable cost, and may be forced to switch permanently to other sources of energy. These are more likely to be nuclear fission or nuclear fusion than solar or wind power, which will be as weak, diffuse and intermittent a thousand years from now as they are today. But that is a problem for the inhabitants of the world of 2500 or 3000 A.D."
My friend, that's a whole lot of assumptions in one paragraph, I don't need to tell you that.  Let's ask my other friend, Andrew Leonard.  He comments on the exact same paragraph above!

"A better explanation for why the world is treating climate change as a low priority problem might be because the U.S. -- historically the largest producer of greenhouse gas emissions -- has refused to take any action at all."
Another goody of Leonard's:

"I'm not sure what definition of catastrophe Lind is using, but the unprecedented frequency of extreme weather events that we are already witnessing all across our planet is a strong indicator that global warming is already contributing to serious disruptions"
As to the relative safety of fracking, Leonard gives us some interesting tidbits:

"I defy anyone to read the New York Times' massive, exhaustively reported series on pollution problems associated with fracking and still not be concerned with threats to the nation's drinking water supply or the multiple failures of our regulatory system. "

Last but not least, Leonard lays it to Lind with Lind's alternative, nuclear energy:
"The more pertinent question to mull is why, if the economics of nuclear power make sense, private industry can't seem to make a go of it. The free market isn't very friendly to nuclear power -- it is most widely implemented, today, in countries where there is a strong state presence in the industry, like France or China. Building enough nuclear power plants to make a dent in climate change will be massively expensive. And if we're going to subsidize new sources of energy why not funnel that government funding toward sectors that do not have waste or potential meltdown issues -- like wind and solar."