Category Archives: Economics

Full Employment

No, we’re nowhere close to it:

Measured against where these people expected the economy to be at this point seven years ago, the economy is indeed awful. Millions of people who should have jobs don’t, and those who do have jobs are working for much lower wages than would be the case in a healthy economy.

This is the worst economic recovery since the Great Depression. For most of the same reasons.

Note, I don’t agree with Baker’s recommendations, though.

[Update a few minutes later]

Of 3000 counties, only 65 have recovered from the recession.

Fifty-Dollar Oil

Is it a floor, or a ceiling?

Competitive market conditions would therefore dictate that Saudi Arabia and other low-cost producers always operate at full capacity, while US frackers would experience the boom-bust cycles typical of commodity markets, shutting down when global demand is weak or new low-cost supplies come onstream from Iraq, Libya, Iran, or Russia, and ramping up production only during global booms when oil demand is at a peak.

Under this competitive logic, the marginal cost of US shale oil would become a ceiling for global oil prices, whereas the costs of relatively remote and marginal conventional oilfields in OPEC and Russia would set a floor. As it happens, estimates of shale-oil production costs are mostly around $50, while marginal conventional oilfields generally break even at around $20. Thus, the trading range in the brave new world of competitive oil should be roughly $20 to $50.

Makes sense to me.

[Update a few minutes later]

I’ve long said that oil over a (inflation adjusted) hundred dollars a barrel was unsustainable. This would seem to validate that.

Dealing With Climate Change

No, it’s not like going on a diet:

Even when people aren’t directly invoking the carbon diet in their language, they often echo its principles by suggesting that everyone needs to cut back. But it falls apart—and starts to seem downright sinister—when you look at its priorities. Most of the world does not need a carbon diet. Three-quarters of the global population uses just 10 percent of the world’s energy, 1 billion people lack access to electricity, and 3 billion cook their food over dung, wood, and charcoal, leading to millions of early deaths. These people are energy starved—and they need a feast, not a diet.

These people are essentially advocating mass murder.

High-Speed Rail

California goes full boondoggle:

IF the internet doesn’t change the way people work, reducing both commuting and the demand for business travel, IF the giant project doesn’t mimic almost all similar projects and develop gigantic cost overruns that make a mockery of the initial cost elements, IF resourceful NIMBY groups and their lawyers don’t find too many endangered species in its path or otherwise tie it up in endless litigation, IF self driving cars don’t make rail travel obsolete, IF the fares aren’t so high even with subsidies that passengers shun it, and IF unlike almost all other passenger rail service in the U.S. it doesn’t lose buckets of money, this project could look like a smart move.

IOW, it’s insane.

How Science Goes Wrong

A good survey from The Economist why we can’t blindly accept the “authority” of “science” or scientists:

Too many of the findings that fill the academic ether are the result of shoddy experiments or poor analysis (see article). A rule of thumb among biotechnology venture-capitalists is that half of published research cannot be replicated. Even that may be optimistic. Last year researchers at one biotech firm, Amgen, found they could reproduce just six of 53 “landmark” studies in cancer research. Earlier, a group at Bayer, a drug company, managed to repeat just a quarter of 67 similarly important papers. A leading computer scientist frets that three-quarters of papers in his subfield are bunk. In 2000-10 roughly 80,000 patients took part in clinical trials based on research that was later retracted because of mistakes or improprieties.

It’s a mess.

Reusable Rockets

CNES is getting in on the action:

Eymard was asked whether CNES is not in the position of having spent two years to catch up to SpaceX with a lower-cost expendable rocket in Ariane 6, only to find that SpaceX has moved to a partially reusable model that cuts costs even further.

“We don’t want to be in the position of appearing to follow in their footsteps all the time,” Eymard said. “But we admire what they are doing and we think it helps put pressure on all of us to do better.”

SpaceX, Blue, ULA, now the Europeans. But NASA insists on building a giant throw-away vehicle.

Gridlock

Why aren’t we thanking it for the economic recovery?

Because it doesn’t fit the narrative. But as Jefferson said, it’s a good demonstration that that government that governs least, governs best. If only we could roll back a lot of this crap.

It’s worth noting that things started to go to hell after the Democrats took over Congress in 2006, and didn’t really start to recover until the Republicans took the House back in 2010.

That Stupid Slate Article About Space Billionaires

I don’t know if I mentioned this foolish piece by Charles Seife last week (what would we do without “journalism” professors?). At the time, I merely tweeted that I didn’t understand why I was supposed to care whether or not Virgin Galactic and SpaceX were about “exploration.”

Jeff Foust commented that Slate editors must have taken the week off (which I think gives them too much credit during the non-holidays). Anyway he has taken it apart.

It’s difficult to imagine a student of Professor Seife’s turning in a class assignment with such factual errors and getting a passing grade.

Zing.

And speaking of “space exploration,” I’ve decided that this is the year I make all-out war on the phrase. It has held us back for decades in thinking about space in a sensible way.

The Government Shutdown Option

How to end it [behind a paywall, though usually you can read by Googling the headline):

The GOP almost always bears the blame for a shutdown, because the smaller-government message of Republicans is easily portrayed as aiming to deprive the public of government services. President Clinton faced off against House Speaker Newt Gingrich in 1995, and Mr. Clinton won. President Obama dueled with the Republican House in 2013 and Mr. Obama won.

The advantages to the political party that favors higher spending—i.e., the Democrats—reflect the existing legal regime. But the next Congress can change the law (the most relevant one being the Antideficiency Act) so that the public suffers less inconvenience when the political parties cannot agree on spending levels. In case of a government shutdown, the government would continue to spend on discretionary programs at a level close to the amount authorized by the previous year’s budget. A reasonable default target might be 95%.

Such a law could be a political game-changer. The public would be less likely to suffer serious inconvenience with spending at this default target, and a 5% solution would strengthen the leverage of the party favoring less spending, i.e., the GOP. A 5% cut would in any event be closer to what Republicans ultimately want. They could hold out for a deal preferable to the default, since there would be very low costs imposed on the public in the interim.

Yes, if the Republicans were smart, they’d deprive the statists of this weapon. Unfortunately, there are lots of things the Republicans would do if they were smart, that they don’t. Which is why I’m not a Republican.

Minimum Wage Hikes

Everything we don’t know about them:

It wouldn’t be all that surprising if a small hike in the minimum wage had little effect on unemployment. But that doesn’t mean that you can extrapolate that result to very high minimums, like the Sea-Tac law, which hiked the local minimum wage by more than 50 percent from a level that was already well above the national average. To illustrate the problem, imagine raising the minimum wage by a penny. It’s extremely doubtful that anyone would fire workers in order to save 40 cents a week. But you’d be foolish to conclude that it would therefore be safe to raise the minimum wage to $100 an hour. The size of the increase matters.

Quantity has a quality all its own.

Another Dumb Space Piece

If it weren’t for that fiasco at The American Spectator yesterday, this would take the prize for the week, if not the month.