Category Archives: Economics

Remember Peak Oil?

Out: Peak Oil.

In: Peak oil demand.

And it’s good news for the airlines and travelers, and bad news for the aircraft manufacturers:

The losers in this scenario would be aircraft manufacturers, which have built up record backlogs on a cocktail of high fuel prices, low cost of capital, and new technology. Lower oil prices mean new aircraft models promising 15-20% fuel consumption reduction are not as attractive from a financial perspective. Coupled with the current trend of increasing cost of capital, this could mean a wave of cancellations of sexy new aircraft models. Or it could mean manufacturers need to revisit pricing assumptions. What is a fair price for a new widebody like the Boeing 777X, for example, in an $85/barrel world where its annual fuel cost falls by $3-4 million?

All is happening as I have foreseen.

Millennials

Is this the year they finally get fed up with big government?

These ads depict millennials as emotional, instinctive animals acting on appetites, impulses, and desires rather than moral and intellectual beings capable of acting according to reason and prudence. The liberal poster child is a product of the state, dependent on cradle-to-grave government support, to which free birth control is a higher end than a well-paying job or — heaven forbid — starting a family.

For many millennials, the scales have fallen. They realize that the future of Obamacare depends on their signing up to pay higher insurance premiums and deductibles. In the era of iPhones and PS4s, they realize that a government that can’t design a website can’t be expected to manage the intricacies of the entire health-care industry. In the wake of the news that the NSA collects mountains of metadata, they also fret that the government that wants you to talk about health care could (with a warrant) listen in on that very conversation.

Given the bleak reality for many millennials today, it’s obvious that the Democratic party can’t talk straight to them. Instead, it manufactures witty, tongue-in-cheek social-media campaigns and faux controversies like the “war on women.” (As with most faux liberal controversies, the data seem to suggest the opposite — in 2009 women became a majority of the work force for the first time ever, while 2013 saw women under 30 earn a higher median income than their male counterparts did.)

These tricks worked in 2008; they worked again, albeit to a far lesser degree, in 2012; but in 2014, it appears the magic has finally worn off. Many millennials see through the catchy rhetoric to the empty promises.

Let’s hope. As I’ve said in the past, I’d like to see a poll that asks if people would be more, or less likely to vote Republican if they promised to repeal and replace Barack Obama next year.

[Update a while later]

ObamaCare flops with the young.

Well, big surprise. What’s in it for them?

Income Inequality

Republicans should own the issue, with competition and markets, and fighting cronyism:

Well, no. Inequality has increased across advanced economies. Macro factors such as globalization and technology deserve most — but maybe not all — of the “blame.” Big Government loves to pick winners and losers in the private sector. Some lucky ducks owe their place in the 1 percent or 0.1 percent or 0.01 percent to federal favoritism. Conservatives shouldn’t mind at all when value-creating innovators and entrepreneurs strike it rich while crony capitalists do not. The precious tax breaks and subsidies that go to rent seekers, such as those in the agriculture and alternative-energy sectors, should get the ax. Sorry, Big Sugar and Big Solar.

Unfortunately, they don’t mind cronyism that much, as long at it’s their cronyism.