Category Archives: Economics

The Force Of The Gore Effect Is Strong In This One

Kyopenhagen abounded in irony, as all of these circuses do, but I found it quite delicious that Obama (and Pelosi, and many other DC denizens) had to rush home from a global warming conference to avoid getting shut out by an approaching blizzard* in the nation’s capital.

I would also note that, while I’m agnostic, I like the old phrase, “Men make plans, and God laughs.” This may put a dagger through the black heart of the health-care disaster, or at least its being passed by Christmas, which means that it may be dead for good (or at least this session, which will buy a lot of time after next year’s elections). But I won’t consider it over until it’s over.

* Yes, I do know the difference between climate and weather. When it’s warm, it’s climate; when it’s cold, it’s weather. Thanks for asking.

Thoughts On Corporatism

From Ross Douthat, and Jonah Goldberg, which is on full display in the health-care debacle, with the weird and awkward bear hug between Washington and the insurance companies:

If you want to know why business takes such an interest in Washington, the answer can be found in your low-flow toilet, in the warning labels adorning your cars, in your 8 zillion page tax returns. It can be found while you wait on hold trying to get a human to answer your questions about your health insurance. And the answer is most certainly somewhere in your box of cereal, made with grains subsidized by Uncle Sam and coated in sugar that has no business being grown in the United States of America. Corporations meddle in Washington because Washington meddles with them.

It is simply naive to believe that a businessman will have no interest in politics when politicians have taken a great interest in him. And it is grotesquely unfair to assume that businesspeople are corrupt simply because they want to support politicians less inclined to hurt them.

Yes, Bill Gates learned that lesson the hard way.

Happy About Kyopenhagen

That’s what the Club For Growth is:

“Like most Americans, I feared President Obama went to Copenhagen to sign a binding, job-killing, economic suicide pact.

“I am greatly relieved that the last-minute agreement President Obama negotiated is being widely described as ‘meaningful.’ When politicians call something ‘meaningful,’ that means it isn’t.

“Without even reading the accord, pro-growth, limited government conservatives today can celebrate the word, ‘meaningful.’ Today that adjective probably saved thirty million jobs.”

Yes, it was the best possible outcome from a blatherfest like that.

Incoherent

Julian Sanchez is as confused about the rationale for the current health-care deform as I am:

So we’re eliminating the rationale for the role private insurance companies play in our system, but insisting that it continue to revolve around them and, even better, handing them an enormous subsidy. What we’ve eliminated is the counterweight designed to check costs, because that part, according to a logic I completely fail to fathom, is especially socialist.

What’s remarkable about this is how naked and brazen it is. That is, I can’t come up with any remotely coherent pretext for thinking this particular policy combination makes sense on any set of background assumptions or values. (Which isn’t to say the same system with the public option was much more coherent.) Contemplate how extraordinary that is: There’s almost always at least some fig leaf of an ideological principle or an economic argument strung up in front of even the most naked interest group grab. But nobody seems to be even pretending this compromise amounts to anything but an open bribe to the very insurers whose existence it renders unjustifiable.

Also, if I hear one more economically ignorant moron tell me that we “need a public option to provide competition for insurance companies,” superheated steam will come out my ears. This is a phrase so absurd that I don’t know why its utterers don’t melt down in the sheer incandescent idiocy of it. If there isn’t competition in the insurance business, it is because (as is always the case in which there is no competition) there is some government policy that prevents it. Fix that. Don’t set up a health-care DMV to “compete” at taxpayer expense.

[Mid-afternoon update]

One of the deranged but prevailing myths among Democrats is that they lost the Congress in 1994 because they didn’t pass HillaryCare, when in reality, their loss was due to a combination of their attempt to do so, plus the “assault” weapons ban, and other misbegotten legislation. But because they continue to indulge themselves in this bizarre fantasy, they continue to equally imagine that their key to political success is ramming this monstrosity through. Sean Trende makes a devastating case against that lunacy as well, and explains why it would actually be political suicide for them. Which almost, but not quite, makes me want to see it pass.

[Bumped]

The Green Jobs Illusion

Thoughts from Ron Bailey, from Kyopenhagen.

This is a good example of the difference between creating jobs, and creating wealth:

As we rode the metro to the conference, Ratledge and I had a pleasant conversation about the great successes of Aspen, Colorado, in producing green jobs. With the financial crisis, construction jobs in Aspen disappeared. But thanks to stimulus money and tax breaks earmarked for weatherization, unemployed construction workers are now insulating houses. Tax breaks have similarly encouraged a solar power installation boom. When I asked him if solar was price competitive with conventional power without government guaranteed low interest loans and tax breaks, Ratledge admitted that it wasn’t. But he predicted that the price of Chinese solar panels was falling so fast that it would soon outcompete conventional power. I chided him that it sounded like the federal stimulus was actually creating green jobs in China. Ratledge did note one rapidly growing green sector in the U.S.: energy auditing. Of course, people and businesses wouldn’t need to hire energy auditors if the price of energy remained low or if they didn’t have to comply with new energy efficiency regulations.

The tax code creates a vast industry of auditors and accountants. But they make the nation poorer, not wealthier.

“Green Jobs” are the last refuge of the economic ignoramus.

[Update a few minutes later]

The Long March — from California to Copenhagen.

If one is a teacher, a public nurse, or a state bureaucrat, and stays close to home, life is not too bad. Two tenured teachers at midlife can easily make together $160,000 with summers off — far more than the owner of a brake shop or a farmer of 40 acres of trees — and without worry over burdensome regulations or the daily need to drive down the 99 for a living, or to fly out of LAX for business, or to depend on the local CSU to provide literate, skilled employees. Life is therefore pretty good, at least so far.

But if you are a private company, dealing with high taxes, all sorts of regulations, a crumbling infrastructure (take a 300-mile drive from Gilroy south on 101; spend a day at LAX, or try finding a convenient east-west route out of California in the winter), and poorly educated employees, the experiment in egalitarianism has failed.

Answer? The best job in California is a state one; the worst a private-sector one. Result? 3,500 flee per week with capital, education, and know-how; 2,500 arrive with far less capital and training.

…This California model is important because Obama is adopting it as a blueprint on a national scale. If he wins (and don’t count him out), life really would be more patterned on an equality of result. New payroll, income, state, local, and health care surcharge taxes would hit those over $200K with about a 70% take of one’s income. The public sector employees double in number, unionize, and demand ever more from “them.” Cap-and-trade charges raise monthly utility bills 20%. Things like SUVs, Winnebagos, and private jet travel are taxed out of reach — except for a guardian class that uses public moneys for a rarefied lifestyle of governance and enforcement (sort of like the jets parked on the tarmac at Copenhagen or Barack’s night out on the Big Apple).

We would all want a job at the DMV but would never want to go there for any service — a model for health care to come. In short, the poor get a little better off, the better-off a lot worse, and America becomes a sort of collective lower middle class at about a 1950s lifestyle, praised and congratulated for ending “poverty.”

And ending wealth as well.

Showing Their True Colors

The watermelons of Kyopenhagen:

The big name in the anti-capitalism club was, of course, Hugo Chávez, the Venezuelan national-socialist strongman. In a typical stem-winder, he belched: “Capitalism is a destructive model that is eradicating life, that threatens to put a definitive end to the human species.”

I don’t know how to say “chutzpah” in Spanish, but you’ve got to hand it to the leader of the world’s No. 5 supplier of oil for bemoaning the system that keeps his regime afloat by buying his product.

Now, I know that nice, moderate progressive types are rolling their eyes at my cynical effort to associate their noble activism with support for socialism and thugs. Fair enough. Let us concede that many, perhaps even most, proponents of draconian restrictions on carbon emissions have no sympathy for socialist dictators and do not want to chuck capitalism in the dustbin of history. But surely it should trouble these responsible greens that they’re in bed with a Star Wars cantina of villains and monsters.

Also, if environmentalists want to avoid the “watermelon” charge (“green on the outside, red on the inside”), maybe the delegates and activists in the audience shouldn’t have given Chávez such a loud and boisterous round of applause? Perhaps the folks who gave him a standing ovation didn’t help either?

They couldn’t help themselves. It’s what they are.

The Socialists’ Victory

in Kyopenhagen:

Let’s ignore McKibben’s barmy notion that man has it in his power to control global climate by tinkering with CO2 output, and concentrate on that part of his tearful outburst that does make sense. Copenhagen never really had anything to do with “Climate Change”. Rather it was a trough-fest at which all the world’s greediest pigs gathered to gobble up as much of your money and my money as they possibly could, under the righteous-sounding pretence that they were saving the planet.

This nauseating piggery took two forms. First were the Third World kleptocracies – led by the likes of Hugo Chavez and Robert Mugabe – using “Global Warming” as an excuse to extort guilt-money from the Western nations.

Second, and much more dangerous, were the First World Corporatists who stand to make trillions of dollars using the Enron economics of carbon trading. Never mind all the talk of President Obama’s trifling $100 billion pledge. This is very small beer compared with the truly eye-watering sums that will be ransacked from our economies and our wallets over the next decades in the name of “carbon emissions reduction.”

Richard North has spotted this, even if virtually nobody else has. The key point, he notes, is the Copenhagen negotiators’ little-publicised decision to save the Kyoto Protocol. This matters because it was at Kyoto that the mechanisms for establishing a global carbon market were established. Carbon trading could not possibly exist without some form of agreement between all the world’s governments on emissions: the market would simply collapse. By keeping Kyoto alive, the sinister troughers of global corporatism have also kept their cash cow alive.

Fortunately, cap’n’tax remains DOA in the Senate.

The Race Is On

I noted in my Popular Mechanics piece last week that Jeff Greason was “cautiously optimistic” that XCOR would have the funds in the next few months to complete Lynx.

Well, they have a press release out today that reveals what he was optimistic about:

The Yecheon Astro Space Center announced today that it has selected XCOR Aerospace as its preferred supplier of suborbital space launch services. Operating under a wet lease model, XCOR intends to supply services to the Center using the Lynx Mark II suborbital vehicle, pending United States government approvals to station the vehicle in the Republic of Korea.

…Working closely with its partners, Yecheon Astro Space Center has formed a broad coalition of regional and national entities to fund the approximately $30 Million project to bring the Lynx to Yecheon for space tourism, educational, scientific and environmental monitoring missions, making it the early leader in commercial manned space flight in Asia. Under the envisioned arrangement, Yecheon will be the exclusive Lynx operational site in Korea.

“As part of our long term strategic plan, we have performed an extensive review of the suborbital vehicle suppliers over the past 18 months, and found XCOR’s Lynx to be the best mix of safe design, reliable clean propulsion, skilled team members, full reusability, ease of operation, turn around time, upfront cost and long term cost to operate,” said Mr Jo Jae-Seong, Founder and Chief Executive Director of Yecheon Astro Space Center. “We look forward to a long term relationship with XCOR and Lynx!”

Note that the plan is to use a Lynx Mark II. In other words, while Virgin Galactic’s Will Whitehorn has run down the Lynx in the past, claiming that it didn’t really go into space, because it didn’t make it to a hundred klicks, the Mark II will, and the new plan is for there to be a single Mark I prototype/test-vehicle, with follow-on vehicles all being spacefaring Mark IIs. Jeff said that his schedule was funding constrained, but it looks now as though, as long as they hit their milestones, that constraint has gone away. That could mean Lynx flights in a little over a year, which means that they’ll be going head to head with Virgin, schedule wise, with much lower operational costs.

Of course, that doesn’t mean that only one company will emerge. They’re different approaches, with different markets, and the markets are large and diverse enough for both.

Of course, they may run into other schedule problems in the interim, perhaps not technical — I’m sure they had to already grease the ITAR skids to do this deal, but I can still imagine potential for it to throw some sand in the gears.

Anyway, this is really great news, on the 106th anniversary of the Wright Brothers first flight. I wonder if they chose the date of the announcement deliberately, or if it was just coincidence? There’s no mention of it in the release. Of course, the release has a date of 17th/18th, because it’s already tomorrow in Korea (as it often is in California), and Jeff is reportedly over there now.

For subscribers (and if you aren’t you ought to be) Charles Lurio has a lot more info at The Lurio Report.

[Update a few minutes later]

It’s worth pointing out that XCOR plans to spend an order-of-magnitude less money in development than Virgin does (thirty million versus at least two hundred million and probably more). This means that they’ll not only have lower operations costs, but also less development cost to amortize per flight. This shouldn’t necessarily be surprising, as Virgin has a much more ambitious project, carrying more passengers, with two vehicle types, plus spaceport investments. XCOR is more of a shoestring operation, with a single-passenger vehicle. And of course, both of them make the EADS estimate of a billion dollars to develop a European suborbital rocket plane look ridiculous.

[Late afternoon update]

Clark Lindsey summarizes some of the info from Charles’ newsletter. Also, go hit his tip jar, so that he can go keep doing what he’s been doing.

[Update a few minutes later]

OK, so it looks like the next couple of years are going to be very exciting in the suborbital reusable rocket world. We now have at least five serious players, with hardware being built and scheduled test flights coming up. We have two horizontal/horizontal (VG and XCOR, with the former two stage and the latter single stage) and three vertical/vertical (Armadillo, Masten and Blue Origin). Even with XCOR’s new deal, VG ang Blue remain the ones with the deepest pockets, and the least likely to fail due to capital constraints. Armadillo comes in next, though I suspect that John is starting to think seriously about looking for other peoples’ money, because while he’s wealthy, he’s no Bezos or Branson. It’s hard to know what Blue’s schedule is because they’re so secretive, but their recent agreement to fly payloads indicates that they plan to have a lot of air under the nozzle soon. Of the three vertical contenders, they’re probably furthest along in having a space-faring vehicle, because I don’t think that Armadillo or Masten have put serious resources into aeroshells yet, which will be a key development for them to leave the atmosphere.

Blue, Armadillo and Masten are closer in technical approach than any of them are to the others, or XCOR and VG to each other, though I’m sure that there are not-insignificant differences in propellant type, propulsion design, structure, etc. The really great thing is that we’re finally going to start to try lots of different things, and let the winners be sorted out by the market, instead of multi-million cost-plus simulations and trade studies. If NASA is smart, it will be buying lots of rides on all of them, just so that it can see how well the different approaches work, and to encourage innovation and diversity. But then, if wishes were horses…

No Honor Among Thieves

Good news from Kyopenhagen — things are falling apart:

Government ministers can’t agree on the best way to take money from their own citizens, give it to an opaque, above-the-law organization, and yet still control it; because, of course, with all that money comes power. Negotiators are skittish about how they can ensure that the money pledged will actually be paid into the pot, and if it does, who gets to dole out the funds. Everybody wants a piece of it, but nobody trusts anybody.

Well, they shouldn’t.

Unfortunately, as he notes, this is only a temporary setback. The leftists will regroup, and make other attempts in the future.