Category Archives: Economics

Business, Economics, Political Commentary, Space

State Socialists In Space

25 Comments

I use the “s” word because the “f” word seems to really upset people, even though it’s more accurate. It’s a shame that Hitler gave it such a bad name.

Anyway, Jeff Foust has an article today on the irrational antipathy of Congress, on both sides of the aisle, to private enterprise. Well, OK, it’s not all irrational. Some of it just typical rent seeking. Congressman Culberson comes off as particularly foolish, and not just for his Marine analogy:

“If the private sector exclusively owns access to space, who owns the technology? They’d have the right to sell it to any nation on the face of the Earth?” (Not easily, thanks to the export control regime that covers space technology in the US today.)

“Imagine if America had to hitch a ride on a commercial vehicle,” he continued. “If the private sector and the Chinese and Russians control access to space, they could charge us whatever they want.”

Yes. Whatever they want. As long as the price wasn’t higher than their competitors.

Why does this so-called fiscal conservative either not understand, or not believe in, how markets work?

You know who really charges “whatever they want”? A monopoly cost-plus contractor for NASA. Which is why Ares I has already cost about twenty times as much as Falcon 9, for similar capability (if it’s ever completed), with first flight for the former still years away, versus weeks away for the latter.

Business, Economics, Political Commentary

Obama’s Middle-Class Squeeze

83 Comments

I’m shocked, shocked:

The hardest hit won’t be those earning more than $250,000 a year–the group that he says needs to “pay their fair share.” Rather, it’s families whose combined annual income is around $100,000 who could be crushed under this plan.
Many of these middle-class families will probably opt to pay the federal fine, and go without health insurance until they get sick.

These folks will be too “rich” to qualify for ObamaCare’s subsidies, but probably too poor to easily afford the pricey insurance that the president’s plan forces them to buy.

Many of these $100K families will be obliged to buy a policy costing an average of $14,700 for the mid-level, “silver” health plan, according to the Congressional Budget Office’s estimates. After income taxes, they’ll be spending almost a quarter of their net income for health insurance.

I think that if you pass a law that requires you to purchase something, and it’s enforced by the IRS, it’s not unfair to call it a tax. And it’s another demonstration that every one of Obama’s statements (this one about no raising taxes on people making less than a quarter million) has an expiration date.

[Late afternoon update]

A commenter asks what he can do to fight this in the final hours. This looks like a good place to start. Whatever your political affiliation, if you want to stop this, it’s all up to the Republicans at this point, and you’re going to have to help them this weekend, if not in the future. Don’t look for any help from the Democrats.

Business, Economics, History, Space

Huh?

50 Comments

Why does the Air Force think that their launch costs will go up with the new policy? Look at the caption of the picture:

Less demand could drive up costs for rocket propulsion systems used to launch Air Force satellites.

This makes no sense. How is flying additional missions for NASA creating “less demand”?

There are two factors that will affect the price of EELVs with the new policy. The first is that adding failure on-set detection to the vehicles may increase their production cost, but I can’t imagine it will be by much. Most of the cost will be in development, which could legitimately be charged to NASA. The second is that increased demand will provide a higher flight rate (which the system is quite capable of, in both production and operations), which will allow the amortization of fixed costs over a larger number of flights, reducing the cost (and presumably price) per flight. From that standpoint, the Air Force should welcome this (and always should have, and in fact not approved NASA’s Ares plans). Moreover, a couple years ago the Air Force was considering forcing one of the lines to shut down, to save fixed costs, which goes against the doctrine of assured access to space, because if there was a problem with the remaining vehicle (whether Atlas or Delta), the Air Force would have no ability to launch its satellites. Increasing the demand like this allows both lines to continue affordably. I just don’t understand the concern.

Is there anyone who can explain this?

[Update a couple minutes later]

I see that Clark Lindsey is scratching his head, too. I just don’t know what Gary Payton is thinking.

[Update a few minutes later]

Commenters over at NASA Watch can’t figure it out, either. So it’s not just me.

[Update a few minutes later]

OK, I’m starting to infer that the problem is the production base for the solids. Apparently, ATK and others have been sharing fixed costs between NASA and the Air Force, and if NASA is no longer purchasing SRBs, as Shuttle ends and Ares doesn’t begin, the Air Force will have to bear the full burden.

Well, boo frickin’ hoo. So the taxpayer will no longer be subsidizing the Pentagon with NASA’s budget, and the actual cost of maintaining our missiles and boosters for defense will become more transparent. Why am I supposed to be concerned about this?

Business, Economics, Media Criticism, Political Commentary

Five Lies

6 Comments

…about the economy:

1. Bold government action staved off a Depression, saving or creating 1.5 million jobs.

“Just remember,” Treasury Secretary Tim Geithner said on November 1, 2009, “a year ago today, last year, you had markets around the world come to a stop. Economic activity just stopped, came to a standstill, like flipping a switch.”

Geithner implies that the American business climate improved substantially in the first year of the Obama administration. In fact, nearly every indicator, from employment to freight transport to rents to retail sales to real estate, has headed steadily south. In some cases, such as unemployment, the numbers have been far worse than the Obama economic team’s worst-case projections. In others, such as real estate, the weakness of the market is masked by expensive government support, including but not limited to the unkillable First-Time Homebuyer Credit, an assault on loan underwriting standards (see Lie No. 2) by the Federal Housing Authority and the government-run mortgage giants Fannie Mae and Freddie Mac, and the completely opaque $75 billion Home Affordable Modification Program (HAMP).

The $787 billion in stimulus spending authorized by the American Recovery and Reinvestment Act of 2009 is now best known for its inflated and unsupportable job creation numbers. At press time, Council of Economic Advisers Chairwoman Christina D. Romer (who, confusingly, made her academic reputation proving that fiscal stimulus did not help the U.S. economy during the Great Depression and World War II) was giving the stimulus credit for 1.5 million American jobs in 2009. All efforts at checking her claims, however, have turned up very different numbers.

There’s a lot more.

Business, Economics, Media Criticism, Political Commentary

The Economic Ignorance

6 Comments

…of Pat Buchanan. Some thoughts:

True, the United States imports a lot of stuff, particularly stuff made by low-wage, low-skilled workers. Everybody’s got a comparative advantage, and sweatshops aren’t ours. I can live with that. But here’s a shocker: The majority of the stuff we import is not consumer goods. The majority of what we import is stuff we use for manufacturing. As Daniel Ikenson reports, as recently as 2006, 55 percent of our imports were industrial components, i.e. stuff that goes into our factories as inputs and comes out as products. Ikenson: “Meanwhile, U.S. factories remain the world’s most prolific, accounting for more than 20 percent of the world’s added manufacturing value. By comparison, Chinese plants account for about 8 percent. And manufacturing is thriving in large measure because of international trade. Manufacturing exports and imports hit records in 2006.”

These kinds of arguments aren’t academic. When implemented as policy, protectionism can destroy, or prevent the creation of, trillions of dollars worth of wealth. It was one of the few areas of policy that Bill Clinton got right.