Category Archives: Economics

The Down Side Of Supply Chain Management

No resiliency.

The supply chain is simply empty, all the way up to the people who mine the raw materials. It’s going to take time to replace all the links in that chain, and it’s not because of the war in Iraq/Afghanistan, The Joos, FEMA, the CIA, a secret agreement to implement gun control through ammo availability, or any other silly theory you may have heard. This is a textbook example of what happens when an inelastic supply chain, composed with scarce “just in time” inventories, meets insatiable demand. It’s not sexy or intriguing, but that’s the way it is.

You know what’s scarier? Your food comes to you the same way. Imagine what would happen if…

And we were thinking about going shooting this weekend.

[Via Mark Danziger]

[Update mid morning]

Here’s a fact sheet on the ammo shortage.

Solar System Day

Regular readers know that I hate the earth and the environment.

Well, not really, but I’d imagine that some of the more deluded among them believe that. And I am opposed to many so-called environmentalists. But it’s not an anti-environment position so much as an anti-anti-humanity and anti-anti-free market position.

So I do have trouble getting into Earth Day. I find the notion far too blinkered and unimaginative.

Yes, earth is special and, as we learned over forty years ago (shortly before the first Earth Day), looks like a very precious and fragile jewel against the black background of an unimaginably vast, sterile and hostile universe.

But it’s just one planet of uncountably many, and we don’t just live on a planet, we live in a solar system, a galaxy, a universe. In fact, while there’s an implicit recognition of this in the worship of the sun by the renewable energy types, they’re insufficiently open minded about the use of the rest of the system as a source of resources whose harvesting would be much gentler on the planet than mining them here, if it could be done cost effectively.

I’d like to see Earth Day used as a platform to focus a lot more attention on the environmental benefits that space technology has brought us over the past half century, from data gathering on deforestation and pollution, communications that allow less business travel and more telecommuting, to space-based navigation that saves fuel and lives. I’d also like to see consideration of the even greater future potential for saving the planet via space.

I actually do share the goal of the anti-humans of wanting to reduce the environmental burden of humanity on the planet, and I don’t even necessarily object to the goal of reducing the terrestrial population, as long as we can dramatically increase the extraterrestrial human population, because I’m one of those people who think that human minds are the ultimate resource, and that you can’t have too many of them. But the way to achieve that goal is to open up space, not to simply reduce the human population on earth, by whatever means necessary (and many of these folks think that end will justify any means).

Back in the seventies, many of the L-5ers were hippies who recognized the peaceful potential of space colonization to gently depopulate the earth and make it into a giant natural park, with the vast bulk of humanity living and producing off planet the wealth, via industrial-intensive processes, that would make such a thing affordable. I wasn’t a hippy, but I thought then, and still think, that a wonderful ultimate goal.

But the means to achieve it are not more constraints and taxes on current energy use, or population. It is to deploy technologies that can actually achieve the goal — nuclear, molecular manufacturing, fusion (if we can do it), and low-cost space access, which might eventually make space solar power and extraction of other extraterrestrial resources for use on earth economically feasible.

Golda Meir once said that there would be peace in the Middle East when the Arabs started to love their children more than they hated the Jews. Similarly, the planet will be saved when many of the watermelons who claim to care for it start to love it more than they hate humans, freedom, individualism and technology.

[Thursday morning update]

Save the humans:

Last week the Environmental Protection Agency did bravely move forward by finding that things like smokestacks and breathing — or anything related to greenhouse gases — endanger the public health and welfare. And since the EPA can now regulate CO2, it can have a say in nearly everything we do with little regard for silly distractions like economic tradeoffs…

…What’s worse than the EPA grabbing power over CO2? Well, leading Luddite and Congressman Henry Waxman is worse. His proposal sets carbon reduction goals of 20 percent by 2020, 42 percent by 2030 and 83 percent by 2050, and, with cap-and-trade, effectively nationalizes energy production.

This incremental destruction of prosperity is probably going to have to be modified as soon as citizens get a taste of reality. But how could any reasonable or responsible legislator suggest an 83 percent cut in emissions without any practical or wide-scale alternative to replace it, or any plan to pay for it all?

Well, that assumes that Henry Waxman is reasonable or responsible, when the available evidence indicates otherwise.

[Bumped]

Defending The EPA

Jonathan Adler thinks they have no choice:

By all means conservatives should object to the regulatory nightmare that the control of greenhouse gas emissions under the Clean Air Act will create. But this is a result of the Supreme Court’s reinterpretation of the Clean Air Act in Massachusetts v. EPA and the failure of Congress to amend the law or enact an alternative, not the Obama Administration.

I’m perfectly happy to blame Congress for it.

Confidence Building

Appropriately frightened CEOs are hampering the recovery:

The yield curve predicts growth. Check. Consumer sentiment is ticking up. Check. But CEO confidence is lousy, and CEOs are (not) spending accordingly. Whoops. This begs the question: Why are CEOs in such a low mood?

Answer: If you are a CEO in financial services, manufacturing, energy production and health care, you are going to be more regulated. Period, end of story. Your response to forthcoming regulation of yet-to-be-determined complexity will be to hunker down. Keep your name out of the news, improve the balance sheet and hold tight.

This is why the U.S. economy, which wants to turn the corner, is still stuck in the intersection as it decides which way to go.

In her book The Forgotten Man, Amity Shlaes (now a Forbes columnist) wrote that the 1937-38 “depression within a depression” occurred when “capital went on strike.” President Roosevelt’s willingness to “try anything”–including retroactive taxation, laws against discount pricing and an attempted Supreme Court packing–had businesses and their backers so confused about Roosevelt’s rules that they simply withdrew.

This is the risk of Obama’s willingness to “do what it takes.” The words sound positive and action-oriented. But in practice, “do what it takes” really means “anything can happen.” Tearing up of legal contracts … that can happen. Limits to salary and travel … that can happen. Bullying by the Environmental Protection Agency … that can happen. Nationalization of General Motors and Citigroup … that can happen. Nobody knows for sure. Government is sorting it out, day by day.

I’d be happy to triple Congressional salaries, if they wouldn’t come in to “work.”

Credit Where It’s Due

One of the few things that I liked about the Clinton administration was its support for free trade. So it’s nice to see the Obama administration get this right as well, despite a lot of idiotic protectionist rhetoric during the campaign:

The media made much of Obama’s polite gestures to dictators, but he gave them nothing resembling what he gave to Uribe. Name one dictator Obama sat with for lunch. Which troublemaker got a White House invitation? Which tinhorn got a promise to visit?

And has anyone heard of Obama giving his autograph — “with admiration!” — to another president? It was as if Obama himself unclenched his own fist to reach out to the Colombian hand.

Obama may have had political reasons to seek out Colombia — the Chavez-Obama pictures didn’t do him any good domestically, and Drudge Report ran pictures of them all weekend, infuriating White House officials.

But the outlook for free trade has been improving for several weeks, too. On a visit to Medellin last month, Uribe gave us a veiled signal of positive moves on trade under the surface, and U.S. Trade Representative Ron Kirk has since made encouraging statements.

Two congressional delegations of pro-trade Democrats turned up in Colombia this month, back-slapping with the Colombians. But nothing approaches the good news seen now.

One of the causes of the Great Depression was protectionism and the imposition of tariffs. I hope that we’ll at least avoid that policy insanity.

Making Ayn Rand Look Good

Tyler Cowen has a brutal review of what looks to be an idiotic ant-capitalist documentary:

A few months ago I went back and tried to read some Ayn Rand. As Adam Wolfson has suggested recently in these pages, it wasn’t easy.1 I was put off by her lack of intellectual generosity. I read her claim that “collectivist savages” are too “concrete-bound” to realize that wealth must be produced. I read her polemic against the fools who focus on redistributing wealth rather than creating it. I read the claim that Western intellectuals are betraying the very heritage of their tradition because they refuse to think and to use their minds. I read that the very foundations of civilization are under threat. That’s pretty bracing stuff.

I can only report that The End of Poverty, narrated throughout by Martin Sheen, puts Ayn Rand back on the map as an accurate and indeed insightful cultural commentator. If you were to take the most overdone and most caricatured cocktail-party scenes from Atlas Shrugged, if you were to put the content of Rand’s “whiners” on the screen, mixed in with at least halfway competent production values, you would get something resembling The End of Poverty. If you ever thought that Rand’s nemeses were pure caricature, this film will show you that they are not (if the stalking presence of Naomi Klein has not already done so). If you are looking to benchmark this judgment, consider this: I would not say anything similar even about the movies of Michael Moore.

In this movie, the causes of poverty are oppression and oppression alone. There is no recognition that poverty is the natural or default state of mankind and that a special set of conditions must come together for wealth to be produced. There is no discussion of what this formula for wealth might be. There is no recognition that the wealth of the West lies upon any foundations other than those of theft, exploitation and the oppression of literal or virtual colonies.

“Narrated by Martin Sheen” would be the first clue.

An Upcoming Regulatory Disaster

This is insane. Here’s why:

Since EPA plans to find endangerment on both health and welfare grounds, the Agency could be compelled to establish “primary” (health-based) NAAQS for GHGs. Logically, the standard would be set below current atmospheric levels. Even very stringent emission limitations applied worldwide over a century would likely be insufficient to lower GHG concentrations. Yet the CAA requires EPA to ensure attainment of primary NAAQS within five or at most 10 years—and it forbids EPA to take costs into account. Regulate CO2 under the NAAQS program and there is, in principle, no economic hardship that could not be imposed on the American people.

It’s the new hair shirt in the new environmental religion. And all from unelected bureaucrats.

[Tuesday morning update]

Here’s a place to go to express your concerns.

[Bumped]

None Dare Call It…

what it is:

Jonah Goldberg evaluates the Treasury Department’s efforts to control the banks without actually nationalizing them: “It’s not socialism. It’s corporatism.”

It is interesting that Harwood depicts the choice to discuss the use of the word fascist as a strategic choice to pump up the volume, which it may be for some. For other commentators, such as perhaps Larry Kudlow, they might be straining not to deem as “fascist” proposals that they would call fascist if that term were not so politically charged.

Me, I just call ’em like I see ’em. And I’m going to continue to attempt to recapture the language from the left. They’re not liberals. I’m a liberal. They’re fascists, even if they insist on remaining ignorant of their own intellectual history.

A Hundred Whole Microbaracks

The administration is going to have a meeting to figure out how to cut <VOICE=”Dr. Evil” hand=”upside down” pinky_end=”in mouth”>…one hundred million dollars</VOICE> out of a multi-trillion dollar (multi-barack) budget.

And then, of course, after they do it (probably from defense) they’ll say that their opponents are lying about them when they accuse them of not cutting the budget. This would be funny if it weren’t so sad and pathetic.

[Update early afternoon]

Fooling the innumerate rubes:

…why bother? Because it may enhance the president’s “budget-cutter” image. Seriously. President Obama has reportedly been working closely with noted behavioral economists, and their studies have shown that most people are “insensitive to scope,” meaning they are not very good at putting large numbers in their proper context. People will react about the same to a policy proposal whether the cost/benefit is $10 million, $10 billion, or $10 trillion. Consequently, the $100 million cut may seem huge to many voters. (Note to conservative lawmakers: This is why the tiny 2005 reconciliation spending cuts were just as difficult to enact as the substantially larger 1990s reconciliation spending cuts. So if you are going to propose spending cuts, you may as well go big).

And based on the outcome of last year’s campaign, they may get away with it. Sigh…

I really wish that opponents would use more visual aids, like bar graphs. Here is the budget. Here are the president’s budget “cuts.”

[Tuesday morning update]

Speaking of visual aids

[Bumped]