Current Cost of Gas Needed to Drive a Mile, Is Not High, by Historical Standards

GasCosts.jpg 

Source of graphic:  p. C1 of NYT article cited below.

 

(p. C1) The price of gasoline is hovering around $3 a gallon, and politicians are falling over each other to pander to voters’ gas fears.  In a recent Gallup Poll, 70 percent of people said they favored price controls, a relic of Richard Nixon’s day.

But it’s time to take a deep breath and consider a radical fact: gas still isn’t all that expensive.  I’m not just talking about the disparity between prices here and in Europe, where gas taxes are much higher.  What really matters to people is the cost of the gas that is needed to drive a mile, a function of both the price of oil and the fuel efficiency of cars.

By this measure, gas for the average American now costs about what it did throughout the 1960’s and early 70’s and much less than in the early 80’s.  The 1990’s, in other words, were the big exception.

 

For the full commentary, see:

David Leonhardt.  "The High Costs of Cheap Gas and Vice Versa."  The New York Times  (Weds., May 10, 2006):  C1 & C11.

Will Google Leapfrog Microsoft?

 

Microsoft co-founder Bill Gates and Google CEO Eric Schmidt.  Source of photo:  online version of NYT article quoted and cited below.

 

The Microsoft-Google rivalry is shaping up as a titanic corporate clash for the ages.

It may not turn out that way.  Markets and corporate fortunes routinely defy prediction.  But it sure looks as if the two companies are on a collision course, as the realms of desktop computing and Internet services and software overlap more and more.

Microsoft, of course, is the reigning powerhouse of computing and Google is the muscular Internet challenger.  On each side, the battalions are arrayed: executives, engineers, marketers, lawyers and lobbyists. The spending and competition are escalating daily.  For each, it seems, the other passes what Andrew S. Grove, a founder and former chairman of Intel, calls the "silver bullet test" of strategic competition.  "If you had one bullet, who would you shoot with it?"

How the Microsoft-Google confrontation plays out could shape the future of competition in computing and how people use information technology.

Do the pitched corporate battles of the past shed any light on how this one might turn out?

Business historians and management experts say the experience in two of the defining industries of the 20th century, mass-market retailing and automobiles, may well be instructive.  The winners certainly scored higher in the generic virtues of business management:  innovation, execution and leadership.

But perhaps even more significant, those who came out on top, judging from history, had two more specific attributes.  They were the companies, according to business historians, that proved able to adapt to change instead of being prisoners of past success.  And in their glory days, these corporate champions were magnets for the best and brightest people.

 

For the full story, see:

STEVE LOHR.  "And in This Corner . . . Microsoft and Google Grapple for Supremacy as Stakes Escalate."  The New York Times  (Weds., May 10, 2006):  C1 & C14.

  Source of graphic:  online version of NYT article quoted and cited above.

Static Versus Dynamic Pictures

Schumpeter distinguished the static picture of capitalism in the textbook model, with the dynamic reality captured in the process of creative destruction.   Apparently Ronald Reagan also understood that a dynamic view is better than a static snapshot.   Michael Deaver recounts:

(p. 75) . . . I told him that I noticed his aversion to sitting for photo shoots.  He looked at me surprised.  "That’s funny, in all these years, nobody’s ever noticed that."   I asked him to elaborate.  "Well, you can never recover from a still shot."

Reagan was most comfortable with moving film, he went on to say.  He truly believed the television camera was a friend, a device that would separate the real from the phony.  Still cameras could always be used to make a candidate look like a fool.  When he explained this to me in the (p. 76) late 1960s, he said, "You know how I sometimes touch my nose before I make a point?  Well, a still shot would show me picking my nose, while a live shot would show me making my point."

 

Source:

Deaver, Michael K.   A Different Drummer:   My Thirty Years with Ronald Reagan.  Reprint ed.  Harper Paperbacks, 2003.

 

Successful Mutual Fund Expert Claims Capitalism is Revitalized by Creative Destruction

SAN FRANCISCO — One morning in November 2003, 15 Dodge & Cox senior managers gathered in a conference room here to decide an issue brewing for years: Was it time to close the flagship Dodge & Cox Stock Fund to new investors?

For months, senior managers had stood in the hallways and gathered in glass-paned offices, questioning what long had been a point of pride in the mutual-fund world: huge sums of money pouring in for investment.  It became "a water-cooler kind of issue," recalls Kenneth Olivier, the firm’s president.

. . .

Dodge also faces some other issues:  In December, longtime Chief Investment Officer John Gunn became chief executive, and a new president and executive vice president were named.  Another CEO switch could occur when Mr. Gunn turns 65 in 2008.  That would be a relatively large amount of turnover for a firm that has had only five CEOs in its history.

. . .

. . . , Mr. Gunn often speaks at mutual-fund forums and investor conferences.  The ruffled-hair Mr. Gunn resembles a college professor, wearing gray pants with yellow pinstripes, a light orange shirt and a yellow tie with zebras one recent day.  His feet on a chair, he quoted 20th century Austrian economist Joseph Schumpeter when talking about media stocks, noting "capitalism is revitalized by waves of creative destruction."  Ancient Asian artifacts, like a pink stone statue from a 14th-century tomb, adorn the office.

As for the flagship fund’s future, Mr. Pohl said as he and Mr. Gunn sat at a conference-room table,  "the fact that we have outperformed" since closing to new investors, "I think is proof" that the decision was made at the right time.

"So far," Mr. Gunn added, half-jokingly.

 

For the full story, see:

DIYA GULLAPALLI.   "When Mutual Funds Don’t Want Your Cash Dodge & Cox Says No To Many New Customers; Angst at the Water Cooler."   The Wall Street Journal  (Mon., May 1, 2006):   R1 & R?.

(Note: ellipses added.)

 

 

Source of graphic:  online version of WSJ article cited above.

Charles Koch Participates in Schumpeter’s Process of Creative Destruction

 

KochClharles.gif Charles Koch.  Source of image:  online version of WSJ article cited below.

 

I heard Charles Koch speak at the April 2005 Orlando meetings of the Association of Private Enterprise Education.  Part of his speech involved how he has tried to apply in his own business, Schumpeter’s process of creative destruction.  For a long time Koch has been a stalwart defender of the free market in word and deed.

Ideas seem to exhilarate him.  This no doubt explains in part why this professorial CEO delivers "dozens and dozens" of lectures around the country to his employees on these very topics.  But what does any of this have to do with explaining his company’s prodigious profitability?  Well, everything — he believes.  Mr. Koch contends that the key insight of his business career was melding these philosophical insights about the way the wealth-creation process works into a business operating system called "Market Based Management."  This system, which he has trademarked, enables every division of his business empire to operate as a separate, autonomous, profit-maximizing unit.  It is intended to reward employees who think like entrepreneurs.

"Long-term success entails constantly discovering new ways to create value for customers and building new capabilities to capture new opportunities," he instructs.  "In this sense, maintaining a business is, in reality, liquidating a business."  Mr. Koch likens the cycle to Schumpeter’s "creative destruction" — where the old and inefficient are ruthlessly swept away by the new.

 

For the full commentary, see: 

STEPHEN MOORE. "THE WEEKEND INTERVIEW with Charles Koch; Private Enterprise." The Wall Street Journal (Sat., May 6, 2006): A8.

 

If Bush’s spirit breaks “evil will indeed triumph”

Natan Sharansky was a political prisoner for nine years in the Soviet Union.  He is articulate and passionate.  But I am not so sure he is right in almost equating freedom and democracy.

While I was an undergraduate at Wabash College, Ben Rogge arranged for Erik Maria Ritter von Kuehnelt-Leddihn to visit campus for a week.  Kuehnelt-Leddihn was an improbable walras of a man.  On my first encounter with him, I was stunned to hear him arguing that a monarchy embued with noblese oblige would be more likely to defend freedom, than would a democracy.  At first I thought the conclusion was patently absurd.  But over time, I gradually came to believe that although it was probably a false conclusion, it was not an absurd one. 

History, and modern experience, provide us many examples of democracies that severely restrict the freedom of their citizens.  And perhaps, for a time, freedom can thrive under enlightened monarchs, or dictators?

I hope, and still believe, that democracy is the system of government most likely, most of the time, to promote freedom.  If so, then what Bush is trying to do, may eventually leave the world safer, and more free:

 

Critics rail against every step on the new and difficult road on which the United States has embarked.  Yet in pointing out the many pitfalls which have not been avoided and those which still can be, those critics would be wise to remember that the alternative road leads to the continued oppression of hundreds of millions of people and the continued festering of the pathologies that led to 9/11.

Now that President Bush is increasingly alone in pushing for freedom, I can only hope that his dissident spirit will continue to persevere.  For should that spirit break, evil will indeed triumph, and the consequences for our world would be disastrous.

 

For the full commentary, see:

Sharansky, Natan.  "Dissident President."  The Wall Street Journal  (Mon., April 24, 2006):  A15.

Charlie Munger Calls Ethanol “Stupid”

Charlie Munger.  Source of image:   http://daily.stanford.edu/tempo?page=content&id=16135&repository=0001_article#

 

Charlie Munger is the number two executive, next to Warren Buffett, at Berkshire Hathaway.  He is old enough, and successful enough, and gutsy enough, and curmudgeony enough, to call ethanol "stupid" while in the "cornhusker state" for the company’s annual meeting.  (Of course, he wasn’t running for public office, and knew he would soon be flying back to his home in California.)

 

Munger said using ethanol for fuel seems "stupid" to him because it takes more energy to create than it produces as a fuel.  Buffett said there are so many ethanol plants, existing or planned, that he doesn’t see how they can all continue operating profitably.

 

For the full article, see:

STEVE JORDON and JONATHAN WEGNER.  "Berkshire Notes: Clayton’s Excutives Double Up."  Omaha World-Herald  (Sunday, May 7, 2006):  1D.

(Note:  the annual meeting was held on Sat., May 6, 2006)