Higher Oil Prices Provide Incentive to Seek Deeper Oil


Source of map:  online version of the WSJ article cited below.

 

(p. C1) The successful production of oil from the five-mile-deep Jack well in the Gulf of Mexico is likely to spur more deep-water exploration around the world — and that prospect is helping calm overheated crude-oil markets anxious about future supplies.

. . .

The successful Jack test underscores what a group of economists and oil-industry executives have been arguing for a while:  High prices will encourage energy companies to find and pump oil in deep, dark places around the world that otherwise would have been uneconomical.

 

For the full story, see:

RUSSELL GOLD.  "More Companies May Dig Deeper In Search for Oil Gulf of Mexico Discovery Fuels Prospects of Finding New Supplies; Lack of Resources Could Slow Push."   Wall Street Journal  (Tues., September 19, 2006):  C1.


“Free to Choose” Turns Estonia into “Boomtown”

  Source of book image:  http://search.barnesandnoble.com/booksearch/imageviewer.asp?ean=9780156334600

 

If, like Mr. Laar, you are only going to read one book in economics, Milton Friedman’s Free to Choose, is not too bad a choice:

(p. A23) Philippe Benoit du Rey is not one of those gloomy Frenchmen who frets about the threat to Gallic civilization from McDonald’s and Microsoft.  He thinks international competition is good for his countrymen.  He’s confident France will flourish in a global economy — eventually.

But for now, he has left the Loire Valley for Tallinn, the capital of Estonia and the economic model for New Europe.  It’s a boomtown with a beautifully preserved medieval quarter along with new skyscrapers, gleaming malls and sprawling housing developments:  Prague meets Houston, except that Houston’s economy is cool by comparison.

Economists call Estonia the Baltic tiger, the sequel to the Celtic tiger as Europe’s success story, and its policies are more radical than Ireland’s.  On this year’s State of World Liberty Index, a ranking of countries by their economic and political freedom, Estonia is in first place, just ahead of Ireland and seven places ahead of the U.S. (North Korea comes in last at 159th.)

It transformed itself from an isolated, impoverished part of the Soviet Union thanks to a former prime minister, Mart Laar, a history teacher who took office not long after Estonia was liberated.  He was 32 years old and had read just one book on economics:  ”Free to Choose,” by Milton Friedman, which he liked especially because he knew Friedman was despised by the Soviets.

Laar was politically naïve enough to put the theories into practice.  Instead of worrying about winning trade wars, he unilaterally disarmed by abolishing almost all tariffs.  He welcomed foreign investors and privatized most government functions (with the help of a privatization czar who had formerly been the manager of the Swedish pop group Abba).  He drastically cut taxes on businesses and individuals, instituting a simple flat income tax of 26 percent.

 

For the full commentary, see:

JOHN TIERNEY.  "New Europe’s Boomtown."  The New York Times  (Tues., September 5, 2006):  A23.

 

“Responsible Biotechnology is Not the Enemy: Starvation Is”

  Source of the book image:   http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?z=y&EAN=9781930754904&itm=1

 

 

Who won the Nobel Peace Prize in 1970?  You may be forgiven for not remembering, given some of the prize’s dubious recipients over the years (e.g., Yasser Arafat).  Well, then:  Who has saved perhaps more lives than anyone else in history?  The answer to both questions is, of course, Norman Borlaug.

Who?  Norman Borlaug, 92, is the father of the "Green Revolution," the dramatic improvement in agricultural productivity that swept the globe in the 1960s.  He is now the subject of an admiring biography by Leon Hesser, a former State Department official who first met Mr. Borlaug 40 years ago in Pakistan, where they worked together to boost that country’s grain production.  "The Man Who Fed the World" describes, in a workmanlike way, how a poor Iowa farm boy trained in forestry and plant pathology came to be one of humanity’s greatest benefactors.

. . .

Mr. Borlaug is still tirelessly working to keep hunger at bay.  He remains a consultant to the International Maize and Wheat Improvement Center in Mexico and president of a private Japanese foundation working to spread the Green Revolution to sub-Saharan Africa.  He believes that biotechnology will be crucial to boosting world food supplies in the coming decades and decries the underfunding of the world’s network of nonprofit agricultural research centers.

He also laments the unnecessary suspicion with which biotech is treated these days.  "Activists have resisted research," he notes, "and governments have overregulated it."  They both miss the point. "Responsible biotechnology is not the enemy:  starvation is."

 

For the full review, see:

RONALD BAILEY.  "Bookshelf; Going With the Grain."   Wall Street Journal  (Tues., September 5, 2006):  D8. 

 

The reference to the book is:

Hesser, Leon.  The Man Who Fed the World: Nobel Peace Prize Laureate Norman Borlaug and His Battle to End World Hunger (Durban House Publishing: Dallas, 2006) ISBN: 1-930754-90-6; Hardback $24.95

Wal-Mart Really Does Benefit Consumers by Lowering Prices

 

Scholarly studies show Wal-Mart’s price reductions to be sizable.  Economist Emek Basker of the University of Missouri found long-term reductions of 7 to 13 percent on items such as toothpaste, shampoo and detergent.  Other companies are forced to reduce their prices.  On food, Wal-Mart produces consumer savings that average 20 percent, estimate Jerry Hausman of the Massachusetts Institute of Technology and Ephraim Leibtag of the Agriculture Department.

All told, these cuts have significantly raised living standards.  How much is unclear.  A study by the economic consulting firm Global Insight found that from 1985 to 2004, Wal-Mart’s expansion lowered the consumer price index by a cumulative 3.1 percent from what it would have been.  That produced savings of $263 billion in 2004, equal to $2,329 for each U.S. household.  Because Wal-Mart financed this study, its results have been criticized as too high.  But even if price savings are only half as much ($132 billion and $1,165 per household), they’d dwarf the benefits of all but the biggest government programs. 

 

For the full commentary, see:

Robert J. Samuelson.  "Wal-Mart as Red Herring."  The Washington Post  (Wednesday, August 30, 2006):  A19.

 

New Concert Halls Reduce Money for Other Activities

”A new theater is not automatically simply great news,” said Marc Scorca, the president of Opera America, an organization serving opera companies nationwide.  When a hall is added, he said, it may just divert audiences and their dollars from other performance and cultural institutions.

”This is all redistributing people’s expenditures from one activity to another,” said David Galenson, an economist at the University of Chicago who focuses on the arts.

Tyler Cowen, a professor of economics at George Mason University and the author of ”Good and Plenty:  The Creative Successes of American Arts Funding,” said there was little solid research measuring the economic impact of arts centers on a city, although there was for sports stadiums.  Such research shows no benefit for a city’s growth, he said, adding that he was skeptical about economic claims for new concert halls.

”The glorious tales are typically exaggerations,” said Mr. Cowen, who also contributes a monthly economics column to The New York Times.

 

For the full story, see: 

DANIEL J. WAKIN.  "This Season’s Must-Have Urban Accessory."  The New York Times, Section 2  (Sun., September 3, 2006):  1 & 17.

Daley Shows Chicago is Still the “City of the Outstuck Neck”

I think it was the poet Gwendolyn Brooks who once described Chicago as the "city of the out-stuck neck."  Chicago’s current Mayor Daley did himself and the city proud recently when he had the guts to stick his neck out by vetoing the proposed Chicago minimum wage. He deserves a salute from Chicago’s consumers and poor.  Democrat Daley is the mayor of the out-stuck neck.

 

Chicago Mayor Richard M. Daley used the first veto of his 17-year tenure to reject a living-wage ordinance aimed at forcing big retailers to pay wages of $10 an hour and health benefits equivalent to $3 an hour by 2010.

The veto is important to Wal-Mart Stores Inc., which plans to open its first store in Chicago late this month in the economically depressed 37th ward.

. . .

In vetoing the ordinance, Mayor Daley cited a potential loss of jobs.  In recent weeks, several big retailers had written to his office to oppose the ordinance.  "I understand and share a desire to ensure that everyone who works in the city of Chicago earns a decent wage," the mayor wrote to the aldermen yesterday.  "But I do not believe that this ordinance, well intentioned as it may be, would achieve that end.  Rather, I believe that it would drive jobs and business from our city."

 

For the full story, see: 

KRIS HUDSON.  "Chicago’s Daley Vetoes Bill Aimed At Big Retailers."   Wall Street Journal  (Thurs.,   September 12, 2006):  A4.

 

(Note:  I can’t find the exact source of the out-stuck neck quote, but one reference on the web is:  http://starbulletin.com/97/05/22/sports/fitzgerald.html )

 

World Health Organization (WHO?) Endorses DDT

MalariaGraphic.gif  Source of graphic:  online version of the WSJ article cited below.

 

The World Health Organization, in a sign that widely used methods of fighting malaria have failed to bring the catastrophic disease under control, plans to announce today that it will encourage the use of DDT, even though the pesticide is banned or tightly restricted in much of the world.

The new guidelines from the United Nations public-health agency support the spraying of small amounts of DDT, or dichloro-diphenyl-trichloroethane, on walls and other surfaces inside homes in areas at highest risk of malaria.  The mosquito-borne disease infects as many as 500 million people a year and kills about a million.  Most victims are in sub-Saharan Africa and under the age of 5.

 

For the full story, see:

BETSY MCKAY.  "WHO Calls for Spraying Controversial DDT To Fight Malaria." Wall Street Journal  (Fri., September 15, 2006):  B1.