Government – Page 130 – artdiamondblog.com

Post Office Wastes Money on 30,000 Ethanol Capable Vehicles

“A General Motors Corp. Chevrolet Uplander flexible fuel vehicle customized for the U.S. Postal Service (USPS) is shown in this handout photo taken on April 22, 2008. The USPS bought more than 30,000 ethanol-capable trucks and minivans from 1999 to 2005, making it the biggest American buyer of alternative-fuel vehicles.” Source of caption and photo: Bloomberg.com article quoted and cited below.

I saw a great CNN video clip on 8/11/08 showing some of the specially designed Post Office vehicles that were expensive, but that were mainly running on regular gasoline because it was too difficult to fill them with the high-ethanol blend that they were converted to use.
Before I finally found the clip on CNNMoney.com, by searching for it using the TRUVEO video search engine, I discovered that a version of the story had run back in May on Bloomberg.com. I quote from the story below.

May 21 (Bloomberg) — The U.S. Postal Service purchased more than 30,000 ethanol-capable trucks and minivans from 1999 to 2005, making it the biggest American buyer of alternative-fuel vehicles. Gasoline consumption jumped by more than 1.5 million gallons as a result.
The trucks, derived from Ford Motor Co.’s Explorer sport- utility vehicle, had bigger engines than Jeeps from the former Chrysler Corp. they replaced. A Postal Service study found the new vehicles got as much as 29 percent fewer miles to the gallon. Mail carriers used the corn-based fuel in just 1,000 of them because there weren’t enough places to buy it.

For the full story, see:
Peter Robison, Alan Ohnsman and Alan Bjerga. “Ethanol Vehicles for Post Office Burn More Gas, Get Fewer Miles.” Last Updated: May 21, 2008 00:01 EDT Downloaded on August 8, 2008 from:
http://www.bloomberg.com/apps/news?pid=20601072&refer=energy&sid=aj.h0coJSkpw

On the CNN Money video clip:
Jason Carroll was the reporter on the CNN Money clip that was added to CNNMoney.com on August 12, 2008, under the title “Snail Mail by Ethanol,” and is viewable at http://money.cnn.com/video/#/video/news/2008/08/12/news.usps.081108.cnnmoney

Reporter Jason Carroll talks with mail carrier Richard Malik, who says he has never used ethanol in his expensive mail truck that had been specially designed to use ethanol. Source of photo: screen capture from the CNN Money video clip discussed above.

Schumpeter on the Government Execution of an Entrepreneur

(p. 257) Entrenched interests fought tenaciously against mechanization and the factory system. Unlike the Prussian inventor of a ribbon-weaving loom, who was put to death in 1579 by order of the Danzig Municipal authority, “Entrepreneurs were not necessarily strangled,” but “they were not infrequently in danger of their lives.”

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.
(Note: the phrases in quotation marks are quotations from Schumpeter’s Business Cycles book.)

“We Educate Them and Then Tell them to Go Home”

(p. C3) The United States may be synonymous with the high-tech revolution, but it is in danger of losing its high-tech edge, according to Cybercities 2008, a report released Tuesday by AeA, a technology industry trade association.
Because the federal government does not issue a sufficient number of green cards or work visas to talented foreign students studying here, there are a “tremendous number of unfilled jobs,” said Christopher Hansen, AeA’s chief executive.
“We educate them and then tell them to go home. This is absurd,” said Mr. Hansen, whose group has lobbied to increase the number of visas for foreign technology industry workers.

For the full story, see:
ERIC A. TAUB. “U.S. High Tech Said to Slip.” The New York Times (Weds., June 25, 2008): C3.

McCain “Shows a Lack of Understanding of the Insights of Joseph Schumpeter”

I agree with the Karl Rove’s analysis below, that John McCain does not exhibit much understanding of Schumpeter’s process of creative destruction. On the other hand, I have seen no evidence that Barack Obama has any such understanding either. (Nor have I seen any evidence that Rove’s former boss, George W. Bush, has any such understanding, for that matter.)
And, in general, I am still of the belief that, overall, between the two of them, McCain will put fewer obstacles in the path of innovation than will Obama.

(p. A13) This past Thursday, Mr. McCain came close to advocating a form of industrial policy, saying, “I’m very angry, frankly, at the oil companies not only because of the obscene profits they’ve made, but their failure to invest in alternate energy.”
But oil and gas companies report that they have invested heavily in alternative energy. Out of the $46 billion spent researching alternative energy in North America from 2000 to 2005, $12 billion came from oil and gas companies, making the industry one of the nation’s largest backers of wind and solar power, biofuels, lithium-ion batteries and fuel-cell technology.
Such investments, however, are not as important as money spent on technologies that help find and extract more oil. Because oil companies invested in innovation and technology, they are now tapping reserves that were formerly thought to be unrecoverable. Maybe we are all better off when oil companies invest in what they know, not what they don’t.
And do we really want the government deciding how profits should be invested? If so, should Microsoft be forced to invest in Linux-based software or McDonald’s in weight-loss research?
Mr. McCain’s angry statement shows a lack of understanding of the insights of Joseph Schumpeter, the 20th century economist who explained that capitalism is inherently unstable because a “perennial gale of creative destruction” is brought on by entrepreneurs who create new goods, markets and processes. The entrepreneur is “the pivot on which everything turns,” Schumpeter argued, and “proceeds by competitively destroying old businesses.”
Most dramatic change comes from new businesses, not old ones. Buggy whip makers did not create the auto industry. Railroads didn’t create the airplane. Even when established industries help create new ones, old-line firms are often not as nimble as new ones. IBM helped give rise to personal computers, but didn’t see the importance of software and ceded that part of the business to young upstarts who founded Microsoft.
So why should Mr. McCain expect oil and gas companies to lead the way in developing alternative energy? As with past technological change, new enterprises will likely be the drivers of alternative energy innovation.

For the full story, see:
KARL ROVE. “Obama and McCain Spout Economic Nonsense.” The Wall Street Journal (Thurs., June 19, 2008): A13.
(Note: I thank John Pagin and Dagny Diamond for alerting me to Rove’s discussion of Schumpeter.)

Obama Top Economist Likes Wal-Mart and Sees Improved Worker Living Standards

(p. C1) Acting quickly after securing his party’s presidential nomination, Barack Obama picked a well-known representative of Bill Clinton’s economic policies as his economic policy director and signaled this week that the major players from the Clinton economics team were now in his camp — starting with Robert E. Rubin.
Senator Obama, Democrat of Illinois, hired Jason Furman, a Harvard-trained economist closely associated with Mr. Rubin, a Wall Street insider who served as President Clinton’s Treasury secretary. Labor union leaders criticized the move, and said that ”Rubinomics” focused too much on corporate America and not enough on workers.
. . .
(p. C4) Mr. Furman, who served for a while as a special economic adviser in the Clinton administration, has taken some controversial positions. He argued in 2005, for example, that Wal-Mart, despite its conflicts with organized labor over pay and health insurance, was a good business model.
More recently, he argued that while the typical worker suffers from inadequate income, that worker’s living standards, broadly measured, are higher today than those of their counterparts 30 years ago — an argument in dispute among economists.
. . .
Until now, Austan Goolsbee, an economist at the University of Chicago, had been Mr. Obama’s chief economic adviser. He remains an unpaid adviser. He said he was not a candidate for Mr. Furman’s full-time job because of his university duties.

For the full story, see:
LOUIS UCHITELLE. “Union Critical of Obama’s Top Economics Aide.” The New York Times (Thurs., June 12, 2008): C1 & C4.
(Note: ellipses added.)

Policeman to Speeding Hoover: “Drive On, Brother”

In her eye-opening The Forgotten Man, Amity Shlaes shows that Herbert Hoover, while not the hero of the Great Depression, was hardly the consummate villain that politically correct legend has made him out to be.
The hapless, hated Hoover, after his electoral defeat by the real villain, FDR, drove the countryside seeking tranquility and direction. At one point, in the middle of a hot summer night, Hoover, with his son Allan, sped toward the cooler Palo Alto:

(p. 221) Hurtling down the highway, Hoover looked in the rearview mirror and saw a flashing red light gaining on him. Soon he could hear a siren. Dutifully, he pulled off the highway and fumbled for his license, handing it to the stern police officer. The patrolman looked at the license, then examined it more closely in the illumination of a headlight. Returning to the car window, he placed a foot on the running board and asked Hoover, “Tell me are you that guy?” The ex-president, with a slight grin, said, “Yes, I guess I’m that guy.” The policeman then asked, “Well, does it make you feel any better to drive sixty miles an hour down this Valley Pike in the middle of the night?” Hoover reflected for a moment and replied, “Well, under the circumstances I think it does.” The highway patrolman stepped back from the running board, looked Hoover in the eye, and with a wave of his arm said, “Drive on, brother.”

Source:
Wert, Hal Elliott. Hoover the Fishing President: Portrait of the Private Man and His Life Outdoors. Mechanicsburg, PA: Stackpole Books, 2005.

The reference on Amity Shlaes’s book, is:
Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.

After Tort Reform, 7,000 M.D.s Have Gone to Texas

(p. A9) When Sam Houston was still hanging his hat in Tennessee in the 1830s, it wasn’t uncommon for fellow Tennesseans who were packing up and moving south and west to hang a sign on their cabins that read “GTT” – Gone to Texas.

Today obstetricians, surgeons and other doctors might consider reviving the practice. Over the past three years, some 7,000 M.D.s have flooded into Texas, many from Tennessee.
Why? Two words: Tort reform.
In 2003 and in 2005, Texas enacted a series of reforms to the state’s civil justice system. They are stunning in their success. Texas Medical Liability Trust, one of the largest malpractice insurance companies in the state, has slashed its premiums by 35%, saving doctors some $217 million over four years. There is also a competitive malpractice insurance industry in Texas, with over 30 companies competing for business. This is driving rates down.
The result is an influx of doctors so great that recently the State Board of Medical Examiners couldn’t process all the new medical-license applications quickly enough. The board faced a backlog of 3,000 applications. To handle the extra workload, the legislature rushed through an emergency appropriation last year.

For the full commentary, see:

JOSEPH NIXON. “CROSS COUNTRY; Why Doctors Are Heading for Texas.” The Wall Street Journal (Sat., May 17, 2008): A9.

Solar Energy Costs Soar in Germany

(p. C1) Thanks to its aggressive push into renewable energies, cloud-wreathed Germany has become an unlikely leader in the race to harness the sun’s energy. It has by far the largest market for photovoltaic systems, which convert sunlight into electricity, with roughly half of the world’s total installations. And it is the third-largest producer of solar cells and modules, after China and Japan.
Now, though, with so many solar panels on so many rooftops, critics say Germany has too much of a good thing — even in a time of record oil prices. Conservative lawmakers, in particular, want to pare back generous government incentives that support solar development. They say solar generation is growing so fast that it threatens to overburden consumers with high electricity bills.
. . .
(p. C7) At the heart of the debate is the Renewable Energy Sources Act. It requires power companies to buy all the alternative energy produced by these systems, at a fixed above-market price, for 20 years.
. . .
Christian Democrats, . . . , say the law has been too successful for its own good. Utilities, they note, are allowed to pass along the extra cost of buying renewable energy to customers, and there is no cap on the capacity that can be installed — as exists in other countries to prevent subsidies from mushrooming.
At the moment, solar energy adds 1.01 euros ($1.69) a month to a typical home electricity bill, a modest surcharge that Germans are willing to pay. That will increase to 2.14 euros a month by 2014, according to the German Solar Energy Association.
But the volume of solar-generated energy is rising much faster than originally predicted, and critics contend that the costs will soar. Mr. Pfeiffer, the legislator, said solar power could end up adding 8 euros ($12.32) to a monthly electricity bill, which would alienate even the most green-minded. With no change in the law, he says, the solar industry will soak up 120 billion euros ($184 billion) in public support by 2015.

For the full story, see:
MARK LANDLER. “Solar Valley Rises in an Overcast Land.” The New York Times (Fri., May 16, 2008): C1 & C7.
(Note: ellipses added.)

Argentine Taxes “Killing Their Incentives”

“Marcelo Marchetti, president of Cigra group.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) WENCESLAO ESCALANTE, Argentina — When the government decided in March to raise taxes on farmers’ profits, it set off a rural revolt in Argentina. For three weeks enraged farmers blocked roads nationwide, paralyzing grain and meat sales and causing food shortages.
. . .
The farmers say they are concerned not only about profits, though the steeper taxes have cut into them. They also say Mrs. Kirchner’s policies are threatening to reverse one of the great agricultural booms in Argentina’s history and to snuff out a technological and entrepreneurial revolution that has made the country a leading food source in a world racked by hunger and rising food prices.
“We have an enormous historic opportunity to grow as a country, but the government wants to punish a sector that should continue to be an engine of growth,” said Marcelo Marchetti, 39. “The world has opened its doors to us, and here we are fighting among ourselves.”
. . .
An emergency law passed in 2002, in the midst of an economic crisis, has allowed the Kirchner government to create export taxes and keep the revenues away from governors and mayors. The Kirchners have used the doling out of those revenues to maintain political control over the provinces, which were critical to Mrs. Kirchner’s election.
. . .
In Wenceslao Escalante, the Marchetti brothers, who both studied accounting in college, said the government’s policies were killing their incentives to produce more. A decade ago they formed their company, Cigra, investing in the latest seed technology and farm equipment, and later buying $400,000 grain harvesters with global positioning systems.
Seven years ago the brothers expanded north into Chaco and Santiago del Estero, provinces where the land was thought to be too dry to support corn and soybeans. Today, with more advanced seeds and better crop rotation, it is considered the frontier for Argentine agriculture. But production there is threatened by declining profitability.
As the government has taken more from the farmers, international prices for the supplies to produce their crops, including fertilizers and seeds, have been rising faster than the prices of the commodities, Marcelo Marchetti said. The price of phosphorus, for example, has nearly tripled since last year, he said.
Suddenly the future seems cloudier. The brothers have decided not to make any investments over the next year.
“Everything is on hold,” Mr. Marchetti said.

For the full story, see:
ALEXEI BARRIONUEVO. “In Argentina’s Grain Belt, Farmers Revolt Over Taxes.” The New York Times, Section 1 (Sun., April 27, 2008): 6.
(Note: ellipses added.)

“At a butcher shop in Buenos Aires, supplies were down during strikes by farmers in rural towns like Wenceslao Escalante.” Source of caption and photo: online version of the NYT article quoted and cited above.

“Theory” Said Gene Sequencing Technique Was “Impossible”

In the book The Genome War, the story is told about how the leading theorist proved the impossibility of the gene sequencing technique. It was the Venter group that gave it a try and proved it could work. This story is similar to the one about theory saying that what Marconi was trying, was impossible. (See: Larson, 2006.)
Rosenberg and Birdzell (1986) discuss the case that theory had proven how solid objects fall. But Galileo’s experiments proved them wrong. This established the primacy of experiment and evidence, over theory.
When governments decide, they usually do what is safe, which is to follow current theory (or in rare cases, they pick Lysenko).
The entrepreneurial system, takes advantage of the tacit individual knowledge that is out there, but not yet theoretically defensible, and allows it to percolate to success.

References:
Larson, Erik. Thunderstruck. New York: Crown, 2006.
Rosenberg, Nathan, and L.E. Birdzell, Jr. How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books, 1986.
Shreeve, James. The Genome War: How Craig Venter Tried to Capture the Code of Life and Save the World. 1st ed. New York: Alfred A. Knopf, 2004.

University of Nebraska Foundation Contributes to Racial Discrimination

Some of us believe that the government should not discriminate on the basis of race, gender, or religion. Unfortunately, governments in the past and present have sometimes mandated or practiced discrimination. Examples from the past would include the Jim Crow laws that mandated racial discrimination against Afro-Americans.
A present example would be the mis-named “affirmative action” laws that mandate racial discrimination against whites.
In the article quoted below, note who has taken a stand on which side of this issue.
Is it appropriate for the University of Nebraska Foundation to be donating $25,000 to support the continuation of racial discrimination?
Note also the opposing positions of two 2006 Republican candidates for Senate: David Kramer is leading the drive to continue racial discrimination, while Pete Ricketts is contributing to ending racial discrimination.

(p. 1A) LINCOLN — Leaders of the Nebraska Civil Rights Initiative called their anti-affirmative-action push one of the most successful petition drives in recent state history. But it’s not yet known whether their proposed ban will go before voters in November.

“The citizens demand the opportunity to vote on the use of race and gender preferences and discrimination in state hiring, state contracts and state education,” said Marc Schniederjans, treasurer of the group that said it submitted more than 167,000 signatures Thursday.
. . .
David Kramer, spokesman for the opposition group Nebraskans United, said he wasn’t disheartened by the number of petition signatures or over the prospect that petition organizers said they planned to submit more signatures today.
. . .
(p. 2A) Connerly’s American Civil Rights Coalition provided $370,750 of the $467,250 raised by the Nebraska petition group as of June 25. According to state records, the next largest donors were Paul Singer, a New York businessman, $50,000; William Grewcock, a former executive with Peter Kiewit Sons Inc., $25,000; and failed GOP U.S. Senate candidate Pete Ricketts, $25,000.
For Nebraskans United, the largest donations toward that group’s $308,167 war chest have come from Omaha billionaire Warren Buffett, $50,000; philanthropist Richard Holland, $50,000; Dianne Lozier, Lozier corporate counsel, $50,000; Wallace Weitz, president of an Omaha-based mutual fund management company, $50,000; the Greater Omaha Chamber of Commerce, $36,250; the University of Nebraska Foundation, $25,000; and the Nebraska State Education Association, $25,000.

For the full story, see:

MARTHA STODDARD. “Petitions Turned In; Fight Far from Over.” Omaha World-Herald (Fri., July 4, 2008): 1A-2A.
(Note: ellipses added.)
(Note: the online title of the article is “Anti-affirmative-action petitions turned in; verifying to begin.”)