Quotulatiousness

October 14, 2009

Neuter NASA to save manned space exploration?

Filed under: Economics, Space, Technology — Tags: , , — Nicholas @ 12:14

Gregg Easterbrook, to be polite, isn’t a fan of NASA’s big-budget plans:

Soon, Barack Obama must make a decision on whether to continue funding NASA’s daffy plan to build a Motel 6 on the moon. The president will be put on the spot when the final report of a space commission [. . .] is delivered. Rumor is that in keeping with the tradition of Washington commissions, the report will contain extremely vague language about sweeping reform; then cite every item on every wish list of every interest group with a finger in this pie; then recommend nothing specific, so as to offend no interest group; then close with a call for higher subsidies. NASA is not one of the core missions of government, and spends only one-half of 1 percent of the federal budget, so space waste is relatively minor in the scheme of things. But if public policy can’t get this right, what can it get right?

Right now NASA’s budget is $18 billion annually, and the quarter or so spent on science — planetary probes, telescopes that scan the far universe — is going very well. The rest of NASA is a mess. The agency has just thrown $100 billion of your money down the drain on the space station, which has no scientific achievement and no known purpose other than keeping checks in the mail to favored contractors and congressional districts. The station is such a white elephant the current plan is to “deorbit” the thing in 2016. “Deorbit” is polite for “make it burn up in the atmosphere.” So after spending $100 billion to build a space station, we’ll destroy it. Your tax dollars at play!

Since 2004, NASA has said its next goal is a manned outpost on the moon, as a stepping-stone to manned travel to Mars. There’s nothing a person could do on the airless, lifeless lunar surface that a tele-robot operated from a Houston office building could not do at a fraction of the price and risk. And the moon has nothing to do with Mars. Any Mars-bound mission will leave directly from low-Earth orbit to the Red Planet: stopping at the moon, then blasting off again, would consume the mission’s fuel to accomplish nothing. Though NASA has been studying moon-base and Mars-mission proposals for five years, the agency refuses to give a cost estimate — a sure sign the plans cannot pass a giggle test. Considering the space station price was $100 billion for a limited facility that was not accelerated to the speed necessary to reach the moon — speed means fuel which means higher price — even a Spartan moon base easily could cost several hundred billion dollars. For what? Why, for “economic expansion”! Today, no one is interested in economic expansion at Earth’s poles, which are far more amenable to life than the moon, have copious resources, and can be reached at one-ten thousandth the cost of reaching the moon.

There’s a lot more, buried in the middle of his weekly “Tuesday Morning Quarterback” column at ESPN.com. The numbers for manned exploration of Mars aren’t encouraging, either.

Disturbing historical pattern

Filed under: Bureaucracy, Economics, USA — Tags: , , , , — Nicholas @ 07:58

Eric S. Raymond poses an uncomfortable question:

A few moments ago, I read a review of a new book, Uncivil Society: 1989 and the Implosion of the Communist Establishment, and the following sentences jumped out at me:

This is less a story of dissidents, so-called civil society, than of the bankruptcy of a ruling class–communism’s establishment, or “uncivil society.” The Communists borrowed from the West like drunken sailors to buy mass consumer goods, then were unable to pay back the hard-currency debts and so borrowed even more. In Eastern Europe, communism came to resemble a Ponzi scheme, one whose implosion carries enduring lessons.

I found myself wondering “And this differs from our political class . . . how?”

The U.S.’s very own nomenklatura, our permanent political class and its parasitic allies, has been on a borrowing binge since the Great Society programs of the 1960s. Just like the pre-1989 Communist elites, they’ve been piling up debt in order to buy the consent of the governed with ever-more-generous entitlement programs. It took another twenty years, but the insolvency of California is bringing those chickens home to roost here as well. With the CBO now projecting that Social Security will go cash-flow-negative next year, an equally cataclysmic collapse of the federal government’s finances won’t be long in coming — in fact, I now give it over 50% odds of happening before Obama’s first term ends in 2012.

October 10, 2009

Where High Speed Trains can beat short-haul flight

Filed under: Economics, Europe, Railways, Technology — Tags: , , — Nicholas @ 11:46

Spain has a new high speed railway (HSR) network that appears to be a huge success, according to the Guardian:

Last year’s drop in air travel, which was also helped by new high-speed lines from Madrid to Valladolid, Segovia and Malaga, marks the beginning of what experts say is a revolution in Spanish travel habits.

In a country where big cities are often more than 500km (300 miles) apart, air travel has ruled supreme for more than 10 years. A year ago aircraft carried 72% of the 4.8 million long-distance passengers who travelled by air or rail. The figure is now down to 60%.

“The numbers will be equal within two years,” said Josep Valls, a professor at the ESADE business school in Barcelona.

Two routes, from Barcelona to Malaga and Seville, opened last week. Lines are also being built to link Madrid with Valencia, Alicante, the Basque country and Galicia. The government has promised to lay 10,000km of high-speed track by 2020 to ensure that 90% of Spaniards live within 30 miles of a station. The prime minister, José Luis Rodríguez Zapatero, boasts it will be Europe’s most extensive high-speed network.

While I’m always skeptical of HSR advocates’ larger-than-life claims, the Spanish system may be in a good position to permanently claim a big share of the short-haul air passenger market. The situation works to the strengths of HSR: relatively dense population corridors, short-to-medium length journeys, and government subsidy of construction costs.

HSR cannot be run on the same tracks as regular freight trains and commuter passenger trains: the signalling, degree of curvature of track, and speed differential between the HSR and ordinary trains creates too many risks. HSR must have its own right of way, which pretty much always means that governments must get involved to condemn existing properties and expropriate them for the benefit of the railway.

That HSR is, or may become, a success in densely populated European countries does not make the case for North American HSR efforts, as I’ve posted a few times before.

October 8, 2009

Google’s neglect of its USENET archive

Filed under: Economics, History, Technology — Tags: , , — Nicholas @ 08:05

Maybe giving Google a monopoly over all those millions of out of date books won’t work out as well as we might hope. They’ve (kinda) been here before, and the results weren’t what you would expect. For those who remember the “good old days” when USENET was the place to be (before the Web, it was the best thing online), Kevin Poulsen looks at what happened after Google took over the effective ownership of the archive:

Salon hailed the accomplishment in an article headlined “The geeks who saved Usenet.” “Google gets the credit for making these relics of the early net accessible to anyone on the web, bringing the early history of Usenet to all.”

Flash forward nearly eight years, and visiting Google Groups is like touring ancient ruins.

On the surface, it looks as clean and shiny as every other Google service, which makes its rotting interior all the more jarring — like visiting Disneyland and finding broken windows and graffiti on Main Street USA.

Searching within a newsgroup, even one with thousands of posts, produces no results at all. Confining a search to a range of dates also fails silently, bulldozing the most obvious path to exploring an archive.

Want to find Marc Andreessen’s historic March 14, 1993 announcement in alt.hypertext of the Mosaic web browser? “Your search — mosaic — did not match any documents.”

October 5, 2009

Publius reviews Fearful Symmetry by Brian Lee Crowley

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 12:36

I tend to avoid reading right-wing rants about Canada, having had a surfeit of them in my youth. Publius makes a case for Fearful Symmetry being, perhaps, an exception to my general rule:

Crowley, a founder and long-time head of the Atlantic Institute for Market Studies, has spent decades preaching the free market gospel in some of the most inhospitable climes in North America for such a message. The theme of the book is tradition, Canadian tradition. A mental framework that dominated the first century of Canada’s existence as a federal state. Thrift, family, economic individualism and small and limited governments were the hallmarks of Canada then. A confluence of two powerful forces, the first the entrance of the baby boomers into the workforce, and second the emergence of Quebec nationalism in the wake of the Quiet Revolution, provoked a dramatic – and detrimental change in public policy and cultural attitudes. Crowley does not dismiss the importance of ideas in the shift to bigger and more intrusive government. He notes that Canada’s volte face from its traditional approach was more dramatic than other nations with a similar history, notably the United States and Australia. Broad intellectual trends set the stage, but it was specific Canadian factors that gave us our current Canadian sized government.

Crowley begins with demography; the baby boom. A jump in the birth rate in the fifteen or so years after the end of the Second World War. This major blip in the demographic charts was more intense in Canada than elsewhere in the developed world.

[. . .]

Economists have blamed this liberalization for Canada’s higher structural unemployment over the last forty years. UI, over time, also acquired regional variations, being especially generous to underdeveloped parts of Canada. In tandem with liberalized UI, straight welfare was also expanded. Combined they produced a gigantic welfare trap. The end result can be seen in Margaret Wente’s notorious, though accurate, description of Newfoundland as “the most vast and scenic welfare ghetto in the world.” To finance this generosity the federal government expanded equalization, the transfer of wealth between the richer and poorer regions of Canada. Until the mid-1970s there were only two “have” provinces, Ontario and British Columbia. The main weight of equalization, however, fell upon the Dominion’s largest, richest and most industrialized province, Ontario. When the province’s premier in the 1960s, the charismatic John P Robarts, was questioned about the burdens of equalization, he justified it thusly: Ontario was in effect exporting purchasing power to the other regions of Canada.

October 4, 2009

Nearly half of American households face no income tax burden this year

Filed under: Economics, USA — Tags: , — Nicholas @ 12:43

Jeanne Sahadi writes that the direct income tax burden is far from evenly spread this year:

Most people think they pay too much to Uncle Sam, but for some people it simply is not true.

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Some in that group will even get additional money from the government because they qualify for refundable tax breaks.

The ranks of those whose major federal tax burdens net out at zero — or less — is on the rise. The center’s original 2009 estimate was 38%. That was before enactment in February of the $787 billion economic recovery package, which included a host of new or expanded tax breaks.

I guess that “soak the rich” plan really is working, then?

For those of a more “progressive” orientation, this is all to the good: those filthy rich paying disproportionally high rates is good, in their view. What it doesn’t take into account is human nature . . . just because they’ll pay that much this year doesn’t mean they’ll do nothing to change that picture next year or the year after that. The big risk being run here is that it will encourage “the rich” to reduce their taxable income (which often means switching from economically more productive uses to less productive ones) or even to remove themselves from the picture altogether (tax havens exist for a lot of reasons).

If only 1% of taxpayers are paying over 40% of the total tax collected, it only takes a few of them to move to a lower-tax jurisdiction to seriously impact the total taxes collected.

Doug Mataconis hopes that this will have a positive outcome:

Once the American people realize that “soak the rich” isn’t going to pay for all the things they claim they want from government, it’s entirely possible that they’ll decide that maybe the state doesn’t need to be as intrusive as it’s become over the years.

I’m not as confident that this is the lesson that most people would draw: once they’re comfortable with the idea of the government providing everything, they’ll be unwilling to go back to the “less civilized” model of having to provide for themselves.

October 1, 2009

Canada as prescription drug “parasite”

Filed under: Cancon, Economics, Health, USA — Tags: , — Nicholas @ 08:07

I guess the discussion on medical costs got boring without bringing international issues into play. Senator Bob Corker got into it with Liberal MP Carolyn Bennett:

An American legislator called Canada “parasitic” on Wednesday for siphoning U.S. dollars to Canada with low prescription drug prices while his country does “all the innovation.”

Canada benefits financially from America’s role as a world leader in medical advances, Republican Sen. Bob Corker charged in an exchange with a Liberal MP as she testified before a U.S. Senate committee.

“One of the things that has troubled me greatly about our system is the fact that we pay more for pharmaceuticals and devices than other countries, and yet it’s not really our country so much that’s the problem, it’s the parasitic relationship that Canada and France and other countries have towards us,” the Tennessee lawmaker told Carolyn Bennett.

Canadian provinces have a financial lever that is a direct result of the single-payer model: if you want to sell your drug in Canada, you have to sell to the government monopoly for each province. The market is small, and there are only a limited number of buyers, so the best price you can get for your product will end up being the price all of the geographical monopolies are willing to pay . . . or you don’t sell into that market at all. Under the circumstances, it’s rational for the companies to sell at close to cost: the bulk of their costs are already sunk in the R&D effort and the regulatory effort to get the drug on to the domestic market.

That doesn’t make the charge any more palatable, but there’s some justice to making it.

September 30, 2009

Testing whether incentive pay for teachers improves student outcomes

Filed under: Economics, Education, India — Tags: , — Nicholas @ 12:13

A post up at Marginal Revolution summarizes a new paper by Karthik Muralidharan and Venkatesh Sundararaman, examining whether incentive pay for teachers (PDF) improves student performance:

1) Evidence comes from a very large sample, 500 schools covering approximately 55,000 students, and treatment regimes and controls are randomly assigned to schools in a careful, stratified design.

2) An individual-incentive plan and a group-incentive plan are compared to a control group and to two types of unconditional extra-spending treatments (a block grant and hiring an extra teacher). Thus the authors can test not only whether an incentive plan works relative to no plan but also whether an incentive plan works relative to spending a similar amount of money on “improving schools.”

3) The authors understand incentive design and they test for whether their incentive plan reduces learning on non-performance pay margins.

In the west, with most students being taught in publicly funded schools with strong teaching unions, these results will not be welcomed by the majority of school systems or unions. From the abstract:

Performance pay for teachers is frequently suggested as a way of improving education outcomes in schools, but the theoretical predictions regarding its effectiveness are ambiguous and the empirical evidence to date is limited and mixed. We present results from a randomized evaluation of a teacher incentive program implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. The program provided bonus payments to teachers based on the average improvement of their students’ test scores in independently administered learning assessments (with a mean bonus of 3% of annual pay). At the end of two years of the program, students in incentive schools performed significantly better than those in control schools by 0.28 and 0.16 standard deviations in math and language tests respectively. They scored significantly higher on “conceptual” as well as “mechanical” components of the tests, suggesting that the gains in test scores represented an actual increase in learning outcomes. Incentive schools also performed better on subjects for which there were no incentives, suggesting positive spillovers. Group and individual incentive schools performed equally well in the first year of the program, but the individual incentive schools outperformed in the second year. Incentive schools performed significantly better than other randomly chosen schools that received additional schooling inputs of a similar value.

I’m surprised that the results were so positive for relatively minor incentive bonus amounts.

September 28, 2009

QotD: Gambling on CO2 reduction

Filed under: Economics, Environment, Politics, Quotations — Tags: , , — Nicholas @ 12:45

There is a real and growing prospect of an all-out trade war being waged in the name of climate change.

The struggle to generate international agreement on a carbon deal has created a desire to punish “free riders” who do not sign on to stringent carbon emission reduction targets. But the greater goals seem to be to barricade imports from China and India, to tax companies that outsource, and to go for short-term political benefits, destroying free trade.

This is a massive mistake. Economic models show that the global benefits of even slightly freer trade are in the order of $50 trillion — 50 times more than we could achieve, in the best of circumstances, with carbon cuts. If trade becomes less free, we could easily lose $50 trillion — or much more if we really bungle things. Poor nations — the very countries that will experience the worst of climate damage — would suffer most.

In other words: In our eagerness to avoid about $1 trillion worth of climate damage, we are being asked to spend at least 50 times as much — and, if we hinder free trade, we are likely to heap at least an additional $50 trillion loss on the global economy.

Bjorn Lomborg, “Costly Carbon Cuts: Proposed Strategies Would Hurt the Most Vulnerable”, The Washington Post, 2009-09-28

September 24, 2009

QotD: Return of the revenge of the subprime mortgage apocalypse

Filed under: Economics, Quotations — Tags: — Nicholas @ 12:50

Put it all together, and throw in mainstream media outlets that as recently as June were calling for mortgage haircuts specifically to allow people to keep borrowing against their houses, and you’ve got the mother of all perfect storms mixed with the crack cocaine of third rails on steroids. The foreclosure wave may seem all tired and 2008, but it’s hotter than ever.

Update: Because commenter hmm brings up the Coming Commercial Real Estate Hyperpocalypse, which is the elephant in the room of all swords of Damocles spreading like wildfire; and also because like a golem I screwed up Jim the Realtor’s title in my latest print column, I urge you to run, don’t walk, to give two thumbs up to this tour of ghost malls by Jim the Realtor®.

Tim Cavanaugh, “Corpse of a Thousand Houses”, Hit and Run, 2009-09-23

September 22, 2009

Truth in advertising?

Filed under: Cancon, Economics, Media, USA — Tags: , , — Nicholas @ 12:10

Jim Davidson watches the new GM television ad . . . and pukes:

They used to advertise “that great GM feeling.” Nowadays it seems more like “that sinking GM feeling.” Case in point, car-neophyte Ed Whiteacre’s current ad campaign.

“Car for car when compared to the competition, we win. Simple as that,” he says in this bright new ad promoting his complete ignorance about automobiles.

Sure, the white haired old man looks alert and sentient as he parades through a nearly empty show room with strange other people wandering around not selling any cars. But the words make no sense.

Car for car when compared to the competition, GM sucks. And they gave up competing on cars when they went for the enormous taxpayer bailout. It isn’t simple as winning in a head to head car making competition. Remember? GM played that game and they lost. They lost all of their money, so they demanded all of our money.

Later he lies again, “So we’re putting our money where our mouth is.” No, you bastard, you stinking lackey of big government, you filthy thief, you aren’t. GM tried putting their money where their mouth is, and they lost. They went under. So now they are putting our money where their mouth is. He isn’t a nice old man, he’s an evil old liar.

Retirement planning

Filed under: Cancon, Economics — Tags: , , — Nicholas @ 11:24

Dark Water Muse had a post a few days ago about the troubles with retirement planning (he’s just gone through the process).

I guess what only just in recent days became DWM’s “trailer park” retirement lifestyle, which he can almost afford, becomes his “cardboard box” retirement lifestyle. Assuming the healthcare system can afford then to cover the costs of treating paper cuts.

The scary part. DWM is one of the “lucky” ones, in a really good position, according to financial advisors. If this is true then how can anybody, in the past 30 years, have realistically expected “average” North American to be able to afford to retire? Aren’t these the same bong puffers who have been trying to eradicate the poppy fields in Afghanistan?

I guess addiction really is an irrational behavior, even when you dress it up and call it economics.

I wrote a comment, and then thought it might be a useful thing to expand on it a bit here:

This is a multi-pronged problem that will yield to no single solution.

The mere existance of the Canada Pension Plan (and the regular payroll deductions that fund current retirees) lull far too many Canadians into thinking that they’re going to be receiving enough money from CPP to carry on their pre-retirement lifestyle. That’s a huge, unconscious reason for people to fail to save for retirement.

Many Canadians have pension plans that are tied directly to their current employer. For the tiny fraction who successfully keep working for that firm/organization all the way to retirement age, it’s a winning bet. For far too many, three years in one plan, five years in another, seven years in a third will yield three miniscule pension cheques (far less than the amount if they’d been fifteen years in a single plan), as most pensions are geared to long-term employment. Given the commonly quoted notion that most Canadians will have three careers between entering the workforce and retiring, planning on putting in 20-25 years of pensionable work with a big firm is a pipe dream.

The banks and other finance organizations don’t help, either, as many of their print and online offerings for potential customers over-estimate financial needs (“What? I need $3 million to retire at 55? That’s impossible!”).

Schools don’t even attempt to provide financial planning information for students, and even if they did, who among us thought about retirement before age 35? It would likely be a wasted effort, unless it was a mandatory part of the graduation requirements. And even then, everyone under 25 thinks they’ll either live forever or be dead by 30, so it wouldn’t make much practical difference.

I’ve been in the working world for nearly 30 years, yet I’ve only ever worked for companies that had pension plans twice. In neither case did I work there long enough to accumulate any worthwhile seniority in the pension scheme (and given that neither company is still around today, I probably didn’t lose much). Among the other companies I’ve worked for, only two had Group RRSP plans (I think the closest US equivalent would be a 401(k) account). . . which paradoxically have been great for my long-term financial health. The broker for the plan at the first company is still the guy I call to get investment advice (each of us has moved on to different firms more than once, but it’s the personal relationship that matters).

I lost a lot of paper wealth in the last 12 months (at the worst, I was down over 45%). My investments — my retirement savings, that is — are back up to about 85% of their peak. If I hadn’t had to withdraw cash during periods of unemployment, I’d be closer to 95%. I’m nowhere near the multi-millions that the bank “planning software” says I should have at this point in my career, but I’m not panicking, yet.

September 18, 2009

US tariff on Chinese tires “a colossal blunder”

Filed under: China, Economics, USA — Tags: , , — Nicholas @ 09:14

I don’t read The Economist regularly these days, having given up my 20-year subscription about five years back. Their steady drift away from free markets towards statist models made the publication less and less interesting (and much more live most other financial publications). This article, however, at least covers the situation in an even-handed way:

You can be fairly sure that when a government slips an announcement out at nine o’clock on a Friday night, it is not proud of what it is doing. That is one of the only things that makes sense about Barack Obama’s decision to break a commitment he, along with other G20 leaders, reaffirmed last April: to avoid protectionist measures at a time of great economic peril. In every other way the president’s decision to slap a 35% tariff on imported Chinese tyres looks like a colossal blunder, confirming his critics’ worst fears about the president’s inability to stand up to his party’s special interests and stick to the centre ground he promised to occupy in office.

This newspaper endorsed Mr Obama at last year’s election in part because he had surrounded himself with enough intelligent centrists. We also said that the eventual success of his presidency would be based on two things: resuscitating the world economy; and bringing the new emerging powers into the Western order. He has now hurt both objectives.

Several sources mentioned that yesterday’s announcement about cancelling the ABM systems that were to be installed in Poland and the Czech Republic was an attempt to cozy up to Russia. This move can only be interpreted as an attempt to look tough against the Chinese — which would just be dumb — or (even more disturbingly) solid proof that Barack Obama doesn’t have a clue on international trade.

September 17, 2009

Just how much do governments owe?

Filed under: Economics, Government — Tags: — Nicholas @ 07:51

The Economist has a depressing little graphic display for you, showing you just how much your government is in debt:

Global_Debt

September 14, 2009

QotD: Depoliticizing the economy

Filed under: Economics, Government, Politics, Quotations — Tags: — Nicholas @ 12:12

FOR years now, many businesses and individuals in the United States have been relying on the power of government, rather than competition in the marketplace, to increase their wealth. This is politicization of the economy. It made the financial crisis much worse, and the trend is accelerating.

Well before the financial crisis erupted, policy makers treated homeowners as a protected political class and gave mortgage-backed securities privileged regulatory treatment. Furthermore, they allowed and encouraged high leverage and the expectation of bailouts for creditors, which had been practiced numerous times, including the precedent of Long-Term Capital Management in 1998. Without these mistakes, the economy would not have been so invested in leverage and real estate and the financial crisis would have been much milder.

But we are now injecting politics ever more deeply into the American economy, whether it be in finance or in sectors like health care. Not only have we failed to learn from our mistakes, but also we’re repeating them on an ever-larger scale.

Tyler Cowan, “Where Politics Don’t Belong”, New York Times, 2009-09-12

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