In re: Country of Origin?

“The concept of country of origin for manufactured goods has gradually become obsolete.”

An interesting article in the WSJ on tech supply chains and the problem with a lot of trade statistics. Remember how much of a trade deficit we have? Well apparently the iPhone’s wholesale cost counts towards China’s exports, not ours. Its interesting as really the only issue is statistics, but in today world where a device like the iPhone contains parts from any number of countries all around the world, is designed in a different country and assembled in China, well it just might not fit neatly into the stats of old. This type of production makes enormous sense, have everyone work on what they are best at, but it leads to strange results. One pair of pants I once bought in the US had a label that read “Made in Mexico with United States fabric” – a lot of trucking going on to make those.

“Chinese labor accounted for only a few dollars of the iPod’s value, even though trade statistics credited China with producing its full value.”

Read the article at the WSJ here


In re: LeBronomics

While many if us in Ohio are still getting over Lebrons departure to Miami we gotta start looking to the future and move on.  So despite that one quick post on Lebron, well not really him, but rather the economics of Lebron.  But before that I will mention that I don’t mind him leaving if that’s what he wanted – but wished he could have done it differently. He could have hurt us less.  but oh well.

Anyway that’s not the point. I think I’ve mentioned but may not have that I love Plant Money an NPR podcast. They had a real interesting show on the economics of Lebron, including the conclusion that Lebron should not have gone to Miami (gasp).  Why?  Well Miami isn’t exactly a big city (compared to NY or Chicago) and to maximize happiness he should have gone to New York, in fact since they were so bad that he wouldn’t have to win for a while to make them happy – just being there would bring a lot of happiness for a large number of people.  Additionally putting all those stars together reduces the supply of stars and how much happiness they can provide (there is a limited amount of how much happiness the Heat can provide, presumably getting Wade and Bosh provides almost as much happiness as adding Lebron.

Anyway, check it out, a lot more interesting things about it (including the enjoyment rooting against someone may bring), check out some of their other pod casts (especially all the great episodes on Haiti – maybe you should check those out first actually.)

Lebronomics here and see planet moneys front page here

In re: Is the public option ‘big government’?

I was struck recently that people in our country are really good at seperating government they like and ‘big government’.  I was up in Maine, in Acadia National Park, which is  truly one of the most amazing places I have been.  While on several ranger led hikes through the park I got to thinking about the ‘Government Program’ I was partaking in at the time.  I guessed that the people on the hike weren’t thinking that they we were experiencing a government program or experiencing ‘big government’.  After all the rangers were perfectly nice people who stayed around to answer questions and most everyone on these hikes seemed to enjoy them.

This past week I have been watching Ken Burn’s documentary on PBS about the National Parks (The National Parks: America’s Best Idea) which I have been enjoying a lot.  The 12 hours series repeatedly showed while discussing the origins of several of the parks the contrasts of National Parks and commercialized venues such as Niagara Falls.  It was interesting to see that the individuals who were instrumental in creating the parks, did so very often in the face of private industry seeking to capitalize on the land.  Places like Niagra Falls that are surrounded by wax musuems, casinos, etc stands in stark contrast to the parks.

Its possible that in one vein the enterprises were right, that in the short run the Grand Canyon would create a larger economic benefit if commercial enterprise came in.  The flaw I think is that under a capitalistic model the process of exploiting the economic value of the park is done so with a short range vision (those running the companies need to extract maximum value in their lifetime – some kind of tragedy of the commons like parallel) capitalism sometimes bypasses the effects and reduced benefits for people in 100, 200, 300 years that would be there if the park wasn’t polluted, mined, commercialized.

The story was the same for many parks, Arizonians fought the creation of the Grand Canyon as a national park, but fast forward to today and no one would say it was a bad decision.  Denali national park 40 years later in Alaska faced the same set of criticims from locales, only a short time later  they sought to expanded it.

So what is the point of all of this?  Well I guess it has got me thinking that there are a lot of flaws in capitalism (among others the free market assumes rational behavior something I have been interested to learn doesn’t exist – oh and no I haven’t seen Michael Moore’s movie yet before branding me a communist).  It just seems turning back to the health care debate that the free market has many potential flaws and I don’t think the free market works real well in delivering certain goods (nature as we just discussed, police & fire service didn’t do well as private enterprises and I am guessing not many people want to go back to private fire & police, the mail (despite Obama seemingly conceding (wrongly I believe) the US mail is not done well compared to Fedex and UPS, forgetting that Fedex and UPS do not deliver first class mail to every house in the country and that they will not deliver packages to all addresses in the US, as there are a few places that are too remote and costly, but the US mail has to by law), oh and of course the military, that so many anti government folks seem to be big fans of).  Health care, especially as long as we have a system where we provide universal emergency care, is not efficient as a divided up pie where some treatment is given if needed and other preventative aspects and proper nutrition and excercise are ignored.  Right now those of us with private health insurance spend a staggeringly large amount of money on  private bureaucracy, which despite that we are still put in the position of fearing bankruptcy if we have a catastrophic health problem, are faced with the fear of changing jobs due to possible loss of coverage  and I think many of us don’t even know what are true salary is (we are getting paid a whole lot less due to huge medical insurance costs we don’t see, if people were offered a gov’t option, no bells & whistles health care plan but got a lot higher take home pay, some of us might take that).

So while I’ll agree with you I am rambling and I may have missed the point I was hoping to make, the point is this, I think that our health care reform efforts have been greatly swung off track, the Democrats are missing a major opportunity to improve our country and we should be aiming higher.  We need to be ready to acknowledge that the free market might not deliver all products well, it didn’t make us un-American and undemocratic to create national parks and fire departments and creating a universal health plan won’t either.

In re: Imagine this season without LeBron?

I was just reading a story about how horrible financially NBA clubs are doing (talking about how empty Clippers game, except when teams that interest expats or provide novelty are in town, included in the high draw were Cleveland).  This got me thinking, imagine what the draw in Cleveland would be if we had our traditional crappy teams that I grew up with during our Shawn Kemp era?  I picture a very very depressing scene with the economy the way it is … lucky with that ping pong ball.

via The Sports Guy: Bill Simmons Welcome to the No Benjamins Association – ESPN Page 2.

In re: Campaign suspension only a ploy?

There was no suspension of his campaign. His surrogates and ads remained on television. Huffington Post bloggers, working the phones, couldn’t find a single McCain campaign office that had gone on hiatus. This “suspension” ruse was an exact replay of McCain’s self-righteous “suspension” of the G.O.P. convention as Hurricane Gustav arrived on Labor Day. “We will put aside our political hats and put on our American hats,” he declared then, solemnly pledging that conventioneers would help those in need. But as anyone in the Twin Cities could see, the assembled put on their party hats instead, piling into the lobbyists’ bacchanals earlier than scheduled, albeit on the down-low.

Op-Ed Columnist – McCain’s Suspension Bridge to Nowhere – Op-Ed –

It appears that McCain’s concern over the economy and his insistence that he needed to stop campaigning and return to Washington to right the ship may have been showmanship and politics.  (I mean what could McCain seriously do about the economy, who is self professed as ignorant on most economic issues)  Despite all that and the fact many presidents have campaigned through much worse, including Lincoln in the Civil War and FDR in WWII McCain may have needed to try and stop the flood gates of a slipping campaign.  This is at least according to an Op-Ed (link following the opening quote above) in the NY Times that mentions that “As recently as Tuesday he had not yet even read the two-and-a-half-page bailout proposal first circulated by Hank Paulson last weekend. “I have not had a chance to see it in writing,” he explained.”

Either way, as someone who once really respected McCain (2000 election cycle) I am now amazed at the transformation he has undergone all in the name of getting elected.

In re: Energy policy? nope

This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country. (Describing the results of putting in a gas tax holiday – resulting in increased consumption)

I just mentioned the gas tax of McCain recently and how dumb it is (see below), and then Hilliary Clinton jumps on the idea as well. Thankfully Obama hasn’t seen fit to give the ridiculous idea his approval as well. These candidates all have top notch economist advisers who apparently get overshadowed by their staffers who want to get dumb votes. Thomas Friedman has a good explanation of why it would be stupid in h is column “Dumb as We Wanna Be” while I don’t always agree with Friedman, he has some good thoughts on globalization and good that can come from it among other ideas, so I try to remember to read his column.

His column then proceeds to explain how we have not made any push into wind and solar power, which you can argue have strong potential both as renewable sources, but maybe right now more importantly in reducing dependency on hostile regimes (won’t have to go to war to keep our wind supply). Yet despite this he recounts the fact that all incentive programs have ceased.

While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

In re: McCain’s gas tax holiday = dumb idea

I just heard about this on my drive home today (thankfully while on the subject of gas its only a 5 minute trip), anyway John McCain the presumptive Republican presidential nominee has proposed a summer gas tax holiday, meaning the 18% or so federal gas excise tax would be discontinued for the summer so as to spur on the economy, allow people to travel and generally drive like gas prices were what were used to.  This is all well in good if you forget for a moment that the gas tax funds a lot of important road projects (yeah, its not like we couldn’t just ramp up the deficit a bit more and borrow).  Secondly the price of gas in the summer going up reflects and increase in demand and the fact that capacity is constrained, such that if the price dropped supply already being extreme would be further challenged by a surge in demand – surely a boon to big oil, but is it really a boon to Americans who would deluding themselves that it is domestic issues that are driving the price up – the reality is high gas prices are here to stay as China and India are now happy to buy barrels of oil even when they are over $100 a barrel.  It is the price raising over the summers that will remind people that they need to be responding to the market forces and finding alternative ways to vacation (maybe closer? maybe think about using the greyhound bus long the realm only the realm of the lower classes one might say but no reason to think that everyone needs to take their cars w/ them on vacation.

Marketplace on NPR had a nice piece on why it is a stupid idea and there are a number of articles (including a Fox News article) that rip the idea apart as well, so I am not too worried that it will gain traction and garner a chance of becoming law.  That said it is a bit troubling to see a supposedly grounded in economics (at least his advisers were?) candidate turn against what is most certainly a smart tax.  While debatable, many would agree that it is best to tax inelastic goods so as to decrease dead weight loss, or secondarily to tax items that you are wishing to discourage consumption of – sin taxes etc., gasoline falls into both camps and I would argue that we don’t tax it enough – as I have mentioned before In re: Skiing in the Emirates.

If we want to lower prices long term we need to reduce demand, not to mention the gain of reducing the oil producing nations grip on the world.