Friday, October 12, 2007
College Loans
I don't get it. Here I am, teaching business and economics thinking one of the biggest points of getting a college education (note: I don't use "degree") is to signal value to the labor market and win a job that pays a higher salary. Now, there's a proposal on the table to "forgive" federal college loans if students go into fields (jobs) that "serve the public good" in some sense for ten years. I really hope kids don't fall into this trap unless they get some personal satisfaction from the service they choose. Otherwise it just doesn't make sense to take a job in the public sector that puts your earnings potential 10-20,000 lower than what you might make in the private sector. The economical choice is to pay off the extra 10-15,000 that you have to take out in college loans over the normal maturity. Trading 10-15,000 over the 4 years prior to your working career for the 10-20,000 extra you can rake in working for private industry for those 10 years is seemingly a no-brainer, or is my calculator just broken?
Wednesday, September 26, 2007
Today my Head Wants to Explode
So, besides the subsiding sinus pressure of the traditional Back-to-School bug that tends to bite the faculties of America's colleges and universities, there are other things making my head want to explode. An article appeared today in the NY Times indicating that companies that rated the securites that were purchased with subprime mortgages as collateral were inappropriately inflating those securities' ratings to make them look better on paper. It's unclear whether Bear Stearns, et al. asked the ratings agencies to do this for them, but this is really bad.
I have a previous post on this that talks about moral hazard, but this story on the security rating agencies adds a completely new layer to the insanity. Basically, what comes out of it is two-sided moral hazard where both parties to a contract have an apparent incentive to deliberately engage in bade behavior. We're waaaaay past supply and demand here. What makes this stuff mind blowing is that the existence of a stable equilibrium is usually not very likely in general terms-- usually only for certain numerical examples with restrictive assumptions. Second, optimal contracts that can overcome the moral hazard problem tend to be characterized partially, and the contractual relationship has to be repeated in order for the contract to carry much weight. There's lots of really hard math involved in the theoretical excursions into this area, hence head explosion.
Bottom line-- the more layers of moral hazard you add to a problem the more chaotic and unpredictable the result, and the more likely it is that bad things happen. Bad things happened.
I have a previous post on this that talks about moral hazard, but this story on the security rating agencies adds a completely new layer to the insanity. Basically, what comes out of it is two-sided moral hazard where both parties to a contract have an apparent incentive to deliberately engage in bade behavior. We're waaaaay past supply and demand here. What makes this stuff mind blowing is that the existence of a stable equilibrium is usually not very likely in general terms-- usually only for certain numerical examples with restrictive assumptions. Second, optimal contracts that can overcome the moral hazard problem tend to be characterized partially, and the contractual relationship has to be repeated in order for the contract to carry much weight. There's lots of really hard math involved in the theoretical excursions into this area, hence head explosion.
Bottom line-- the more layers of moral hazard you add to a problem the more chaotic and unpredictable the result, and the more likely it is that bad things happen. Bad things happened.
Sunday, September 23, 2007
Stop China-bashing
So, it's not China that's secretly sabotaging our toys to kill our babies and take over our country. Apparently our own designers and managers in the US that are not doing their jobs. In a statement issued under cover of darkness (how's Friday afternoon/Saturday morning gonna grab Lou Dobbs' attention?), Mattell admitted what many of us suspected all along: the lead in the toys was the fault of management and design teams (KC Star).In a related story, recalled cribs made in China by Graco are also a result of faulty design-- by good ole American design workers. (Video: here, courtesy of YouTube.) It is interesting how the fact that the cribs were made in China takes the headline over the fact that the design flaw had nothing to do with China, offshoring, globalization, Lou Dobbs' War on the middle class, or the price of tea. Just a plain combination of sloppy or unscrupulous decisions by designers and managers. But, as they say, iiit runs downhill, and China (foreigners generally) are at the bottom of the social hill. I'll be tilting if someone will be my windmill.
Oh well I guess it doesn't sell newspapers to report that thousands of poor people in China did their jobs and your good ole American white-bred neighbor screwed up his and killed a few babies.
Oh well I guess it doesn't sell newspapers to report that thousands of poor people in China did their jobs and your good ole American white-bred neighbor screwed up his and killed a few babies.
Baby Crib Recall
China and TRADE HAVE NOTHING TO DO WITH THIS! It's a design flaw by US designers and managers!
Wednesday, September 12, 2007
Equal Time for Stupid Democrats
I just want to take a moment to call out the Democrats on Iraq, because they're not any smarter when it comes to making logical arguments about their positions on Iraq than those other guys. Every time a democrat argues that we should get out because we should have never gone in to begin with s/he is making the same fallacy in judgement as the Republicans who say we should stay there because we did decide to go. The decision to have gone in the first place is a foregone conclusion, and all of these twits need to learn from the past without re-arguing it. No decision about how best to proceed should be based on anything other than weighing the present and future gains to our National and global security against the marginal consequences and costs of those proposals.
Tuesday, September 11, 2007
Iraq and the Sunk-Cost Trap
Just a quickie today. I'm calling out Mike Huckabee and half of the Republican field for falling into what anyone with an undergraduate business degree knows to be a "sunk cost trap." Regardless of how you weigh the costs and benefits of various alternatives to how we should move forward in Iraq, it is a disservice to our troops to stay the course simply because we decided to go in the first place. To me, continuing a policy (whether that policy is good, bad or ugly) on the basis of events already behind us is a sad mistake in how to move forward in an optimal fashion.
The argument I'm calling out is the "honor" argument, which basically stakes the claim that changing course, redeploying, etc. is not an option because so many service men and women have already made the ultimate sacrifice. What bigger disservice could we do to their memory than to not learn from their sacrifice? Would it not be appropriate to allocate the lives of the men and women who carry the flag behind the fallen in a way that best serves our National Interest instead of squandering their service to a failed policy? In otherwords, the lives lost, are sadly and tragically already lost-- they are a "sunk cost" that can never be recovered. Let's ensure that any additional loss in life maximizes the benefit of security obtained from those future casualties.
The argument I'm calling out is the "honor" argument, which basically stakes the claim that changing course, redeploying, etc. is not an option because so many service men and women have already made the ultimate sacrifice. What bigger disservice could we do to their memory than to not learn from their sacrifice? Would it not be appropriate to allocate the lives of the men and women who carry the flag behind the fallen in a way that best serves our National Interest instead of squandering their service to a failed policy? In otherwords, the lives lost, are sadly and tragically already lost-- they are a "sunk cost" that can never be recovered. Let's ensure that any additional loss in life maximizes the benefit of security obtained from those future casualties.
Sunday, September 9, 2007
Poverty and Immigration
This week, Washington Post columnist Robert Samuelson set forth the claim that the United States is Importing Poverty. In it, he argues that immigration has increased poverty in the U.S. because the hispanics who disproportionately migrate here also happen to fall disproportionally below the poverty line. A number of critics could easily read this article to mean that we should cut off immigration, but that would just be another way to lie with statistics.
I would pose the question this way: What impact does immigration have on (1) The immigrants who come here; (2) Those currently at or near the poverty line in the U.S., and; (3) Those living in poverty in Mexico.
The first group are almost unambiguously better off. Otherwise, why give up the life you lead in Mexico, Guatemala, or elsewhere? Although immigrants often earn less and work harder than their native cohort in the U.S., they are glad to be "exploited" in this sense so that they can use some of their repatriated savings to purchase land or improve the lives of their families in their home country.
The third group is also usually better off. For the most part, the emigration of moderately-skilled hispanics to the United Statess, along with the FDI attracted by the relative abundance of unskilled labor, has tended to increase wages. And that's before accounting for the impact of repatriated wealth from emigrant family members.
The tricky middle is the second group. There is some evidence that immigration has worsened wages in the labor market for the least-skilled and least-experienced U.S. natives. But, at the same time immigration has tended to leave all other groups' welfare unchanged or improved.
To me, the argument comes down to how, not if we show concern for those who are poor. I would argue that if we are concerned with poverty, we should not just be concerned with the absolute headcount below some artificial poverty line, but also with the severity of the poverty that those folks live in. In addition, if our intentions are altruistic (and not just "us against them"), we should be concerned with those living in the most abject of poverty conditions, not just those living here, and the most poor folks out there are generally living outside our (increasingly gated) borders. I would only weigh those small losses to our own citizens against the huge gains to those who would come here and not treat them as One Fifth of One American.
I would pose the question this way: What impact does immigration have on (1) The immigrants who come here; (2) Those currently at or near the poverty line in the U.S., and; (3) Those living in poverty in Mexico.
The first group are almost unambiguously better off. Otherwise, why give up the life you lead in Mexico, Guatemala, or elsewhere? Although immigrants often earn less and work harder than their native cohort in the U.S., they are glad to be "exploited" in this sense so that they can use some of their repatriated savings to purchase land or improve the lives of their families in their home country.
The third group is also usually better off. For the most part, the emigration of moderately-skilled hispanics to the United Statess, along with the FDI attracted by the relative abundance of unskilled labor, has tended to increase wages. And that's before accounting for the impact of repatriated wealth from emigrant family members.
The tricky middle is the second group. There is some evidence that immigration has worsened wages in the labor market for the least-skilled and least-experienced U.S. natives. But, at the same time immigration has tended to leave all other groups' welfare unchanged or improved.
To me, the argument comes down to how, not if we show concern for those who are poor. I would argue that if we are concerned with poverty, we should not just be concerned with the absolute headcount below some artificial poverty line, but also with the severity of the poverty that those folks live in. In addition, if our intentions are altruistic (and not just "us against them"), we should be concerned with those living in the most abject of poverty conditions, not just those living here, and the most poor folks out there are generally living outside our (increasingly gated) borders. I would only weigh those small losses to our own citizens against the huge gains to those who would come here and not treat them as One Fifth of One American.
Friday, September 7, 2007
Lou Dobbs, Hater
Yesterday, my old nemesis Lou Dobbs was back on the anti-immigration warpath. His topic: H1-B visas and the support among presidential candidates for more of them at the expense of hard-working middle-class "Americans." I guess he's either hoping that you don't know what H1-B visas are, that you don't know who's most adversely affected by immigrants coming to the US, or that you don't know who the middle class is.
1. What is an H1-B visa? It is a visa for immigrants with a minimum of a bachelors degree, usually with some degree of specialization in some technical field. Do the visas uniformly get allocated to the most qualified or most in-demand? NO! But, I can only imagine how hot Lou would be at the administrative cost of our Citizenship and Immigration Services (formerly INS) if they tried to evaluate each of the hundreds of thousands of applications to try to evaluate which ones were the best-suited to help our economy grow.
2. Who's most adversely affected by immigration? Not the middle class! The only group that has been shown (in empirical studies of the economy by well qualified econometricians) to be adversely affected by immigration (legal or otherwise) is the lower-tail, i.e. those with low education (high school dropouts) and low experience (18-25 years old). I don't dispute that these, less fortunate groups should be looked after, but I do think that there are better ways to do it than by cutting off the flow of immigrants who help our economy be the leader in innovative technologies.
3. Who is the middle-class anyway? Well, the median household in the US earns about $55,000. Last time I checked, the gardener who does upkeep around my townhouse or the carpenter putting up new units accross the way isn't pulling down anything near that. So, are the immigrants we're most worked up about really killing the middle class? I don't think so-- I really don't think that they're competing in the same labor markets as the "middle" class.
1. What is an H1-B visa? It is a visa for immigrants with a minimum of a bachelors degree, usually with some degree of specialization in some technical field. Do the visas uniformly get allocated to the most qualified or most in-demand? NO! But, I can only imagine how hot Lou would be at the administrative cost of our Citizenship and Immigration Services (formerly INS) if they tried to evaluate each of the hundreds of thousands of applications to try to evaluate which ones were the best-suited to help our economy grow.
2. Who's most adversely affected by immigration? Not the middle class! The only group that has been shown (in empirical studies of the economy by well qualified econometricians) to be adversely affected by immigration (legal or otherwise) is the lower-tail, i.e. those with low education (high school dropouts) and low experience (18-25 years old). I don't dispute that these, less fortunate groups should be looked after, but I do think that there are better ways to do it than by cutting off the flow of immigrants who help our economy be the leader in innovative technologies.
3. Who is the middle-class anyway? Well, the median household in the US earns about $55,000. Last time I checked, the gardener who does upkeep around my townhouse or the carpenter putting up new units accross the way isn't pulling down anything near that. So, are the immigrants we're most worked up about really killing the middle class? I don't think so-- I really don't think that they're competing in the same labor markets as the "middle" class.
Tuesday, September 4, 2007
Presidential Energy Records, Part III
So, first of all, from reading the actual record it's apparent that the big issue is OIL. Also, there is a real dialectic between the parties on this topic: Republicans want to solve the energy issue by expanding production of oil and gas, whereas Democrats favor policies that curtail consomption. So by now you may be wondering, "As an 'expert' economist who do you think is right?" Well, I'm a two handed economist-- On the one hand they're both right, and on the other hand they're both wrong. Both stategies will help extend our ability to fuel our cars and heat and cool our homes in the short to medium run. Yet, both strategies are very costly, and neither strategy promises to be very effective in the long run.
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Presidential Energy Records, Part II
Part II of Saturday's post: the republicans on energy and oil from http://www.ontheissues.org/.
Sam Brownback
Voted NO on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted NO on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted NO on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Rudy Guiliani
No formal record on energy, but formal statements include:
Accept global warming & work toward energy independence. (Jun 2007)
Signing Kyoto would just move CO2 emissions to China & India. (Mar 2007)
No new energy tax; focus on alternatives instead. (Mar 2007)
Nuclear power is dangerous, but nobody's died from it. (Mar 2007)
Develop energy-independent technology, but not wind power. (Mar 2007)
Open Strategic Petroleum Reserve to battle high oil prices. (Feb 2000)
Oil crisis is “compelling justification” to use Reserves. (Feb 2000)
Mike Huckabee
Kyoto was a mistake, but "Earth in the Balance" is not. (Jan 2007)
Shouldn't limit oil production while increasing consumption. (Jan 2007)
Explore ways to harness nuclear power. (Jan 2007)
Promote alternative fuel technology. (Nov 2002)
Voluntary partnerships reduce greenhouse gases economically. (Aug 2000)
Kyoto Treaty must include reductions by all countries. (Aug 2000)
More funding to develop domestic energy supplies. (Sep 2001)
Use federal funds for nuclear cleanup, with state input. (Sep 2001)
Share offshore oil development revenue with states. (Sep 2001)
Duncan Hunter
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
John McCain
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Ron Paul
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Mitt Romney
No-regrets policy: biofuel, nuclear power, drill ANWR. (Jun 2007)
Big Oil should reinvest profits in oil refineries. (Jun 2007)
Develop alternative energy but also drill in ANWR. (Dec 2006)
Tom Tancredo
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Fred Thompson
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Sam Brownback
Voted NO on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted NO on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted NO on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Rudy Guiliani
No formal record on energy, but formal statements include:
Accept global warming & work toward energy independence. (Jun 2007)
Signing Kyoto would just move CO2 emissions to China & India. (Mar 2007)
No new energy tax; focus on alternatives instead. (Mar 2007)
Nuclear power is dangerous, but nobody's died from it. (Mar 2007)
Develop energy-independent technology, but not wind power. (Mar 2007)
Open Strategic Petroleum Reserve to battle high oil prices. (Feb 2000)
Oil crisis is “compelling justification” to use Reserves. (Feb 2000)
Mike Huckabee
Kyoto was a mistake, but "Earth in the Balance" is not. (Jan 2007)
Shouldn't limit oil production while increasing consumption. (Jan 2007)
Explore ways to harness nuclear power. (Jan 2007)
Promote alternative fuel technology. (Nov 2002)
Voluntary partnerships reduce greenhouse gases economically. (Aug 2000)
Kyoto Treaty must include reductions by all countries. (Aug 2000)
More funding to develop domestic energy supplies. (Sep 2001)
Use federal funds for nuclear cleanup, with state input. (Sep 2001)
Share offshore oil development revenue with states. (Sep 2001)
Duncan Hunter
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
John McCain
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Ron Paul
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Mitt Romney
No-regrets policy: biofuel, nuclear power, drill ANWR. (Jun 2007)
Big Oil should reinvest profits in oil refineries. (Jun 2007)
Develop alternative energy but also drill in ANWR. (Dec 2006)
Tom Tancredo
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Fred Thompson
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Presidential Energy Records, Part III
So, first of all, from reading the actual record it's apparent that the big issue is OIL. Also, there is a real dialectic between the parties on this topic: Republicans want to solve the energy issue by expanding production of oil and gas, whereas Democrats favor policies that curtail consomption. So by now you may be wondering, "As an 'expert' economist who do you think is right?" Well, I'm a two handed economist-- On the one hand they're both right, and on the other hand they're both wrong. Both stategies will help extend our ability to fuel our cars and heat and cool our homes in the short to medium run. Yet, both strategies are very costly, and neither strategy promises to be very effective in the long run.
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Saturday, September 1, 2007
Presidential Energy Records, Part I
I'm feeling a little lazy, so I'll just publish some records of presidential candidates on energy and oil (from: www.ontheissues.org). Part I: The Democratic Primary Candidates for President. For the most part the policies reflect a strong concern over the environment (especially for global warming), which may be the larger issue anyway. (As I've mentioned before, energy itself will be available to fuel our cars for the foreseeable future using what's in the sands of Northern Alberta once the embarrassingly cheap reserves in the Middle East dry up.) Like we would expect from the Left, they are generally opposed to corporate subsidies.
Joe Biden:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Hillary Clinton:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Chris Dodd:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
John Edwards:
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Mike Gravel:
No recent record on energy. Strongly opposed to nuclear power because of waste issues. No strong record on energy alternatives per se. Focuses on Global Warming and waste issues.
Dennis Kucinich:
Voted YES on criminalizing oil cartels like OPEC. (May 2007)
Voted YES on removing oil & gas exploration subsidies. (Jan 2007)
Voted YES on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted NO on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on authorizing construction of new oil refineries. (Oct 2005)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted YES on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted YES on prohibiting oil drilling & development in ANWR. (Aug 2001)
Barack Obama:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Joe Biden:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Hillary Clinton:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Chris Dodd:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
John Edwards:
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Mike Gravel:
No recent record on energy. Strongly opposed to nuclear power because of waste issues. No strong record on energy alternatives per se. Focuses on Global Warming and waste issues.
Dennis Kucinich:
Voted YES on criminalizing oil cartels like OPEC. (May 2007)
Voted YES on removing oil & gas exploration subsidies. (Jan 2007)
Voted YES on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted NO on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on authorizing construction of new oil refineries. (Oct 2005)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted YES on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted YES on prohibiting oil drilling & development in ANWR. (Aug 2001)
Barack Obama:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Thursday, August 30, 2007
Sub-Prime Lending
Quick comment on subprime lending. Today, the NYTimes ran a report describing the ruling in bankruptcy court that denied Bear Stearns (based in the Caymans) bankruptcy.
I've heard about every story on who's to blame-- some people say it's all Bear Stearns, others say it's the people who took out the loans in the first place, others still say it was the people who agreed to take the mortgages as collateral in securities transactions, borrowers began defaulting as interest rates rose, the securities bombed and the collateral was worthless. Which leads back to Bear Stearns. Then, somebody I know tried to goat the government for it because they tried to create more opportunities for lower-income families to take out loans. When in doubt blame Uncle Sam.
This whole mess is more or less on Bear Stearns. I have to hold them responsible for making risky loans to folks without the means to keep making payments once rates rise and monthly payments double. They knew what they were doing, if anyone did. The borrowers screwed up, but they weren't motivated by greed. And now the judge is making them pay their own debts. Good.
I've heard about every story on who's to blame-- some people say it's all Bear Stearns, others say it's the people who took out the loans in the first place, others still say it was the people who agreed to take the mortgages as collateral in securities transactions, borrowers began defaulting as interest rates rose, the securities bombed and the collateral was worthless. Which leads back to Bear Stearns. Then, somebody I know tried to goat the government for it because they tried to create more opportunities for lower-income families to take out loans. When in doubt blame Uncle Sam.
This whole mess is more or less on Bear Stearns. I have to hold them responsible for making risky loans to folks without the means to keep making payments once rates rise and monthly payments double. They knew what they were doing, if anyone did. The borrowers screwed up, but they weren't motivated by greed. And now the judge is making them pay their own debts. Good.
Tuesday, August 28, 2007
The Dirty Secret Behind "The Dirty Secret Behind America's Energy Future"
Jeff Godell's book, "Big Coal: The Dirty Secret Behind America's Energy Future," has gotten a resurgence of media attention in recent days because of the events that have transpired in the Utah mine tragedy and the more recent tragedy of a similar nature in China. One of the things Godell blasts the coal industry for is safety (hence the newfound media attention). Now, if you've read my other posts on energy, you'll know that I'm no blind defender of Big Coal. I am, however, a big fan of making sure that if I'm going to pour my outrage, and that I target it where it will do the most good.
Around the time of a BIG EVENT with LOTS OF MEDIA, nearly every politician has to make sure they are on the public record "saying the right thing," and showing the appropriate amounts of outrage over the incident, resolve to do more from now on, and contrition that nothing was done sooner that would have saved the lives of the noble citizens who met their ultimate demise. But do we mete out our attention, sympathy, outrage and action equally? Well, OF COURSE NOT. It's a "law of small numbers" thing (the principle comes from the properties of the Poisson Distribution of statistics and referenced in Thomas Pynchon's fictional novel, "Gravity's Rainbow"). Basically, the way I'm going to apply it is to say that because certain events are so unexpected generally, that when they do occur they tend to grab our attention and affect behavior disproportionately to their risk of occuring again. My point is, there are hundreds of on-the-job fatalities every year (over 1400 in manufacturing) and almost none of them make Headline News. Why? They're just too damn common to be newsworthy! Hence, there is almost no public outcry for the government to take action. It's kind of like flying versus driving-- people are terrified of planes even though it's widely known that driving is statistically much more risky. (Again, there are so many damn car wrecks there's no way the news is going to start sending crews to them...) Does the fact that a certain type of fatality is more "common" or "mundane" make it less tragic?
Back to mining... Have I mentioned that economists like to back stuff up with data? So, the Coal mining industry actually has a much LOWER incidence of on-the-job fatality than the general manufacturing sector (according to the Bureau of Labor Statistics, manufacturing had about 3 fatal incidents per 1,000 workers in 2006 whereas coal had about 0.8 per 1000 workers). So, even if, as Mr. Godell asserts, coal accidents increase drastically over the next several years, it is unclear that our regulatory efforts are best-placed in that sector. It is conceivable that many more lives would be saved by fortifying safety regulations in a more general way rather than targeting coal. Not only that, it seems to me that the dangers of mining coal underground are not unforseen, so miners who choose that line of work are making an informed choice-- and are compensated for the perceived risk. In fact, despite a lower incidence of fatalities, COAL miners out-earn their colleagues in the manufacturing sector by about $7 per hour.
So, with all of this in mind, where should we spend our regulatory dollars? In coal, where there were just 78 fatalities in 2006, and incidents were relatively rare, or in the manufacturing sector or in a more general way altogether, where there are far more fatalities (and lives that could potentially be saved), but far less media attention? Should the media's crocodile tears and misinformation dictate where our tax dollars are spent? Maybe I'm a jerk, but as my students know, I want to make sure that I get the most "Bang" for my buck.
Around the time of a BIG EVENT with LOTS OF MEDIA, nearly every politician has to make sure they are on the public record "saying the right thing," and showing the appropriate amounts of outrage over the incident, resolve to do more from now on, and contrition that nothing was done sooner that would have saved the lives of the noble citizens who met their ultimate demise. But do we mete out our attention, sympathy, outrage and action equally? Well, OF COURSE NOT. It's a "law of small numbers" thing (the principle comes from the properties of the Poisson Distribution of statistics and referenced in Thomas Pynchon's fictional novel, "Gravity's Rainbow"). Basically, the way I'm going to apply it is to say that because certain events are so unexpected generally, that when they do occur they tend to grab our attention and affect behavior disproportionately to their risk of occuring again. My point is, there are hundreds of on-the-job fatalities every year (over 1400 in manufacturing) and almost none of them make Headline News. Why? They're just too damn common to be newsworthy! Hence, there is almost no public outcry for the government to take action. It's kind of like flying versus driving-- people are terrified of planes even though it's widely known that driving is statistically much more risky. (Again, there are so many damn car wrecks there's no way the news is going to start sending crews to them...) Does the fact that a certain type of fatality is more "common" or "mundane" make it less tragic?
Back to mining... Have I mentioned that economists like to back stuff up with data? So, the Coal mining industry actually has a much LOWER incidence of on-the-job fatality than the general manufacturing sector (according to the Bureau of Labor Statistics, manufacturing had about 3 fatal incidents per 1,000 workers in 2006 whereas coal had about 0.8 per 1000 workers). So, even if, as Mr. Godell asserts, coal accidents increase drastically over the next several years, it is unclear that our regulatory efforts are best-placed in that sector. It is conceivable that many more lives would be saved by fortifying safety regulations in a more general way rather than targeting coal. Not only that, it seems to me that the dangers of mining coal underground are not unforseen, so miners who choose that line of work are making an informed choice-- and are compensated for the perceived risk. In fact, despite a lower incidence of fatalities, COAL miners out-earn their colleagues in the manufacturing sector by about $7 per hour.
So, with all of this in mind, where should we spend our regulatory dollars? In coal, where there were just 78 fatalities in 2006, and incidents were relatively rare, or in the manufacturing sector or in a more general way altogether, where there are far more fatalities (and lives that could potentially be saved), but far less media attention? Should the media's crocodile tears and misinformation dictate where our tax dollars are spent? Maybe I'm a jerk, but as my students know, I want to make sure that I get the most "Bang" for my buck.
Monday, August 27, 2007
All New Meaning to "Cost of Living"
Several days ago, I was on a rant about Lou Dobbs calling economists "idiots" and "jackasses." But, while we tend to know what we are talking about a good deal of the time (usually with data and ituition to back up our stories), we are also really big jerks. Case in point: most "normal" people would hear the phrase, "you can't put a price on a human life" and agree without a second thought. Eonomists hear this, and ask, "can you back that claim up with data?" In fact, human life does have a price put on it, and economists aren't to blame.
Economists have actually done calculations to try to infer the cost of dying using data that are readily available. Frank Ackerman has "priced" a number of things, including death, in his pamphlet, "Pricing the Priceless." So how much is a human life worth? On average, between 1 and 6 million, depending on certain characteristics. But here's the catch: Computations aren't entirely made on the basis of earnings, life expectance at birth, etc.-- They're made by observing and evaluating our own behavior. If you feel this cheapens your worth as a person, you have yourself to blame. Here's one approach that's been used. Take construction workers, and survey their hourly earnings. Now survey the compensating differential between working on the first floor and working on the thirtieth floor. Next, calculate the increase in the risk of dying on the job, and there you have it. The price these construction workers have voluntarily put on their own lives using this back-of-the-napkin approach is about 2 million dollars.
So, the next time you run a red light,. think about the 30 seconds it saves you, the risk of dying you assume by doing it, and the fact that somewhere an economists might be watching.
Tomorrow, I will focus on the information distortion we get from the media-- are we evaluating the risk of death or disaster appropriately when we weigh whether or not to fly vs. drive, or in measuring our level of outrage for government action for things like mining regulations, bird flu precautions, etc.
Economists have actually done calculations to try to infer the cost of dying using data that are readily available. Frank Ackerman has "priced" a number of things, including death, in his pamphlet, "Pricing the Priceless." So how much is a human life worth? On average, between 1 and 6 million, depending on certain characteristics. But here's the catch: Computations aren't entirely made on the basis of earnings, life expectance at birth, etc.-- They're made by observing and evaluating our own behavior. If you feel this cheapens your worth as a person, you have yourself to blame. Here's one approach that's been used. Take construction workers, and survey their hourly earnings. Now survey the compensating differential between working on the first floor and working on the thirtieth floor. Next, calculate the increase in the risk of dying on the job, and there you have it. The price these construction workers have voluntarily put on their own lives using this back-of-the-napkin approach is about 2 million dollars.
So, the next time you run a red light,. think about the 30 seconds it saves you, the risk of dying you assume by doing it, and the fact that somewhere an economists might be watching.
Tomorrow, I will focus on the information distortion we get from the media-- are we evaluating the risk of death or disaster appropriately when we weigh whether or not to fly vs. drive, or in measuring our level of outrage for government action for things like mining regulations, bird flu precautions, etc.
Wednesday, August 22, 2007
An Immigration Story (Part III)
Today's post arrives late, and tomorrow will probably pass without new information, but SAY-LAH-VEE as the French say. 8-hour department meetings to prepare to greet the new academic semester do not leave much time for me to go on my usual rail about economics on my blog.
In my last two episodes we learned something of how my family came to the United States as immigrants from Denmark. Two days ago we learned about an old spinning wheel that my great great grandfather used as a gerry-rigged bellows, and had become worn out from hard work (much like the immigrants themselves who come here). Yesterday we learned that my ancestors came to this country somewhat casually, and not necessarily in a fully formalized way by first entering Canada, then following what work was available along the St. Lawrence River and then Sault Ste. Marie, MI, eventually landing in Plano, IL. Not only that, but they didn't all speak English from day one! The nerve! Today we will hear the story of how they built their life and eventually became landowners in Nebraska, the eventual home to most of my extended family today.
Stories of homesteads and cheap land in Nebraska were the motivation necessary to bring them to this state in February, 1880. Grandpa and his family and John Andersen and his family plus three other Danes loaded everything they had on two railroad cars and then got aboard these cars themselves and travelled to the end of the line which at that time was Lowell, Nebraska.
Uncle J*** said that Grandpa used to recall that when he looked south from Lowell and saw nothing but sandhills he said that if they did not find anything better than that they would go back to Illinois. However, they travelled to a place seven miles south of where Minden [Nebraska, ed.] is now located and there made their home.
Although homesteads were still available, Grandpa decided to buy an “improved quarter” rather than hunt for a good homestead location. He paid $400 for this farm. However, the improvements included only a one-room, dirt floor dugout on the west side of a draw and dug well on the east side.
Because Minden had not been founded it was necessary to go to Gibbon [NE, ed.] or Kearney [NE, ed.] to sell produce and to buy needed provisions. This was a hard two-day trip with a team of horses, in that it was 29 miles to Gibbon and 27 miles to Kearney. When Grandpa made these trips it left Grandma alone with a young family. However, Uncle J*** said that Grandma did not worry about anything except the possibility of an animal or a herd of animals falling through the roof of the dugout which was ground level on one side. There were some wild cattle, wild horses, and some buffalo in the area at the time.
Crops were good in those early years, but one of the first winters caught Grandpa and Grandma without a fuel supply. Fuel was very hard to find in that there was little wood available, because every year for hundreds of years prairie fires had burned all trees except those in sheltered spots at a crook of a stream. When the early snow came it became necessary for Grandpa to take a shovel and a length of rope and go to the corn field to find fuel. He would uncover corn stalks, cut them off, lay them over the rope, and when he had gathered a large bundle he would tie them up and carry them home.
The good crops enabled them to make good progress. After two years in the dugout they built a sod house. By 1892 they had a frame house, they had outbuildings and a good orchard and garden. In 1904 a fine addition to the house was completed. Uncle J*** said that Grandpa was proud that his former employer from Illinois, J*** L****, and his wife came to visit them one year and spent a while month in their home.
To return once more to the spinning wheel. Uncle Jim said that spinning wheel was one of their best toys when he was a kid. He said they would run it by the hour, and that along with the fun it provided it was often the cause of a fight when a brother or sister would cause the belt to come off.
In my last two episodes we learned something of how my family came to the United States as immigrants from Denmark. Two days ago we learned about an old spinning wheel that my great great grandfather used as a gerry-rigged bellows, and had become worn out from hard work (much like the immigrants themselves who come here). Yesterday we learned that my ancestors came to this country somewhat casually, and not necessarily in a fully formalized way by first entering Canada, then following what work was available along the St. Lawrence River and then Sault Ste. Marie, MI, eventually landing in Plano, IL. Not only that, but they didn't all speak English from day one! The nerve! Today we will hear the story of how they built their life and eventually became landowners in Nebraska, the eventual home to most of my extended family today.
Stories of homesteads and cheap land in Nebraska were the motivation necessary to bring them to this state in February, 1880. Grandpa and his family and John Andersen and his family plus three other Danes loaded everything they had on two railroad cars and then got aboard these cars themselves and travelled to the end of the line which at that time was Lowell, Nebraska.
Uncle J*** said that Grandpa used to recall that when he looked south from Lowell and saw nothing but sandhills he said that if they did not find anything better than that they would go back to Illinois. However, they travelled to a place seven miles south of where Minden [Nebraska, ed.] is now located and there made their home.
Although homesteads were still available, Grandpa decided to buy an “improved quarter” rather than hunt for a good homestead location. He paid $400 for this farm. However, the improvements included only a one-room, dirt floor dugout on the west side of a draw and dug well on the east side.
Because Minden had not been founded it was necessary to go to Gibbon [NE, ed.] or Kearney [NE, ed.] to sell produce and to buy needed provisions. This was a hard two-day trip with a team of horses, in that it was 29 miles to Gibbon and 27 miles to Kearney. When Grandpa made these trips it left Grandma alone with a young family. However, Uncle J*** said that Grandma did not worry about anything except the possibility of an animal or a herd of animals falling through the roof of the dugout which was ground level on one side. There were some wild cattle, wild horses, and some buffalo in the area at the time.
Crops were good in those early years, but one of the first winters caught Grandpa and Grandma without a fuel supply. Fuel was very hard to find in that there was little wood available, because every year for hundreds of years prairie fires had burned all trees except those in sheltered spots at a crook of a stream. When the early snow came it became necessary for Grandpa to take a shovel and a length of rope and go to the corn field to find fuel. He would uncover corn stalks, cut them off, lay them over the rope, and when he had gathered a large bundle he would tie them up and carry them home.
The good crops enabled them to make good progress. After two years in the dugout they built a sod house. By 1892 they had a frame house, they had outbuildings and a good orchard and garden. In 1904 a fine addition to the house was completed. Uncle J*** said that Grandpa was proud that his former employer from Illinois, J*** L****, and his wife came to visit them one year and spent a while month in their home.
To return once more to the spinning wheel. Uncle Jim said that spinning wheel was one of their best toys when he was a kid. He said they would run it by the hour, and that along with the fun it provided it was often the cause of a fight when a brother or sister would cause the belt to come off.
Tuesday, August 21, 2007
An Immigration Story (Part II)
Today is Part II of a three-part series on the immigration experience of my own family from Denmark in the late 1860's to early 1870's, as written by my grandfather. In yesterday's excerpt, we learned of a spinning wheel that had been passed from my great-great grandfather to my great-great uncle, which was now worn out and broken. In a sense it represented both the struggles they went through to achieve something more, and the power of the American entrepreneurial spirit. Today, we get the story of how my family was able to arrive here.
To get back to the original story that thoughts of this old spinning wheel brought back to Uncle J***, I will start with Grandpa’s arrival in the United States. He was M**** B***, born in Denmark on October 5, 1849, and he landed in Canada in 1869. After arriving in the “New World” he got a job on a boat that worked the St. Lawrence River. From that boat he transferred to a boat that sailed the Great Lakes. His primary objective at this time was to travel until he found a place where he wanted to settle or where he could find a good job. When he got to Sault Ste. Marie, Michigan, he found a job at the “unheard of wage”, as Uncle J*** said, of four dollars a day. This job was in an open pit copper mine.
These good wages allowed him to save money rather rapidly and it was not long until he was able to send money to Denmark to bring his brother **** to the United States. **** also worked in the copper mine until the two of them heard of good jobs being offered at the Plano Binder Company in Plano, Illinois. (The Plano Binder was a hand tie forerunner of the McCormick Reaper.) The two of them went to Plano, but by the time they arrived all of the jobs had been filled, so Grandpa went to work for a farmer by the name of J**** L*****.
The story now goes back to Denmark and to my Grandma’s side of the family. Her brother J*** A**** had come to Plano to get his start and had saved enough money to bring his sister, my grandma, and his fiancee Tante M*** to the United States. The two of them were packed and arrived at the pier to board ship to come to the United States. However, at the last minute Tante Marianna lost her nerve and did not go, but Grandma made the trip by herself. She was sixteen years of age at that time. Tante M*** did come at a later date and did marry Uncle J*** A****.
Uncle J**** said that Grandma used to tell of the first sighting of the Statue of Liberty when all of the passengers went on deck and gave a great cheer for what was to become their adopted country.
Grandma was in a new strange country and could not speak the language. After the ordeal of going through customs she was trying to think of a way to order a meal in a restaurant when the waiter told her to talk Dane because he too was Dane. He not only helped her order a meal but he wrote notes for her to use in ordering future meals and making railroad transfers and the like. One side of the note was written in Dane, the other in English.
Grandma got to Plano and expected to meet her brother, but although he had waited for her for several days he had decided that he had to go back to work. Communications did not allow them to contact each other. However, they did get together and Grandma got a job working for a family by the name of A**** D****. My dad got his name from this employer, and I in turn have that name.
Grandpa and Grandma met in Plano and were married there on February 19, 1878. They rented a farm from J*** L**** and farmed in the Plano area for the next two years. Their oldest child **** was born May 21, 1879. (**** was my Uncle J***’s father.)
So, the history of how my great-great grandfather got here is somewhat vague. What is somewhat interesting here, is that he seems to have first come to Canada, then worked along the St. Lawrence river, and probably first arrived through Sault Ste. Marie, MI. Although there were no formal restrictions or quotas on immigration until 1924, the government was trying to document new immigrants, which is ultimately why Ellis Island was founded in 1892. So even though no law prohibited my ancestors' entry to the US, one could surely doubt whether their entry was documented or controlled in the ways immigration is now regulated. I imagine there are several thousand stories like this one in nearly every US citizen's background, and the hypocricy and prejudice that dominates the debate over immigration needs to be set aside in favor of reasonable arguments about National welfare (rather than the special interest welfare of certain interest groups).
To get back to the original story that thoughts of this old spinning wheel brought back to Uncle J***, I will start with Grandpa’s arrival in the United States. He was M**** B***, born in Denmark on October 5, 1849, and he landed in Canada in 1869. After arriving in the “New World” he got a job on a boat that worked the St. Lawrence River. From that boat he transferred to a boat that sailed the Great Lakes. His primary objective at this time was to travel until he found a place where he wanted to settle or where he could find a good job. When he got to Sault Ste. Marie, Michigan, he found a job at the “unheard of wage”, as Uncle J*** said, of four dollars a day. This job was in an open pit copper mine.
These good wages allowed him to save money rather rapidly and it was not long until he was able to send money to Denmark to bring his brother **** to the United States. **** also worked in the copper mine until the two of them heard of good jobs being offered at the Plano Binder Company in Plano, Illinois. (The Plano Binder was a hand tie forerunner of the McCormick Reaper.) The two of them went to Plano, but by the time they arrived all of the jobs had been filled, so Grandpa went to work for a farmer by the name of J**** L*****.
The story now goes back to Denmark and to my Grandma’s side of the family. Her brother J*** A**** had come to Plano to get his start and had saved enough money to bring his sister, my grandma, and his fiancee Tante M*** to the United States. The two of them were packed and arrived at the pier to board ship to come to the United States. However, at the last minute Tante Marianna lost her nerve and did not go, but Grandma made the trip by herself. She was sixteen years of age at that time. Tante M*** did come at a later date and did marry Uncle J*** A****.
Uncle J**** said that Grandma used to tell of the first sighting of the Statue of Liberty when all of the passengers went on deck and gave a great cheer for what was to become their adopted country.
Grandma was in a new strange country and could not speak the language. After the ordeal of going through customs she was trying to think of a way to order a meal in a restaurant when the waiter told her to talk Dane because he too was Dane. He not only helped her order a meal but he wrote notes for her to use in ordering future meals and making railroad transfers and the like. One side of the note was written in Dane, the other in English.
Grandma got to Plano and expected to meet her brother, but although he had waited for her for several days he had decided that he had to go back to work. Communications did not allow them to contact each other. However, they did get together and Grandma got a job working for a family by the name of A**** D****. My dad got his name from this employer, and I in turn have that name.
Grandpa and Grandma met in Plano and were married there on February 19, 1878. They rented a farm from J*** L**** and farmed in the Plano area for the next two years. Their oldest child **** was born May 21, 1879. (**** was my Uncle J***’s father.)
So, the history of how my great-great grandfather got here is somewhat vague. What is somewhat interesting here, is that he seems to have first come to Canada, then worked along the St. Lawrence river, and probably first arrived through Sault Ste. Marie, MI. Although there were no formal restrictions or quotas on immigration until 1924, the government was trying to document new immigrants, which is ultimately why Ellis Island was founded in 1892. So even though no law prohibited my ancestors' entry to the US, one could surely doubt whether their entry was documented or controlled in the ways immigration is now regulated. I imagine there are several thousand stories like this one in nearly every US citizen's background, and the hypocricy and prejudice that dominates the debate over immigration needs to be set aside in favor of reasonable arguments about National welfare (rather than the special interest welfare of certain interest groups).
Monday, August 20, 2007
An Immigration Story (Part I)
Dear All,
I often write posts on this site relating events in the news to abstract economic theories and technical empirical studies. This mountain of theory and evidence so often gets dismissed by skeptics of economic science as irrelevant to their own lives and families. Too often we struggle to see the human face of the opportunities free markets afford us. Jagdish Bhagwati also speaks of this need for a more human face for topics such as immigration, trade, and globalization.
The story begins in Nebraska in 1974 with an interview by my grandfather with his uncle, my great-great uncle.
Too often we neglect to keep account of family history until the source of such information is no longer available. For that reason I shall always be pleased that on Friday, February 15, 1974, I was fortunate enough to be able to have a visit about such things with my Uncle **** **** of Minden, Nebraska.
At that time Uncle **** was 88 years of age and had just returned home from the hospital. He had been hospitalized because of an ulcer and possible heart problems. However, on this date he was in good spirits and very able and willing to visit. He was best able to visit with one person at a time because his hearing was poor. He and I sat at the kitchen table while others present were in the living room.
This story of family history started when I asked Uncle **** if he remembered his mother’s spinning wheel. He said he sure did and wondered what had become of it. I told him that I had it and had started to restore it, that it was in pieces in a box, and that the wheel would need some repair parts which I planned to make. He told me to keep it as nearly like the original as possible and added that he would like to see it again. I assured him that I would bring it to Minden for him to see after I had completed the restoration job. He told me that the Danish name for a spinning wheel is “ruck.”
(This is not a part of our visit, but I believe should be of interest to those who might read this account. My dad, ******* ******, told me that when Uncle **** was a young man he used the wheel and pedal to drive the bellows on a forge that he built. The wheel could not stand the strain and broke up. Dad said he gathered up all of the parts and put them in a box which he placed on a shelf in the shop. Here they stayed until his parents **** and **** **** moved to town in 1917. At that time Dad asked his mother for the spinning wheel and she was pleased to give it to him. Dad always planned to restore it, but did not get it done.)
I will continue with the transcript tomorrow, and I will post it in 3 parts. It speaks to the history of my own family, but also to the history of this country as a Nation of Immigrants, in the words of President John F. Kennedy.
I often write posts on this site relating events in the news to abstract economic theories and technical empirical studies. This mountain of theory and evidence so often gets dismissed by skeptics of economic science as irrelevant to their own lives and families. Too often we struggle to see the human face of the opportunities free markets afford us. Jagdish Bhagwati also speaks of this need for a more human face for topics such as immigration, trade, and globalization.
The story begins in Nebraska in 1974 with an interview by my grandfather with his uncle, my great-great uncle.
Too often we neglect to keep account of family history until the source of such information is no longer available. For that reason I shall always be pleased that on Friday, February 15, 1974, I was fortunate enough to be able to have a visit about such things with my Uncle **** **** of Minden, Nebraska.
At that time Uncle **** was 88 years of age and had just returned home from the hospital. He had been hospitalized because of an ulcer and possible heart problems. However, on this date he was in good spirits and very able and willing to visit. He was best able to visit with one person at a time because his hearing was poor. He and I sat at the kitchen table while others present were in the living room.
This story of family history started when I asked Uncle **** if he remembered his mother’s spinning wheel. He said he sure did and wondered what had become of it. I told him that I had it and had started to restore it, that it was in pieces in a box, and that the wheel would need some repair parts which I planned to make. He told me to keep it as nearly like the original as possible and added that he would like to see it again. I assured him that I would bring it to Minden for him to see after I had completed the restoration job. He told me that the Danish name for a spinning wheel is “ruck.”
(This is not a part of our visit, but I believe should be of interest to those who might read this account. My dad, ******* ******, told me that when Uncle **** was a young man he used the wheel and pedal to drive the bellows on a forge that he built. The wheel could not stand the strain and broke up. Dad said he gathered up all of the parts and put them in a box which he placed on a shelf in the shop. Here they stayed until his parents **** and **** **** moved to town in 1917. At that time Dad asked his mother for the spinning wheel and she was pleased to give it to him. Dad always planned to restore it, but did not get it done.)
I will continue with the transcript tomorrow, and I will post it in 3 parts. It speaks to the history of my own family, but also to the history of this country as a Nation of Immigrants, in the words of President John F. Kennedy.
Friday, August 17, 2007
This Jackass's Thoughts
Economists typically get bombarded with criticism for being arrogant, dispassionate, unrealistic, wishy-washy, abstract, misguided, and a whole list of other things, some of which I cannot list here. But usually economists have a strong reputation for being pretty smart guys and gals. Now, journalist Lou Dobbs has called economists "idiots" and "jackasses." How does one argue with someone so steadfast in his convictions that he categorically dismisses an entire field of science? Let me try.
First, let me apologize for the stooge who likened labor migration to trading apples. Clearly human beings are not to be treated as objects, but this was not the point of the comparison. The point was that when Factors of Production (machinery, workers, or other "stuff" that's used to produce the "stuff" households consume) move, society gains in a way that is similar to the way society gains when we are able to trade goods freely (both within our own borders and with other countries). The comparison was in the nature of the gain to society, not the ways in which they should be treated in a political, social, or moral sense. Economists are rational to a fault, and often ineloquent.
Mr. Dobbs asks, "Are there any empiricists among these idiotic economists?" Yo. Right here. In fact, the vast majority of the policy recommendations are based on careful empirical research that gets scrutinized by the sharpest minds in economic theory and statistical methodology before they see print. Trade (and movement of labor and capital) has two impacts: Aggregate gains and distributional consequences. When there is a change that lifts the restrictions placed on Rational Individuals, markets tend to function better and on average countries experience net gains. The net gains from trade are generally pretty big. But, some argue, trade is bad for labor and can lead to a loss in jobs. Still, if we count up every job that would be lost in the sectors dessimated by import competition, the average cost of US trade restrictions was estimated to be around $50,000 per job saved in 2000. The gains from immigration inflows has been estimated to be quite a bit smaller at around 0.25% of GDP per capita, but they are gains nonetheless. That means the median household (middle class American) is better off by $125 per year because of immigrants already here. War on the middle class? Hardly.
However, some individuals and groups will lose in the short run, and their transition to greener pastures in the long run may be a rocky path. Economists are not ignorant of that. Take for example Jim Richardson at Syracuse. He actively advocates for stronger Trade Adjustment Assistance programs that would include wage repacement stipends in addition to education credits.
Speaking to immigration specifically, Dobbs argues that since we have the strongest and best-funcioning economy, suddenly every person from a poor country will flood through our borders. Now who's being arrogant?!? First of all, immigration is difficult and costly (financially and socially), and there are a lot of people living in poor countries who simply cannot afford to come here, even if they wanted to do so. Second of all, not everyone wants to live here! Not only that, but almost one million illegal immigrants leave every year voluntarily! So let's not make up a number like, "4.8 billion people" that would suddenly flood our border once the gates open.
Finally, immigrants who come here looking to work and toil for a better life make our country richer and greater. To enact legislation that is largely designed to protect certain US labor interests at the expense of immigrants who are even poorer than the working poor here (not to mention to the detriment of the majority of native-born US citizens) is nationalist bigotry. It feeds on our basest prejudices against "outsiders." But even more than that, it is poor public policy. It is a lazy man's solution to a complicated problem. Immigration, like trade can benefit us all. Unfortunately, change causes socio-economic displacements that cannot be ignored, are difficult to solve, but must be addressed head-on rather than haphazardly. The solution to an infected papercut is not to chop of the entier arm.
First, let me apologize for the stooge who likened labor migration to trading apples. Clearly human beings are not to be treated as objects, but this was not the point of the comparison. The point was that when Factors of Production (machinery, workers, or other "stuff" that's used to produce the "stuff" households consume) move, society gains in a way that is similar to the way society gains when we are able to trade goods freely (both within our own borders and with other countries). The comparison was in the nature of the gain to society, not the ways in which they should be treated in a political, social, or moral sense. Economists are rational to a fault, and often ineloquent.
Mr. Dobbs asks, "Are there any empiricists among these idiotic economists?" Yo. Right here. In fact, the vast majority of the policy recommendations are based on careful empirical research that gets scrutinized by the sharpest minds in economic theory and statistical methodology before they see print. Trade (and movement of labor and capital) has two impacts: Aggregate gains and distributional consequences. When there is a change that lifts the restrictions placed on Rational Individuals, markets tend to function better and on average countries experience net gains. The net gains from trade are generally pretty big. But, some argue, trade is bad for labor and can lead to a loss in jobs. Still, if we count up every job that would be lost in the sectors dessimated by import competition, the average cost of US trade restrictions was estimated to be around $50,000 per job saved in 2000. The gains from immigration inflows has been estimated to be quite a bit smaller at around 0.25% of GDP per capita, but they are gains nonetheless. That means the median household (middle class American) is better off by $125 per year because of immigrants already here. War on the middle class? Hardly.
However, some individuals and groups will lose in the short run, and their transition to greener pastures in the long run may be a rocky path. Economists are not ignorant of that. Take for example Jim Richardson at Syracuse. He actively advocates for stronger Trade Adjustment Assistance programs that would include wage repacement stipends in addition to education credits.
Speaking to immigration specifically, Dobbs argues that since we have the strongest and best-funcioning economy, suddenly every person from a poor country will flood through our borders. Now who's being arrogant?!? First of all, immigration is difficult and costly (financially and socially), and there are a lot of people living in poor countries who simply cannot afford to come here, even if they wanted to do so. Second of all, not everyone wants to live here! Not only that, but almost one million illegal immigrants leave every year voluntarily! So let's not make up a number like, "4.8 billion people" that would suddenly flood our border once the gates open.
Finally, immigrants who come here looking to work and toil for a better life make our country richer and greater. To enact legislation that is largely designed to protect certain US labor interests at the expense of immigrants who are even poorer than the working poor here (not to mention to the detriment of the majority of native-born US citizens) is nationalist bigotry. It feeds on our basest prejudices against "outsiders." But even more than that, it is poor public policy. It is a lazy man's solution to a complicated problem. Immigration, like trade can benefit us all. Unfortunately, change causes socio-economic displacements that cannot be ignored, are difficult to solve, but must be addressed head-on rather than haphazardly. The solution to an infected papercut is not to chop of the entier arm.
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