Friday, March 14, 2003

Well, what would you do if you had a brain?

I could while away the hours
Conferring with the flowers
Consulting with the rain.
And my head I'd be a-scratchin'
While my thoughts were busy hatchin'
If I only had a brain.

I'd unravel every riddle
For any individdle
In trouble or in pain
With the thoughts I'd be a-thinkin'
I could be another Lincoln
If I only had a brain.

Oh I could tell you why
The ocean's near the shore
I could think of things I'd never thunk before
And then I'd sit, and think some more.

I would not be just a nothin'
My head all full of stuffin'
My heart all full of pain
I would laugh and I'd be merry
Life would be a dinglederry
If I only had brain.

Mmmm, Burger

Yourish is pushing tomorrow as an Eat Meat for PETA day. While I am sympathetic to his antipathy for PETA. I don't know if I can really contribute to the cause. Hardly a waking hour passes when I am not putting cured, broiled, fried or boild animal flesh into my gapping maw. I could not possibly eat any more furry friends than I already do. So all I can offer is my solidarity and a greasy thumbs up.

Take The Bus

Urban Planning sounds like an incredibly boring topic. A couple of years ago I saw a program on television that had urban planners debating the benefits of various urban planning topics. You would think that this would be incredibly boring. But apparently I am an incredibly boring person because I loved this program. These guys and gals were talking about zoning laws, and public transportation and all sorts of stuff you don't think twice about as you commute to work. Unfortunately, I did not bother to write down the program's name so I have no link or reference to pass on.

One of the interesting things I learned from the program was that there has never been a profitable public mass transit system. Since we are talking public (ie, spending your money with abandon) sector I should not have been surprised. But I was, never is a long time. Rachel DiCarlo jogged my memory with an article in the Weekly Standard about mass transit. But you can also look at the NJ Transit budget to see what a loser mass transit is.

In 2001 NJ Transit (pdf) took in $484,771,441 in fares. It paid out in wages and benefits $632,319,588. Thats a loss of $150 million dollars before you have to pay for gas, parts for the vehicles, and other expenses of running a transportation business. All operating expenses totaled $991,076,879, almost a billion USD. That is an operating loss of ~$500,000,000. That is a huge loss, and we are not talking about rocket science, this is all about driving a bus, for god's sake! Operating expenses does not include capital investment, ie investment in infrastructure, like new buses, new rail links, new bus shelters, etc. Capital investment totaled $760,367,212. Jackpot. But we can't say that's a loss of $1,000,000,000 because capital spending is an investment and will yield a return in the future. I can't believe I said that with a straight face.

Maybe 2001 was unusual. Lets look at 2000 (pdf). Received $450,981,975 in fares. Paid out in wages and benefits $611,683,125. All operating expenses totaled $953,754,517. Capital investment totaled $500,328,055.

In 1999 (pdf). Received $441,258,685 in fares. Paid out in wages and benefits $576,903,043. All operating expenses $847,992,305. Capital investment totaled $412,504,682.

In 1998 (pdf). Received $410,230,335 in fares. Paid out in wages and benefits $532,620,633. All operating expenses $802,524,693. Capital investment totaled $415,757,000.

In 1997 (pdf). Received $377,028,878 in fares. Paid out in wages and benefits $526,122,927. All operating expenses $794,733,394. Capital investment totaled $519,001,656.

I'm starting to see a pattern here. Where is the billion USD a year that are not collected in fares coming from? Taxes baby. Yours and mine. Is all this spending relieving traffic? Anecdotal evidence says no, and so do traffic studies. You can also take a look at The Reason Foundation's Public Policy Institute, they have some useful info about mass transit.

Frustrating

Lots of people are frustrated with the pace of the current confrontation with Iraq. Most of what I have heard is the feeling of having the possibility and probability of war hanging over everybody's head. That frustration has been boiling over at targets like France, Chirac, Germany, Schroder and Bush. I have found myself feeling increasingly frustrated with what the President is doing. I can only guess what the deployed soldiers and their families must be feeling.

On the other hand, one can see that the President's concerted effort to corral all parties into resolving this without war is the least he can do. If he decides to finish with diplomacy the military will fight and do their job, so the President is doing his.

Tid Bits

Ah, the wisdom of the masses. From a Fox poll.
[Have you p]articipated in any of the recent anti-war protests?
    Yes 3%, No 97%.
Do you think anti-war protests are:
    An effective way to stop war 16%,
    Just a way to make the participants feel better? 70%, Not sure 14%
Who do you think is doing more to achieve real peace in Iraq –- war protesters or soldiers?
    Protesters 8%, Soldiers 75%, Both 5%, Not sure 12%
Do you think there is any way for the United States to avoid war with Iraq now, or do you think war is inevitable?
    Can avoid war 31%, War is inevitable 62%, Not sure 7%
Via Pejman

That Hurt

A lot of people got their head handed to them after yesterday's stock market rally.

Wednesday, March 12, 2003

Hippies?

Mr Kling has a curious article in which he criticizes "supply-side" interpretations of the deficit. First of all I would like to state I am very sympathetic to "supply-side" views. But their emphasis on reduced government involvement in the economy is shared by many non-supply-sider economists, like Friedman (a moneterist), Austrians and Classical economists spring to mind.

However, the examples Mr Kling gives are hardly proof of intellectual quicksand.

Case 1, Mr Kling basically doubts people can see that deficits will lead to higher taxes. I know lots of peoplple who do implicitly use this line of reasoning. The attraction of Roth IRAs is based on the very issue of avoiding future tax rates. People's concern over inflation is also tied to the concern over the deficit. So while Mr Kling may not see folks walking around down Main street discussing what is the sustainable budget deficit, whether it should be measured against GDP, USD zero-maturity money supply or the global debt market , that does not mean they are not aware how deficits impact their long-term investments.

Case 2, is not an example of quicksand either. The example of Argentina may be an example of external markets giving up on funding a government's deficit. But Argentina is also an example of a country whose "social welfare" spending has grown at the expense of private enterprise. Also Japan is a famous example of a country where interest rates have fallen as deficits have spiralled. And Japan is a much larger economy than Argentina. If the point is that balooning social welfare programs drive deficits and therefore force greater taxation on enterprise will make external investors question investing in a country than I'm with him. But the issue is not just the deficit, but what kind of investment is being made by the money borrowed (deficit).

Case 3, is hardly an example of quicksand. Since when can the Committee for Economic Development predict the future? And while Mr Kling may disagree with Lee's framework relying on global debt market (personally I think this critique is warranted), he does not explain why it is wrong.

Bottom line is that there is a lot of hypotheticals flying around masquerading as fact. And drawing parallels is complicated because trends move linearly over short spans and along a curve over the long term. So looking at Argentica only gives you a glimmer of info as does Japan, and not all the information you need. Mr Kling in the comments section states
I think that the empirical relationship between deficits and interest rates is hard to untangle for several reasons.

1. Deficits and interest rates are both endogenous variables. There are shocks to the economy that move them together and other shocks that move them in opposite directions.

2. Government bonds are traded in an efficient market. In efficient markets, it is never easy to measure when expectations change. But if you don't know exactly when expectations about the deficit change, then you can't measure the effect of a change in expectations on interest rates.

3. We don't have very many experiments of the form 'long-term change in deficit spending.' Most changes are short-term.
The point that is not being discussed much by the advocates of tax-cuts is that the only way to reign in government spending is by cutting off the flow of money, ie. lower taxes. And the prospect of deficits is greatly preferrable to a growing government sector.

As for Medicaid and Social Security these are critical issues for the nation and the causes for our ballooning deficit. Al Greenspan raised this issue in his previous testimony. The fact that these are programs championed and mismanaged by the left, and are now buckling under their own weight and inefficiency, gives the right the "intellectual highground" (as Mr Kling points out) when addressing the problem. Of course, if the right does not meet this challenge and stem the growth of government being driven by Medicare and Social Security they will lose that advantage, and the threat of captial flight will become a painful reality in the US.

Serb

The Serb prime minister has died after an assasination attempt wounded him. Its WW1 all over again. Keep your eyes on the Germans and Turks.

Again?

BBC radio is reporting OBL has been captured. I have heard this so many times, its beginning to feel like catch-and-release fishing.

I say let him go, close your eyes and count to twenty.

Tuesday, March 11, 2003

Bits and Pieces

UPI hears section has interesting bits, as always...

1. Chirac wants Sadaam to do a press conference announcing the dismantling a major weapon. Problem is that Iraq has said they do not have any.
2. There is probably a lot of chem and bio stuff in Iraq, even by UN estimates.
3. The explosives being planted in Iraqi oil wells are being done by Iranian rebel group (MKO), under Sadaam's protection. MKO defectors claim that there are underground laboratories in their bases. The inspectors were kept out because MKO claimed this was not Iraqi territory. That's a good one.
4. Gerhard and Blair are going to propose an EU sponsored plan for humanitarian aid for Iraq as a way towards healing the rift with the US. Like Glenn Reynolds says, its about time somebody started appeasing us.
5. Latest Saudi fashion are t-shirts with Osama and WTC aflame.

South Park

I don't often watch South Park, its past my bedtime. But luckily Jay Nordlinger posted this funny bit. This is the song Sadaam sings to his love-interest Satan.
But I can change, I can change.
I can learn to keep my promises,
I swear it.
I’ll open up my heart
And I will share it.
Any minute now
I will be born again.
Yes, I can change, I can change.
I know I’ve been a dirty little bastard:
I like to kill, I like to maim.
Yes, I’m insane, but that’s okay,
’Cause I can change.

Monday, March 10, 2003

The Pros

Ran across this analysis by a crude oil trading firm, dated Friday.
Crude climbed $0.78 to $37.78.
Only thing in the news that matters today was Iraq. Here's a brief summary of the day's events. Hans Blix, "Blah blah blah Iraq blah blah blah better than they used to blah blah blah not good enough." Colin Powell, "Blah blah blah lies blah blah blah catalogue of deception blah blah blah evil blah blah blah." Jack Straw, "Blah blah blah, March 16 or 17, blah blah blah or else blah blah blah stupid French." Ivan Ivanov, "Blah blah blah headway blah blah blah disarming blah blah blah give peace a chance."
Elsewhere, still looks like OPEC production is flooding into this market, setting the stage for a much weaker market once this thing is resolved. Ven production also continues to slowly climb. They are now close to 2 million/day.