Economics – Page 154 – artdiamondblog.com

Obama Tire Tariff Hurts Poor

“A man walks past a tire store in Beijing on Sunday. A new U.S. tariff on Chinese tires could lead to shortages in the lower-cost-tire market segment as retailers scramble to find alternative sources in other countries.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A3) Consumers who buy low-price Chinese tires — the bulk of the tires China exports to the U.S. — will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.

The tariffs, which apply to all Chinese tires, will cut off much of the flow of the more than 46 million Chinese tires that came to the U.S. last year, nearly 17% of all tires sold in the country.
The low end of the market will feel the impact of the tariff most, as U.S. manufacturers, who joined the Chinese in opposing the tariffs, have said it isn’t profitable to produce inexpensive tires in domestic plants.
“I think within the next 60 days you’ll see some pretty significant price increases,” said Jim Mayfield, president of Del-Nat Tire Corp. of Memphis, Tenn., a large importer and distributor of Chinese tires. He estimates prices for “entry-level” tires could increase 20% to 30%.

For the full story, see:
TIMOTHY AEPPEL. “Tariff on Tires to Cost Consumers; Higher Prices Expected at Market’s Low End, Where China Focuses Its Exports.” The Wall Street Journal (Mon., SEPTEMBER 14, 2009): A3.
(Note: the online version of the article has the date Tues., Sept. 15.)

Incandescent Bulb Defended by Light Expert Who Relit Statue of Liberty

(p. A13) The Energy Independence and Security Act of 2007 will effectively phase out incandescent light bulbs by 2012-2014 in favor of compact fluorescent lamps, or CFLs. Other countries around the world have passed similar legislation to ban most incandescents.

Will some energy be saved? Probably. The problem is this benefit will be more than offset by rampant dissatisfaction with lighting. We are not talking about giving up a small luxury for the greater good. We are talking about compromising light. Light is fundamental. And light is obviously for people, not buildings. The primary objective in the design of any space is to make it comfortable and habitable. This is most critical in homes, where this law will impact our lives the most. And yet while energy conservation, a worthy cause, has strong advocacy in public policy, good lighting has very little.
. . .
As a lighting designer with more than 50 years of experience, having designed more than 2,500 projects including the relighting of the Statue of Liberty, I encourage people who care about their lighting to contact their elected officials and urge them to re-evaluate our nation’s energy legislation so that it serves people, not an energy-saving agenda.

For the full commentary, see:
HOWARD M. BRANDSTON. “Save the Light Bulb!; Compact fluorescents don’t produce good quality light.” The Wall Street Journal (Mon., AUGUST 31, 2009): A13.
(Note: ellipsis added.)
(Note: the online version of the article is dated Sun., Aug. 30.)

World Trade Barriers Are Increasing

The small dark blue squares indicate the “number of nations that have imposed protectionist measures on each country” and the light blue squares indicate the “number of measures imposed on each category of goods.” Source of quotations in caption and of graph: online version of the WSJ article quoted and cited below.

(p. A5) BRUSSELS — This weekend’s U.S.-China trade skirmish is just the tip of a coming protectionist iceberg, according to a report released Monday by Global Trade Alert, a team of trade analysts backed by independent think tanks, the World Bank and the U.K. government.
A report by the World Trade Organization, backed by its 153 members and also released Monday, found “slippage” in promises to abstain from protectionism, but drew less dramatic conclusions.
Governments have planned 130 protectionist measures that have yet to be implemented, according to the GTA’s research. These include state aid funds, higher tariffs, immigration restrictions and export subsidies.
. . .
According to the GTA report, the number of discriminatory trade laws outnumbers liberalizing trade laws by six to one. Governments are applying protectionist measures at the rate of 60 per quarter. More than 90% of goods traded in the world have been affected by some sort of protectionist measure.

For the full story, see:
JOHN W. MILLER. “Protectionist Measures Expected to Rise, Report Warns.” The Wall Street Journal (Tues., SEPTEMBER 15, 2009): A5.
(Note: ellipsis added.)

Global Warming Is Least Worry of Vanuatu Island’s Poor

(p. A19) In a warning often repeated by environmental campaigners, the Vanuatuan president told the United Nations that entire island nations could be submerged. “If such a tragedy does happen,” he said, “then the United Nations and its members would have failed in their first and most basic duty to a member nation and its innocent people.”

Torethy Frank, a 39-year-old woman carving out a subsistence lifestyle on Vanuatu’s Nguna Island, is one of those “innocent people.” Yet, she has never heard of the problem that her government rates as a top priority. “What is global warming?” she asks a researcher for the Copenhagen Consensus Center.
. . .
Torethy and her family of six live in a small house made of concrete and brick with no running water. As a toilet, they use a hole dug in the ground. They have no shower and there is no fixed electricity supply. Torethy’s family was given a battery-powered DVD player but cannot afford to use it.
. . .
What would change her life? Having a boat in the village to use for fishing, transporting goods to sell, and to get to hospital in emergencies. She doesn’t want more aid money because, “there is too much corruption in the government and it goes in people’s pockets,” but she would like microfinance schemes instead. “Give the money directly to the people for businesses so we can support ourselves without having to rely on the government.”
Vanuatu’s politicians speak with a loud voice on the world stage. But the inhabitants of Vanuatu, like Torethy Frank, tell a very different story.

For the full commentary, see:

BJøRN LOMBORG. “The View from Vanuatu on Climate Change; Torethy Frank had never heard of global warming. She is worried about power and running water.” The Wall Street Journal (Fri., OCTOBER 23, 2009): A19.
(Note: ellipses added.)
(Note: the online version is dated Thurs., Oct. 22.)

John Mackey: “I Believe in the Dynamic Creativity of Capitalism”

Whole Foods CEO John Mackey. Source of the caricature: online version of the WSJ interview quoted and cited below.

(p. A11) “I honestly don’t know why the article became such a lightning rod,” says John Mackey, CEO and founder of Whole Foods Market Inc., as he tries to explain the firestorm caused by his August op-ed on these pages opposing government-run health care.
. . .
. . . his now famous op-ed incited a boycott of Whole Foods by some of his left-wing customers. His piece advised that “the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us closer to a complete government takeover of our health-care system.” Free-market groups retaliated with a “buy-cott,” encouraging people to purchase more groceries at Whole Foods.
. . .
What Mr. Mackey is proposing is more or less what he has already implemented at his company–a plan that would allow more health savings accounts (HSAs), more low-premium, high-deductible plans, more incentives for wellness, and medical malpractice reform. None of these initiatives are in any of the Democratic bills winding their way through Congress. In fact, the Democrats want to kill HSAs and high-deductible plans and mandate coverage options that would inflate health insurance costs.
. . .
Mr. Mackey’s latest crusade involves traveling to college campuses across the country, trying to persuade young people that business, profits and capitalism aren’t forces of evil. He calls his concept “conscious capitalism.”
What is that? “It means that business has the potential to have a deeper purpose. I mean, Whole Foods has a deeper purpose,” he says, now sounding very much like a philosopher. “Most of the companies I most admire in the world I think have a deeper purpose.” He continues, “I’ve met a lot of successful entrepreneurs. They all started their businesses not to maximize shareholder value or money but because they were pursuing a dream.”
Mr. Mackey tells me he is trying to save capitalism: “I think that business has a noble purpose. It’s not that there’s anything wrong with making money. It’s one of the important things that business contributes to society. But it’s not the sole reason that businesses exist.”
What does he mean by a “noble purpose”? “It means that just like every other profession, business serves society. They produce goods and services that make people’s lives better. Doctors heal the sick. Teachers educate people. Architects design buildings. Lawyers promote justice. Whole Foods puts food on people’s tables and we improve people’s health.”
Then he adds: “And we provide jobs. And we provide capital through profits that spur improvements in the world.
. . .
“I don’t think anybody’s too big to fail,” he says. “If a business fails, what happens is, there are still assets, and those assets get reorganized. Either new management comes in or it’s sold off to another business or it’s bid on and the good assets are retained and the bad assets are eliminated. I believe in the dynamic creativity of capitalism, and it’s self-correcting, if you just allow it to self-correct.”
That’s something Washington won’t let happen these days, which helps explain why Mr. Mackey felt compelled to write that the Whole Foods health-insurance program is smarter and cheaper than the latest government proposals.

For the full interview, see:
STEPHEN MOORE. “The Conscience of a Capitalist; The Whole Foods founder talks about his Journal health-care op-ed that spawned a boycott, how he deals with unions, and why he thinks CEOs are overpaid.” The Wall Street Journal (Sat., OCTOBER 3, 2009): A11.
(Note: ellipses added.)

How “Free” Government Health Care Works

“Michael Kellerman and daughter Jovi, 1, wait in line near 69th and Underwood for a flu shot Thursday morning.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

Thousands turned out this morning for Douglas County’s first public clinic for H1N1 flu vaccinations.

The line ran out of the First United Methodist Church to the east, then down 69th Street before hooking west along Cass Street toward 72nd Street.
Police estimated that 4,000 people had gathered by 9:20 a.m.
Phil Rooney of the Douglas County Health Department said the turnout was no surprise.
“There hasn’t been a clinic this size done in the county or in the surrounding counties recently, so we were prepared for a very large crowd, and that’s what we’ve got,” he said.
He said 252 people were vaccinated in the clinic’s first hour. “The pace the first hour was slower than we wanted, so we’re trying to pick that up,” he added.

For the full story, see:
John Keenan and Rick Ruggles. “Long line for flu shots.” Omaha World-Herald online edition (Thurs., Nov. 5, 2009).
(Note: as far as I can tell, having checked several online e-editions for Nov. 5 and Nov. 6, this version of the article was never published in any of the print editions of the paper.)
(Note: at some point the title of the online version of this article was changed to “Flu shot seekers turned away.”)

European Central Bank (ECB) Warns that Cash-for-Clunkers “May Delay Necessary Structural Change”

(p. A9) Cash-for-clunkers programs have no lasting economic benefit and could even lead to a “substantial weakening” in euro-zone automobile sales next year, the European Central Bank said.

The findings, though far from original, amount to an official slap on the wrist to European governments including those of Germany, France and Spain that rolled out the popular programs to stoke demand in their auto sectors at the height of the financial crisis.
. . .
Such incentive measures should be applied “with caution,” the ECB said, “as they may hamper the efficiency of the functioning of a free-market economy and may delay necessary structural change, thereby undermining overall income and employment prospects in the longer term.”

For the full story, see:
BRIAN BLACKSTONE. “Clunker Plans Are Risky Route, Central Bank Says.” The Wall Street Journal (Fri., OCTOBER 16, 2009): A9.
(Note: ellipsis added.)

Google Does Good

Source of cartoon: online version of the NYT commentary quoted and cited below.

(p. A25) . . . the vast majority of books ever written are not accessible to anyone except the most tenacious researchers at premier academic libraries. Books written after 1923 quickly disappear into a literary black hole. With rare exceptions, one can buy them only for the small number of years they are in print. After that, they are found only in a vanishing number of libraries and used book stores. As the years pass, contracts get lost and forgotten, authors and publishers disappear, the rights holders become impossible to track down.

Inevitably, the few remaining copies of the books are left to deteriorate slowly or are lost to fires, floods and other disasters. While I was at Stanford in 1998, floods damaged or destroyed tens of thousands of books. Unfortunately, such events are not uncommon — a similar flood happened at Stanford just 20 years prior. You could read about it in The Stanford-Lockheed Meyer Library Flood Report, published in 1980, but this book itself is no longer available.
Because books are such an important part of the world’s collective knowledge and cultural heritage, Larry Page, the co-founder of Google, first proposed that we digitize all books a decade ago, when we were a fledgling startup. At the time, it was viewed as so ambitious and challenging a project that we were unable to attract anyone to work on it. But five years later, in 2004, Google Books (then called Google Print) was born, allowing users to search hundreds of thousands of books. Today, they number over 10 million and counting.
. . .
In the Insurance Year Book 1880-1881, which I found on Google Books, Cornelius Walford chronicles the destruction of dozens of libraries and millions of books, in the hope that such a record will “impress the necessity of something being done” to preserve them. The famous library at Alexandria burned three times, in 48 B.C., A.D. 273 and A.D. 640, as did the Library of Congress, where a fire in 1851 destroyed two-thirds of the collection.
I hope such destruction never happens again, but history would suggest otherwise. More important, even if our cultural heritage stays intact in the world’s foremost libraries, it is effectively lost if no one can access it easily. Many companies, libraries and organizations will play a role in saving and making available the works of the 20th century. Together, authors, publishers and Google are taking just one step toward this goal, but it’s an important step. Let’s not miss this opportunity.

For the full commentary, see:
SERGEY BRIN. “A Library to Last Forever.” The New York Times (Fri., October 9, 2009): A25.
(Note: ellipses added.)
(Note: the online version is dated October 8th.)

Samuel Johnson Saw Benefits of Free Markets

(p. A19) In “A Journey to the Western Islands of Scotland,” an account of his travels with James Boswell through the Hebrides in 1773, Johnson vividly described the desolation of a feudal land, untouched by commercial exuberance. He was struck by the utter hopelessness in a country where money was largely unknown, and the lack of basic material improvements–the windows, he noticed, did not operate on hinges, but had to be held up by hand, making the houses unbearably stuffy.

He was even more struck by the contrast between places where markets thrived and those where they didn’t. In Old Aberdeen, where “commerce was yet unstudied,” Johnson found nothing but decay, whereas New Aberdeen, which “has all the bustle of prosperous trade,” was beautiful, opulent, and promised to be “very lasting.”
Johnson also understood that what Smith would later call the division of labor was instrumental for human happiness and progress. “The Adventurer 67,” which he wrote in 1753 at the height of a commercial boom (and 23 years before Smith published “The Wealth of Nations”), delights in the sheer number of occupations available in a commercial capital like London.

For the full commentary, see:
ELIZA GRAY. “Samuel Johnson and the Virtue of Capitalism; The great 18th century writer on commerce and human happiness.” The Wall Street Journal (Fri., Sept. 11, 2009): A19.

Federal “Stimulus” Money Delays Omaha Road Work

“Work has been put on hold for this stretch of 132nd Street between Blondo Street and West Maple Road. Omaha officials say the stimulus funds will be worth the wait, but some nearby residents are upset about the slowdown.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

We live near the still-two-lane stretch of 132nd pictured above, and were happy to read in the Omaha World-Herald early last spring that the city would be finishing the widening of 132nd, by widening the above stretch during the summer of 2009. As the summer progressed and widening did not, we became more and more puzzled.
Well, after you read the passages quoted below, you will ‘know the rest of the story’ as Paul Harvey used to say:

(p. 1A) The federal stimulus program, which was designed to accelerate roads projects around the country, instead put the brakes on widening a major Omaha thoroughfare.

The chance to grab $3.5 million in stimulus funds was worth delaying a widening project along 132nd Street between West Maple Road and Blondo Street, Omaha officials decided.
Work was supposed to begin last summer. Now the project between the Champions and Eagle Run golf courses won’t begin until next spring.
Preliminary work was begun in March, when utility lines were moved out of the way. Part of the street was closed for that work.
Area residents expected more crews to start work during the summer.
When nothing happened for months, a handful of residents in the nearby Sunridge neighborhood called the city. They com-(p. A2)plained that digging from the utility work was causing mud and rainwater to pool near the subdivision’s entrances off 132nd Street.
Resident Mary Ellen Pollard was surprised to find out that the widening work had been put on hold because of the stimulus program.
“I thought that stimulus package was for projects that were ready to go,” she said Monday. “If it was ready to go, why didn’t they proceed with it? . . . The barricades are up. Let’s go get it done.”
Plans change, public works officials said.
Meeting federal stimulus guidelines for environmental studies on the 132nd Street project, plus other planning and documentation requirements, took several months, City Engineer Charlie Krajicek said.
“We expected to have some work going this year, but it just didn’t work out,” he said.

For the full story, see:
Tom Shaw. “Stimulus slows 132nd St. work.” Omaha World-Herald (Tuesday October 6, 2009): 1A-2A.
(Note: the online version of the article is dated Weds., October 7 and has the slightly expanded title: “Stimulus Watch: Program slows 132nd St. work.”)
(Note: ellipsis in original.)

Source of map: online version of the Omaha World-Herald article quoted and cited above.