Thursday, December 4, 2008

Money & Business

Capital Commerce

Obama's Big-Government Energy Policy

June 25, 2008 02:53 PM ET | James Pethokoukis | Permanent Link | Print

Reader Comments

Barack Obama better rethink his argument for government led innovation. After we put a man on the moon, we haven't been back for almost 40 years. On top of that, hardly any of the innovations that result from the space missions ever make there way into normal, everyday life.

The fact that Obama is saying "no" to everything and not making his own proposals will be his downfall, whether it is during the election or during his term in office. He should probably stop trying to run out that clock and start playing some offense. After all, losers can get lucky in the final minutes of the game (just ask Boston in Game 3 against the Lakers).

let's have an energy race

We need real support and some kind of oversight of the energy sector. First off, an energy x-prize alone won't be any help if we do develop viable alternative energy technology and the industry refuses to adopt it. The oil and car lobbies are very strong and there's a lot of questionable tactics they can use to block the adoption of technologies which threaten their current model. Example: California used to have a public transit trolley system, GM bought it, scrapped it, and now Cali public transit sucks and the traffic is horrible.

Secondly, related, the x-prize isn't necessarily a good comparison. there aren't giant entrenched industries in the space field that actively prevent new technology adoption or new companies. (previously that had been nasa, who said hey space is our thing, and opposed private space companies etc. but now nasa is on board with privatization of space)

lastly (most importantly) it is so obvious and I think other people who've been students at engineering universities recently would agree, technology is not the issue. We should have a clean car now, or could have it in less than a year, if we dedicated the resources short-term (it wouldn't take that long) and had an "energy race" like the space race and addressed the economic issues. Did anyone see who killed the electric car? The EV was from like 10 years ago, a fully electric car that people who drove it loved, but GM pulled it for no reason other than not wanting to give up the status quo. Yes the EV wasn't perfect, it was a 2-seater and the battery was very large- but that was 10+(?) years ago and there's a company in boston A123 that makes new efficient, very safe batteries that would be much smaller. And the company that made the batteries for the EV, they were also on their way to developing smaller, more efficient batteries.....until they were bought by GM and shut down. Seriously it won't help if we have an energy-x-prize and then the startups get bought by GM and shut down....

Barrack needs to get out in the Real World

All of his policies conveniently assume that the US does not have to compete with the rest of the world...he is alienating all of our strategic oil suppliers, his greenhouse credit scheme, his 150% increase in the Social Security tax and his creation of a massive new entitlement program will serve to quickly make us non-competitive in world markets.

As someone posted on another board, his energy policy and greenhouse credits policy will serve to enable us to swap our cars and air conditioners with China and India for thier bicyles, horses and carts.

High prices are useful

The problem with tax and spend solutions to the energy problem is that they actually reduce the incentives to change. People change their behavior because of the marginal costs and benefits, not the total costs. If the cost of using another gallon of gasoline is high, people will seek alternatives. But if alternatives are subsidized through taxation, rather than through high gas prices, that doesn't provide nearly the same incentive to switch from gasoline, even though the total costs and benefits are nearly the same.

The goal of these maneuvers is to collect tax money to subsidize energy solutions so that people will have the illusion that the unit cost of energy is low.

Barack Obama clearly understands this. But he knows that the people of the US, being generally uneducated about economics, do not. His interest is in power, not in doing what is right. As Bush has so aptly shown, doing what is right can be very unpopular. Bush shows why term limits are so important, they allowed him the unfettered freedom to do what is right because he no longer is competing for votes.

But it is no coincidence that the downturn in economic growth arose with the Democrats' rise to power in the 2006 elections. The Democrat leaders believe that a weak economy empowers them, because the people will demand big-government solutions, and do not connect the actual (and intended) effects with their polices, but instead believe the lofty rhetoric.

Economic Mythology

' California used to have a public transit trolley system, GM bought it, scrapped it, and now Cali public transit sucks and the traffic is horrible.'

That is completely false. An urban legend.

Trolleys were 19th century technology--rails were put down because it made it easier for the horse to pull the car--replaced by 20th century technology; the diesel powered bus. GM's only role was selling buses.

OBAMA’S ARTISTRY OF THE AMBIGUOUS

- It is not his lack of experience that will work against him.

Obama would be well served by his hired help if it could move him to specifics on numerous critical fronts.

Voters are looking for definitive action while they battle overwhelming increases in costs on all fronts.

http://pacificgatepost.blogspot.com/2008/06/obamas-artistry-of-ambiguous.html

Re: gm and public transit

All right, I did a little more looking things up and I agree that there were technology reasons that would favor automobiles over trolleys on rails...but still it is true that GM was convicted of violating the Sherman Antitrust Act and was buying the railcars to sell their buses after which public transit usefulness was degraded. They are still an example of how large companies are powerful and can use their power in possibly illegal ways to look after their interests.

Also I don't know why we can't have better public transit. I've visited Seoul and Tokyo and they have metros that span very large areas, in Seoul the end to end ride on a line was more than an hour and a half, that's at least comparable to the LA area Santa Monica to South Bay. You wouldn't need a car to live in the nearby semi-suburbs and commute to the city. I don't know if the current CA public transit is subsidized by the state, or run at a loss, but why can't they work on making it actually useful and even profitable to run. If you want to use it now, you have to drive anyway to get to the station. http://blog.wired.com/cars/2008/03/hong-kong-subwa.html

Discovering Longitude

A bounty was used by the British government to solve the Longitude problem (i.e., a way to enable ships to know how far east or west they were). The solution was, in essence, a watertight, motion proof clock set at London time. By comparing the position of the sun to the London time, ships could establish their longitude (See the Dava Sobel book, Longitude, for a fascinating description).

The key here is that the use of a mechanical time piece was highly disfavored by the well connected elites at the Royal Academy, who believed that the problem was an astrnomical one rather than a mechanical one to be solved by a mere tradesman. Had the British government used some sort of program of government funding the research rather than paying for the result to anyone who found it, it likely would have funded these highly connected elites and not the alternative that ultimately prevailed.

Re: gm and public transit

Someone has to want to ride te public transit for it to be viable.

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About the Capital Commerce Blog

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James Pethokoukis is the money and politics blogger for U.S. News & World Report , where he writes the monthly Capital Commerce magazine column. Pethokoukis is also the assistant managing editor of the magazine's Money & Business section. He has written for many publications including the New York Times, the American, USA Today, Investor's Business Daily, and TCS Daily. Pethokoukis is also an official CNBC contributor and appears frequently on that network's Kudlow & Company, Power Lunch, and The Call shows. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, CNN, and Nightly Business Report on PBS. A 1989 graduate of Northwestern University where he double majored in Soviet politics and American history and a 1991 graduate of the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! champion.

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