Efficiency! (OR Better Cars are Good)

May 19, 2009

OK, I admit it… I’ve been blowing off the blog for a long time. I have no excuse. My explanation is that the news seems to be progressively more depressing every day, and I really can’t bring myself to focus on it for too long.

That being said, there was some good news yesterday:

The Transportation Department’s National Highway Traffic Safety Administration would set the new fuel-economy standards, which would raise the average fuel efficiency of a new car by 30 percent. Cars, for instance, would need to average 39 miles per gallon by 2016, while light trucks would need to reach 30 mpg.

The EPA, using its power to regulate carbon dioxide emissions under a 2007 Supreme Court ruling, plans a tailpipe emissions standard of 250 grams per mile for vehicles sold in 2016, roughly the equivalent of what would be emitted by vehicles meeting the mileage standard. Vehicles sold in 2009 are expected to emit about 380 grams per mile, industry sources said.

[…]

“In addition to dramatically reducing the global warming emissions from our vehicles, this move will slash our dependence on oil and make us more energy independent,” Sierra Club executive director Carl Pope said in a statement. “Congress put us on the road toward more fuel efficient vehicles two years ago when it passed the first increase in fuel economy standards in more than 30 years. Now President Obama is dramatically accelerating our progress.”

My illustrious co-blogger continues to try to convince me that it’s more important that we improve efficiency at the bottom end of the scale, which is, technically, true. Unfortunately, I can’t shake the feeling that improvements at the high end of the spectrum can highlight inefficient vehicles…

For example… let’s say the average truck is getting 15 mpg and the average car is getting 30. Dave will tell you, and I would agree, that we make a bigger dent in emissions by raising the truck to 30 mpg than the car to 45 (increasing efficiency by 100% compared to 50%).

One of the difficulties, however, is that we humans (especially the non-math oriented ones) don’t necessarily think like that… 10 mpg is 10 mpg. And, worse than that, 10 doesn’t seem like all that much.

I feel like there needs to be something at the high end of the efficiency scale demonstrating what’s possible. People are still surprised when I mention that my little VW sedan gets 45 mpg. You can almost see the “wow, that’s a lot” thought run through their brain. To me, that just indicates how skewed our perceptions are. When we can advertise cars that get 30+ mpg as “best in class” mileage, we’re missing something.

The people buying and driving those 15 mpg SUVs are looking at the mileage they could get in a car (say 25-28 mpg) and figuring that 10-12 mpg isn’t really that big a deal. And they’d be right, since that 10 mpg, would take them half way to the most effiencient car available. But what if the really efficient cars were getting 50+ mpg or more? Then those same 10 mpg would still mean they’d need to double their effiency to reach the top of the scale. Suddenly, 10 mpg doesn’t seem like too much.

So, yes, we need more efficient vehicles all the way around (which the Obama Adminstration proposal will do) but we also need to get consumers to be more aware of what’s possible, and what they might be missing.

And, yes, I acknowledge that this also means getting consumers to value efficiency over size and power, but we saw that begin to happen when gas was $4 a gallon. It’ll happen again when prices rise to that level once more.

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Note: I’m writing this post with an external editor… so, apologies for bad formatting/broken links, etc… :)

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Common Good (OR What private industry won’t do)

March 7, 2009

Related to my last post, and reinforced by this article from Ezra, is the simple fact that there are things which private industry will not do. Why? Because there’s no money in it. Companies exist to make money, they are motivated by what allows them to make the most money.

As Ezra details in his article, the Health Insurance market incentivises less and worse coverage:

[I]t’s natural that insurers — which are, after all, for-profit companies, not government agencies or public trusts — turn their attention to making deals with the most profitable among us and avoiding deals (or finding ways to break contracts) with the least profitable.

Matt also touches on this idea in a different industry:

My understanding is that the internet is radically faster in some Asian countries, notably South Korea and Japan, than it is here in part because the state has intervened in a more heavy-handed way to ensure that this is the case. Clearly, though, South Korea and Japan are not crushing the United States economically. One potential explanation for this is that all this talk about the Internet is way off-base, and digital communication isn’t actually all that important to the modern economy. I don’t find that especially plausible. Another explanation is the Cowen/Quiggen explanation—the consumer surplus associated with digital communication is only very partially captured as profits. That will predict that absent heavy-handed government intervention, capital markets will underfund broadband infrastructure and you’ll have less of it than would be socially optimal. This is, I think, a fairly reasonable interpretation of the broadband gap.

He comes at it from the perspective of productivity, but the idea is the same: private enterprise will only go so far. Matt has been reiterating that markets are not inherently better, they are only more efficient a lot lately, and I think that now is a really good time remember that.

President Obama touched on it during his campaign and in some of his speeches recently, particularly about the stimulus bill. For almost 30 years, we have been asking the service sector of our government to do more with less. Military spending is still through the roof, but infrastructure projects go unfunded and education requirements are created but not funded (see “No Child Left Behind”). Our electrical grid is antiquated and (as Rachel Maddow loves to point out) vulnerable to the most predicatable occurances like snow in winter. Or broadband infrastructure practically prehistoric in technological timeframes. And all the while our population grows, placing more dependence and stress on all facets of our infrastructure.

It’s obvious to me that the private sector would have been jumping all over these opportunities if there were profit to be had. Yet they haven’t, which seems to indicate that there’s no money there. Why should an ISP invest in upgrading their consumer grid when those same consumers will just expect better performance for the same price? Why should a power company improve the reliability and durability of their lines when customer will object to the higher costs?

This is where government’s role is, but the very idea of the value of government has been so besieged that we have silly debates about whether it’s wise to raise taxes on the riches 2% of the population. We’ve all heard and used the phrase “you get what you pay for”, but, somehow, it’s never applied to government. We’ve all complained about the efficacy of some governmental office (see DMV), but don’t really consider that they do the best they can, given the resources. We’ve probably all moaned a little about the exorbitant price of stamps (ohmigod! $.42), without really considering that for that price you we can send a letter anywhere in the coutry (or further) and have it arrive within a week.

And, since government is, in many ways, a service industry, the quality of those services can depend greatly on the quality of the employee providing it. When government offers 10-20% less salary for an equivalent private sector job, is it any wonder that the exemplary employees find themselves better paying jobs? But, that’s all the government can afford, because we’re so deathly afraid of the taxman.

This is not to say that there aren’t inefficiences in the way that government operates. There are, and we would be right to demand that those inefficiencies be sought out and corrected, which can be more difficult that in private industry because the bottom line is much fuzzier. But such a task costs money too, and we’ve starved our governments of that money for so long it’s almost amazing they manage to do as well as they do.

Here’s hoping that President Obama has a very successful administration, and that people stop being afraid of the big-bad-government monster for a while.


“Insurance” OR (Time to fix it)

March 7, 2009

I’m sure you all have heard the noise about the Obama Administration’s prioritization of Health Care reform, and the promise to accomplish such this year.

Personally, I hope it happens…  but more than that, I hope it happens in such a way as to completely undermine the Health Insurance industry.

Looking at the big picture, nothing seems more ridiculous than having a for-profit layer of bureaocracy between this country’s people and health care providers. It almost ensures that we’ll lose money in the deal.

The Obama Administration has also indicated that health care reform needs to work not only for the almost 50 million people uninsured, but to work better for everyone else who is insured. Which is great, considering that, for most people, what they have doesn’t work now, even if they don’t know it.

I’ve talked about this before, but it seems like it’s worth reiterating: we’re all potentially “underinsured.” If we have the misfortune of being struck by any significant illness, our “insurance” won’t cover our costs. It’s almost a given.

To illustrate how absolutely fucked up our current system is, Ezra points to an article from Time:

What makes these cases terrifying, in addition to heartbreaking, is that they reveal the hard truth about this country’s health-care system: just about anyone could be one bad diagnosis away from financial ruin. Most people get their coverage where they work. But Anna McCourt, a supervisor at the ACS call center, says employees often have difficulty understanding the jargon in insurance policies. Even human-resources personnel may not fully understand all the intricacies of a policy when briefing a new employee. Coverage that seems generous when you are healthy — eight annual doctor visits or three radiation courses — quickly proves insufficient if you find yourself really sick.

Part of the problem, I think, is that we really have hard time conceiving of the worst case scenario happening to ourselves…  and have no way to conceive of the costs of medical care.

No one wants to think of what might happen were they diagnosed with cancer, and even if so, no one wants to complicate that picture with what it might cost to treat it. $1.5 million lifetime maximum? That’s more than some people might make in a lifetime. How can people conceive of medical treatments that will reach that threshold?

Health “Insurance” is not designed to allow us to care for or health, it’s designed to make money while providing a false sense of security. The idea that this industry is somehow vital to our well being as a country, because of the wonders of the free market, is offensive to the extreme. This industry exists to fill a void left vacant for too long, and make a profit while. They are not interested in the actual well being of their customers, and to believe otherwise seems exceptionally myopic.

The Declaration of Independence says that we are endowed with unalienable rights to ‘life, liberty and the pursuit of happiness.” An argument could be made that the first and third of these depend upon the physical and mental well being of an individual. The Declaration goes on to say “That to secure these rights, governments are instituted among men”.

To secure the right of life and pursuit of happiness, which could be said to depend on our well being, we institute governments. Right there, in our founding principles is the case for universal, government funded health care. It doesn’t say that to secure our rights we create markets (free or otherwise),  but that’s always the oppositions answer: Let the market take care of it.

Newsflash! The market brought us to where we are, with money flowing away from the people to corporations who used some of that money to peddle influence to ensure that more money flows away from people to corporations. Health care is not the only sector to which this applies, of course, but it is, right now, the most significant.

So, I do hope that whatever shape reform takes there is something that undermines the primacy of private insurers in our health care sector. When government leaves them a different niche to fill, they are welcome to do so. For now, they need to cease being an obstacle to universal coverage (not insurance) that will ensure that the US has a healthy population with which to compete in the global marketplace.


Unaccountable (OR What a fine mess)

March 6, 2009

I don’t have time for a long post, and I keep delaying some posts that I mean to write so much that they don’t seem relevant by the time I get around to them…  but, here’s a quickie.

Talking Points Memo details the sort of mess we can get into (and did) when we rely on an unaccountable agency to rescue the financial sector from itself:

To avoid booking a loss on the Fed’s balance sheet, because the Fed had some legal problems if either of these Maiden Lanes lost money, and because of a reporting requirement that Dodd had put into TARP which actually required the Fed to report to the Congress and the public about the cost to taxpayers from ML I, the Fed did some creative accounting.

As they say, read the whole thing. It’s bad enough when companies go bankrupt after their “creative accounting” comes to light, it seems particularly treacherous if the US Federal Reserve does the same. Which reminds of a point Robert Reich made a while back:

The Fed is not directly accountable to American voters, or even to Congress or the President.


Recovery (OR Where do we spend money next?)

February 21, 2009

One concern that’s beginning to filter through the blogosphere seems be an uncertainty about what will bring our economy out of its current slump. Where will investment go? What will drive consumer consumption? What will spur growth?

Matt Yglesias thinks:

American households won’t have that much capacity to consume additional stuff. Americans will need to start making more products and services that people in East Asia and Germany and the oil-exporting countries want to buy. My understanding is that the main export goods we specialize in are airplanes, defense systems, and pop culture.

Which sounds a little tongue-in-cheeky…  Paul Krugman has similar concerns:

To be sure, the Obama administration is taking action to help the economy, but it’s trying to mitigate the slump, not end it. The stimulus bill, on the administration’s own estimates, will limit the rise in unemployment but fall far short of restoring full employment. The housing plan announced this week looks good in the sense that it will help many homeowners, but it won’t spur a new housing boom.

What, then, will actually end the slump?

Krugman also points out that Japan crawled out of their lost decade by increasing exports, but the whole world can’t increase exports.

It seems to me that the answer will be found in things we are not yet doing, namely clean energy. If we impose some type of carbon pricing mechanism, and lead the world in doing the same, we will simultaneously create a profitable sector of our economy where American ingenuity and entrprenuership can flourish and create a significant revenue stream for our (and other) governments which can be used, in our case, to continue the internal investment (in infrastructure, schools, education, trasportation, etc). Both sides of this should create jobs and, partnered with something like the Employee Free Choice Act, help grow incomes to a point where we can become good little consumers again (only with a little more restraint, this time).

Of course, getting something like this through the increasingly obstructionist Republican party doesn’t seem all that likely, but one can hope.


Outside the Box (OR Why Cars?)

February 19, 2009

You may have heard that Chrysler and GM went back to Washington this week to beg for more money from the government.

Matt Yglesias, Ezra Klein, and Robert Reich all made some remarkably similar points about what the real objective is, and should be.

Yglesias:

[I]f every country around the world insists on sinking more and more money not into its nation’s car companies instead of into its people who work for car companies then we’ll have a situation where the whole industry just keeps shrinking and sinking slowly.

Klein:

Deciding that this is not the time to lose the jobs provided by GM cannot be the same as deciding that we can never lose GM.

Reich:

Why pay the Big Three billions of taxpayer dollars to stay afloat when, even after being bailed out, they cut tens of thousands of American jobs, slash wages, and shrink their American operations into small fractions of what they used to be?

That’s backwards. The auto bailout should help American autoworkers keep their jobs or get new ones that pay almost as well.

The common thread, of course, that spending taxpayer money on companies that will cut some of those same taxpayers’ jobs is pretty ridiculous. So, here’s what I’m wondering:

Would it be possible for the government to invest the same money to retool the auto production lines to produce something other than cars? It was done in WWII, of course, I’m just really sure about the cost.

And, what might we have them produce? I’m thinking that we’ll need some high speed trains to run on all those high speed rail lines we just agreed to build.

I’m sure it’d be taken as undue government interference in the private market, but if the objective is to keep people working and producing useful things, it seems like it’d be more effective if those troubled auto makers stopped making cars that no one wants or can afford to buy.


*Snip* OR (This isn’t what I voted for)

February 8, 2009

As I’m sure you’ve heard, a group of “moderate” Senators took it upon themselves to trim almost $100 billion out of a stimulus bill that was already potentially too small.

Matt gives a good rundown of the potential rational for cutting from the stimulus:

  • One is that you might want to maintain that the macroeconomic situation isn’t actually so dire that we need such a quantity of stimulus. Obviously, if that’s the case then you want to reduce the overall amount of stimulus.
  • A second is that a proposal might be actually harmful. Offering to pay a $1,500 no-questions-asked bounty to anyone who brings another person’s severed finger into their local post office could stimulate the economy, but the cure would be worse than the disease.
  • A third is that you might think a given proposal isn’t as good an idea as some other proposal, so you’re offering a swap. To my mind, spending money on new highway construction is a worse idea than spending money on fixing up existing highways. And spending money on transit is better than spending money on highways. And spending money on operating costs is a better idea than spending money on new transit construction. So within that set of hierarchies, if I were a Senator I would be seeking to shift funds from worse ideas to better ones within the realm of the politically possible.

And Paul Krugman gives a quick analysis of the repercussions:

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

And, I heard on the radio (and confirmed here) that Colorado’s two new Senators, Udall and Bennet, were amoung the group of “moderates” who helped gut the bill.

I really can’t express how frustrated I’m getting with this whole process. I’m regularly reminded why I never used to pay much attention to politics, and why, I imagine, a majority of American’s don’t pay attention to politics. We, are Atrios often says, ruled by some stupid, stupid people…

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