Freecycle cronicles

11. WANTED: Bumbo baby sitter
12. OFFER: Ferret cage

close enough in my book.

for those of you who are unaware: Freecycle.  a place where you can get a bag of 2T (toddler) clothes for $0, and sort through what you might want to use and what ought to be thrown away (or Freecycled to another…)

good stuff.  unfortunately treadmills and ellipticals rarely come available…

blowhard, Nobel laureate; whatever

Yeah, virtually the day after I called him names on my blog, Paul Krugman wins the Nobel.  Makes me look a little silly, doesn’t it?  In my defense, he’s being recognized for seriously influential economics work that he did, like, 20 years ago — not for the humorless op-ed stuff he does now in the NYT.

Of course, I was completely unaware that he was a serious, influential economist until this award, and for that I am clearly exposed as an ignoramous.  Or at least for going off half-cocked, picking a fight against someone clearly out of my league.  Oh well.

Friedman, Gladwell — if you want me to pick on you next fall, maybe you too can be America’s Next Hot Economist.

Thomas Friedman wants you to pay more for energy

I can’t say it any more clearly than that.  Watching Meet-the-Press, he advocated that government should mandate a certain percentage of electricity be generated from renewable sources.  The only reason that they would need to be mandated is that they are more expensive, which power companies would avoid in order to reduce their costs*.  If renewable sources were more cost-effective, then energy companies would already be using them (or moving to them) to displace dirty-dirty-coal energy.  In fact, this is the case in some areas, namely where hydro-electric power is a big contributor.  Which raises the question — why doesn’t anyone talk about hydro-power anymore?  Now it’s all solar and wind farms… did Hydro cease to be a renewable, clean, technology?  Just curious.

Did anyone tell Friedman, or the rest of the alternative-energy loving population, that we’re in the middle of a financial and economic crisis?  If McCain claims that the economy is ‘fundamentally sound’, they’ll rip into him for being out of touch.  How is this any different?**

Anyhow, as long as mandates are driving adoption, you’re only going to get the minimum amount of ‘alternative’ energy sources to meet the mandate.  Above and beyond that, power companies exist to make a profit, and for the most part consumers are going to choose the least expensive energy option.  (Of course, there are some outliers who will pay more for alternative energy our of some sense of duty, guilt, or piety.)

Friedman’s hope is likely that by forcing enough power to alternative energy sources, there will be some innovation in alternative energy production that will radically change the game.  I’m not sure if there are any examples of this working in the past:  MPG mandates on automobiles have not encouraged innovations that created huge gains — even hybrids are barely enough to keep entire manufacture fleets above their EPA standards.  If federal mandates magically pushed us through these types of barriers, we’d all be driving 100 mpg (likely 100% internal combustion, since hybrid’s are more complicated than they’re worth) cars.  Or electric cars that go farther than 40 miles per charge…  Seriously, how that dinky little Smart car gets less than 100mpg, I’ll never understand.

OK, so MPGs was only one example — if anyone has an example of a federal mandate spontaneously causing leaps in innovation, I’m all ears.  And no, the government never mandated anything related to TCP/IP adoption…

Friedman: “What I say is if climate change is a hoax, it’s the greatest hoax ever perpetrated on the United States of America.” (which I thought was a Jesus reference, but now Google seems to be betraying me and not indicating the original source of the phrase; only recent antecendants).  He made this reference as though it was proof that global warming is real (after all, it couldn’t be an elaborate hoax!), completely oblivious to the fact that many reasonable people think otherwise.

“Because everything we would do to get ready for climate change, to build this new green industry, would make us more respected, more entrepreneurial, more competitive, more healthy as a country.”  Respected for falling for an elaborate hoax?  Entrepreneurial for developing solutions to a problem that doesn’t exist — and that in the end nobody is going to want to pay more for?  More competitive by investing more in basic scientific research? — OK, that might actually be valid, but if global warming is a hoax and we fund science aimed at solving global warming problems (ie. a level or two above basic science, like building a better hybrid-engine) then we miss the boat on that.  More respected?  Do you think the truly poor in the world have a huge amount of respect for us, while they starve, knowing that we’re spending discretionary dollars on wind-generated energy instead of dirty coal?  Do you think they’re thinking, “gosh, I’m hungry today, but at least American’s are treating the planet better”?  I’m guessing they’d rather have a full belly.  Better to buy dirty energy, send our savings to Africa, and sustain a young life that might solve some entreprenurial problems closer to his own home; and which might spill over to the rest of the world.

[quotes from Meet the Press transcript]

* let me state this another way:  if alternative energy sources were already more cost-effective, power companies would be turning to them en masse to reduce their energy costs and extract more profits from consumers.  the fact that this is not so is proof that alternative sources cost more (fully-loaded, lifecycle costs; not marginal costs)

** I know, I know; just as they’ll call for alternative energy mandates, and at the same time call for subsidies or exceptions so the poor won’t have to bear the burden.  so the Rich will pay all the alternative-energy excess…  and in their eyes it couldn’t be more fair than that.

straight talk on energy independence

A pleasant surprise from the Washington Post:

the idea that the United States, the world’s single largest energy consumer, can be independent of the $5 trillion-per-year energy business — the world’s single biggest industry — is ludicrous on its face. The push for energy independence is based on a series of false premises.

They identified five myths about energy independence:

1. Energy independence will reduce or eliminate terrorism.
2. A big push for alternative fuels will break our oil addiction.
3. Energy independence will let America choke off the flow of money to nasty countries.
4. Energy independence will mean reform in the Muslim world.
5. Energy independence will mean a more secure U.S. energy supply.

And the said the same thing I always say:

Remember, the two largest suppliers of crude to the U.S. market are Canada and Mexico

Whole article here.

the kids are alright, for now, but will probably end up dealing drugs…

An even better example, written up in the Boulder Weekly (tip to Reason):

Richard’s son, Sean, found a great bargain on AirHeads (a taffy-like candy), at Costco.

“I offered to help him buy the product, if he would pay me back,” Richard said. “We sat down and did the math. He was getting 90 in a box that cost about $12 dollars. Based on what he was able to sell an AirHead for, he was getting a 900 percent profit — almost a tenfold markup. That seemed like a pretty good enterprise. He was clearing at least $150 a week in profit.”

Sean treated his mother to dinner and a movie [and] bought an iPod. He bought a fancy gaming keyboard with multiple interchangeable sets of keys, new shoes, a sweatshirt and a hoodie.

“In a devious sort of way, I was proud of him,” Richard said. “One the other hand, we had this sense that something was wrong with this picture. We kind of knew that the school didn’t want him doing this. We also worried that it would all become a bit too enticing. And then, when the customers are too old to want candy, what’s he going to sell? Drugs. That was our concern. We worried that he would be unable to resist the money, and would sell whatever the customer wanted.

I was saddened that the father made this connection — or as Reason put it:

Candy didn’t use to be a gateway drug. Now it is. Thanks, school board!

I dealt Coke (Classic, sometimes Diet) at summer camp; as a camp counselor I’d have cases under my bunk and under-cut the “Tuck shop” by a dime or a quarter. Counselors would get a day off each week that we could run into town and I could restock — the poor campers were stuck there for two weeks straight.

For the record, I never made anywhere near 900% profit.  I like to think my campers liked me, but I have no doubt they would have ratted me out to the camp management if I tried to squeeze them.

What is AirHeads secret ingredient that makes kids NEED to have it?  Crack?

the kids are all-right

so my Wife relays to me the following story (November 1st or 2nd):

You know how when you pull into our cul-du-sac you turn head-on to number [xx]?  Well I turn the corner today, and there are the neighborhood kids with a sign in the driveway: “Candy 25 cents”.  I stopped beside the driveway and asked them if they were really selling Hollowe’en candy, and they said yes, but “only the candy they didn’t like”.  “THEY’RE TRYING TO SELL OUR OWN CANDY BACK TO US!!!!”

I’m glad the Wifey relayed the story to me over the phone, cuz I’m sure it took the sting off the laugh I gave when she was done.  What did she expect?  I was proud of these kids, trying to turn their Hallowe’en booty into cold-hard cash.  I mean really, from an economic point of view, if people are willing to give you something for nothing (or virtually nothing, since costumes seem to be optional nowadays), why not try to sell the proceeds for a profit?

obviously, she didn’t buy anything.  and given that we had about 125,000 calories worth of left-over candy at our house, I didn’t object.   but come on — these kids had the right idea*

* the other thing the Wife was upset at was the idea that the kids were selling back candy “they didn’t want”.  Butterfingers, I believe, were the main thing they were pushing.  They were not trying to return the KitKats or Peanut Butter Cups that we liked, or she might have bought them back.  Again, I saw this as an example of the free-market at work…

sub-prime lending

the other day, when I admitted that I didn’t understand exactly what this whole sub-prime lending situation was, someone convinced me that the loans were being made at lower than the prime rate (sub-“prime rate”).  that sounded absurd to me — how could a bank loan at less than the incredibly low interest rates that were available to prime borrowers?  convinced is a strong word — I objected, and they persisted, so I stopped arguing with them (A HA!  I shouldn’t have caved — may that be the last time I ever do THAT!)

anyways, as Wikipedia sayeth:

The term “subprime” refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself.

alas, I didn’t have Wikipedia available when I was having that discussion.  am I the only guy that wishes I had the Internet available in my peripheral vision at all times, just like the Terminator and his heads-up display?  that should be available soon enough, I imagine.

more on why we shouldn’t bail out the subprime debacle by the chief economist at the Waffle House (??!?)…

31 consecutive years of trade deficits

In the comments to this thread on Lou Dobbs decrying our trade deficits, one Mike Laursen had the winning quote in my book:

You’d think that our having thrived through thirty-one years of trade deficits might spark the thought that maybe trade deficits don’t matter that much.

Ah yes, remember how great things were before the huge trade deficits?  The crappy-funk economy that was the mid-70’s; gas shortages and national ‘malaise’?

Until someone can offer some better proof — historical precedence even — that these trade deficits are bad, I don’t buy it.  The prediction that impending doom is right around the corner is as old as mankind, and it sells a lot of books and TV airtime…

local pizza vs. corporate pizza

First of all, Bryan, I’m sorry for barfing all over the comments on your post Does Anyone Care? with my why-oh-why doesn’t everyone think my economist-heroes response. Sometimes I forget that being a bit of an econ-geek isn’t everyone’s idea of how to make friends and be the life of the party.

Anyhow, I thought this was interesting and in the same vein as your question — will New Yorkers support the local ‘authentic’ pizza place over Papa John’s?

There really is a John inside Johnny’s Pizza in Sunset Park, Brooklyn – John Miniaci Jr., whose father, John Sr., founded the neighborhood pizzeria in 1968.

There will soon be another John right next door on Fifth Avenue – Papa John’s Pizza, a franchise outlet. John Jr. considers this as an insult to his own papa John, who died just one month ago. Of all the spots the franchise could have chosen, why, he asks, did it have to be on the other side of the wall where two centurion busts stand guard above customers waiting for zeppoles or Sicilian slices? “This is a neighborhood that has had businesses in the same family for two and three generations,” Mr. Miniaci said. “These big corporations come in and don’t see the value of that.”

There are three main potential outcomes: Papa John’s crushes Johnny’s, the new Papa John’s goes out of business, or they share the market and both continue to operate. I predict #3.

hedonics — what do you think?

it’s economics, but bear with me.

think about what a “state of the art” car cost in 1985. the consumer price index (CPI) tries to tell us all what that car costs today. for the sake of argument, let’s say it was $10,000 then and $25,000 today. but did the car in 1985 have airbags? power locks and windows? as much horsepower? 600 watt stereo?

hedonics tries to reconcile this, saying that — where applicable — products today are better than they were in the past. the number crunchers don’t do this arbitrarily, they have all kinds of functions to determine how much better products are. but seriously, computers have multiple times more power, the “state of the art” TV is bigger and sharper and might have DVR built in…

the problem, according to some, is that the CPI/inflation numbers as reported may be lower than reality because the government might abuse hedonics.  if true, we aren’t cruising along with the very low inflation we thought we had and might be relatively worse off.  of course, when I look at all the modern conveniences that average households have, I have a hard time believing our collective standard of living as a country is going down.

what do you think?