Monthly Archives: November 2008

What is wrong with Bernanke?

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What is wrong with Bernanke? He and Paulson must be the only people in America who think we don’t have enough debt. Our financial problems are not the result of a lack of credit. But today he unleashed $800 billion to “unfreeze” (other known as thawing) credit markets.

The problem is with the financial system is not a lack of credit. The banks have money, but they are sitting on it. People don’t want to make investments when they are this concerned about the overall situtation with the economy.

The problem is not liquidity. The problem is uncertainty. Just yesterday the Fed had to rescue Citibank. That doesn’t instill the confidence necessary to take risks. Until we have more confidence in the economy, credit markets are going to remain frozen. The Fed can do whatever it wants, but it won’t matter (other than hurt us down the road when inflation takes off because of the Feds actions).

Why Obama should keep his BlackBerry

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Recent there were stories how Obama’s BlackBerry addiction and how he will likely give it up, as President Bush did when he became President. Bruce Schneier writes in the WSJ why Obama should keep his Blackberry because it will help protect liberty. Schneier writes:

Subjecting the president’s communications to eventual public review increases liberty because it reduces the government’s power with respect to the people. Subjecting our communications to government review decreases liberty because it reduces our power with respect to the government. The president, as well as other members of government, need some ability to converse ephemerally — just as they’re allowed to have unrecorded meetings and phone calls — but more of their actions need to be subject to public scrutiny.

The Libertarian Party is a Failure

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Ilya Somin at theVolokh Conspiracy presuasively argues that the Libertarian party is a failure and doesn’t deserve our time or money. He writes:

Libertarians have had some genuine successes over the last 35 years. These include abolition of the draft (heavily influenced by Milton Friedman’s ideas), deregulation of large portions of the economy (of which libertarians were the leading intellectual advocates), major reductions in tax rates (facilitated by libertarian economists, libertarian activists, and the legislative efforts of libertarian-leaning Republicans), the increasing popularity of school choice programs, increases in judicial protection for property rights, gun rights, and economic liberties (thanks in large part to advocacy by libertarian legal activists), and heightened respect for privacy and freedom of speech (promoted by libertarians in cooperation with other groups). Libertarian academics and intellectuals have also done much to make libertarian ideas more respectable and less marginal than they were in the 1960s and early 70s.

What all these successes have in common is that they were achieved either by working within the two major parties or by efforts outside the context of party politics altogether. The Libertarian Party didn’t play a significant role in any of them.

Libertarians often emphasize that failed enterprises should be liquidated rather than kept going on artificial life support. That enables their resources to be reinvested in other, more successful firms. The point is well taken, and it applies to the Libertarian Party itself. For 35 years, the Party has consumed valuable resources, both financial and human. The money spent on the LP and the time donated by its committed activists could do a lot more to promote libertarianism if used in other ways.

Honesty from the Post

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Now that the media’s candidate has been elected, they are free to do some soul-searching about fairness. The Post’s Ombudsman, Deborah Howell, has written a second piece about Washington Post‘s left-wing bias. She writes:

But some of the conservatives’ complaints about a liberal tilt are valid. Journalism naturally draws liberals; we like to change the world. I’ll bet that most Post journalists voted for Obama. I did. There are centrists at The Post as well. But the conservatives I know here feel so outnumbered that they don’t even want to be quoted by name in a memo.

Journalists bristle at the thought of their coverage being viewed as unfair or unbalanced; they believe their decisions are journalistically reasonable and that their politics do not affect how they cover and display stories.

Journalists may bristle, but bristling doesn’t make their reporting fair or balanced. And at time the reporting may be completely fair, but what is unfair is which stories are covered and which are not. For example, the media did precious little investigative journalism about Obama. That said, unlike a lot of the Post’s coverage, Howell’s article is fair.

And at least the Post’s zeal for Obama didn’t go as far as others, such as Rolling Stone’s deification of the man.

Thanks to Nate posting the link to this article in the comments.

Why the U.S. Can’t Have the Greenest Car in the World

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Arguably, the greenest car in the world is Ford’s new 64 mpg (74 mpg highway and 51 mpg city) Fiesta ECOnetic Diesel. It gets better gas mileage than the Prius, and unlike the Prius, it doesn’t use difficult-to-recycle batteries.

The Obvious Business Reasons Ford Won’t Sell the Fiesta ECOnetic in the U.S.

So why isn’t the car being sold in the U.S.? According to Ford America President Mark Fields, “there are business reasons why we can’t sell it in the U.S.” One of these business reason is that it runs on diesel. According to Business Week, the thinking is that Americans prefer hybrids to diesel because we perceive diesel as dirty and old–not high tech like hybrids.

The second business reason Ford isn’t bringing the Fiesta ECOnetic to the U.S. is because they make it in the U.K. and importing the car would cause them to loose money if they wanted to be cost competitive with the Prius.

The Really Obvious Reason Ford Won’t Sell the Fiesta Fiesta ECOnetic in the U.S.

A couple years ago, Ford could have planned to build this car in America, which would have reduced the costs over building it in the U.K. But Detroit only understands that America loves trucks and SUVs. American car companies still haven’t figured out that people are willing to buy fuel-efficient and reliable cars. Americans, especially of my generation, don’t trust Detroit to build cars that are reliable. When we think reliability, we think of Toyota, Lexus, Honda, and Acura–not GM or Ford.

The Non-Obvious Business Reasons Ford Won’t Sell the Fiesta ECOnetic in the U.S.

The real reasons Ford isn’t bringing the Fiesta ECOnetic to the U.S. is because of CAFE standards and the U.S.’s auto emissions standards. The auto workers’ unions support CAFE (Corporate Average Fuel Efficiency) standards because they promote protectionism for American-made cars. As United Auto Workers economist Dan Luria’s stated, “CAFE acts like a domestic content law.” CAFE standards require U.S. automakers to meet the fleet fuel efficiency standards using only cars built in the U.S. It might seem like it would really help Ford to meet the CAFE standards by importing a super-efficient car, but because the Fiesta ECOnetic would have to be imported, it wouldn’t help Ford.

The second non-obvious reason Ford isn’t importing the Fiesta ECOnetic is because it doesn’t meet U.S. auto emission regulations. The U.S. has very stingent standards on the emissions of particulate matter (a fancy name for dust). Our standards are more stringent than Europe’s standards and as a result it is very difficult for diesels to meet the standard for all 50-states (for example, the Subaru Forrester diesel won’t meet the emission standards for all 50 states).

It’s a sad irony that the U.S.’s clean air standards help keep possibly the greenest car in the world out of the U.S.

The Bailout Has the U.S. on the Hook for $5 Trillion

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According to Forbes, the bailout has the U.S. government on the hook for $5 trillion. And what has this bailout bought us? Treasury Secretary Hank Paulson says that it has improved our stability. Has he not watched the market continually fall? For the benefit of Mr. Paulson, I have helpfully provided a graph of the Dow Jones Industrial Average over the last year:

Where’s the stability in this picture? Almost every day there is a new company declaring that it needs help from the Fed.

It’s time the Fed and the Treasuring just step back. Companies that made poor choices will fail. That is what real capitalism is all about–letting companies which made bad decisions feel the economic pain of those decisions. As things stand right now, the Fed and Treasury are just prolonging the inevitable.