Economics

  • Economics,  Middle East,  Oil

    Oil

    I came across an interesting article by Alan Reynolds on the Cato site:

    We import nearly 58 percent of all petroleum, yet only 45 percent of each barrel is used to produce gasoline, and a significant portion of that gasoline is used in delivery vans and taxis. Commuter and leisure driving accounts for little more than 40 percent of the oil we consume — far less than the amount we import. The rest of each barrel of crude is used for heating oil and diesel fuel for trucks, busses, farm machinery and ships (23 percent), petrochemicals (17 percent), jet fuel (9 percent), asphalt (4 percent) and propane (4 percent).

    The U.S. index of industrial production peaked at 116.4 in June 2000 and then fell to 109.1 by December 2001; the price of West Texas crude simultaneously fell from $32 to $19. U.S. Industrial demand for petrochemicals declined, and so did the related need for fuel used to transport industrial supplies and products.

    Similar effects were magnified worldwide. Falling industrial production in any region has the same effect on oil prices, so crude fell from $25 to $12 in the wake of the Asian currency crisis of 1997-98.

    and

    Nobody in Washington shows the slightest awareness of the global nature of the oil market, of the fact that industrial damage from high oil prices has nothing to do with whether a country imports or exports oil, or even the fact that there is a crucial two-way linkage between worldwide industrial production and worldwide oil prices. When it comes to causes and effects of high oil prices, nobody in Washington shows much interest in logic or facts. It might be sad if it wasn’t so pathologically pathetic.

    RTWT.

  • Economics,  Links,  Middle East

    Rapid fire Friday

    • Tupac Shakur arts center opens – and so very close to me. Meanwhile the guy who created the first schools for blacks in this state can’t even get an elementary school named after him.
    • Poll: In wake of Iraq war, allies prefer China to U.S. – To thine own self be true America. If all of the aid we donated both publicly and privately in the wake of the Tsunami didn’t help anything in these countries, then not much will. Immigration is a much better metric than polls anyway.
    • The One Campaign – solve Extreme Poverty and Global Aids (why are they extreme and global?) via nagging and fashionable wristbands. It’s so cool, after all Bono and Angelina Jolie are for it. Brought to you by people who don’t understand the difference between stock and flow.
    • Palestinian Woman Heading for Treatment at Israeli Hospital Caught Carrying Explosives – really! To Quote:

      At the Shikma Prison in Israel’s Negev Desert, where the Shin Bet security service allowed Israeli TV reporters to interview her, al-Biss said she was determined to carry out a suicide attack against Israel because of its occupation of the West Bank and Gaza.

      “My dream was to be a martyr,” she said, adding that she was recruited by the Al Aqsa Martyrs Brigades, a violent offshoot of Palestinian leader Mahmoud Abbas’ Fatah movement. “I believe in death.”

      Sitting calmly across from an Israeli TV interviewer, the young woman with large brown eyes and curly dark hair pulled back in a ponytail said her decision had nothing to do with her disfigurement, which might make her less desirable as a bride.

      “Don’t think that because of how I look I wanted to carry out an attack,” said al-Biss. “Since I was a little girl I wanted to carry out an attack.”

      RTWT. She takes a bit of it all back, worth reading.

    • The Two Blogospheres – an interesting article by Mathew Yglesias
    • ScriptCenter: ATM for Drugs – much more on this later, but definitely a step in the right direction.
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  • BigThink,  Boyd,  Economics,  Game Theory,  History,  Hoffer

    Ideas to elaborate on later

    Here are ideas and historical (no emotional connection to me) events that have fundamentally affected my outlook.

    In no particular order

    • Pareto Optimality
    • Coase Theorem
    • Hayek and Sowell on the limits and costs of knowledge
    • Gresham’s law
    • Napoleon’s invasion of Russia
    • Dominant Strategies
    • Schelling Points (as elaborated on by David Friedman)
    • The seatbelts kill theory of Steven Landsburg (though the theory might actually originate with George Stigler)
    • The diaries of Eric Hoffer (and his books, they’re fairly similar) as they deal with mass movements
    • Network effects
    • Robert Nozick’s notion of morality as a time saving device (morality is used very broadly) as explained in the Examined Life
    • The defensive boxing style of Pernell Whitaker

    I’ll have more detail on what they are and how they are all used later.

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  • Economics,  Islam

    Bolshevism and Islam

    As an amplification of my earlier post about Saudi influence on modern Islamic culture. Throw in a bit of Bryan Caplan and Eric Hoffer, and I’m closer having better thoughts on the subject.

    To wit, the problem is the merging of state, society, economy and religion into a single unit. The most obvious parallel is pre-revolution Russia, with the Saudi royal family playing the Romanovs, and bin Laden playing Lenin.

    After Ivan the Terrible essentially annexed the Russian orthodox church and installed the Czar as head of the church (or maybe that was Peter the Great, I can’t remember), all authority, be it economic, political, or religious in Russia became ever more centralized in the person of the Czar. When Lenin seized power in 1917 he merely continued this process, finally culminating in Stalin.

    All of this centralization basically discards useful information as revealed in action and prices per Hayek in the Fatal Conceit. One man does the thinking for millions, and the society is one millionth as smart as it could be. Could this be what is happening in the Arab world right now? Is the problem just lack of knowledge and power distribution, as it was in the Soviet era, and current North Korea?

    As I read over this post I see it is very jumbled and unclear. I’ll explore more on this topic later.

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  • Economics

    Perfectly put

    From Will Wilkinson’s blog

    Should we expect less bottom to top, number one with a bullet, mobility as an economy grows wealthier overall?

    Yes. People are constantly confused by the growing gap between the rich and poor. This is good thing, not a bad thing. If the bottom is fixed, at zero income, and the top keeps going higher, you’ve got a bigger gap. But lots of people are better off and nobody is worse off. Similarly, if the lowest quintile is anchored by a fixed bottom, and the top is untethered and rising, the distance from the bottom to the top will increase. The distance from the bottom to the middle will increase. So it will take longer to get there. If today’s middle is equivalent in real terms to yesteryear’s top, people who are going from the bottom to the middle are doing no worse than people of yore who went from the bottom to the top (even if we assume, counterfactually, that there has been no change in quality of life for people at the bottom.)

    We should be AIMING at a system where the middle of the middle is, say $500,000 per annum, and so the trip from the bottom of the bottom to the top of the bottom, much less to the middle of middle, is a VERY BIG trip indeed.

    The original post is here. I wonder why I’ve never heard that arguement put that way before. It’s the standard economic reasoning for a positive sum game, but that line is the best you’re going to see in terms of delivery.

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