Best Paragraph I read Today

Our real choice is between two candidates who don't understand economics. And they both want to govern a country full of people who also don't understand economics while thinking they do. That makes the old, senile guy the only person in this scenario that isn't deluded or lying. He tells you up front that he doesn't understand economics.

From Scott Adams on the Dilbert Blog. The man does not get enough credit as an economist.

I will not cease talking about this

Good McCain:

Through his lack of support for ethanol, a fuel made from corn that benefits Iowa's farm economy, McCain, who has not campaigned in Iowa, made it clear he would take a stand for his issues. This was true whether or not the issues favored Iowa--making him look as if he was trying to appeal to his New Hampshire supporters more than gain the support of Iowans.

"I'm here to tell you that I'm going to tell you the things that you don't want to hear, as well as the things you want to hear, and one of those is ethanol," McCain said. "Ethanol is not worth it. It does not help the consumer."

And over time, he has gotten worse. Click that link. Read it.

No really, read it. And here is McCain being flat out hilarious.

But here's what's frightening: I agree with Jeff Sachs.

The issue of spiralling food and energy prices is also fueling an emerging debate over how much the rising prices can be blamed on ethanol production. The basic argument is that because ethanol comes from corn, the push to replace some traditional fuels with ethanol has created a new demand for corn that has thrown off world food prices.

Jean Ziegler, United Nations Special Rapporteur On The Right To Food, has called using food crops to create ethanol "a crime against humanity".

"We've been putting our food into the gas tank," Sachs of Columbia University said.

I mean, damn. I don't buy the right to food thing, but crime against humanity isn't so far off. Here's some of the details from a great editorial by David Ridenour.

Never mind that ethanol is helping spike food prices. Corn prices have already increased by 70 percent since 2005, and the U.S. Department of Agriculture projects they will rise an additional 10 percent to 20 percent this year.

But that's not the half of it. Corn-dependent livestock are also increasing in price. The USDA estimates that corn feed price increases added nearly 9 percent to the price of beef last year. But this doesn't include the indirect costs. U.S. beef cattle herds declined by 338,000 in 2007, increasing beef prices further, in part due to higher prices for feed, according to the American Farm Bureau Federation.

Ethanol advocates claim that rising corn costs have contributed only modestly to the overall increase in food prices. They're not being entirely honest, as they're only counting the direct costs of ethanol. They don't count, for example, increases in soybean prices resulting from farmers switching to the more lucrative corn crop. Soybean crops dropped by 11 million acres last year — much of it used to produce corn.

Here am I discovering an initial supply shock and one of the problems of ethanol - it takes fuel to transport ethanol since you can't pipeline it. Here I note congress tries to punish gas makers for charging more with the new ethanol regulations. And finally, I play the role of the silly optimist, thinking that since these problems are so simple, why not just fix them like this? You could even pay the corn growers a subidy if you'd feel better, because at least it wouldn't screw with world food prices as much. Is that too much a price to pay to make food more affordable?

Schools

So a charter school in Minnesota drew fire because it's basically a Muslim school. From the local news (HT Drudge):

Being a charter school Tarek ibn Ziyad Academy, or TIZA, is supported by tax dollars. The teacher told 5 EYEWITNESS NEWS the presence of religion she observed at the school took her b surprise.

TIZA Executive Director Azad Zaman insisted the school follows with state and federal laws.

"TIZA does not endorse any religion," he said.

However, TIZA Academy is sponsored by Islamic Relief USA, based in California.

Based in California! Gasp! The story gets interesting here:

The questions came after substitute teacher Amanda Getz taught at TIZA last month and told the Star Tribune about things she observed that day that shocked her.

"I've been in a lot of schools and I've never been in a school where they had washing rituals, or they had prayer, or where they had a room where you had to take your shoes off," Getz said.

"It is most likely that this substitute teacher was sadly mistaken," said Zaman.

He said the school follows state and federal guidelines when it comes to religion.

Granted, one can certainly argue the merits of the word ritual, especially since this is a TV news story so there is very little content. And rituals are a good way to make sure kids actually to remember to wash their hands, to be fair (maybe they should do something similar for doctors) But the blanket denials by Zaman (whose full name, Azad Zaman, is worth 31 points in Scrabble) are just plain hilarious. 'What? Washing rituals? This teacher is mistaken.' My favorite part:

State law requires the school to fly an American flag during school hours, however no flag flies outside of TIZA Academy.

Zaman told 5 EYEWITNESS NEWS he didn’t know how to work the flagpole.

THIS IS SUPPOSED TO BE A SCHOOL! If you don't know how, you learn how. Any 8 year old cub scout could tell you how. You hook the flag on and pull the rope. Not hard.

But speaking of learning, I figured I'd actually look this school up on Wikipedia, to see what I could learn. It's not that controversial, because no Wikipedia entry exists, so I went to the school's website. The school lunch menu doesn't contain any bacon, ham or pork. The school does not have a week long spring break, just the Thursday and Friday before easter, although it does offer a week long break during Ramadan. There is a break for Christmas as well as Eid-al-Adha (Abraham's willingness to sacrifice his son). They also teach the kids Arabic.

But really, this is not a religious school. The school is designed to cater to Muslim Students, who then make up more of the student body. Nothing wrong with that. But regardless, I'm still laughing at Zaman.

Local governments and sports stadiums

Lately, professional sports stadiums have been paid for through public financing more and more. Sports economists, though, have repeatedly stated that this is not an efficient use of taxpayer funding.

JC Bradbury has said a good bit over at Sabernomics about this, and he has a guest blogger, Frank Stephenson, talking about the Gwinnett Braves. Here's the traditional argument:

Adding together the $15,000 annual fee, the season ticket revenue split, and the naming rights, the Braves have paid $671,429 for their first five years in the stadium. A sensible way to compare this figure to the $14.9 million cost of the stadium is to think about the opportunity cost that taxpayers incur by having their $14.9 million tied up in a stadium rather than having it available for other uses. Economists typically measure such opportunity costs via an interest rate. Taking a conservative interest rate of 3%, taxpayers are sacrificing about $450,000 per year in interest in order to construct the baseball stadium. (Higher interest rates would imply a larger opportunity cost.) Since the Braves annual payments have averaged about $134,000 per year, they’ve paid a bit under one-third of the taxpayers annual cost of the stadium. Of course, the taxpayers aren’t really being repaid since the Braves payments go into the capital maintenance fund.

The "no, it does not pay for itself" argument, but something is missing. Fundamentally, there is the issue of the benefit derived from having a local team in terms of attracting and retaining people in the city. People who are more in demand have more options, and if given comparable salary packages when considering cost of living as well as similar advancement for oppurtunity, they may decide to go where the local amenities are more in their favor. Richmond has a symphony orchestra, a ballet company, colleges and universities, good roads, and it is within 2 hours of the beach or DC. But it is possible that someone may look at Richmond and say, there's no professional baseball team, so I will go to some other city instead.

If you think that sounds crazy, ask yourself if you would be willing to attend a large university, say more than 15,000 students, that does not have an NCAA division 1 football team. How much of Virginia Tech's reputation is based on the quality of their students, and how many of their students chose to go there at the margin because schools of similar cost and academic reputation did not have such a successful football team? If you compare schools with similar costs, reputation, often the tiebreaker will be a matter of which one looks like it will be more fun. By the same token, George Mason's applications drastically increased in 2006 during their Final Four run, and what did that do to average SAT scores and high school GPA? But what of their lack of an NCAA football team; how many musicians and music education majors were lost because they wanted to do marching band in college (although to be fair, how many were attracted because they hate marching band?)?

Barack Obama Wants My Vote

Observe:

I have to say that I did not expect a Reagan analogy, and neither did Ben Smith at Politico, when I stole this. But it makes sense.

Obama has going for him not so much being the man of change, but the unwavering optimist. For those on the right, he is the Democrat that probably scares them the least - Edwards is the class warfare guy, and Hillary's attempt at government-controlled healthcare still frightens those who fear death while waiting in line. Of course, he still believes government is the solution rather than the problem, but hey, he has a positive outlook.

Social Security

Well, it turns out that Bush was right that this was a problem, but it still hasn't been fixed. Barack Obama had the following to say:

"I think the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more and people who are in need are protected," the Illinois senator said.

"That is the option that I will be pushing forward." Currently, only the first $97,500 of a person's annual income is taxed. That cap is scheduled to rise to $102,000 next year.

Obama's proposal could include a gap or "doughnut hole" to shield middle-income earners from higher payroll taxes, he said.

Uh huh, uh huh. WHAT?!! Now raising the cap on social security taxes makes sense, as Social Security would be better as a flat tax than a regressive tax as it currently is. What I want to know is when will Social Security honestly be declared not to be a pension system, but rather, just "welfare for old people?" Because that's what it is.

But the doughnut hole is basically a very open invitation for not just company cars, but company-provided housing, helicopters, etc. Sound silly? Well come on - this is the stuff tax accountants dream of.

Any other ideas?

On the Republican side, candidate Fred Thompson last week unveiled a Social Security proposal that calls for reducing benefits to future retirees and creating a system of voluntary personal retirement accounts. The plan is similar to one put forth by President Bush that ultimately stalled in Congress.

Gee, why does that sound familiar? Maybe Because George Bush already tried it and fell flat on his face. The government doesn't need to get involved with private accounts - because they're private. Private accounts already exist. This is as mind-boggling as the need to hire a scout to find out if Greg Maddux can pitch.

Privatizing Social Security is something that the US simply cannot do because it was put off far too long. To pull it off, it needs a more comfortable position, and the only way to get there is to raise the retirement age at an astounding rate.

Most importantly, the Minimum retirement age, which Bill Bradley has pointed out before, should be raised. Getting that up to 65 in the next decade and 70 by 2030 is not an unreasonable goal with the full retirement age rising along with it up to 70 and ultimately 75. After all, the program was created when the retirement age was 3 years in excess of life expectancy; it doesn't take a mathematician to figure out that if the retirement age slips to more than 10 years below life expectancy, then you have a problem. If you get the retirement age back up to life expectancy minus 3, you're in excellent shape.

At that point, Social Security stops being a source of income for a generation of people living off that and their savings for 20 years. Then you can talk privitization, because you'll reduce the impact it has on people's lives. Getting there would be harder, but it's a good start.

Chinese Crackdown

After a few Chinese sources delivered unsafe products, the Chinese government has decided to take action, by saying that American products are bad.

From the Washington Post:

Investigative reports in the state-run media delve into the case of an exploding cellphone purportedly made by U.S.-based Motorola that allegedly killed a young man. They warn consumers not to use contact-lens solution produced by U.S.-based Advanced Medical Optics, which has been linked to rare cases of blindness. And they play up recalls of U.S. beef.

Faced with mounting international concern over the safety of some of the products it exports, the Chinese government -- often perceived as defensive and clumsy in how it handles public relations -- is firing back.

In Washington, China has put together a team of lobbyists who have been practically living on Capitol Hill for the past few weeks. In Beijing, the government has taken the unusual step of seeking advice from outsiders, including public relations powerhouses Ogilvy and Edelman, about how to get positive messages out to Chinese and American consumers.

Of course, because the Chinese government has not altogether abolished communism in China, it makes sense that the government would concern itself with PR. But yeah, that's the setup. Then there's this paragraph right after it:

The result has been an aggressive campaign to save the "Made in China" label by presenting an alternate view on consumer safety and globalization. The message is that China isn't the only country that has had problems with the products it exports. China, as government officials have been pointing out in recent days, rejects U.S. imports at a rate that is just a little less than the 1 percent of Chinese products rejected by the United States.

But look at this. The Chinese government is trying to argue that their products are safe because the US makes stuff that gets rejected too. The question of safety, though, is not which ones are rejected, but rather which accepted products cause harm, if one is concerning themself with product safety. Here, it seems that China is stating that they are better at regulating imports than the US, although I don't think they're offering to scrutinize their own exports further.

Then a professor said this later on in the article:

On the other hand, Shi Anbin, an associate professor of media and cultural studies at Tsinghua University in Beijing, said that trying to turn the tables and focus attention on problems with U.S. products is "not a wise strategy."

"We need to face our own problems rather than pointing an accusing finger at a scapegoat," Shi said. "I believe Chinese officials still need to learn some PR and communication skills."

Yes, that is correct that what the Chinese government did does not address the initial problem. I'm glad that Ariana Eunjang Cha was able to get an expert to state the painfully obvious.

Right after, there was this bit:

Sen. Charles E. Schumer, chairman of the Joint Economic Committee, which has been pushing for punitive trade legislation against China, described the execution of the former head of the Chinese food and drug administration and the country's new ban of a chemical that was mixed in toothpaste as "surreal actions."

These "prove that China just doesn't understand the real problems," the New York Democrat said

Senator Schumer, your advocacy for punitive trade legislation against China proves that you don't understand the real problem. That would make Chinese products more expensive for consumers, so to compete, they'd have to get cheaper and take more shortcuts. And to be technical, that doesn't prove that China doesn't understand the problem, only that China is not interested in solving the real problem. And that the communist method of dealing with problems - killing people - is stupid.

But I'm going with the Chinese government being stupid, especially after reading this gem.

Nevertheless, the incident has brought out hostility in some Chinese consumers. The headline on one online bulletin board posting blares, "America's Motorola is following Bin Laden's example, killing Chinese with explosion." It quotes from the official New China News Agency in giving examples of past quality problems, though its main purpose seems to be complaining about Motorola's after-sales service.

Yes, an accident where someone died in an explosion makes someone like Bin Laden, but firing squad, that's just how you take care of business. But if you want to know how bad the Chinese government is at defending themselves in an argument, this one guy states, perhaps rightly, that this is an improvement.

Dan Harris, a U.S.-based attorney who runs a popular China law blog and represents small to mid-sized companies doing business with China, said the shift in the government's public relations strategy "is definitely smart on their part. They are not going to convince Americans that everything is okay just by denials."

Heh. They're trying to distract people, but at least they aren't completely denying problems, and they don't have to fix anything. An improvement, but barely.