American Energy Policy, Asleep at the Spigot | By NELSON D. SCHWARTZ | Published: July 6, 2008
...
Outside the thriving oil patch, it makes for a bleak economic picture. But it didn’t have to be this way.
Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries. What’s more, for all the surprise at just how high oil prices have climbed, and fears for the future, this is one crisis we were warned about. Ever since the oil shortages of the 1970s, one report after another has cautioned against America’s oil addiction.
...
... Last week, Ford Motor reported that S.U.V. sales were down 55 percent from a year ago, while demand for its full-size F-series pickup, a gas guzzler that was the country’s best-selling vehicle for 26 consecutive years, is off 40 percent.
...
... the largest energy appetite in the world is still found in the United States. Home to only 4 percent of the world’s population, the nation slurps up about a quarter of the planet’s oil ...
...
Indeed, low-priced gasoline has long been part of the American social contract, according to Newt Gingrich, the former House speaker and Republican leader. ...
...
Before that point, the country reaped the benefits of the first fuel-economy standards, passed in 1975, known as corporate average fuel economy, or CAFE. Between 1974 and 1989, the efficiency of a typical car sold in the United States almost doubled, to 27.5 miles per gallon from 13.8.
LARGELY as a result, oil consumption in 1990 totaled 16.9 million barrels per day, basically on a par with the 17 million barrels per day consumed in 1980, even as the economy grew substantially. Oil prices were in the middle of a long downward slide that would take them from well above $30 a barrel in 1980 to a low of just under $10 in late 1998 and early 1999, interrupted only by brief spike in 1990 after Iraq’s invasion of Kuwait.
...
Even as Congress idled when it came to tightening CAFE standards or substantially raising levies on gas, the Exxon Valdez oil spill in 1989 made offshore drilling yet another unpalatable option. “That caused a sea change and after that no one had any sympathy for the oil industry,” Mr. Becker says.
...
In any event, added drilling is unlikely to generate sharply lower prices. A recent study by the federal government’s Energy Information Administration estimated that under the best-case scenario opening up the Arctic National Wildlife Refuge would reduce prices by $1.44 a barrel by 2027. Drilling in broader swaths off the continental United States wouldn’t affect prices until 2030.
...
In 2007, with oil at $82 and gas nearing $3, Congress finally approved the first big increase in fuel-efficiency standards in 32 years, requiring the fleet average to reach 35 m.p.g. by 2020. That will save one million barrels a day by 2020, but onetime CAFE opponents like Mr. Castle now say they wish that Congress had acted sooner. Since the 1980s, fuel efficiency has flatlined at 24 m.p.g., while vehicle weight has jumped more than 25 percent and horsepower has nearly doubled. In Europe, on the other hand, fuel efficiency currently stands at 44 m.p.g. and is slated to hit 48 m.p.g. by 2012.
...
What Congress didn’t or couldn’t do, the free market is now doing in the form of higher gas prices: forcing Americans into more fuel-efficient cars. Ms. Cischke of Ford says that in the last two months, “We have seen more of a shift in the market than in 20 years of CAFE. People are buying what they need.”
Unfortunately, the shift is happening too fast for a company of Ford’s size. That is among the reasons Wall Street expects Ford to lose more than $2 billion this year.
...
Thursday, July 10, 2008
If ... really supported free trade, they would be insisting that we do the exact same thing for our most highly educated professionals
Free Trade, Why "Free" Matters | Monday 07 July 2008 | by: Dean Baker, t r u t h o u t
...
The most important point, which I unfortunately have to keep repeating, is that these are not free trade agreements. They do not free all trade and, in fact, increase some forms of protectionist barriers.
The main area in which US trade policy has sought "free" trade has been manufactured goods. A main purpose of most recent trade deals has been to make it as easy as possible for US firms to relocate their production to Mexico, Central America, and everywhere else and to ship their output back to the United States.
This does not mean just reducing tariff barriers. In most cases, the tariff barriers to imports were already low. The point of these deals was to set up an institutional framework that would facilitate foreign investment in manufacturing in these countries for the purpose of exporting back to the United States.
This meant talking to the auto companies, the textile companies, and other businesses and finding out exactly what was preventing them from taking advantage of the low-cost labor in these developing countries and then removing the obstacles. This had the effect of putting manufacturing workers in the United States in direct competition with low-paid workers in the developing world.
Putting US manufacturing workers in competition with low-paid foreign workers lowers their wages. It also has the effect of lowering the wages of non-college-educated workers more generally, since manufacturing has historically been a source of high-paying jobs for workers without college degrees.
Of course, we have seen a decline in the relative wages and job security of non-college-educated workers. This is not a case of the trade agreements not working or not following the course predicted by economic theory. This is what the trade agreements were designed to do - the reduction in the relative wages and living standards of non-college-educated workers is exactly the outcome predicted by economic theory.
But this is not "free trade." We decided to subject our non-college-educated workers to competition with low-paid workers in the developing world. If Senator McCain and others really supported free trade, they would be insisting that we do the exact same thing for our most highly educated professionals.
In other words, we would ask our hospitals, law firms, universities, and other employers of highly educated workers, what exactly is keeping them from filling their staffs with low-paid professionals from the developing world? We would then change the laws and structure the institutions to ensure that smart kids from the developing world, who were trained to our standards, could as easily work as professionals in the United States as kids born in New York or California.
This would send the wages of professionals tumbling, along with the price of their services. This is exactly the sort of gain from trade that economists like so much, except in this case it would come at the expense of the most highly paid workers instead of low- and moderate-income workers. ...
...
The most important point, which I unfortunately have to keep repeating, is that these are not free trade agreements. They do not free all trade and, in fact, increase some forms of protectionist barriers.
The main area in which US trade policy has sought "free" trade has been manufactured goods. A main purpose of most recent trade deals has been to make it as easy as possible for US firms to relocate their production to Mexico, Central America, and everywhere else and to ship their output back to the United States.
This does not mean just reducing tariff barriers. In most cases, the tariff barriers to imports were already low. The point of these deals was to set up an institutional framework that would facilitate foreign investment in manufacturing in these countries for the purpose of exporting back to the United States.
This meant talking to the auto companies, the textile companies, and other businesses and finding out exactly what was preventing them from taking advantage of the low-cost labor in these developing countries and then removing the obstacles. This had the effect of putting manufacturing workers in the United States in direct competition with low-paid workers in the developing world.
Putting US manufacturing workers in competition with low-paid foreign workers lowers their wages. It also has the effect of lowering the wages of non-college-educated workers more generally, since manufacturing has historically been a source of high-paying jobs for workers without college degrees.
Of course, we have seen a decline in the relative wages and job security of non-college-educated workers. This is not a case of the trade agreements not working or not following the course predicted by economic theory. This is what the trade agreements were designed to do - the reduction in the relative wages and living standards of non-college-educated workers is exactly the outcome predicted by economic theory.
But this is not "free trade." We decided to subject our non-college-educated workers to competition with low-paid workers in the developing world. If Senator McCain and others really supported free trade, they would be insisting that we do the exact same thing for our most highly educated professionals.
In other words, we would ask our hospitals, law firms, universities, and other employers of highly educated workers, what exactly is keeping them from filling their staffs with low-paid professionals from the developing world? We would then change the laws and structure the institutions to ensure that smart kids from the developing world, who were trained to our standards, could as easily work as professionals in the United States as kids born in New York or California.
This would send the wages of professionals tumbling, along with the price of their services. This is exactly the sort of gain from trade that economists like so much, except in this case it would come at the expense of the most highly paid workers instead of low- and moderate-income workers. ...
The employment to population ratio (EPOP) fell to 62.4 percent in June, its lowest level in more than three years, as the economy lost another 62,000
Employment Rate Drops as Economy Sheds 62,000 | Thursday 03 July 2008 | by: Dean Baker, t r u t h o u t
...
Private sector job gains in the Bush years may fall below 3 million by November. The employment to population ratio (EPOP) fell to 62.4 percent in June, its lowest level in more than three years, as the economy lost another 62,000 jobs in June. This was the sixth consecutive month in which the economy lost jobs. The private sector lost 91,000 jobs in June. With the April and May numbers revised down by 76,000, the job loss in the private sector over the last three months has been 273,000, an average of 91,000 a month. The private sector has now shed 578,000 jobs since employment peaked in November.
Job loss continues to be led by construction and manufacturing, but most sectors are now losing jobs. Construction lost 43,000 jobs in June, with both residential and non-residential construction now shedding jobs. Employment in residential construction has fallen by 15.8 percent since its peak in February of 2006. By comparison, real spending is down by almost 50 percent over this period. The fact that employment has fallen so much less than production undoubtedly reflects the fact that many undocumented workers never showed up in the employment data. ...
...
Private sector job gains in the Bush years may fall below 3 million by November. The employment to population ratio (EPOP) fell to 62.4 percent in June, its lowest level in more than three years, as the economy lost another 62,000 jobs in June. This was the sixth consecutive month in which the economy lost jobs. The private sector lost 91,000 jobs in June. With the April and May numbers revised down by 76,000, the job loss in the private sector over the last three months has been 273,000, an average of 91,000 a month. The private sector has now shed 578,000 jobs since employment peaked in November.
Job loss continues to be led by construction and manufacturing, but most sectors are now losing jobs. Construction lost 43,000 jobs in June, with both residential and non-residential construction now shedding jobs. Employment in residential construction has fallen by 15.8 percent since its peak in February of 2006. By comparison, real spending is down by almost 50 percent over this period. The fact that employment has fallen so much less than production undoubtedly reflects the fact that many undocumented workers never showed up in the employment data. ...
If supply-side economics/market fundamentalism worked, the economic landscape would look quite different than it does now
Jared Bernstein: The Antidote to Our Pessimism: Change - Politics on The Huffington PostPosted July 6, 2008
In decades of tracking such sentiments, I've never seen people so pessimistic about the economy. And remember, we haven't even had a quarter of contracting GDP yet.
Of course, rising gas prices, the deteriorating job market, and paychecks that are barely making it past gas and groceries are the major drivers of these poll results. But they're not the whole story. Well before gas prices spiked, majorities were telling pollsters that something fundamental was wrong in the economy, and that it had to do with the fact that most of the folks who were baking the economic pie were ending up with thinner slices.
These latest economic stressors have simply served to turn this underlying feeling that the game was rigged into a much more urgent sense that something's got to change.
...
First, the structural fissures in the US economy -- the bubble and bust macroeconomy, over-leveraged households consuming beyond their means, inequality levels not seen since the late 1920s -- had to come to light at some point. We're fortunate that they've done so a few months before a general election between the two candidates with starkly different economic visions. More on that in a moment.
...
If supply-side economics/market fundamentalism worked, the economic landscape would look quite different than it does now. The last eight years have served as something quite rare in economics: a natural experiment of the effectiveness of market forces, goosed liberally (wrong word, but you know what I mean) with high-end tax cuts, to address the challenges we face. Health care would be on a sustainable trajectory, energy policy would exist (subsidies to big oil don't count), tax policy would help to offset inequality, not exacerbate it, financial markets would speculate less, price risk more accurately, and be much less bubbly, and the benefits of productivity growth would be more broadly shared with the working men and women responsible for creating them.
...
... McCain can run from Bush, but as long as he doubles down on both Bushonomics and the war, he can't hide. ... His chief economic policy architect is Phil Gramm, that cowboy deregulator who brought us the Enron loophole and sponsored banking legislation that put us solidly on the path to where we are today, bailing out investment banks that failed partly from lack of oversight.
In decades of tracking such sentiments, I've never seen people so pessimistic about the economy. And remember, we haven't even had a quarter of contracting GDP yet.
Of course, rising gas prices, the deteriorating job market, and paychecks that are barely making it past gas and groceries are the major drivers of these poll results. But they're not the whole story. Well before gas prices spiked, majorities were telling pollsters that something fundamental was wrong in the economy, and that it had to do with the fact that most of the folks who were baking the economic pie were ending up with thinner slices.
These latest economic stressors have simply served to turn this underlying feeling that the game was rigged into a much more urgent sense that something's got to change.
...
First, the structural fissures in the US economy -- the bubble and bust macroeconomy, over-leveraged households consuming beyond their means, inequality levels not seen since the late 1920s -- had to come to light at some point. We're fortunate that they've done so a few months before a general election between the two candidates with starkly different economic visions. More on that in a moment.
...
If supply-side economics/market fundamentalism worked, the economic landscape would look quite different than it does now. The last eight years have served as something quite rare in economics: a natural experiment of the effectiveness of market forces, goosed liberally (wrong word, but you know what I mean) with high-end tax cuts, to address the challenges we face. Health care would be on a sustainable trajectory, energy policy would exist (subsidies to big oil don't count), tax policy would help to offset inequality, not exacerbate it, financial markets would speculate less, price risk more accurately, and be much less bubbly, and the benefits of productivity growth would be more broadly shared with the working men and women responsible for creating them.
...
... McCain can run from Bush, but as long as he doubles down on both Bushonomics and the war, he can't hide. ... His chief economic policy architect is Phil Gramm, that cowboy deregulator who brought us the Enron loophole and sponsored banking legislation that put us solidly on the path to where we are today, bailing out investment banks that failed partly from lack of oversight.
Health-Care Crisis Endangers Economy
Health-Care Crisis Endangers Economy | By Jason Leopold, Consortium News. Posted July 6, 2008.
A new report urges policymakers to find a solution to the health-care crisis; long-term fiscal problems may develop if the issue is not addressed.
If the United States does not act soon to address health-care costs, federal and state governments as well as American businesses could face a cascading fiscal crisis with devastating long-term consequences, says a new report by the Government Accountability Office.
In the report entitled, "Long Term Federal Fiscal Challenge Driven Primarily by Health Care," the GAO, the investigative arm of Congress, said an immediate "multi-pronged solution" must be pursued before the "window of opportunity" to address the issue closes.
"Rapidly rising health-care costs are not simply a federal budget problem," said the report, prepared by Gene Dodaro, acting U.S. Comptroller General. "Growth in health-related spending is the primary driver of the fiscal challenges facing state and local governments as well.
"Unsustainable growth in health-care spending also threatens to erode the ability of employers to provide coverage to their workers and undercuts their ability to compete in a global marketplace." ...
A new report urges policymakers to find a solution to the health-care crisis; long-term fiscal problems may develop if the issue is not addressed.
If the United States does not act soon to address health-care costs, federal and state governments as well as American businesses could face a cascading fiscal crisis with devastating long-term consequences, says a new report by the Government Accountability Office.
In the report entitled, "Long Term Federal Fiscal Challenge Driven Primarily by Health Care," the GAO, the investigative arm of Congress, said an immediate "multi-pronged solution" must be pursued before the "window of opportunity" to address the issue closes.
"Rapidly rising health-care costs are not simply a federal budget problem," said the report, prepared by Gene Dodaro, acting U.S. Comptroller General. "Growth in health-related spending is the primary driver of the fiscal challenges facing state and local governments as well.
"Unsustainable growth in health-care spending also threatens to erode the ability of employers to provide coverage to their workers and undercuts their ability to compete in a global marketplace." ...
Ralph Nader: Economic Domino Theory
Ralph Nader: Economic Domino Theory | July 2, 2008 | Greed Without Accountability
The worst top management of giant corporations in American history is also by far the most hugely paid. That contradiction applies as well to the Boards of Directors of these global companies.
Consider these illustrations:
The bosses of General Motors (GM) have presided over the worst decline of GM shares in the last fifty years, the lowering of GM bonds to junk status, the largest money losses and layoffs of tens of thousands of workers. Yet these top executives are still in place and still receiving much more pay than their successful counterparts at Toyota.
...
Then there are the financial companies. Top management on Wall Street has been beyond incompetent. Wild risk taking camouflaged for years by multi-tiered, complex, abstract financial instruments (generally called collateralized debt obligations) kept the joy ride going and going until the massive financial hot air balloon started plummeting. Finally told to leave their high posts, the CEOs of Merrill-Lynch and Citigroup took away tens of millions of severance pay while Wall Street turned into Layoff Street.
The banks, investment banks and brokerage firms have tanked to levels not seen since the 1929-30 collapse of the stock market. Citigroup, once valued at over $50 per share is now under $17 a share.
...
Countrywide, the infamous giant mortgage lender (subprime mortgages) is about to be taken over by Bank of America. Its CEO is taking away a reduced but still very generous compensation deal.
...
Now the entire U.S. economy is at risk. The domino theory is getting less theoretical daily. Without investors obtaining more legal authority as owners over their out of control company officers and Boards of Directors, and without strong regulation, corporate capitalism cannot be saved from its toxic combination of endless greed and maximum power—without responsibility.
Uncle Sam, the deeply deficit ridden bailout man, may have another taxpayers-to-the-rescue operation for Wall Street. But don’t count on stretching the American dollar much more without devastating consequences to and from global financial markets in full panic.
Consider the U.S. dollar like an elastic band. You can keep stretching this rubber band but suddenly it BREAKS. Our country needs action NOW from Washington, D.C.
The worst top management of giant corporations in American history is also by far the most hugely paid. That contradiction applies as well to the Boards of Directors of these global companies.
Consider these illustrations:
The bosses of General Motors (GM) have presided over the worst decline of GM shares in the last fifty years, the lowering of GM bonds to junk status, the largest money losses and layoffs of tens of thousands of workers. Yet these top executives are still in place and still receiving much more pay than their successful counterparts at Toyota.
...
Then there are the financial companies. Top management on Wall Street has been beyond incompetent. Wild risk taking camouflaged for years by multi-tiered, complex, abstract financial instruments (generally called collateralized debt obligations) kept the joy ride going and going until the massive financial hot air balloon started plummeting. Finally told to leave their high posts, the CEOs of Merrill-Lynch and Citigroup took away tens of millions of severance pay while Wall Street turned into Layoff Street.
The banks, investment banks and brokerage firms have tanked to levels not seen since the 1929-30 collapse of the stock market. Citigroup, once valued at over $50 per share is now under $17 a share.
...
Countrywide, the infamous giant mortgage lender (subprime mortgages) is about to be taken over by Bank of America. Its CEO is taking away a reduced but still very generous compensation deal.
...
Now the entire U.S. economy is at risk. The domino theory is getting less theoretical daily. Without investors obtaining more legal authority as owners over their out of control company officers and Boards of Directors, and without strong regulation, corporate capitalism cannot be saved from its toxic combination of endless greed and maximum power—without responsibility.
Uncle Sam, the deeply deficit ridden bailout man, may have another taxpayers-to-the-rescue operation for Wall Street. But don’t count on stretching the American dollar much more without devastating consequences to and from global financial markets in full panic.
Consider the U.S. dollar like an elastic band. You can keep stretching this rubber band but suddenly it BREAKS. Our country needs action NOW from Washington, D.C.
The Monkey Cage: Inequality and information among conservatives and liberals
The Monkey Cage: Inequality and information among conservatives and liberals
As a follow up to Lee’s post on Napier and Jost, this graph, from Larry Bartels’ Unequal Democracy, is pretty striking.
... Rather than being more likely to recognize the reality of growing inequality, those conservatives who were most politically aware were most likely to deny that income differences had increased. In this instance, political awareness did more to facilitate ideological consistency than it did to promote an accurate perception of real social conditions.
... Among liberals, recognition of increasing income inequality rose markedy with general political awareness, to 86% for people of average political awareness … and a near-unanimous 96% at the highest information level. However, the proportion of extreme conservatives who were willing to admit that economic inequality had increased actually decreased with political information, from 80% among those who were generally least informed about politics to 70% for people of average political awareness to a little less than 60% among those at the top of the distribution of political information.
backdoor H-1B cap increase that could lower wages for U.S. tech workers
June 13, 2008 (Computerworld) WASHINGTON -- The Bush administration's decision to allow foreign students to work in the U.S. for up to 29 months before getting an H-1B visa faces opposition from the AFL-CIO. The largest labor organization in the U.S. labeled the move a backdoor H-1B cap increase that could lower wages for U.S. tech workers, according to comments about the rule change made available this week by the government. ...
Moreover, Avendano said the rule change "allows employers to completely bypass" any of the protections in the H-1B program that prevent employers, for instance, from using foreign workers to break a strike. Moreover, students working on OPT won't have to be paid the prevailing wage as required under the H-1B program. An OPT employee could, theoretically, work for minimum wage, she wrote.
Moreover, Avendano said the rule change "allows employers to completely bypass" any of the protections in the H-1B program that prevent employers, for instance, from using foreign workers to break a strike. Moreover, students working on OPT won't have to be paid the prevailing wage as required under the H-1B program. An OPT employee could, theoretically, work for minimum wage, she wrote.
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