by Art Woolf
My weekly look at interesting sites, economic and otherwise, on the web.
1. James Hamilton, at Econbrowser, gives us the secret of wealth creation: Buy low and sell high. A macroeconomist who specializes in energy issues, he writes
It's a strategy that works for individuals, and can work for the entire nation as well. If you can figure out a way to find resources whose value in their current use is not very great-- in other words, if you buy low-- and redeploy them somewhere else where their value is much greater-- in other words, sell high-- then you will not only add to your personal wealth, you will be creating new wealth for society as a whole. The process of allocating resources to their most efficient use is the heart of what drives economic growth. The fact that individuals have a strong personal incentive always to be looking for better ways to do that is the primary factor responsible for the standard of living that we enjoy today.
He then applies that commensense notion to the Keystone Pipeline. Well worth reading the blog post.
2. Welcome to the Year of the Dragon, which appears to be a very good year for stocks. I'll take a 7% real return on my portfolio. Let's hope.
3. Alex Tabbarok has a new book out called Lauinching the Innovation Rennaisance. His short Atlantic essay is an excerpt from the book.
Regulatory thickets are also strangling energy innovation. The U.S. Department of Energy, for example, estimates that small and environmentally friendly hydro-electric projects could generate at least 30,000 MWs of power annually. That's equivalent to the generating capacity of about 30 nuclear power plants. Moreover, since 97% of U.S. dams are generating zero power today, these projects would not require building any new dams. So what's the problem? The problem is that building even a small hydro-electric project requires the approval of numerous agencies, including the Federal Energy Regulatory Commission, the U.S. Fish and Wildlife Service, the Army Corps of Engineers, State Environmental Departments and State Historic Preservation Departments. It's simply too expensive, time-consuming and risky to build these projects when any of these agencies could veto it at any time.
4. Economic historian Deirdre McCloskey has been probing the depths of why, beginning about 200 years ago, humans became rich after living at subsistence conditions for ten thousand years. The Wall Street Journal profiles her
"Bourgeois Dignity" makes a historical argument. Modern economic growth, she claims, is a result of an ideological and rhetorical transformation. In the Elizabethan period, business was sneered upon. In Shakespeare's plays, the only major bourgeois character, Antonio, is a fool because of his affection for Bassanio. There is no need to dwell on how the other bourgeois character in "The Merchant of Venice," Shylock, is characterized.
She contrasts this with attitudes 200 years later. When James Watt died in 1819, a statue of him was erected in Westminster Abbey and later moved to St. Paul's cathedral. This would have been unthinkable two centuries earlier. In Ms. McCloskey's view, this shift in perceptions was central to the economic take-off of the West. "A bourgeois deal was agreed upon," she says. "You let me engage in innovation and creative destruction, and I will make you rich." A commercial class that was not ostracized or sneered at was thus able to activate the engine of modern economic growth.
I think there may be some lessons here for Vermont.
5. Two teenagers engage in a literal flight of fancy. Amazing stuff.
Ho approached Muhammad in the hallway of Agincourt Collegiate Institute, where they are both Grade 12 students. Muhammad has a passion for all things flight-related. His goal is to be an aircraft technician, so he has applied to engineering programs at U of T and Centennial College.
The two met in middle school. Muhammad’s family had just immigrated emigrated from Pakistan, and he spoke no English. When other students were ignoring him, Ho walked up and made friends...
Two weeks ago, Ho and Muhammad launched a homemade balloon carrying a Lego passenger and four cameras. It fell back down to Earth 97 minutes later with astonishing footage from an estimated 24 kilometres above sea level, three times the typical cruising altitude of a commercial aircraft.
6. In a long essay, Walter Russell Mead argues that our intervention in Libya will probably have major negative consequences for U.S. foreign policy.
Meanwhile, many analysts agree that the war in Libya, brilliant and strategic though it appeared to the White House at the time, may be making our options regarding Iran more limited. The west made a deal with Gaddafi: stop your nuclear program and we will treat you with respect. He kept his end of the bargain and we dispatched him to his eternal reward. What assurances can we now give the mullahs that would induce them to believe that they will be safe without nukes?
....From any point of view (humanitarian, political, strategic), Syria was more important than Libya in the spring of 2011. It is more important than Libya now. Tripoli was a diversion from Damascus rather than a road to it; whatever our policy was going to be, we should have put more weight on Syria and less on Libya.
7. How VW makes the Phaeton in an architecturally designed factory in downtown Dresden. It's a pretty neat factory tour on youtube and shows you why manufacturing jobs don't go to high school dropouts any more.
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