Business & Economics: August 2008 Archives

Here's a scary list of S&P 500 stocks that are down more than 50% from the index's recent peak. Lots of financial companies, real estate, car manufacturers, but also a surprising number or tech and energy stocks. Strange mix.

Here's a nifty map of Wal-Mart's spread across America.

John Stossel is right about the economic idiocy of "energy independence":

Most every politician and pundit says "energy independence" is a great idea. Presidents have promised it for 35 years. Wouldn't it be wonderful if we were self-sufficient, protected from high prices, supply disruptions and political machinations?

The hitch is that even if the United States were energy independent, it would be protected from none of those things. To think otherwise is to misunderstand basic economics and the global marketplace.

To be for "energy independence" is to be against trade. But trade makes us as safe. Crop destruction from this summer's floods in the Midwest should remind us of the folly of depending only on ourselves. Achieving "energy independence" would expose us to unnecessary risks -- such as storms that knock out oil refineries or droughts that create corn -- and ethanol -- shortages.

Trade also saves us money.

I think Stossel misunderstands McCain's desire for "strategic independence", however.

"I have set before the American people an energy plan, the Lexington Project -- named for the town where Americans asserted their independence once before," John McCain said. "This nation will achieve strategic independence by 2025".

Barack Obama, promising to "set America on path to energy independence," is upset that we send millions to other countries. "They get our money because we need their oil".

I don't think the idea is to use domestic oil/energy exclusively, but to break the strategic power that OPEC and our enemies derive from their oil reserves.

Sen. John McCain says he would seek to break U.S. reliance on foreign oil by 2025 by stepping up offshore drilling, nuclear power and conservation.Aides to the Republican presidential contender say his aim is strategic energy independence - a U.S. economy where oil is no longer be the primary fuel or dependent on cartels such as OPEC.

"Strategic independence" is part domestic energy policy, and part foreign policy.

I'd been meaning to post these for a week or so but hadn't gotten around to it.

Jonah Goldberg explains that our capitalist system itself is the most valuable national asset we've got.

Capitalism is the greatest system ever created for alleviating general human misery, and yet it breeds ingratitude.

People ask, “Why is there poverty in the world?” It’s a silly question. Poverty is the default human condition. It is the factory preset of this mortal coil. As individuals and as a species, we are born naked and penniless, bereft of skills or possessions. Likewise, in his civilizational infancy man was poor, in every sense. He lived in ignorance, filth, hunger, and pain, and he died very young, either by violence or disease.

The interesting question isn’t “Why is there poverty?” It’s “Why is there wealth?” Or: “Why is there prosperity here but not there?”

At the end of the day, the first answer is capitalism, rightly understood. That is to say: free markets, private property, the spirit of entrepreneurialism and the conviction that the fruits of your labors are your own.

For generations, many thought prosperity was material stuff: factories and forests, gold mines and gross tons of concrete poured. But we now know that these things are merely the fringe benefits of wealth. Stalin built his factories, Mao paved over the peasants. But all that truly prospered was misery and alienation.

A recent World Bank study found that a nation’s wealth resides in its “intangible capital” — its laws, institutions, skills, smarts and cultural assumptions. “Natural capital” (minerals, croplands, etc.) and “produced capital” (factories, roads, and so on) account for less than a quarter of the planet’s wealth. In America, intangible capital — the stuff in our heads, our hearts, and our books — accounts for 82 percent of our wealth.

Which is why idiot ideas like "stimulus" tax rebates do far more harm than good: a few dollars in our pockets are worth far less than the damage such a stimulus (and the oppressive tax regime that underlies it) causes to our fundamental capitalist system. We need to aggressively protect our economic liberty if we want to protect our economic health. The latter is a result of the former.

Andrew Roth explains how globalization and economic liberty not only create wealth, but also foment political liberty. As he excerpts from The PayPal Wars:

We're definitely onto something big. The need PayPal answers is monumental. Everyone in the world needs money - to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that's more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection.

Of course, what we're calling 'convenient' for American users will be revolutionary for the developing world. Many of these countries' governments play fast and loose with their currencies. They use inflation and sometimes wholesale currency devaluations, like we saw in Russia and several Southeast Asian countries last year, to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars.

Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless local currency for something more secure.

Capitalism breeds liberty of all sorts, and when you squelch it (as the global left is wont to do) you can't help but engender oppression of every kind.

I guess cheating offsets are about as reasonable as carbon offsets!

What is Cheat Offsetting?

When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere.

Cheatneutral offsets your cheating by funding someone else to be faithful and NOT cheat. This neutralises the pain and unhappy emotion and leaves you with a clear conscience.

Can I offset all my cheating?

First you should look at ways of reducing your cheating. Once you've done this you can use Cheatneutral to offset the remaining, unavoidable cheating.

As a non-cheater, I can get paid to "offset" cheating done by others. It's win-win-win!

A brilliant German businessman created and sold for $999.99 an iPhone application that did absolutely nothing except display a picture of a red gemstone. The point: show off to your friends that not only can you afford the luxury of an iPhone, you can also blow a grand on a useless piece of software. Naturally Apple enthusiasts were lined up to buy the software, until Apple removed it from their online store.

Its function is exactly what the name implies: to alert people that you have money in the bank. I Am Rich was available for purchase from the phone's App Store for, get this, $999.99 -- the highest amount a developer can charge through the digital retailer, said Armin Heinrich, the program's developer. Once downloaded, it doesn't do much -- a red icon sits on the iPhone home screen like any other application, with the subtext "I Am Rich." Once activated, it treats the user to a large, glowing gem (pictured above). That's about it. For a thousand dollars.

Apple apparently had some problems with I Am Rich. After initially approving it for distribution, the company has since removed it from the store. Heinrich, a German software developer, has yet to hear back from Apple concerning the removal. "I have no idea why they did it and am not aware of any violation of the rules to sell software on the App Store," Heinrich said in an e-mail with The Times today.

The "violation" is obvious! Only Apple is allowed to sell overpriced-yet-elegant status symbols!

WaPo has a great graphic that breaks down the cost of gas.

Here's another graphic that shows gas taxes around America.

(HT: The Big Picture and SMI Blog.)

Corporations give millions of dollars to all sorts of non-profits, but sometimes the targets of their donations are inimical to human life and need to be stopped.

With shareholder activism, Strobhar has had a hand in changing the corporate giving policies of more than 150 companies, essentially depriving Planned Parenthood [the nation's largest performer of abortions] of donations that would have totaled multimillions of dollars.

The tool of choice for Strobhar, who describes himself as "just a stockbroker from Dayton, Ohio," is the shareholder resolution. In order to introduce a shareholder resolution, a shareholder must own stock in the company valued at $2,000 or more for at least one year prior to the introduction of the resolution. Since 1991, Strobhar has introduced more than 60 such resolutions. ...

AT&T was giving $50,000 a year to Planned Parenthood when Strobhar began his activism at the company. The company had received thousands of letters from customers [protesting those contributions], but to no avail. It was only when Strobhar threatened the introduction of a shareholder resolution, suggesting that the company was in "breach of fiduciary responsibility," that AT&T paid attention. Within months, AT&T announced it would no longer contribute to Planned Parenthood. ...

General Mills and American Express also stopped giving to Planned Parenthood following shareholder resolutions introduced by Strobhar.

Bravo. Strobhar should serve as an example to opponents of both corporations and free speech: the solution to speech you don't like, or corporations you don't like, isn't to suppress or boycott, it's to get engaged with some speech of your own.

(HT: Sound Mind Investing Blog.)