To the Bitter End

Unless something completely unexpected happens it’s going to be a convention fight. With primaries like West Virginia, Kentucky, Oregon, Puerto Rico, Montana and South Dakota remaining it’s just going to be more of the same. That list of states looks like more tit-for-tat wins and loses. There is nothing left that can serve as that defeat from which there is no coming back. Senator Clinton now has all the momentum, meager as it may be, to carry her through the last one on 3 June. Where things stand now is where they’ll be on August 25th, the opening day of the nominating convention.

The second factor here is that one may whish for some party elders to deliver to Senator Clinton her come to Jesus talking-to, but who has the sway over the Clintons? Howard Dean is an enemy that they fought to keep from his current position. Harry Reid has sworn neutrality because he is going to have to cope with at least one, at this rate perhaps both of them come the 111th Congress. The various other Senators are pledged all over the map. On MSNBC they were talking about Al Gore, but at this point there is too much bad blood between the Clintons and Mr. Gore.

There is nothing left now that can stop Senator Clinton from fighting on to the bitterest of bitter ends. Her strategy is clearly to wait it out and see if there are any more Reverend Jeremiah Wrights lurking in Senator Obama’s shadow. Or see if they can drum up some. Something, anything to cause an mass defection of delegate support come convention.

Consider what will happen if Hillary Clinton were to win the nomination in a convention fight? Could that be the end of the Democratic lock on the African American vote? Imagine how chilly the 111th Congress will be under a President McCain. Imagine the recrimination within the Democratic party should the Democrats lose after eight years of George W. Bush. Clearly the darkest days of the Democratic party are not yet safely in their past.

If it comes to a convention fight, I may have to put in for that week off from work.

Asian Triumphalism

The blaring red 36-point font on the cover of the latest issue of Foreign Affairs insists, “Is America in Decline?” which immediately caught my attention, of Spenglarian tendencies as I am. Turns out it’s just an abridgement of Fareed Zakaria’s new book, The Post-American World. Turns out it’s all hype and the article hims and haws around an answer of “no.” But the issue also contains and adaptation of Kishore Mahbubani’s The New Asian Hemisphere: The Irresistible Shift of Global Power to the East as well as a reviews of Amy Chua’s Day of Empire: How Hyperpowers Rise to Global Dominance–and Why They Fall, Parag Khanna’s The Second World: Empires and Influence in the New Global Order as well as top billing, Fareed Zakaria’s book.

And wow, there sure are a number of books out about the certainty of U.S. relative decline. But there is something distinct about this list of authors: they’re all Asians. Fareed Zakaria was born in Mumbai, India, Kishore Mahbubani is a citizen of Singapore, Amy Chua is a first generation American of Chinese descent and Parag Khanna was born in Kanpur, India. And I’m not cherry-picking. This is lifted from a single issue of Foreign Affairs. And I’m not suggesting that they’re part of some Asian propaganda front. They’re all correct in their analysis. The United States is experiencing decline relative to a rising Asia and other countries.

What puzzles me is that there isn’t a similarly prominent cohort of white guys writing books saying the same thing. I am reminded of John Mearsheimer’s “China’s Unpeaceful Rise,” (Current History, vol. 105, no. 690, April 2006, pp. 160-162), but the issue of the relative decline is for Mr. Mearsheimer a subordinate point to his “tragedy of great power politics” shtick and he is writing it in a down market publication. I’m sure white people making the same point are out there, but why so little known? Is there something about actually being Asian that makes one prone to see and accept this point and something about being white that puts one in a massive state of denial? Or do publisher think there’s something novel and amusing about publishing such voices? Is there something about our discourse on relative decline that we feel the need to give it Asian spokespeople? Will Thomas Friedman’s next book be on the relative decline of the United States and the rise of Asia? Did Paul Kennedy write it so long ago that is doesn’t bear revisit?

Bob Dylan-Like Lyrics

Weird Al Yankovic exists somewhere on that thin line between being a complete doofus and a genius. His spoof of Bob Dylan’s “Subterranean Homesick Blues” (YouTube | Wikipedia) is firmly ensconced on the side of genius. In Weird Al’s version, all the lyrics are palindromes and as a method for generating Bob Dylan-like lyrics, palindromes seem to work surprisingly well.

For the original Dylan film — what we now call a music video — the person who helped Dylan make the cue cards: Allan Ginsberg.

I sometimes feel at a disadvantage in defending the nonsensical, sort of Da-Da poetry lyrics of Nirvana. Or at least merely in the vicinity of sense, insofar as one gets the sense that there is some meaning or narrative to a Nirvana song, it’s just not a sense that stands up once one begins to look closer or try to impose any sense. In this regard Nirvana seems to be well within the tradition of Dylan.

More Enthusiasm for Expensive Gas

And hey, sales of compact and subcompact cars are at an all-time high, with one in five cars sold in April now from this category, up from one in eight at the height of the SUV craze. And four cylinder engines are now more popular than six cylinder. Sales of SUVs and trucks are down between 25 and 35 percent (Vlasic, Bill, “As Gas Costs Soar, Buyers Flock to Small Cars,” The New York Times, 2 May 2008).

In my own observation, I have noticed that the slug lines in D.C. — namely the one on 14th between F and G — have grown quite competitive as of late.

Regarding taxes, many critics of the holiday proposal have answered that it would simply benefit the oil companies, not consumers. But on consumers is where the burden of paying the taxes falls, right? Not exactly. Empirical studies show that consumers and oil companies roughly split the cost of gas tax increases. For example, this study excerpted by Matthew Yglesias suggests the following:

Using the estimated coefficients, we can determine the incidence of federal and state specific taxes. An increase in the federal tax by 1¢ raises the retail price by 0.47¢ and decreases the wholesale price by 0.56¢. Thus, consumers and wholesalers each pay roughly half of the federal specific tax.

(Chouinard, Hayley and Jeffrey M. Perloff, “Incidence of Federal and State Gasoline Taxes,” Economics Letters, vol. 83, no. 1, April 2004, pp 55-60; Yglesias, Matthew, “Gas Tax Incidence,” TheAtlantic.com, 2 May 2008)

These stories aren’t unrelated. Gas was hitherto imagined as one of those products for which demand was highly inelastic because it was largely a function of house purchasing and employment decisions — both factors not amenable to rapid readjustment. Consumers would only be able to adjust to increased fuel prices on the timescales in which they make house buying and employment decisions — that is, not very fast.

It turns out that consumer demand for gas isn’t as inelastic as it was previously thought. Many have pointed out that companies don’t pay taxes, they collect them. In other words, if the government taxes a corporation — they’re evil, they deserve it! — they will just pass the tax through to the consumer by building it into the price of their products. It turns out that the catch-phrase version of this story is too simple. The power of a company to pass a price along to consumers is dependent on elasticity of demand for their products. Where it’s highly inelastic, they can unproblematically pass it all on. Where consumers are more responsive, producers have less liberty and must to price with caution.

In the case of gas, it turns out that people can and do take steps to adjust their consumption — not enough that we’re going to achieve oil independence, but enough that oil companies have to think twice before passing along a price increase.

And this is all just the steps that are being taken now. I would expect urban density to begin to increase and the suburbs to start to depopulate over the next few years as those longer-term adjustments to fuel consumption come within the purview of people’s decision making.

Three Cheers for Expensive Gas

Everyone’s all worked up about the price of a barrel of oil these days, with certain pandering candidates proposing a gas tax holiday for the duration of the summer. But look what’s happening with prices being as high as they are. Drivers in the Northwest have reduced fuel consumption eleven percent to 1966 levels and long-haul freight is moving off trucks to rail, a trend driven by the 3-to-1 fuel efficiency advantage of trains over trucks. I would say this is all good news brought to you in whole by astronomical prices at the pump (Barnett, Erica C., “Northwest Gas Consumption at Lowest Level Since 1966,” SLOG, 18 April 2008; Ahrens, Frank, “A Switch on the Tracks: Railroads Roar Ahead,” The Washington Post, 21 April 2008).

Expensive gas isn’t as good as a carbon tax or a cap and trade system, but it’s progress. So let’s not give up while we’re ahead. Instead of a summer gas tax holiday, why don’t we double down? Let’s add a few more cents of gas tax. Every penny in Uncle Sam’s coffer is one less in that of the House of Saud.

And as for those truckers in Pennsylvania, it’s called creative destruction. It’s part of the capitalist system. Time to take that tech school cert in diesel engine maintenance. The rail companies are hiring like gangbusters and those are better jobs anyway. Instead of pandering on fuel prices to an industry that should be paired down to everyone’s advantage anyway, the Democrats should be pushing a grand bargain between capitol and labor: an enhanced social safety net to cushion workers against the currents of globalization in exchange for greater liberalization.

The whole argument of freemarketeers is that prices are signals to consumers and by consumers acting on those signals, optimum or near-optimum resource utilization will be achieved. I’m actually in favor of enhanced signaling. Price leveling schemes by utility companies are a convenient service to their customers who have to plan household budgets, but it is signal-dampening. I think that price leveling should be done away with favor of hyper market in utilities. Power, water and gas prices should fluctuate on a per minute or per hour basis with a price readout in every house and some smart planning tools available to consumers to help them make consumption decisions. People might run certain appliances at night when power generation and distribution systems were underutilized and the electricity at its cheapest or refrain from watering their lawns so much in the summer.