Remember peak oil?

Apparently no one else does either. Welcome to everlasting oil (FP) with oil so cheap, pirates don't even want it anymore (qz).

The biggest threats to Western Civilization don't exist outside its borders...

Juxtaposition - "Why the West is Irresistible" (NationalPost):

It’s easy to laugh at the news that the Islamic State of Iraq & the Levant (ISIL) is so short of money that it has stopped giving its fighters free energy drinks and Snickers bars. Har, har, har. But it’s also profoundly important. [...]

This bitter, theologically obtuse concession to fiscal reality underlines the same insurmountable contradiction within Islamism generally as the free energy drinks, Snickers bars and jihadi Twitter accounts. These radical movements hate the West, not because of our policies or even our consumerism, but because our vertiginously dynamic creativity and cultural turmoil, the wellspring of our prosperity and power, is irresistible psychologically and practically.

Read the whole thing. On the other hand, "Ivy League crybullies vs. survivor of a Soviet labor camp; guess who needs ’emotional support’?" (WashingtonPost). As Reason points out, nevermind the tuition that costs $60k a year, "it's exhausting work, being offended all the time."

Chinese textile firm opens up in South Carolina to reduce costs

Comparative advantage can shift both ways also proving some people will never be happy (WSJ):

But Keer executives said they realized that the gap in wages between China and the U.S. was narrowing, plus South Carolina had cheaper land, energy and raw cotton than China. Keer opened its first plant in South Carolina last year and now employs about 180 people, said Lilian Chang, a sales executive at the South Carolina plant. Over time, it wants to add four more factories and build up its workforce to 500.

“What we lack (in South Carolina) is professional technicians” to run the company’s automated spinning machinery, Ms. Chang said. One reason the U.S. textile industry had such big layoffs, economists say, is that the industry became so automated that it needed far fewer workers to run computerized assembly lines.

For some in the Palmetto state, the investment by the state’s one-time archrival is worrying, despite the jobs the companies bring. The Chinese investment “is a sign of weakness,” said Jim Jamborg, a Little River, S.C., postal worker. “The Chinese are coming in and American businesses are moving out.”

Bee-mageddon averted? U.S. honeybee colonies hit a 20-year high

Bee colonies are no longer on the decline, and according to the Washington Post's Wonkblog, that's (un)surprisingly thanks to free markets:

Beekeepers have been doing this sort of thing since the advent of commercial beekeeping. When CCD came along, it roughly doubled the usual annual rate of bee die-offs. But this doesn't mean that bees are going extinct, just that beekeepers need to work a little harder to keep production up.

The price of some of that extra work will get passed on to the consumer. The average retail price of honey has roughly doubled since 2006, for instance. And Kim Kaplan, a researcher with the USDA, points out that pollination fees -- the amount beekeepers charge to cart their bees around to farms and pollinate fruit and nut trees -- has approximately doubled over the same period.

"It's not the honey bees that are in danger of going extinct," Kaplan wrote in an email, "it is the beekeepers providing pollination services because of the growing economic and management pressures. The alternative is that pollination contracts per colony have to continue to climb to make it economically sustainable for beekeepers to stay in business and provide pollination to the country’s fruit, vegetable, nut and berry crops." We have also been importing more honey from overseas lately.

But rising prices for fruit and nuts hardly constitute the "beepocalypse" that we've all been worried about. Tucker and Thurman, the economists, call this a victory for the free market: "Not only was there not a failure of bee-related markets," they conclude in their paper, "but they adapted quickly and effectively to the changes induced by the appearance of Colony Collapse Disorder."

Free markets have also resulted in more and better services to make innovation easier. One of the top funded indiegogo campaigns ever? "Flow Hive: Honey on Tap Directly From Your Beehive"

"Why you can't afford a home"

I suspect that this applies as much for Canada as it does for the US (New Geography):

The connection between growing inequality and rising property prices is fairly direct. Thomas Piketty, the French economist, recently described the extent to which inequality in 20 nations has ramped up in recent decades, erasing the hard-earned progress of previous years in the earlier part of the 20th century. After examining Piketty’s groundbreaking research, Matthew Rognlie of MIT concluded (PDF) that much of the observed inequality is from redistribution of housing wealth away from the middle class.

Rognlie concluded that much of this was due to land regulation, and suggested the need to expand the housing supply and reexamine the land-use regulation that he associates with the loss of middle-class wealth. Yet in much of the country, housing has become so expensive as to cap upward mobility, forcing many people to give up on buying a house and driving many—particularly young families—to leave high-priced coastal regions for less expensive, usually less regulated markets in the country’s interior.

Unfortunately, I think statists have been far better at communicating their message and arguing for policies that are just making things worse as millenials apparently have a higher opinion of socialism than capitalism (Washington Post). I think this image is worth distributing:

What Russia really fears...

Frackers (Manhattan Institute). Which explains some of their "philanthropy" in the US (Daily Caller).

When "investments" really aren't

China's ghost cities (Wired): a reminder that markets are far more efficient at capital allocation than governments.

Why most Germans rent

Surprise, surprise, incentives matter. Fascinating look at housing policy - particularly in Germany and how it has shaped whether people buy or rent. Also a look at well meaning interventions elsewhere that have ultimately failed most the people they were designed to "help" (qz):

There’s another pretty simple reason Germans are less likely to own houses. The government doesn’t encourage it. Unlike high-homeownership countries like Spain, Ireland and the US, Germany doesn’t let homeowners deduct mortgage-interest payments from their taxes. (There’s more on the structure of European tax systems here.) Without that deduction, the benefits of owning and renting are more evenly balanced. “Both homeowners and landlords in Germany are barely subsidized,” wrote Voightländer in a paper on low homeownership rates in Germany. Those regulations, a solid supply of rental housing, and the fact that German property prices historically rise very slowly —that’s a whole other story—mean German rents don’t rise very fast. And because one of the main reasons to buy a home is to hedge against rising rents, the tendency of German rents to rise slowly results in fewer homebuyers and a lower homeownership rate.

The things people get offended by...

High up on the list seems to be that outcomes are influenced by personal choices (CBC - yes, the our state sponsored broadcaster):

Not wanting to face a lifetime of debt, Cooper sacrificed three years of his life to pay down a $255,000 mortgage on a $425,000 Toronto home he bought in 2012.

He worked up to 100 hours a week at three jobs: pension analyst; financial writer; and supermarket clerk. Naturally, the bachelor's social life suffered. Cooper also lived like a pauper, maintaining a strict budget and residing in the basement so he could collect rent on the rest of his house.

His story generated more than 2,000 comments on CBC News sites.​

[...] Media across the globe have now jumped on the story and also taken sides. "Well done, big fella, congratulations, an inspirational guy," gushed host David Koch on the Australian breakfast television program, Sunrise.

But America's Slate magazine had a different take, stating Cooper's story implied our money troubles were entirely our own fault. The Slate article suggested cash-strapped people wanted real economic change rather than just "inspirational stories of sacrifice and pluck."

General rule of thumb: when you're offended by what someone else has done that isn't hurting anyone else, that probably says more about you than anyone else...

The real barrier to affordable housing?

According to Reason, regulations and bureaucrats:

In an alternate reality, the city government wouldn't be calling shots on what is legal and illegal in terms of apartments, rents, sub-contracting, you name it. That would fall on the shoulders of owners and renters rather than what is at best a capricious set of rules enforced by bureaucrats whose actions are subject to wide variation.

According to Lisa Sturtevant of the National Housing Conference, regulatory approvals (zoning, inspections, and more) add up to $50,000 to the cost of new single-family dwellings in urban areas. That's a lot of scratch that ends limiting housing supply and squeezing residents in all sorts of ways.

Michael Burry: After the financial crisis

Yep. Remarkably candid/good reporting from NYMag:

The major reform legislation, Dodd-Frank, was named after two guys bought and sold by special interests, and one of them should be shouldering a good amount of blame for the crisis. Banks were forced, by the government, to save some of the worst lenders in the housing bubble, then the government turned around and pilloried the banks for the crimes of the companies they were forced to acquire. [...] Whether it’s the one percent or hedge funds or Wall Street, I do not think society is well served by failing to encourage every last American to look within. This crisis truly took a village, and most of the villagers themselves are not without some personal responsibility for the circumstances in which they found themselves. We should be teaching our kids to be better citizens through personal responsibility, not by the example of blame.

But also, in response to the question "What, if anything, makes you hopeful about the future?":

Innovation, especially in America, is continuing at a breakneck pace, even in areas facing substantial political or regulatory headwinds. The advances in health care in particular are breathtaking — so many selfless souls are working to advance science, and this is heartening. Long-term, this is good for humans in general. Americans have so much natural entrepreneurial drive. The caveat is that it is technology that should be a tool making lives better in the real world, and in line with the American spirit of getting better and better at something, whether it’s curing cancer or creating a better taxi service. I am less impressed with the market values assigned to technology that enhances distraction. We don’t want Orwell’s world, but we don’t want Huxley’s world either.

2015: Best year to be alive, but also a year of absurdity

A juxtaposition - a pessimistic look of 2015 and the pain we, in the West, inflict on ourselves by George Will (Washington Post):

We learned that a dismal threshold has been passed. The value of property that police departments seized through civil asset forfeiture — usually without accusing, let alone convicting, the property owners of a crime — exceeded the value of property stolen by nongovernment burglars. [...]

The Internal Revenue Service persecutes conservative advocacy groups but does not prosecute IRS employees who are tax cheats: An audit revealed that over the past decade, the IRS fired only 400 of the 1,580 employees who deliberately violated tax laws, rather than the 100 percent required by law. [...]

A suburban Washington high school promoted self-esteem by naming 117 valedictorians out of a class of 457. Two Edina, Minn., elementary schools hired “recess consultants” to minimize “conflict” — children saying “Hey, you’re out!” rather than “Nice try!” The principal of a San Francisco middle school withheld the results of student elections that did not produce properly “diverse” results.

But a year of hope as well - from John Stossel looking at the world as a whole. While the US, along with much of the west, may be making incremental moves away from economic and personal liberty that has brought them prosperity, much of the rest of the world has been moving in the opposite direction with quantifiable, positive and predictable results (Fox):

Twenty-five years ago, 2 billion people lived in extreme poverty -- that meant surviving on about a dollar a day, often with little access to basic needs like water and food. “Experts” predicted that number would rise as the population grew. Happily, thanks to the power of free markets, they were wrong. In the space of a generation, half the people most in need in the world were rescued.

Ten percent of the world’s people still live in dire poverty, but the trend is clear: Where there is rule of law and individual freedom, humanity is better off. As Marian Tupy of HumanProgress.org puts it, “Away from the front pages of our newspapers and television, billions of people go about their lives unmolested, enjoying incremental improvements that make each year better than the last.”

Science myths that just won't die

Nature: "False beliefs and wishful thinking about the human experience are common. They are hurting people — and holding back science."

Saudi Arabia's finances hit by low oil prices

It couldn't happen to nicer people... (Reuters) other than Russia of course:

The government ran a deficit of 367 billion riyals ($97.9 billion) or 15 percent of gross domestic product in 2015, officials said. The 2016 budget plan aims to cut that to 326 billion riyals, reducing pressure on Riyadh to pay its bills by liquidating assets held abroad and issuing bonds.

Next year's budget projects spending of 840 billion riyals, down from 975 billion riyals actually spent this year. The ministry said it would review government projects to make them more efficient and ensure they were necessary and affordable.

Revenues next year are forecast at 514 billion riyals, down from 608 billion riyals in 2015, when oil revenues accounted for 73 percent of the total. The Brent oil price averaged about $54 a barrel this year but is now around $37.

China slows...

An overview from the WSJ:

China's Communist Party promised to transform people's lives after decades of chaos. Higher living standards underpin the party’s rule, making limits on personal freedoms worthwhile for many. As the economy slows, that social compact is fraying.

There's a certain amount of nervousness, fear but also optimism and hope as to what comes next.

Plus other challenges: Xinjiang seethes under Chinese crackdown (NYT via Instapundit)

Because making some customers less profitable...

Will make banks want to serve those customers more? I'd say that the economic literacy/idiocy is remarkable but sadly I don't think it is (NYT):

Some who advocate the use of the ID cards question whether the refusal to accept them has less to do with security concerns and more to do with protecting the bottom line. Regulations reining in fees have reduced the profits banks can make from low-income customers, putting the city’s immigrants among the least attractive sources of potential customers.

“If New Yorkers who rely on IDNYC were perceived to be highly profitable customers, the big banks would no doubt change their tune,” said Deyanira Del Río, a co-director of New Economy Project, which works with community groups in New York.

Branding is crucial...

But so is authenticity: How the Mast Brothers fooled the world into paying $10 a bar for crappy hipster chocolate (Quartz). We've been exploring ecommerce and the development of nascent brands lately so I've been thinking a lot about things like this... though it also speaks to the limitations of marketing (as I'm sure the Mast Brothers are about to learn).

Thomas Sowell: 'Poverty is the norm, wealth is the exception'

Well, yeah. Interview promoting his most recent book - Wealth, Poverty and Politics (Amazon via theArtsMechanical):

Corruption as symptom, not cause, of poverty

Interesting hypothesis being advanced by Daron Acemoglu and James A. Robinson (WSJ):

Corruption doesn’t come from nowhere. It is a result of economic and political institutions that empower unrepresentative elites while shutting out the rest of the country. That empowerment lets politicians, bureaucrats and soldiers grab resources and get wealthy from bribes. What allows them to get away with it is the absence of democratic accountability and effective checks and balances, like the rule of law and press freedom. Without fundamental change in these institutions, anticorruption crusades aren’t likely to improve the economic lives of ordinary people. The greedy elites that dominate most poor countries will just find other ways to enrich themselves at public expense.

If corruption were the real problem, its absence would mean widespread prosperity, but we know that’s not the case. Take pre-1994 South Africa, where white-supremacist rule included a competent, professional bureaucracy and a somewhat independent judiciary. Uncorrupt though it might have been, this apartheid state ruthlessly oppressed its impoverished and disenfranchised black majority.

Or consider Cuba, which Transparency International today considers to be less corrupt than Greece. Cuba is poorer now than at the time of Fidel Castro’s revolution in 1958. The reason isn’t graft or the enrichment of the country’s elites. The problem is communist dictatorship: The economic institutions established by the Castro brothers discourage investment, innovation and entrepreneurship.

It would have been nice had the authors explored further what this means. What institutions can/should get developed and how does one develop them when their transparency and creation run counter to the entrenched interests of local elites?

Self inflicted wounds: Another company leaves Connecticut

What's galling is that these regulations that hurt businesses are supposed to help workers. Without jobs how are these workers really helped? A farewell letter (TheArtsMechanical):

With the Litchfield hills and Connecticut in our rear-view mirror as we move our 101-year-old manufacturing company to South Carolina, we are nostalgic, excited, and disappointed.

We love Torrington and Connecticut but not all the things the General Assembly and the governor have done to induce us to leave family and friends behind. After more than a century of manufacturing in Connecticut, we are not looking for handouts.

We have paid our fair share, but enough is enough.

Connecticut’s high cost of doing business and its anti-employer attitude have finally driven us out. We are not moving for any government incentives.

Consider these facts:
• We sold our 50,000-square-foot building for enough money to buy a 100,000-square-foot building — and still had enough money left to pay for the transport of 100 trailer loads of machinery and equipment to our new site.
• The property taxes on our big new facility in South Carolina are much less than those on our smaller former building in Connecticut.
• Our utility costs in South Carolina, especially for electricity, will be about a third of what we paid here, though our space will more than double.
• We are taking a third of our employees with us and paying them the same wages. With South Carolina’s lower cost of living, it is as if they are getting a big raise. And we pay our new employees in South Carolina competitive local wages. These savings could no longer be ignored.

At the same time, the constant hostility of the General Assembly, the governor, and state agencies, particularly the state Labor Department, settled the matter against staying in Connecticut.

Year after year employers like us have to fight off efforts to: — Expand state requirements for paid sick leave.
— Increase the highest minimum wage in the nation to $15 per hour and more.
— Require paid family and medical leave.
— Impose unworkable restrictions on workforce scheduling.
— Restrict our ability to talk to our employees about union organizing efforts.
— And, of course, make us pay for every new “investment” policymakers think is a good idea.

We have always believed that to attract the best employees, we need to be among the best employers. We have never paid minimum wage and we have always offered our employees excellent benefits, including health insurance plans, paid vacation time, disability insurance, a 401(k) plan with employer matching contributions, profit sharing, and other time off based on individual needs.

Some people in authority in Connecticut refuse to understand that a mandated $15 minimum wage would mean that companies like ours would have to raise pay across the board. It would mean that rather than investing in our company and being able to create more jobs, we would have to raise pay for all employees, including those who are already being paid a good wage. These cost increases would cause us to raise the price of our product and become less competitive with companies outside Connecticut.

To make it worse, staying in Connecticut would require us to speculate on how much more our taxes and costs will go up as state government fails to pass a balanced budget.

Under the current administration state government has imposed nearly $4 billion in tax increases and still runs a deficit.

We can’t afford to wait for the governor and the legislature to see they have a spending problem and to address it. We can’t wait for state government to make any more “investments” by giving our money to a few favored companies.

Perhaps the final straw for us was our mind-boggling treatment by the Labor Department, which actually awarded unemployment compensation to an employee who was fired for threatening a supervisor with physical harm. No one is surprised that the only state agency we heard from when the word got out that we were thinking of leaving was the Labor Department, which insisted that we allow it into our company to conduct a seminar for our employees to tell them how to get all the benefits they were entitled to.