Orin KerrImage link here. Photo link here.
Even in a crowd of rising food and commodity costs, corn stands out, its price having doubled in less than a year to a record $7.87 per bushel in early June. Booming global demand has overtaken stagnant supply. But rather than ameliorate the problem, the government has exacerbated it, reducing food supply to a hungry world. Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex. ... Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.
That’s not all. Ethanol packs less punch than gasoline and uses considerable energy in its production process. All told, each gallon of gasoline that is displaced costs the Treasury $1.78 in subsidies and lost tax revenue.--Steven Rattner
After earning my PhD, in chemistry, I worked in drug-discovery research for more than 20 years. Aside from being a fascinating profession, it was pretty secure -- until the last decade. Then it became anything but. Why the change? Well, it costs about $1 billion to bring a new drug to market. Blockbuster drugs that bring in multiple billions in profits, such as Lipitor, are needed to support the R&D costs of all other drugs -- ones that don't pan out, and ones that just can't help enough people to justify the investment before the patent expires. And the patents of almost all current blockbusters are expiring about now, cutting drug companies' revenues drastically. Adding to the problem is the Food and Drug Administration, which has become overly restrictive and risk-averse, has made it very difficult (and even more expensive) for companies to bring replacement drugs to market. To trim expenses, companies began to outsource research to India and China. It started as a trickle, but soon became a tsunami, leaving many thousands of highly intelligent and well-trained professionals with nothing to do -- a shameful waste of talent.--Josh Bloom
Combined with central government debt and other liabilities such as bad bank loans, analysts estimate China’s overall explicit debt load is about 70 per cent of gross domestic product. But some analysts believe the contingent liabilities of the government are much higher, once debts on the books of state-owned enterprises and other entities implicitly backed by the state are included. “If you take a very broad view of the Chinese government’s contingent liabilities rather than explicit debt on the books then the number comes to well over 150 per cent of China’s GDP in 2010,” according to Victor Shih, a political economist at Northwestern University in the US. The US has a debt-to-GDP ratio of 93 per cent, while Japan’s ratio is over 225 per cent.--Simon Rabinovitch and Jamil Anderlini
... I do not believe that China’s high savings and low consumption rates are a function of any remarkable preference on the part of Chinese households for savings over consumption. They are simply the automatic consequence of a system in which increases in GDP growth are subsidized by transfers from the household sector, which effectively constrains the relative growth of household income and, with it, household consumption. In that case the only way for China to rebalance would be for Chinese household income to grow faster than GDP. This requires three things above all. It requires that wages grow faster than productivity, that the currency appreciates, and that real interest rates rise. This does not seem to be happening in China, as I discussed in a blog entry last month. Wages have been rising quickly in the past year, but the currency is barely appreciating in real terms against the dollar (and is probably depreciating on a trade weighted basis), and of course real interest rates are declining sharply.--Michael Pettis
In Does Education Matter?, [Alison] Wolf illustrates the absurdity of the increase-the-graduates/increase-the-growth logic by reference to the high remuneration of lawyers. That is, given lawyers’ high wages, having more lawyers would surely mean that there are more and more people earning more and more dough, and therefore in total, society is becoming more and more wealthy. ‘[This] would suggest’, she writes, ‘that the fastest way to boost growth would be to send everyone to law school’. Which is clearly ridiculous. In fact, what the high remuneration of lawyers tells us is that we live in a highly regulated society – as opposed to a productive one – which consequently values lawyers. It doesn’t mean that churning out an ever-increasing number of law graduates is the elixir of economic growth. Likewise, Wolf writes, ‘it is no more self-evident that since some education makes some of us richer, more would make more of us richer, than it is that “two aspirin are good” means “five aspirin are better”’. The wrongheaded belief that you can generate growth simply by increasing the number of graduates has led to the effacement of the structural problems of the economy. In other words, seeking the wrong answers has generated the wrong questions. For example, ‘there tends to be an obsession with how many engineers the UK produces, when the real question ought to be why haven’t we got more engineering industry?’, says Wolf. You don’t have to be a fully signed up economic determinist to recognise that our economic travails cannot be solved through education, education, education.--Tim Black
Al Gore’s lifestyle is a test case for the credibility of his gospel — and it fails. The tolerance of Al Gore’s lifestyle by the environmental leadership is a further test — and that test, too, the greens fail. The average citizen is all too likely to conclude that if Mr. Gore can keep his lifestyle, the average American family can keep its SUV and incandescent bulbs. If Gore can take a charter flight, I don’t have to take the bus. If Gore can have many mansions, I can use the old fashioned kind of shower heads that actually clean and toilets that actually flush. Al Gore looks to the average American the way American greens look to poor people in the third world: hypocritically demanding that others accept permanently lower standards of living than those the activists propose for themselves. ... The Vice President thinks he can square this circle, but he can’t. Sometimes the truth is inconvenient. Mr. Gore must find either a new cause or a new way to live. ... I don’t judge, dear reader, and neither should you. May we all find mercy when we stand alone, naked and ashamed before the judgement seat of God. ... If Al Gore really wants to understand why the global green movement has tanked, he should start by taking a long hard look in the mirror. Gaia, too, can be betrayed by a kiss.--Walter Russell Mead
Walter Russell Mead
Today, heterosexual marriage is frequently depicted as a site for domestic violence and child abuse. A review of academic literature on the subject would indicate a preoccupation with the damaging consequences of heterosexual marriage. Terms such as the ‘dark side of the family’ invoke a sense of dread about an institution where dominating men allegedly brutalise their partners and their children. This preoccupation of professional victimologists is reflected in popular culture. Cinema and television constantly give us stereotypical stories about unhappy, failed and dysfunctional heterosexual marriages. In contrast, same-sex unions are treated with reverence in popular culture, depicted as mature relationships between loving equals. Of course, heterosexual couples continue to get married, but there has been no time in history when the institution of heterosexual marriage has enjoyed such feeble affirmation. Indeed, these days heterosexual couples are often likely to hear the refrain ‘Why get married?’ or ‘Why wait for marriage before having children?’. Paradoxically, in some quarters the idea that marriage for heterosexuals is no big deal coincides with the cultural sacralising of same-sex unions. It is difficult to avoid the conclusion that behind the gay-marriage discussion there lurk some profound questions about how to endow intimate relationships with meaning today. And in such circumstances, elite-sanctioned snobbish intolerance is really no more acceptable than anti-gay prejudice.--Frank Furedi