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Wow.  He's getting so stupid that he's endanger of defying a different law of economics, namely that People Aren't THAT Stupid.

Witness, from Bloomberg, via hat tip to Greg Mankiw:

[Senator McCain] has shown increasing disdain for any economist who questions his policy prescriptions. Earlier this month, he lashed out at critics of his proposal for a summer gas-tax holiday.

"You know the economists?'' McCain said June 12 at Federal Hall, near the New York Stock Exchange. "They're the same ones that didn't predict this housing crisis we're in. They're the same ones that didn't predict the dot-com meltdown. They're the same ones that didn't predict the inflation that's staring us in the face today.''

Where to start.  So much stupidity.  Make him stop.

OK, first.  If you say shit like "The issue of economics is not something I've understood as well as I should" all the time, then maybe you should either a) shut the hell up about economics or b) check your facts really hard before you go spouting bullshit about the subject.

Second, and this is a little related to the first point about being able to check your facts if you don't STFU, As it happens, John's statement is simply false.  There are several very prominent economists that did indeed predict the housing crisis we're in, among them Dean Baker, who is, understandably, endlessly frustrated by all the idiots in the press and politics who keep saying that no one could have seen this coming, and Paul Krugman, whose predictions were not as dire as Dean's but definitely forbode some bad times for homeowners.  Furthermore, there were a ton of economists, hell, there were a ton of journalists, who saw the dot-com meltdown coming.  I mean, they didn't know exactly when, but they sure as hell knew that companies with negative net income were not worth $5 billion valuations.

And last, as Greg points out, let's be clear, John, that there is no magical other group of people who predicted all these things perfectly.  But nice straw man attempt.

Oh, yeah, and WTF at the Bloomberg article NOT POINTING ANY OF THIS OUT AS BULLSHIT.  It ends with the above quote as if this were some nugget of maverick wisdom.  Seriously, when are the press going to do their jobs and ask the man some hard questions.  On second thought, how about some questions that any competent college grad could answer?

I imagine good ol' John will become a recurring character in the people are stupid series, because, wow is that man dumb.

Recently John decided to demonstrates how much he cares about the environment by offering a $300 million dollar prize for anyone that invents a better car battery.

Newsflash, idiot:  anyone that invents a better car battery is set him/herself up for a shitload more than $300 million for it.

As Tom Lee points out, via hat tip to Ezra Klein, it's not as if car companies are sitting around yelling at their R&D departments to stop working on battery improvements.  Seriously, John, I know you are older than polyester, but I know a lot of smart old guys, so I'm going to have to come to the conclusion that you aren't ignorant of economics 101 simply because you went to college before Economics existed, but rather because you are just plain old stupid.

You want to help vs. global warming?  Offer a billion dollar prize to somebody who can figure out how to reverse the damage done to the ozone layer.  Because last time I checked, there is no huge market for that particular development, which means that anyone smart enough to do it isn't going to "waste their time" on that particular project.

By the way, it completely stuns me that the mainstream press let's John McCain get away with saying really, really genuinely stupid things all the time, particularly on things like economics, a subject in which he has already admitted to having no expertise whatsoever, without just once (one ****ing time!) calling him out for it.  I mean, Hillary got more than her share of shit for supporting the gas tax holiday (which was a very stupid idea), but John, who came up with it in the first place, didn't have to face one single reporter asking him "Can you name any economists who support this proposal?".  Not one journalist.    Seriously?

Speaking of Ezra, he has a nice piece about how our Biofuel subsidies are responsible for about 1/3 of the current global food crisis.

I've said this before.

Seriously.  This has reached ridiculous levels.  I understand that no one that works in the agriculture industry will agree with me (i.e. the ones that benefit from the $8.9 billion that our government put directly in the pockets of large agra firms last year), but the rest of you, COME ON.

Write your congressman/woman.  Tell him/her that you get it.  You know they saw "An Inconvenient Truth".  You know they watched Al Gore get the Nobel Prize.  You know they are really worried about being perceived as doing something about global warming.  And you need to tell them, RIGHT NOW, that:

a) You will still vote for them even if they don't pass every damn energy efficiency bill or alternative fuel source bill that comes within ten miles of their freaking desk.  Quantity is not Quality.

a) You WON'T vote for them if they keep placing politics above smart decision making.  Unintended Consequences really freaking matter.  PEOPLE ARE DYING HERE.  This isn't a joke, and this isn't harmless pandering to some green-earth hippies.

I am genuinely worried about global warming, really.  And I am all about reducing greenhouse gases.  I'm in favor of the Pigou Club (I think the $1/gallon proposal of the Pigou Club is too cheap, actually), tolls on freeways, an end to coal-powered electricity, etc.  I'm willing to put my money where my mouth is, and in a way that isn't popular;  pay the price at the gas pump every week and you feel it.  But if the government just gives your money away in farm subsidies it feels "free" to you.

But get real here.  We (yes, we, as in YOU and I) are starving our brothers and sisters.  One hundred million people are going to move from "poor" to "absolute poverty" in the coming year.  Not "food stamp" poverty.  "Death, Starvation, Famine, Disease" poverty.    ONE HUNDRED MILLION PEOPLE.  This must stop!  Write your senators and congressmen/women now!

One last addendum.

Good People of Iowa.  I understand that much of your economy is dependent on corn (but probably not nearly as much as YOU think it is).  But you seriously need to tell Sen. Charles Grassley that shit like this is so not OK:

"If part of our problem is that the Chinese are going to eat meat and you've got to have corn and soybeans to feed the Chinese their meat, then why isn't it just as legitimate for the Chinese to go back and eat rice as it is for us to change our policy on corn to ethanol?" Grassley asked in a conference call with reporters.

Are you ****ing kidding me?  Write your representative now.

Ezra Klein points out that it would be foolish for John McCain to tap Fiorina for Vice President:

She's known solely to the universe of people who read The Wall Street Journal, and in no small part because she was publicly and controversially dumped from the company when the board of directors leaked a long memo taking issue with her performance and management style.

Um, normally, I think Ezra knows a lot more about politics than I do.  But Ezra's forgetting the People Are Stupid law here.  Need I remind Ezra that George's W. Bush's record among that very same WSJ readership, who all presumably know that he was the CEO and owner of an Oil company that went bankrupt, and the owner of a baseball club that made money solely because it got taxpayers to pay for some land included in the purchase of the club, was never really a big stumbling block on the way to the white house for him?  Why on earth should it be any different for Fiorina?

97% of this company does not know that Fiorina was the CEO of Hewlett Packard, I guarantee it.  The G.O.P. will make a big deal of her "success in business" and most of the public will probably just shrug and move on.  Let's gloss over the fact that CEO skill sets and POTUS skill sets only overlap in very small areas -- it's true that a CEO has to play politics, especially with the board, but let's be real: the CEO can fire the CFO's ass any time he/she wants, and the CFO knows it.  Such power never needs to be used, or have its use threatened; its just "out there", and it means that CEOs often have very direct means of getting things done -- it's all very Jean-Luc Picard-like -- "Make it so."  Not only can the President NOT fire the speaker of the house's ass, he  (or, in 6 months, possibly she) will usually have to spend a great deal of time kissing that ass to get things done.

But, getting back to my point, people won't care.  It will be a news item, sure.  But Ezra has said before that John McCain would be well-served getting a woman to run for V.P. because, let's face it, the man's a misogynist, and he's going to have enough trouble getting the female vote even with a woman running at his side.  I think Fiorina comes with a lot less baggage than most candidates, given that Condie doesn't appear interested.

The price of food is starting to hurt.  I've blogged about this before, but Paul Krugman has brought it up again in  his column in the NY Times (Grains Gone Wild), and the mainstream media is starting to pay attention to this.  If you travel to poorer countries it can't escape your attention -- my wife recently e-mailed me from southeast Asia and asked "Hey, mr. economist guy, me and my friends want to know why wheat is getting so expensive!" because it is a big story in that area of the world.  There are lots of reasons including the fall of the dollar and the rising cost of energy (read: oil), but as Krugman says (and I did in my previous post on this subject), it basically boils down to:

And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states.

Again, Ethanol == EVIL.

Small 'd', even though I am a Democratic.  I attended the caucus on Saturday here in Washington, and I must say that if you're feeling kind of down about the state of democracy, this is just the kind of thing you should get out and do to cheer yourself up.  I was very impressed at the level of discussion (although, it's easy to have a civilized discussion when you know you won't, for example, be getting in any debates about whether or not gay marraige should be banned or the country should "stay the course" in Iraq, etc) and had a lot of respect for the Clinton voters.  I support Obama, and was even elected as a delegate (a classic case of the squeaky wheel getting the grease, I assure you), but my primary motivation isn't that I believe Obama is more suited to be president, it's that we need to  move the country away from its current oligarchy status.  Even if I KNEW that Hilary was the most capable person on the planet, I wouldn't vote for her, because I believe the principal of not setting the "ruling family precedent" is more important than putting the most competent person into the oval office (assuming a certain "baseline" competency exists -- I'd rather have a benevolent and competent Monarch than an imbecile running things, a choice that we were unfortunately not given anytime in the last 7 years).

One thing that did depress me is that our district sent an "uncommitted" delegate.  In the final tally, 44 voted Obama, 17 voted Hilary, and 7 voted uncommitted.  So 10% of our district gets to send one of 5 delegates (20% of the delegates, for those of you doing the math at home).  It's very hard for me to understand how this is a) fair or b) even in the interest of those 7 undecided voters.

Help me out here.  You're an undecided voter.  Fair enough.  Why send an undecided delegate to the convention?  It's not like he's undecided for the same reasons you are.  It's also not likely that he will use the same values as you would in coming to a decision in the next couple of months.  You are basically abdicating your decision-making power to the delegate.  So, tell me: how is this different from staying home on caucus day?!?  How is this different from letting the superdelegates decide things for you?

I feel that as an undecided voter, if you attend the caucus, it should be with the purpose of using the caucus proceedings to decide.  Anything else is just a cop-out, and, quite frankly, unfair to the rest of the voters -- your vote, apparently, is worth twice as much as mine.  Hmmm.  In fact, the Clinton supporters agreed with me, here.  All of them said that they would rather send an additional Obama delegate than an undecided delegate.  It's a bit of a mystery to me how an undecided voter would not be swayed by THAT argument.

A story in the Wall Street Journal brings up the debate in congress over whether Telcos like AT&T or Verizon should be held responsible for handing over customer data to the US government illegally when the US government was illegally wiretapping its citizens.

Why is there a debate here?  WTF?

The Bush administration wants to shield telecom providers from lawsuits faced as a result of participation in the president's warrantless wiretapping program and says the provision is needed to ensure future cooperation from the companies.

Yeah.  Did I mention that the whole operation was illegal?  Let's be clear here.  NO ONE in D.C. is arguing that any part of this operation was legal (the White House has claimed that it has special war-time powers to ignore the law, but never claimed that it was acting within the law).

So, basically, Bush is saying, "Ya'll can't persecute them or they won't help me break the law next time around."

Yes, I intentionally replaced prosecute with persecute.  If the man can't speak coherently, don't expect me to correct his grammar when I paraphrase him.

Anyway, the WSJ goes on:

Why is immunity needed? The White House argues that private business, particularly telecom companies, won't cooperate with intelligence-gathering if they face the threat of legal liability. "Allowing foreign terrorists, the ACLU, or anyone else to sue telecom companies because they cooperated with our government in an effort to stop enemy attacks during a congressionally authorized period of war makes absolutely no sense," says Robert Turner, a University of Virginia law professor who testified Wednesday before the House Judiciary Committee.

Again, I call bullshit.  I call holy-shit-that-bullshit-stinks-more-than-ordinary-bullshit.

(And, before I go any further, your little trick of putting the ACLU right next to terrorists in the same sentence is deplorable.  Ooooooh, you're a tricky little bastard aren't you?  Almost fell for that one!  Of course, it's even more deplorable that the WSJ didn't MAKE FUN OF YOUR TRANSPARENT BIAS.  All the fucking time, with the press corp...)

Mr. Turner, when our government breaks the law there should be consequences.  Furthermore, when our government approaches a corporation and asks them to help it break the law, we WANT the corporations to react something like this:

"You want what?  Is that legal?"

"No?  Then, um, why should we do that?"

"So, lemme get this straight.  You're breaking federal law and you want us to help?"

"Lemme talk to my boss...."

"OK, he says that shit's illegal.  Get the hell out of here."

And if they don't react like that, OF COURSE we want the ACLU to sue them!  They broke the LAW!

Now, Mr. Turner, I'm pretty sure you know the law better than I do.  And there are plenty of provisions in the law that allow for corporations to be treated just like people.  But I'm also pretty sure that I am more familiar with corporations, and their economic incentives, than you are.  Let me tell you a little secret:  even though the law pretends that corporations are people, corporations aren't people.  They don't have moral codes.  They are collections of individuals who react according to one primary incentive:  making money for their shareholders.  Sure, there are other incentives, and some stakeholders may have some moral incentives, but that one incentive is by far the biggest.

One part of making lots of money is to keep costs down.  So when the US government knocks on your door and says "Gimme some data.  I know it's illegal, but I don't care," you can refuse, but that will probably cost money.  Why?  Well, the government has lots of powers to do lots of things that will cost you lots of money (audits, investigations, etc.).  Even the very time that your lawyers spend arguing with the FBI over the legality of it all is expensive.  So what do many corporations do?  They hand over the docs.  Screw the law, costs too much money.

So, you do the math.  Do you want to leave it up to the corporations to weigh morality/legality vs. cost?  Especially when the "cost" of breaking the law appears to pretty much be zero, because congress will grant them immunity anyway?

Or do you want the corporation to say "Well, if we break this law, it could cost us $1000 per customer affected?"

I'm not that good at math, but...oh, wait, no I'm actually pretty good at math.  Of course I want the corporations to have solid economic incentives for not breaking the law.


Hat tip to Marginal Revolution

This title is going to become one of my recurring themes, for sure.  Ethanol is EVIL.  It doesn't help reduce global warming, it isn't cheaper or more efficient than petrol, but worse, some (also pretty evil) PR people have somehow managed to convince everyone that its a weapon in our fight to reduce global warming.  As a result, politicians in recent years have lined up to pump money into the (did I mention it's EVIL yet!?) Ethanol industry.

So, this is why economics matters.  This is why economics should be a requirement in every high school, rather than an elective that some business majors take and then promptly work really hard to forget.  A tiny, tiny bit of economics is all anyone needed to know in advance that these subsidies were Really Bad Things.

Food prices have risen 75% since 2005 (in inflation adjusted terms).  This matters a LOT to poor families.  And why?  Ethanol subsidies.

From the Economist:

"But the rise in prices is also the self-inflicted result of America's reckless ethanol subsidies. This year biofuels will take a third of America's (record) maize harvest. That affects food markets directly: fill up an SUV's fuel tank with ethanol and you have used enough maize to feed a person for a year. And it affects them indirectly, as farmers switch to maize from other crops. The 30m tonnes of extra maize going to ethanol this year amounts to half the fall in the world's overall grain stocks."

The bolded part is pretty amazing.  And all the people everywhere patting themselves on the fucking back for how they're helping reduce global warming.  The sad part about this is that aside from the Economist, I haven't seen a single mainstream media outlet run ONE FUCKING STORY about how useless Ethanol is, and how reckless and destructive ethanol subsidies are.  Oh, sure, every once in a while a biochemist gets 30 seconds on CNN and mentions that Ethanol only really offers about a 1% fuel-efficiency savings over regular gasoline, but the interviewer is always quick to move on.

I'm a big fan of Greg Mankiw's Pigou Club, a huge opponent of agricultural subsidies (especially for EVIL PRODUCTS).

House democrats have reached a deal on a bill that will enforce a 40% increase in fuel efficiency by 2020:

Automakers would be required to meet an industrywide average of 35 miles per gallon for cars and light trucks, including SUVs, by 2020, the first increase by Congress in car fuel efficiency in 32 years.

.....

"It is a major milestone and the first concrete legislation to address global warming," declared Sen. Dianne Feinstein, D-Calif., who was involved in the discussion with House Democrats as the agreement with Dingell was worked out.

Sigh. I have some bad news for the politicians.  Fuel efficiency gains do not decrease consumption.  This is something that lawmakers have been confused about for decades.  Just make stuff more efficient, and we'll use less energy, right?

Wrong.  In fact, the opposite is true.  Yes, that's right, fuel efficiency gains lead to increased consumption.  this concept is illustrated quite beautifully in the book "The Bottomless Well" by physicists Peter Huber and Mark Wills.

If you think about it, it should be obvious why.  Say you own a car that gives you 20 mpg today.  What happens if I give you a car that gets 40mpg and take your gas guzzler away?  That's right, you drive more.  This is essentially the law of demand in action.

Notice that if you make "Price" be the cost of driving one mile, and you make "Quantity Demanded" the miles driven, what happens to the miles you drive as the fuel efficiency of your car rises?

The same is true of electricity and other fuels.  If things become more efficient, we simply find more things to use that consume energy.  LCD Screens are far more energy-efficient than CRT Displays.  So we scrap the 23" Magnavox and buy a 50" Sony flat screen.  We throw away the giant 19" CRT monitor and buy two 20" LCD Monitors.  We're using less energy per device but aren't consuming less energy in aggregate.

Energy efficiency is NOT going to solve global warming.  It's not even going to help in the battle.  

I know I should just let this one lie, but here goes.

Mark Thoma references the article that I linked to in the previous post:

I have to take issue a bit with this characterization of the importance of rural versus urban America in the political process. One of the claims is that rural America, particularly the part that are actually farmers, is too tiny to justify the attention the media gives to it:

<snip quoted text>

More than that, there is a cultural tradition in these areas that is not limited to farmers or even to rural areas that embraces the ideals that you hear when farmers speak. I can think of many, many people who do not live in what we would classify as rural areas, family in Sacramento come to mind, who certainly are not farmers but grew up around it and still feel a part of that culture and embrace its ideals.

Now, for what it's worth, I agree with Mark.  There's a huge population of people in the U.S. today that aren't farmers, but grew up farming, or around farmers, or hell, just far enough out in the suburbs that they consider themselves "rural".

But that isn't the point.

See, I think what Kung Fu Monkey is ranting about has nothing to do with farmers, or "rural America".  The real reason he's upset (I hope) is that he's just plain sick and tired of mainstream journalists who will not...shut...the...fuck...up about "the great divide between the coastal cities and the heartland" (or some variant on this meme).

Remember all the stories we heard in 2004 about some rural American bitching about some east (or west) coast city dwellers "sipping their lattes"?  I bet I saw that repeated on CNN 500 times.  Hell, there's a whole book about it.  How long do I have to endure the lame "sipping lattes" meme?  Presumably as long as I will have to endure the "heartland" mean.  If it sells Chevy trucks, it must be true, right?

Seriously the notion that the vast majority of American citizens live in rural "heartland" areas, while a small minority lives in cities, ruling over them like an upper class, is a bit absurd.  As is the notion that those of us that live in the city are heathens, heartless capitalists, or persons of low moral character.  Or that all people living in "the heartland" are "simple folk" right out of the movie Fargo.  Let's move on, OK?  There are 56 Starbucks stores in Kansas.  Plenty of latte-sipping going on there.  Find another meme.