BillstronBlog

I’ve been somewhat anxious about what “we” are going to do about energy and oil with the price of the slippery stuff back down to a reasonable level. People with memories spanning more than 30 years know that this has happened before. In the seventies, the price of oil, and consequently gasoline, went through the roof prompting a push toward fuel efficiency. As the high price waned, so did America’s impetus toward saving fuel. The high-low price cycle has again occurred, with the price of oil peaking earlier this year above $140 per barrel and now being below $60 per barrel. Our nation is at a crossroads. Do we repeat the psychological/economic cycle and forget about our summer time desire to quit the addiction, or do we put the needle back in the arm — maybe a bigger syringe this time, Hummer H2000 anyone?

I’m starting to like President-Elect Obama more and more these days because he wants to take us to rehab. In Sunday night’s 60 minutes interview, he explained that we need to continue the political progress toward alternative energy and getting off oil.  I’m really glad to hear that at least one politician is still focused on this looming problem.

The answers cannot just come from the political realm though. This will also have to be born out on Main Street (in the popular vernacular). We all must reject our oil consuming ways — ride your bike, take the bus, carpool, and if you have the resources, get a fuel efficient car. Now, I’m not suggesting that everyone go out and get a Prius (there are a lot of excellent reasons not to buy a new car when you consider your carbon costs), but there are a lot of nice used cars that get really good gas mileage relative to your Hummer H2.

With this in mind, I’ve made some transportation decisions in my life. For the past couple of years, I’ve been riding my motorcycle to campus every day. My bike is old and only gets about 35 per gallon, but the commute time via motorcycle is very favorable to any other way. Instead of riding my bike, I’m now riding the bus to campus. It takes a little longer, but I think the time’s worth it for the cause.

I’d like to hear what you’re doing to save fuel. Tell us in the comments.

I’m no economist, but the recent jaw flapping by the two Democratic candidates against free trade, i.e. NAFTA, is ridiculous. Free trade is not bad for our economy. In fact, economist squarely agree that free trade is good for the economy, and quotes by the chief economist, Ben Bernanke, extolling free trade are easy to find by putting “bernanke free trade” into a google search. Here are some selected quotes from his 2004 speech at Duke University:

One proposition commands almost unanimous assent within the economics community. That proposition is that free trade among nations promotes economic prosperity.
Trade creates jobs in the United States by expanding the potential market for U.S. goods and services.
Moreover, the savings that consumers enjoy because of the availability of lower-cost imports effectively increase household purchasing power, extra income that can be spent on other goods and services, including those produced domestically.
In the long run, avoiding economic isolationism and maintaining economic dynamism will pay big dividends for everybody.

To be sure, free trade does displace some workers, and this is a tragic shame. But the actual number of displaced workers is drastically over hyped. Another quote from Bernanke’s 2004 speech:

Only slightly more than 2 percent of gross job losses are the result of import competition.An analysis by Goldman-Sachs (2003) estimated that U.S producers shifted between 300,000 and 500,000 jobs abroad during the past three years, an average of between 100,000 and 167,000 jobs per year since 2000.

The unsexy and difficult solution to this problem is to help these displaced workers find new jobs. M.E. Markes from Forbes magazine had this to say in Why Do They Say these Things?:

It is equally true that free trade will always create winners and losers. And we should be paying far more attention to the disruptions in the lives of the losers, rather than railing against the free trade agreements themselves.

Closing our borders would destroy our economy. Does anyone remember the Cold War? Arguably, the collapse of the USSR was caused by a sluggish protectionist economy that drug living conditions, morale, and Socialism down with it. Russia is still living with these economic sins.
So, back to Clinton-Obama, come on guys! Get real! Barack, you’re smart, you went to Harvard, and Hillary, your husband signed NAFTA. You guys know that free-trade isn’t evil. You are just pandering for votes and offering false hope to the poor folks effected by the depressed Ohio economy. R. Karlgaard in Stand Up, Free-Trade Democrats! on the Forbes Blog had this to say:

Silicon Valley Democrats are free traders.
Smoot Hawley-style protectionism would be a disaster, a cancer. Free-trade Democrats need to see this.

And this too say in Trade Protectionism In the iPod Era:

One of the great threats to the American and global economies is trade protectionism.
I hope politically progressive CEOs like Steve Jobs step up and stop the protectionist drift of their party.

Democrats — Karlgaard and I are speaking to you! Don’t let your bleeding hearts destroy our economy.