Jasper Smith

Commentary on politics, economics, culture and sports.

Archive for September 2007

A little Sunday Wal-Mart bashing

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Kevin Drum thinks Wal-Mart can do better by its employees:

Labor expenses only amount to about 10% of revenues for Wal-Mart. If you increased the pay of every single clerk, greeter, and stocker in the chain by two or three bucks an hour, it would only increase Wal-Mart’s prices by about 2%. Their prices would still be the lowest around because it’s not labor costs that account for most of their efficiency. It’s world class logistics, aggressive offshoring, enormous sales volumes, and ruthless bargaining with suppliers that account for most of it. If Wal-Mart had to offer low wages and lousy benefits just to stay in business, that would be one thing. But they don’t. We should expect them to do better.

Personally I think this is the wrong approach. Wal-Mart no doubt could afford to pay higher wages, but, like nearly all companies, they don’t pay more than they have to to attract and retain the workers they need. Pfizer or Goldman Sachs don’t pay the wages they do because they’re nice firms, they pay the wages they do because they have no choice: workers who possess such skills as analytical chemistry and currency arbitrage are more expensive than shelf stockers. And, although offering a “buck or two more” might not break the bank for Wal-Mart, offering significantly more robust benefits probably would have more of an adverse effect on their profits than Kevin’s glib assessment indicates. Health insurance is very costly in America. Unlike other, wiser nations, we rely on employers to act as purchasing agents for health benefits. It’s a stupid practice. Wal-Mart and McDonald’s shouldn’t be disparaged for a rational response to a policy that is not their fault.

I think Liberals waste a lot of energy engaging in corporation bashing. A company’s job is to make money. Not to provide for a just society. That’s government’s role. By all means spend more money on a stronger social safety net and universal healthcare, and raise taxes if you have to. But let companies get on with what they know how to do best: generate profits for their owners.

Written by Jasper

September 30, 2007 at 3:24 pm

Posted in Economics, Policy

Our long national nightmare is finally over

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Thank God. What a serious buzz killer this has been.

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September 17, 2007 at 8:36 pm

Monday Putin blogging

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Ross Douthat ponders the legacy of Vladimir Putin:

I think there’s little question that Putin has been one of the most successful world leaders of the new century, and I’ve always had the impression that this success is related to his being smarter, in some meaningful way, than most of his rivals and partners on the world stage… It will be very interesting to watch what he does after 2008 – both how he continues to exercise power in Russia (as he assuredly will), and what his de facto political dominance will mean for the leaders who succeed him. He will only be fifty-six when his term ends – younger than any of the front-runners for the GOP nomination, it’s worth noting – which means that the Putin era, in one fashion or another, probably still has decades left to run.

I guess time will tell. I personally suspect there’s another shoe that may still drop, and it’s called “the price of oil.”

It’s hard to imagine Putin accomplishing 10% of what he’s accomplished in recent years without all those fat petrochecks. I don’t buy the hype about oil remaining dear ad infinitum. Oh sure, in the long run we’re no doubt running out of the stuff, and over the long term it will likely get more expensive. The short and medium terms, however, are a different story.

Price spikes in the past have prompted conservation efforts. They’re doing so again. When you follow this process with the inevitable recession (we still haven’t managed to repeal the business cycle, by the bye), the price of oil drops. Usually quite substantially. And so, too, will Russian economic prospects, and the received wisdom about how great a leader Vladimir Putin has been.

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September 17, 2007 at 1:38 pm

Farm subsidies: even worse than you think

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Matt Zeitlin takes Robert Samuelson to task, not for his opposition to farm subsidies, but for his poor argument:

Robert Samuelson should be shooting a fish in the barrel, launching to a perennial column about the the evil of agricultural subsidies. Before I criticize Samuelson, let me make something clear, I support the total elimination of all agricultural subsidies, protections, tariffs, quotas and price supports. Not only do they distort the domestic market, but they also have a fair amount of culpability for hundreds of thousands of deaths and persistent poverty in the agricultural sector of the third world. Samuelson, seemingly afraid to argue that having a domestic supply of food isn’t all that important, tries to go the other way and ensure his readers that even without agricultural price supports and subsidies, there’d still be agriculture in the US…

I’m not going to re-quote the lengthly Samuelson excerpt Matt provides. I will key in on one conclusion he (Zeitlin) arrives at, however, that I believe is erroneous (even as I wholeheartedly agree with both Zeitlin and Samuelson about the evil of agricultural subsidies):

So if the US meat sector is doing well, it is largely because we subsidize it indirectly through keeping the price of corn low. This is, however, not an argument against getting rid of subsidies.

I’m extremely skeptical of Matt’s argument here, but it’s one I hear often. I think there’s a widespread belief out there that, although farm subsidies are a harmful policy as a whole, they at least keep food cheaper. I’m pretty sure this logic isn’t sound however, and here’s why.

In a nutshell, taxpayer money flowing to farmers tends to prop prop up inefficiency. Without subsidies, some acreage devoted to corn or soybeans or whatever would indeed be allowed to go fallow (or converted to golf courses, or whatever). But, to the extent that the domestic market (read meat producers and food processors) demanded it, any decrease in US agricultural output created by the ending of government subsidies would simply be met by higher efficiency farms. In other words, farmers in Iowa or Alberta or Brazil would meet the demand, and they’d do so on an economically efficient basis (otherwise they’d not be profitable). Over the long term this would almost certainly have the effect of lowering the price of agricultural commodities, and, by logical extension, meat and other foods.

By “enabling” inefficient producers to stay in business, or to control greater market share, or simply to produce less efficiently than they would need to in a subsidy-free environment, taxpayer supported subsidies mean that animal feed and other agricultural commodities are probably more expensive, and this must surely hurt the profits of meat producers. It also means we all get hit with higher prices at the dinner table.

Farm subsidies indeed create all kinds of economic distortions, and they absolutely hammer both taxpayers and developing world farmers. Thing is, though, they’re even worse than most people think.

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September 17, 2007 at 9:19 am

Iraq policy: just how crazy?

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Matt Yglesias talks about possible motivations behind US policy in Iraq:

…while the absence of political reconciliation is probably Iraq‘s biggest problem, it’s not a particularly large problem for the American military presence. On the contrary, a unified Iraq — especially one swayed by Iraqi public opinion — might be very likely to give the US the boot. By contrast, in a divided and chaotic Iraq one can easily imagine the main players resenting the US presence but preferring it to anarchy. Indeed, Bush seems to have convinced both the Maliki government and the Anbar Salvation Front that they need American troops to protect them from each other. Meanwhile, the Kurds want us to defend them from the Turks, and the Turks want us to keep the Kurds in line and there’s really no sign of an end to the tensions and violence. From one point of view it looks like a quagmire, but from another point of view it’s more-or-less ideal.

It’s really really really hard for me to believe that even some of the certified crazy people running US foreign and defense policy these days think our current situation in Iraq is “more-or-less ideal.” Unless they’re a whole lot more fucking crazy than I thought.

First, the meat grinder that is Iraq without question is putting enormous stress on the US military, and is surely negatively impacting its effectiveness. How the hell would would the US be able to respond to an outbreak of trouble in, say, East Asia? How can that be “ideal”? Moreover, the Iraq debacle is costing the Treasury over ten billion a month, if you believe the wildly conservative, unrealistic estimates (which fail to properly account for things like medical costs for rehabbing vets, etc.). Even for a country as rich as the US, writing an eleven figure check every freaking month ain’t chicken feed. What’s so vital about Iraq’s geography that couldn’t be emulated a lot more cheaply by bases in Kuwait or the UAE?

I’m personally no longer able to perceive any rational basis whatsoever behind US policy in Iraq. It’s now all about George Bush’s worries with respect to the history books.

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September 16, 2007 at 7:29 am

President Rudy and a Democratic Congress

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Ross Douthat speculates on the various possibilities and scenarios involving a Republican president in 2009 coupled with a Democratic Congress possessing fatter margins:

A vote for Mitt Romney, for instance, is probably a vote for Clinton-style triangulation, and a Republican White House that views bipartisan reform efforts (health care, anyone?) as the ticket to high approval ratings and second term. The same goes for McCain, most likely, given his track record in the Senate – unless he ends up engaged in a political war of attrition with the Democrats over Iraq. A vote for Rudy, on the other hand, is likely to be a vote for confrontation over triangulation – which is probably why so many conservative primary voters, a confrontational bunch if there ever was one, find him so easy to like. My calculus here has less to do with ideology than with governing style. You could argue, based on his record as New York’s mayor, that Rudy Giuliani is technically ideologically closer to the Democratic Party than most of his rivals in the field. But I’m nonetheless willing to bet that Washington would be a more polarized and nasty place with Giuliani in the White House than with McCain or Romney (or Huckabee or Thompson, for that matter) occupying the oval office.

Maybe. I’m still not convinced though, that, irregardless of the nastiness factor, a lot of what we see out of the Rudy campaign isn’t just plain old GOP primary politickin’ 101: run hard to the right until the nomination is sewn up, and then tack back to the center.

Now, because, given his pro gun control/pro sanctuary/pro abortion rights/pro gay past there’s not all that much that Rudy can do when it comes to demonstrating his right-wing bona fides, he just snarls his way through the campaign on the issues of national security and Hillary Clinton.

I guess what I’m trying to say is that I agree with a lot of folks that there’s something faintly Nixonian about Giuliani, and he probably wouldn’t be greeted very warmly by a mostly Democratic Washington. On the other hand neither was Nixon, but, working with a Democratic congress, he actually managed to get a lot done, domestically.

In the final analysis, though, I doubt any of this matters. Count me among the people spouting the conventional wisdom that we’ll surely be welcoming a Democratic president in 2009.

Written by Jasper

September 15, 2007 at 10:44 am

Posted in Election 08, Politics

Choose your battlefields

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Here’s a thought: we continually hear that we must stay in Iraq in order to wage the War on Terror, and that al-Qaeda in Iraq has materialized as a deadly foe. Hence retreating from Iraq would be synonymous with being handed a major defeat by al-Qaeda.

But since when do astute wagers of war allow the enemy to dictate the terms of battle? Sure, perhaps al-Qaeda would like to use Iraq as a battleground against the United States. But why should the United States want to use Iraq as a battleground against al-Qaeda? It hardly seems obvious that just because it makes sense for your enemy to favor a particular location for use as a battlefield it likewise makes sense for you.

America clearly has good reasons for wanting to fight the enemy called al-Qaeda. But likewise there pretty clearly exist some major disadvantages for America in wanting to do that fighting in the country known as Iraq

Written by Jasper

September 13, 2007 at 7:26 pm