Philip Greenspun’s Weblog

J.R. Simplot, the architect of the modern American diet and major supplier of frozen french fries to McDonald’s, died peacefully at age 99, leaving a fortune estimated at $3.6 billion in 2007.  According to Wikipedia, he was an atheist who dropped out of school during the eighth grade.

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Joseph Stiglitz claims that our Iraq adventure will cost the U.S. three trillion dollars and the rest of the world an equivalent amount, for a grand total of $6 trillion (source). Can this be true? Let’s look at some numbers.

The first number is population. Stiglitz talks about Iraqis being killed, emigrating, or being displaced. He cites the current population at 28 million, in agreement with the CIA Factbook, but fails to note that it was 24 million before the war. Iraq has a much lower death rate per 1,000 population than the U.S. and a much more rapidly growing population. The guy’s Nobel Prize was in economics, not in demographics. If we were worried about weapons of mass destruction and we’re sure which of the Iraqis were developing them, with $6 trillion we could have offered each of the 24 million pre-war Iraqis $250,000 to get them set up in a new country with no major weapons or Jihad industry (the typical Iraqi family has 4-5 kids, so that would be at least $1.5 million per family).

Let’s look at the economy. The CIA Factbook says that Iraq’s current GDP is $55 billion. The $6 trillion cost to the world would therefore be equivalent to 100 years of Iraqi GDP. Definitely not a very good bargain, especially since the world probably derives no more than 5 percent benefit from Iraqi GDP (i.e., it would take 2000 years to get a return on our $6 trillion).

Oil exports from Iraq are 1.67 million barrels per day, about $61 billion per year and, again, roughly 100 years to equal $6 trillion.

How about oil reserves? The CIA says 115 billion barrels. At $100 per barrel, this is worth $11.5 trillion, almost an entire year of U.S. GDP. Again, however, there does not seem to be a plan to confiscate Iraq’s oil and distribute it among the investors in this $6 trillion effort.

One thinks of government and the military as wasteful, but it is tough to believe that we are being this wasteful. When I first heard about the Iraq war and someone said “We’re spending $1 billion per day”, I thought “Who cares? The U.S. military spends about $1 billion every day in peacetime.” But $3 trillion or $6 trillion is real money.

In his essay, referenced above, Stiglitz cites a $2 trillion growth in U.S. debt as evidence for the cost of the war. This doesn’t make sense to me. As a nation, we’ve borrowed money for a lot of things besides Iraq. We’ve borrowed to pay for Medicare, Medicaid, and other entitlement programs. We’ve borrowed so that we could subsidize the melting down of corn into SUV fuel. We’ve borrowed so that we could give billions of dollars to America’s wealthiest farmers and agribusiness. We’ll soon be borrowing to bail out real estate and mortgage speculators.

Who has read this book? Is Stiglitz convincing? By winning the Nobel he has proven that he is smart. Could it be that the rest of us are actually dumb enough to spend $6 trillion on Iraq?

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Folks seem to be upset that Hillary has brought up the name of Robert F. Kennedy. What should really make Americans weep is a comparison of RFK to our current crop of politicians. Let’s look at a few facts about RFK:

• fathered 11 children, thus providing some of the new taxpayers that we needed to support a government that was greatly expanded in the 1960s, most notably with Medicare and Medicaid
• served in the military
• from within the Johnson Administration, opposed the Vietnam War that LBJ was committing America to
• as Attorney General, promoted equal rights and opportunity for Americans regardless of skin color (his statements on equal opportunity would have been out of step with our government’s current race- and sex-based Affirmative Action policies)
• traveled to South Africa in 1966 to lobby against apartheid
• prosecuted organized crime, thus reducing some of its drag on the U.S. economy (much worse in the old days due to the fact that Mob-dominated New Jersey and New York were proportionately more important industrially)

Sample quote from 1968: “Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product … if we should judge America by that – counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. …”

There may be a lot of good reasons for not bringing up RFK, but probably the best one is to avoid reminding Americans that they once were able to vote for a guy like him.

Note: I wrote a bit about RFK in an earlier posting about the JFK Library.

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The newspapers are full of happy news from Iraq, with U.S. military leaders saying that some of our soldiers may be able to come home in the fall. Might the long-term prognosis for Iraq be positive?

According to the CIA Factbook, Iraq has 28 million people and a birthrate of 31 new babies for each 1,000 population, which translates to nearly 1 million new babies every year (compare to the U.S. with 14 births per 1,000 and the U.S. has a much higher death rate) and a very rapid rate of population growth.

What are these new Iraqis going to do with themselves? With a literacy rate of 74 percent, they are not going to compete in the global workforce with the Chinese (literacy rate of 91 percent plus some of the world’s better universities). Watching Western and Chinese oil companies pump dinosaur blood out of the sand is not going to be a major source of new employment.

Two scenarios seem most likely. Suppose that oil becomes cheap again. Iraq is already having trouble importing enough food to make its people happy (see this article where Iraqis blame Americans for the fact that food is expensive). As the population grows and we’re still over there, it will be American taxpayers who have to pay to feed all of those new Iraqis.

Suppose that oil grows in price to keep pace with Iraqi population growth and our puppet government over there distributes all of the oil revenue uniformly. Iraqis will join Palestinians and Saudi Arabians in not having to work in order to obtain food, shelter, and clothing. With Palestinians and Saudis, who share a common Arab culture with the Iraqis, quite a few idle young men have decided to fill their days by taking up arms (or bombs) against the West. Our Islamic antagonists have not come from poor regions where daily survival is a struggle, they’ve mostly come from places where all of the necessities are taken care of and the only daily challenge that young men face is how to occupy their time.

One might argue that the solution is to build schools and educate Iraqis to a competitive world standard.  Unfortunately we’ve tried that here in the U.S. and, despite bleeding taxpayers white to support the world’s most expensive schools, we don’t seem to be succeeding.

Let’s cut and run from Iraq.  No matter how bad it is now, one of the world’s highest birthrates coupled with idleness is going to make it a lot worse in the future.

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As this entry is being typed, Congress is overriding King Bush II’s veto of the $300 billion farm subsidy bill. All of the money is going to be collected from working Americans and (a little bit) handed out to the poor via food stamps and (a lot) handed out to millionaire farmers. This made me wonder how hard the average American is going to have to work for the next five years. Let’s look at some major items that primarily benefit those who don’t work…

• $300 billion farm handouts
• $1.4 trillion($250 billion per year and growing) for Medicare (health care for those over 65)
• $1.6 trillion ($300 billion per year and growing) for Medicaid (health care for poor Americans)
• $500 billion, estimated remaining cost of our effort to make Iraq safe for Iraqis (some estimates and comparisons to previous wars)
• 13 percent of wages for Social Security, includes employer-paid portion (Social Security is billed as a savings program, but it is really pay as we go and depends substantially on taxes from current workers)
• about 1 percent of wages to pay for all the people in prison (roughly 2 percent of the working age population)

We have approximately 150 million workers in this country. Running the numbers, over the next five years, each of those workers will have to generate more than $25,000 plus 13 percent of wages. An employer of American workers would therefore have to pay at least $5,000 per year per person just to enable that person to pay enough taxes to cover farm subsidies, health care for the old and the poor, and our misadventures in Iraq. Then the employer would have to pay another 14 percent on top of whatever else was being paid to cover Social Security and prisons.

Given that a fairly well educated worker in China can be employed for $5,000 per year, it is tough to understand how the American economy is sustainable unless we believe that our workers are vastly better educated than Chinese workers.

Let’s not forget that the working slobs are soon to be taxed another $1 trillion to bail out real estate and mortgage speculators (higher end of Standard and Poor’s estimate of the ultimate cost to the taxpayer).

The prevailing wisdom at the New York Times (editorial) seems to be that our economic future will be assured if we start selling houses to each other at ever-higher prices.  All we need to do to grow our economy is build more and larger houses and sit inside them watching big-screen TVs that we import from Asia, occasionally getting up to drive our imported car to the supermarket to buy more chips and beer, stopping on the way home to fill up with imported oil.

Given all of the burdens that the American worker has to shoulder compared to his counterparts in younger countries, could the truth be a lot more frightening?  Might we have to work harder?  Study at night instead of watching TV?

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Hot on the heels of Governor Deval Patrick trying to destroy the aviation industry in Massachusetts, Avidyne, our only local avionics company, which was founded by an MIT alum, has suffered the loss of their largest customer, Cirrus Design.  Route 128 is high tech, but apparently Olathe, Kansas is higher tech.  Garmin has sewed up nearly every new certified aircraft design with its G1000 system.  A Garmin glass panel is now standard on more or less every plane from the Chinese-built $130,000 Cessna 162 Skycatcher right up through the $4 million light jets.  The one big thing that Garmin was missing was synthetic terrain, a featured offered by Microsoft Flight Simulator for $39, in experimental airplanes for $2,000, by Chelton as part of a $90,000 retrofit system and as of a few weeks ago by Garmin as a $10,000 option.

More:  Aero-news.net.

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Governor Deval Patrick’s proposed new aircraft sales tax for Massachusetts has been passed by our House and denied by our Senate. The decision will now rest with a conference committee.

At first glance this would appear simply to be a jobs creation bill for New Hampshire, Connecticut, and Rhode Island, sending airplanes, hangar construction, maintenance, and pilot jobs over the borders. It also looks like a revenue reduction bill since (a) nobody buying a $10 million plane would be dumb enough to base it in Massachusetts and pay the tax, and (b) all of people who would have been employed in the care and feeding of that $10 million plane will now become residents of other states and therefore will stop paying income tax, sales tax, and property tax here in Massachusetts.

A deeper look reveals how destructive this bill will be to the environment. Let’s look at noise first, a common complaint of those who have recently built houses near long-established airports.

Scenario 1: Jet lives in MA. Owner drives to airport, takes off for West Palm Beach, hangs out with rich pals, returns to MA. Jet is tugged into hangar. Takeoffs in MA: 1. Landings in MA: 1.

Scenario 2: Jet and its crew of pilots, flight attendant, and mechanics all live in Nashua, NH and pay taxes up there. Owner drives to his local airport in MA where the plane is waiting for him. He flies to West Palm and back. The jet returns to NH. Takeoffs in MA: 2. Landings in MA: 2. Twice as much noise plus some extra fuel burned for the additional 10 minutes of flight time each way.

Now let’s look at fuel consumed and CO2 emitted.

Joe Average: Joe and his three friends are going to buy a new four-seat airplane for $300,000 and share it. They had planned to keep it at Hanscom Field despite the high fuel prices and expensive hangars. Faced with the new tax, however, they decide that the plane should live in Nashua, NH. The tax savings alone will pay for four years of hangar up there and they only plan to keep the plane for four years before upgrading to something with higher performance to match their increased flying skill. Fuel and maintenance will be cheaper as well. Every time they go flying, however, Joe and his friends will drive an additional 60 miles round-trip to get to the plane and back home.

Generic Company: Despite facing some of the nation’s highest labor costs and most onerous regulations on business, somehow this mid-sized company has managed to hang on in the blighted crack-house dominated town of Springfield, MA. All of their competitors have moved to South Carolina and Kentucky or overseas. Generic has offices and operations in six other states and keeps a 15-year-old jet here at headquarters for when it needs to send teams of people out to meetings (neither Springfield nor any of its other locations are served by commercial airlines). The jet is very noisy by modern standards and also rather thirsty. Generic has been considering upgrading to a quieter airplane that burns half as much fuel, but the payback period would be 5 years because they don’t fly many hours per year. When Deval Patrick’s new tax takes effect, Generic runs the numbers again, concludes that the payback period would now be 8 years, and decides to fly the airplane for 10 minutes to tax-free Connecticut for repainting and new carpet and upholstery. Generic will be inflicting a lot more noise on neighbors with its old jet and burning twice as much fuel as if they had upgraded.

If passed, this tax is going to be remembered as another nail in the coffin of central and western MA.  Eastern Massachusetts does okay no matter how incompetent our government.  Harvard and MIT have accumulated more than $50 billion dollars in wealth.  There are a lot of businesses that need to be near Harvard and MIT.  People come up from Manhattan fighting for the chance to pay $10 million for a beach house on Nantucket and then to pay property tax on that house for the rest of their lives.  If the City of Cambridge can’t figure out how to teach kids reading and arithmetic for $15,000 per year per kid, Buffy and Chip can be sent to private school.

What have they got going in Worcester and points farther west?  Big airports and a tradition of skilled craftsmanship.  With Governor Patrick’s new tax, they’ll have to look somewhere other than aviation for new jobs.  Maybe they can compete with northern Kentucky for the next Toyota factory…

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Ever wonder why you find so many bags of potato chips littering programmers’ cubicles?  http://www.nytimes.com/2008/05/20/science/20tier.html

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February 2006: http://philip.greenspun.com/careers/women-in-science

May 2008:  Boston Globe article.

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America’s black leaders have overwhelmingly endorsed Barack Obama for president. Ask Jesse Jackson, Louis Farrakhan, or Reverend Jeremiah Wright, Jr. whom they are going to vote for and it is Obama, Obama, Obama. The question is “Why?”

Ask one of these guys why black Americans aren’t doing better in school, in steering clear of the judicial system, or in finding jobs and they will say that it is white prejudice that is impeding black progress. Rev. Wright said “Fact number one: We’ve got more black men in prison than there are in college. … Fact number two: Racism is how this country was founded and how this country is still run.” (source) The prevailing theory among black leaders seems to be that when a white person sees black skin, he or she will deny the person inside the skin a job, an educational opportunity, a house in a nice neighborhood, etc.

Along comes Barack Obama, inside a skin that he claims is black and that these same leaders claim is black. White people have given this guy good grades in school. White people have hired this guy for high-paying jobs. White people have given this guy millions of their hard-earned dollars to buy his books. Tens of millions of white people have voted for this guy to represent and/or govern them. In his autobiography, he does not mention having to make any special efforts to overcome white prejudice nor does he cite any incidents in which white prejudice had an effect on his educational opportunities, job opportunities, social opportunities, or housing opportunities.

If Barack Obama’s black skin has not held him back, it would seem to discredit these guys’ explanation of what is holding back others in America with black skin. Why then would they recommend voting for the very person whose success is discrediting their logic?

[Note that in December 12, 2007, I predicted in this Weblog that Obama would win the general election.]

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