Wednesday, June 29, 2011

Dissapointing Obama

I don't really like David Frum, but he pretty much nails Obama in this post. We have a mild, do-little president in times that call for leaders that act, and spur on others to act.

Fat Cars Kill

I realize no one reads my blog. Hopefully enough people read this article on Slate (or even better the referred paper) to start to get this into our collective conscious:

The heavier the car, the more dangerous it is to everyone on the road that is not in that car.

If someone wants to drive around in a tank to protect themselves/their children, that should be their prerogative, but they should have to pay the cost to the rest of us for their scary vehicle. I love the idea of a tax of, say $0.25 for each pound over 2500 lbs per year as part of registration. People would think twice if it cost $1000 to register their 6500 lb. SUV every year. Even better, reverse it to credit below weight down to the cost of registration, so that if you had a 2200 lb car you could get $75 off registration every year, which would mean SUV drivers subsidizing people who they are endangering!

Friday, June 24, 2011

Tax Repatriation Holiday Suggestion

Coming from this post...I would change it from "Holiday" to "Penalty". Basically, congress could say that firms repatriating funds pay an additional penalty of 5% (in some fashion that doesn't discourage international investment/business, maybe by having it only applied to funds in excess of their net international [sales]). Then say that the penalty will be enacted in the near future, maybe next year. Companies will be motivated to get that money back into the US (which they clearly want to do otherwise the holiday idea would be worthless) before the penalty kicks in.

The result would be a rush to get funds repatriated before the penalty kicks in and less hoarding of money abroad in the future.

Wednesday, June 22, 2011

Big Houses

While I generally agree with the point this writer is making here, she uses a monstrously bad example. Beach front houses like those in Hilton Head, and the Outer Banks, and a fair amount of the Jersey/Deleware/Maryland shore are designed around vacation visits. People group together, rent a massive house on the beach for a week and share the cost. Bigger houses make sense if you want to rent them out. Many of the people living in these communities actually live in much smaller houses that are usually not located on the beach but a few miles--or blocks (OBX)--away.

That said, I am a firm believer in smaller, more efficient houses. Heck, I own one, and though I would like to make quite a few changes (add a half bath, finish at least half the basement, relocate my garage, maybe expand the very small kitchen), increasing the size is extremely low on the list.

Big houses are not necessarily unsustainable, but they require enough people living in them for them to make sense. Thanks to the bad economy we are already seeing more people with roommates, and more college grads moving back in with the folks, and more people renting out rooms/apartments in their houses. If energy and, particularly, transportation costs increase this will happen more and more, and people will start moving closer and closer together, living in less square footage (per person). Big houses aren't necessarily doomed, but they could become homes for extended families or even communal living situations.

Tuesday, June 21, 2011

Missing Something Important

I've seen a few posts on how housing starts have dropped, but since population is still growing this is unsustainable and will undergo a serious correction. Matt Yglesias follows up here with a surprisingly bad (though not, I suppose for MattY haters) graph. People per new housing start is a really bad ratio. If the population suddenly stopped growing, then we would need no new housing starts and so that would stop and that ratio would skyrocket, but would be completely and totally sustainable.

The appropriate graph, and one I haven't seen anywhere, would be population to total housing (including condos, apartments) ratio. That ratio should be more or less constant. Increasing wealth will shift it to more housing per person as there would be less sharing and more second/vacation home ownership, but as more wealth also often means slower population growth it could end up shifting both sides of the fraction. Still, that is the relevant graph.

And so long as that ratio stays above trend there is no reason for new housing starts to pick up in any meaningful way. Moreover, so long as the pickup leads--even a little--the return to trend, there is no reason to expect a major housing correction.

Lastly, of course, even though housing has national trending and inside the US mobility makes for some balance, housing is a local phenomenon, so some places could pick up while others stagnate for a century.

Saturday, June 18, 2011

Wherefore College

I enjoyed college. More, I think that it is a rather important and quite powerful force in advancing societies. I seem to be hearing and reading quite a bit lately about whether college is necessary. Largely this has to do with whether it is financially worthwhile, but there have been some pieces that are a bit...unusual.

First: yes, it is certainly possible to achieve happiness and even great success without going to college or receiving a degree. It is far easier, however, for people who do go to college. There are many necessary jobs out there that do not require college degrees. There are also plenty of positions that do not really need a college educated person, but that often use that as a screen...there are arguably good reasons for this. There is also the world of entrepreneurship. This is a bit of a mixed bag in that anyone can do it, but very few can actually do it. It is only a few that have success as entrepreneurs, and an exceptional few that are actually going to be able to have success as an entrepreneur without college...this is particularly true when it comes to any scientific/engineering endeavor.

Second: college is way too expensive and students (and their parents) are accruing way too much debt, but it is still worth it when looking at overall statistics. So while picking up $120k in loans to get a fine arts degree probably won't pan out, rolling up $50k for a chemical engineering degree (most) certainly will. College grads can get better, higher paying jobs. College grads also have a broader knowledge base from which to strike out on their own.

How to fix? First no federally backed loans, only federal loans and public loans. If banks want to have student loans the fed shouldn't pick up the tab for defaulters. Second these federal student loans should be limited to the total cost for state universities in the state the students come from. So when I was living in Kansas, I should not have been eligible for federally backed loans (to anywhere) in excess of the ~$8k/year that it cost then to attend KU. Students who want to go to NYU need to cover the difference in cost with private, not federally backed student loans. Third, all federal repayment plans should be forced to end after 15 years, and should be pegged to never exceed some fraction of the student's income...say 20%. So for people who take full loans to attend state schools, but have trouble getting work, or getting work that pays well enough to cover the true cost of the loan will still be free and clear of student loan debt 15 years after starting repayment.