The latest lesson for our betters in Washington, from Bill Whittle.
37 thoughts on “Wealth Creation”
The interesting thing is how much wealthier we are today than in the past. For example, while glancing through GDP figures (and using real GDP) it appears that there are 12 countries currently that have a GDP greater than when the US initiated the Manhattan project (in 1940 right?).
At a guess, it appears that in 10 years, less than 2% of the world’s population will reside in countries with a GDP per capita less than that of the US in 1790 and virtually all of them will reside in countries that will at first have a growth rate far greater than the US had during its history. Sounds to me like no one has the excuse that they can’t follow the US example to wealth.
Moving on, I really like the economic treatment in this episode. I’m tired of the retards who hate wealth, who hate the people who make the US better, and who come up with a variety of retarded, counterproductive ideas (such as revoking corporate personhood, to name a popular one these days).
Anti-competition is the enemy. Those that want to put all power in the government are looking for a monopoly. Business people are not pure of heart either and would like monopolies themselves and often work with politicians to achieve it. But as long as people have choices they win.
It is just amazing that the simple and demonstrable truths of this video have zero chance of making a dent in the minds of true believers. It’s almost as if they do know these things to be true but have an agenda that doesn’t care.
It is just amazing that the simple and demonstrable truths of this video have zero chance of making a dent in the minds of true believers.
I cannot fathom why it wouldn’t — it’s not like Bill spoke overly fast or used big words. 🙂
Eh, no, the electricity is most likely not generated by oil from ExxonMobil. I guess the last time Bill Whittle looked at the energy market was in the 1970s. Most of it is coal. Oil has been too expensive to burn for electricity generation ever since the 1970s oil crisis.
Bill Whittle is also repeating the specialization of labor meme that I read in the Wealth of Nations by Adam Smith. While that is true, he is conveniently ignoring the infant industry argument that people like Friedrich List exposed. Without protectionism or incentives of some sort, it is hard for a non-developed economy to develop industry in the face of other more developed economies. The US, German, Russian, Japanese, and Chinese economies developed along these economic lines. In the case of the US and Germany they would have found it hard to otherwise compete with British manufactures which had first mover advantage and better economies of scale.
It is also important to take into account strategic resources. The access (or lack of) to strategic resources can make or break certain industries. While R&D can come up with substitute products for certain resources, in the long term, this does not come cheap. In the short term you may find your industries closing down and your competitors overtaking you in industrial production. Without a viable industry there is no viable national defense capability.
Sub-Saharan African countries like Djibouti have several issues which were glossed over. If most of your country’s population lived in the malaria belt without access to clean water I bet your economic output would be crap as well.
Godzilla,
Business needs two things, access to capital and a champion. You see all the mineral resources of Israel right? You don’t. Hmmm…
“Eh, no, the electricity is most likely not generated by oil from ExxonMobil. I guess the last time Bill Whittle looked at the energy market was in the 1970s. Most of it is coal. Oil has been too expensive to burn for electricity generation ever since the 1970s oil crisis.”
You would be incorrect. #6 has been used and is still used. In fact, in the 90’s and early this decade when oil was cheap, oil competed with gas daily.
There happens to be an “ExxonMobil Coal and Minerals Company” as a subsidiary of ExxonMobil. Most of the gas companies have been energy companies for awhile now.
I think Godzilla missed the whole part about wealth being limitless. All one needs to do is dip the bucket of potential wealth generating ideas. All it takes is 2% of a population to come up with a strategy or a solution to create capital wealth. The trickle out effects will generate far more money for other individuals than any other means. The overall reliance is on the limitless potential of thousands or millions of individuals making unique and purposeful decisions. This far out ways any of the speculation on very specific resources or commodities.
I have trouble believing there are actually people who don’t believe in wealth creation. I think what Bill is doing here is a simple strawman. What I would ask him is does he believe that *all* trade is fair? Is that the same as free trade? Many of us are compelled daily to engage in trade, so it can’t all be free..
I have trouble believing there are actually people who don’t believe in wealth creation.
How do you explain the people who claim business is theft? Or Obama’s claim that you can make too much money? Or the people who claim that the developed world is wealthy only because it is stealing from the developing world? They are out there.
What I would ask him is does he believe that *all* trade is fair?
What does “fair” mean? Trade is fair in that the participants in the trade prefer the results of the trade to not trading. If one party is coerced to exchange something, then it isn’t a trade.
Is that the same as free trade?
Free trade is a special form of trade without notable restrictions or constraints. I gather in practice, there can be constraints, but these are minor for legitimate trades (for example, importing fruit into the US where the only cost is inspection of the fruit, to verify that it meets standards of the US).
Many of us are compelled daily to engage in trade, so it can’t all be free..
As long as the “compulsion” is of our own desires or impulses, such as spending eight hours tugging on a slot machine or a similar amount of time playing World of Warcraft, it is trade and can even be free trade.
And I have a comment on something Godzilla wrote:
Sub-Saharan African countries like Djibouti have several issues which were glossed over. If most of your country’s population lived in the malaria belt without access to clean water I bet your economic output would be crap as well.
It’s worth noting that much of the southern US fell in the malaria belt and didn’t have access to clean water through to the beginning of the 20th century. Somehow we managed to figure out how to fix malaria and other mosquito borne illnesses as well as the quality of our water. Perhaps Djibouti should try those solutions first before we complain that they somehow aren’t beholden to principles of economics.
And then there are cases like Hong Kong, with its complete lack of any resources whatsoever, except of course for the acuity of its people and its (until recently) deep committment to free trade. PJ O’Rourke does a wonderful compare and contrast between Tanzania and Hong Kong in his book ‘Eat the Rich’ in two chapters which he titles “How to create everything out of nothing” (Hong Kong), and “How to create nothing out of everything” (Tanzania)…
Godzilla…you might want to look it up…
@Al:
Bill explicitly said ‘oil’ to generate electricity. Not gas. Not coal.
@Scott:
The Southern US could rely on the industrial capacity of the Northern US to build the necessary machines, and loan the necessary skilled engineers to do the work.
Hong Kong was an important trade colony of the British empire. It was their door to do trade in Asia. The British empire was a naval power which could supply whichever resources Hong Kong needed from their many other colonies in the world.
@ken:
It is true that having access to capital and a champion goes a long way towards making a successful business. In a free trade economy, not controlled by monopolies, capital is resources. Israel could rely on a large number of ex-pats to send money there. This also happens in some other economies. Israel also gives very generous incentives to industries which are located there.
However no economy is 100% free. The high trade barriers in agriculture are one example. There are strategic reasons why this is so. Nations which cannot grow their own food are highly susceptible to collapse in case of strife. At a certain point the Roman empire depended on wheat from Egypt to feed its population… As the trade routes collapsed food supplies were cut. The rest is history.
Capital is nice but you cannot eat bonds and greenbacks.
Zilla, I said nothing about the Southern US, but as long as you want to play that game…you might want to take a look at the post-Civil War South (after the overthrow of the plantation aristocracy), when credit was almost non-existent, and the industrial base had been obliterated by the war. The South still built an impressive industrial base (Alabama, TN, and GA are superb examples) out of nothing, with very little help from the northern states.
As for Hong Kong, they certainly benefitted from trade, but they did so by exploiting those options, by adopting (especially in the postwar era) a highly laissez-faire economic strategy, and by avoiding the typically third world attempts to tax, regulate, and tarriff their way to prosperity. Tanzania, on the other hand, went the full socialist route…and their population, famrland, abundant credit, and resources did nothing for them…
Thanks for playing though…
The Southern US could rely on the industrial capacity of the Northern US to build the necessary machines, and loan the necessary skilled engineers to do the work.
For what? If you’re draining swamps, wiping out mosquito breeding grounds,, and other malaria fighting tactics, you don’t need to import machines or engineers. I bet sub-Sahara Africa already has all the labor and talent it needs to fight malaria. Their societies just have other priorities.
Capital is nice but you cannot eat bonds and greenbacks.
Sure you can, if your capital is a productive farm.
Sure you can, if your capital is a productive farm.
Even if you have a farm the farming cycle can easily take one year between waiting, sowing, growing, and harvesting. Assuming you harvest anything. In the meantime you starve.
Just because you have capital in some form it does not necessarily mean it is convertible, or convertible fast enough into the goods you desire. That is where the expression ‘A horse, a horse, my kingdom for a horse!’ comes from.
Capital is nice but you cannot eat bonds and greenbacks.
I see your confusion. Bonds and greenbacks are not capital. They are a convenient means of conveying capital. Capital would include: knowledge, training and experience of your labor, machinery and other assets that allow you to produce, land with a clear title (until the mortgaged backed security mess, America was pretty good about this) from which you can borrow to trade for other capital (not any form of money. I mean actual capital.)
Anything that encumbers simple capital restricts your ability to grow wealth.
What you are highlighting Godzilla is that the UN caused a large slice of the problems in, say, Somalia. Food Distribution Issues
Cape Cod Times just had an article about the ‘possible’ shutdown of it’s local electrical power plant powered by…oil. Capital cost to convert to gas fired deemed too high.
Well yes. If you give free food you are skewing the food market. It is a kind of extreme dumping. When you are in a country where the productive sector is limited to agriculture, you are basically destroying the only form of working income these people know and have.
If the UN wants to improve living conditions in the 3rd world they would be better off making an investment fund to provide clean water, flood control, and electricity. Infrastructure development. The investment would be paid back by selling the water and electricity to local populations.
The UN would also do good if they worked some more on disease control. The smallpox eradication campaign was a success. Why not do the same for malaria and other tropical diseases? Just by disabling the mosquito attack vectors you could significantly reduce or even eliminate many of these diseases.
Cape Cod Times just had an article about the ‘possible’ shutdown of it’s local electrical power plant powered by…oil. Capital cost to convert to gas fired deemed too high.
Electricity generation from oil is insignificant. The plants remaining are 70s relics used for peaking power whenever the baseload power plants cannot provide enough electricity. Don’t take my word for it, just look at this DOE chart: http://en.wikipedia.org/wiki/File:USEnFlow02-quads.gif
I am guessing Cape Cod decided to import peaking electricity instead of producing it because of some envirowackos.
So we’ve gone from oil hasn’t been used since the 70’s to it’s only used for peaking. If the cost per Btu gets low enough, almost any fuel will be used.
Looking to the UN or any government to solve problems or create wealth is a mental disease. Most problems are local and that’s where they need to be solved.
@ken:
Try making a highway system or damming some of the largest rivers in the world using only local, rather than national, funding.
Petroleum generated electricity is basically irrelevant today and keeps shrinking further. These plants only exist for legacy reasons. Eventually they will all be scrapped. If you expect the oil price to go down significantly to a place where it can compete with US natural gas and coal for electricity generation, I have a bridge in Brooklyn to sell you.
“If you expect the oil price to go down significantly to a place where it can compete with US natural gas and coal for electricity generation, I have a bridge in Brooklyn to sell you.”
Where did I write that? I didn’t. You’ve dissembled from oil stopped being a fuel in the 70’s to okay, very little is used now. I wrote it was used in the 90’s and into this decade. I’m not the disingenuous one. #6 was competitive with NG long after the 70’s.
There are still people selling horse rides in New Orleans as well. Does that mean the automobile hasn’t replaced the horse?
The “benefits” of coal and natural gas for energy production are not nearly so dramatic though. If there were a major long-term shortage in either we’d slowly shift right back if needed. (Unless nuclear or the other alternatives had finally progressed to the point to make the economic case as opposed to the moral case.)
“Does that mean the automobile hasn’t replaced the horse?
—————
There are several locations in the world where horseback is still the only practical mode of transportation. So no, the automobile hasn’t completely replaced the horse. It is a replacement for the horse but hasn’t completely eradicated its use as a meaningful form of transportation.
Really though I just think it is a nitpick. Bill was probably just using a company brand name that people will recognize as an energy provider. Not very many people would know a coal company’s name if they saw one. Plus the argument doesn’t negate the fact that clearly oil is used, was used, and will probably continued to be used as some sort of energy production product. Energy consumption is the direct component of expansive GDP growth no matter how you try to slice it.
But lets not forget also that Americans are clearly not so stupid to understand that many countries just so happen to be situated in regions that do not afford them the good luck of easy access to critical resources. That is why America contributes 40 times more to international care and aid organizations than any other country on the planet. It’s a good thing when people give out of the kindness of their hearts. Not many people I know get a warm fuzzy when they mail in that check on April 15th.
Even if you have a farm the farming cycle can easily take one year between waiting, sowing, growing, and harvesting. Assuming you harvest anything. In the meantime you starve.
Just because you have capital in some form it does not necessarily mean it is convertible, or convertible fast enough into the goods you desire. That is where the expression ‘A horse, a horse, my kingdom for a horse!’ comes from.
Why would you starve? There’s already food here. Look I’m aware of the excuse for farm subsidies. They don’t hold water for various reasons, most importantly because the US would remain competitive in food production and hence, would continue to produce food even in the absence of any subsidies.
It’s also worth noting that in the play that the phrase came from, nobody would seriously believe that the King of England was going to give up his kingdom for a horse. He promised the world, but he wasn’t going to deliver. If he had been sincere in his promises, he may have well gotten that horse he desired.
That was not the only nitpick I found in his speech. There is little in the iPhone which is made in the US. Only the industrial design and pieces of the OS were made in the US. Most of the components are designed and manufactured in either South Korea or China and it is assembled in China. Samsung already figured they can sell their own smartphones. Check out the Galaxy S sometime.
Godzilla, where was the wealth created? I’ll grant 100% of raw materials through assembly for the components is foreign for discussion.
Try making a highway system or damming some of the largest rivers in the world using only local, rather than national, funding.
We had a highway system, before the national highway system. The first thing they did was screw it up by making long straight sections that killed people. It’s better now, but that doesn’t mean it could not have been the same by coordination between the states rather than a centrally planned system. Is this magic money, or did it come from taxpayers that lived in those states. Were some states ‘drive through’ and poor so they wouldn’t be able to support there part of the ‘system?’ Too bad. New Mexico fit that description even with the interstate, but they got better over time.
Dams? You think only the federal government could build a huge dam? If the power potential is there, funding would not be a problem. Again, is this magic money or taxpayer money? You think the most efficient source of electricity would have trouble getting funding?
This idea that only the federal government can do things is just plain wrong. I like the military being centralized, but even that was state militia when we founded this country and we fought and won against that eras superpower of the time.
This idea that the way we do things today is the only way is just a complete lack of imagination and historical perspective.
Godzilla, where was the wealth created? I’ll grant 100% of raw materials through assembly for the components is foreign for discussion.
Check out who makes the most expensive hardware components. Not mere plastic or silica. Then tell me how many of those are made in the US. Sure Apple has a lot of profit right now. But what will happen after Samsung gets a decent phone out (Samsung Galaxy S is already here) and LG finally figures out how to make a credible design? They already manufacture all the relevant hardware components and have a good OS available (Android).
Guess which are the most expensive components in the phone? The display, the Flash memory, the CPU. Guess who are the top two worldwide display and Flash memory manufacturers? Samsung and LG; Samsung and Hynix. All South Korean.
The Chinese assemblers at Foxconn will work for anyone willing to pay the price. It doesn’t have to be Apple.
“There are still people selling horse rides in New Orleans as well. Does that mean the automobile hasn’t replaced the horse?”
LOL Now you’re being funny. There’s a difference between technology and price. If oil was still cheap, it would be producing a lot of electricity. Don’t forget the amount of fuel oil burned in homes in the NE displacing electric heat.
Check out who makes the most expensive hardware components. Not mere plastic or silica. Then tell me how many of those are made in the US. Sure Apple has a lot of profit right now. But what will happen after Samsung gets a decent phone out (Samsung Galaxy S is already here) and LG finally figures out how to make a credible design? They already manufacture all the relevant hardware components and have a good OS available (Android).
Apple will still probably have its growing market. Remember there were smart phones before the iPhone. It’s not enough to have a “decent” or “credible” design. It’s got to be better, if it’s going to grab market share from Apple.
“What do you mean by wealth? Profit? Gross margin? The iPhone4 bill of materials has been estimated at $187.51 USD:”
But that’s my freaking point. The foreign companies made somewhere around $190 for the raw materials and all the components (say). That is wealth creation, and good for them. But that isn’t all of the wealth creation. It may seem silly, but it is real wealth. Apple sells it here, and they average a nearly 40% margin. Plus the retail types and the software types – a slice of their pay is a portion of the price of the phone. Rumor has AT&T paying $250 per phone to Apple, so don’t be sidetracked by the $99 selling price.
Then realize that the iPhone is aimed at getting people to buy apps. Lots of apps. In fact, a really ridiculous number of apps – where Apple gets 30%.
I’m not arguing “Hey, they’re invincible”, I don’t much care if Samsung comes out with a crushing phone next week – that doesn’t change the discussion of “Does the iPhone create wealth… now?” Apple going from 10 billion in the bank to 50 (fifty) billion in the bank is a pretty convincing argument that they’re doing something right – and it isn’t the computer division.
What do you mean by wealth? Profit? Gross margin?
These are grade school concepts. Income is not wealth. Income is a means of accumulating wealth. Wealthy people are mostly beyond their peak earning years. How can you have an intelligent conversation without knowing fundamental concepts?
You’re not alone. It’s part of the reason people support class warfare politicians.
The interesting thing is how much wealthier we are today than in the past. For example, while glancing through GDP figures (and using real GDP) it appears that there are 12 countries currently that have a GDP greater than when the US initiated the Manhattan project (in 1940 right?).
At a guess, it appears that in 10 years, less than 2% of the world’s population will reside in countries with a GDP per capita less than that of the US in 1790 and virtually all of them will reside in countries that will at first have a growth rate far greater than the US had during its history. Sounds to me like no one has the excuse that they can’t follow the US example to wealth.
Moving on, I really like the economic treatment in this episode. I’m tired of the retards who hate wealth, who hate the people who make the US better, and who come up with a variety of retarded, counterproductive ideas (such as revoking corporate personhood, to name a popular one these days).
Anti-competition is the enemy. Those that want to put all power in the government are looking for a monopoly. Business people are not pure of heart either and would like monopolies themselves and often work with politicians to achieve it. But as long as people have choices they win.
It is just amazing that the simple and demonstrable truths of this video have zero chance of making a dent in the minds of true believers. It’s almost as if they do know these things to be true but have an agenda that doesn’t care.
I cannot fathom why it wouldn’t — it’s not like Bill spoke overly fast or used big words. 🙂
Eh, no, the electricity is most likely not generated by oil from ExxonMobil. I guess the last time Bill Whittle looked at the energy market was in the 1970s. Most of it is coal. Oil has been too expensive to burn for electricity generation ever since the 1970s oil crisis.
Bill Whittle is also repeating the specialization of labor meme that I read in the Wealth of Nations by Adam Smith. While that is true, he is conveniently ignoring the infant industry argument that people like Friedrich List exposed. Without protectionism or incentives of some sort, it is hard for a non-developed economy to develop industry in the face of other more developed economies. The US, German, Russian, Japanese, and Chinese economies developed along these economic lines. In the case of the US and Germany they would have found it hard to otherwise compete with British manufactures which had first mover advantage and better economies of scale.
It is also important to take into account strategic resources. The access (or lack of) to strategic resources can make or break certain industries. While R&D can come up with substitute products for certain resources, in the long term, this does not come cheap. In the short term you may find your industries closing down and your competitors overtaking you in industrial production. Without a viable industry there is no viable national defense capability.
Sub-Saharan African countries like Djibouti have several issues which were glossed over. If most of your country’s population lived in the malaria belt without access to clean water I bet your economic output would be crap as well.
Godzilla,
Business needs two things, access to capital and a champion. You see all the mineral resources of Israel right? You don’t. Hmmm…
“Eh, no, the electricity is most likely not generated by oil from ExxonMobil. I guess the last time Bill Whittle looked at the energy market was in the 1970s. Most of it is coal. Oil has been too expensive to burn for electricity generation ever since the 1970s oil crisis.”
You would be incorrect. #6 has been used and is still used. In fact, in the 90’s and early this decade when oil was cheap, oil competed with gas daily.
There happens to be an “ExxonMobil Coal and Minerals Company” as a subsidiary of ExxonMobil. Most of the gas companies have been energy companies for awhile now.
I think Godzilla missed the whole part about wealth being limitless. All one needs to do is dip the bucket of potential wealth generating ideas. All it takes is 2% of a population to come up with a strategy or a solution to create capital wealth. The trickle out effects will generate far more money for other individuals than any other means. The overall reliance is on the limitless potential of thousands or millions of individuals making unique and purposeful decisions. This far out ways any of the speculation on very specific resources or commodities.
I have trouble believing there are actually people who don’t believe in wealth creation. I think what Bill is doing here is a simple strawman. What I would ask him is does he believe that *all* trade is fair? Is that the same as free trade? Many of us are compelled daily to engage in trade, so it can’t all be free..
I have trouble believing there are actually people who don’t believe in wealth creation.
How do you explain the people who claim business is theft? Or Obama’s claim that you can make too much money? Or the people who claim that the developed world is wealthy only because it is stealing from the developing world? They are out there.
What I would ask him is does he believe that *all* trade is fair?
What does “fair” mean? Trade is fair in that the participants in the trade prefer the results of the trade to not trading. If one party is coerced to exchange something, then it isn’t a trade.
Is that the same as free trade?
Free trade is a special form of trade without notable restrictions or constraints. I gather in practice, there can be constraints, but these are minor for legitimate trades (for example, importing fruit into the US where the only cost is inspection of the fruit, to verify that it meets standards of the US).
Many of us are compelled daily to engage in trade, so it can’t all be free..
As long as the “compulsion” is of our own desires or impulses, such as spending eight hours tugging on a slot machine or a similar amount of time playing World of Warcraft, it is trade and can even be free trade.
And I have a comment on something Godzilla wrote:
Sub-Saharan African countries like Djibouti have several issues which were glossed over. If most of your country’s population lived in the malaria belt without access to clean water I bet your economic output would be crap as well.
It’s worth noting that much of the southern US fell in the malaria belt and didn’t have access to clean water through to the beginning of the 20th century. Somehow we managed to figure out how to fix malaria and other mosquito borne illnesses as well as the quality of our water. Perhaps Djibouti should try those solutions first before we complain that they somehow aren’t beholden to principles of economics.
And then there are cases like Hong Kong, with its complete lack of any resources whatsoever, except of course for the acuity of its people and its (until recently) deep committment to free trade. PJ O’Rourke does a wonderful compare and contrast between Tanzania and Hong Kong in his book ‘Eat the Rich’ in two chapters which he titles “How to create everything out of nothing” (Hong Kong), and “How to create nothing out of everything” (Tanzania)…
Godzilla…you might want to look it up…
@Al:
Bill explicitly said ‘oil’ to generate electricity. Not gas. Not coal.
@Scott:
The Southern US could rely on the industrial capacity of the Northern US to build the necessary machines, and loan the necessary skilled engineers to do the work.
Hong Kong was an important trade colony of the British empire. It was their door to do trade in Asia. The British empire was a naval power which could supply whichever resources Hong Kong needed from their many other colonies in the world.
@ken:
It is true that having access to capital and a champion goes a long way towards making a successful business. In a free trade economy, not controlled by monopolies, capital is resources. Israel could rely on a large number of ex-pats to send money there. This also happens in some other economies. Israel also gives very generous incentives to industries which are located there.
However no economy is 100% free. The high trade barriers in agriculture are one example. There are strategic reasons why this is so. Nations which cannot grow their own food are highly susceptible to collapse in case of strife. At a certain point the Roman empire depended on wheat from Egypt to feed its population… As the trade routes collapsed food supplies were cut. The rest is history.
Capital is nice but you cannot eat bonds and greenbacks.
Zilla, I said nothing about the Southern US, but as long as you want to play that game…you might want to take a look at the post-Civil War South (after the overthrow of the plantation aristocracy), when credit was almost non-existent, and the industrial base had been obliterated by the war. The South still built an impressive industrial base (Alabama, TN, and GA are superb examples) out of nothing, with very little help from the northern states.
As for Hong Kong, they certainly benefitted from trade, but they did so by exploiting those options, by adopting (especially in the postwar era) a highly laissez-faire economic strategy, and by avoiding the typically third world attempts to tax, regulate, and tarriff their way to prosperity. Tanzania, on the other hand, went the full socialist route…and their population, famrland, abundant credit, and resources did nothing for them…
Thanks for playing though…
The Southern US could rely on the industrial capacity of the Northern US to build the necessary machines, and loan the necessary skilled engineers to do the work.
For what? If you’re draining swamps, wiping out mosquito breeding grounds,, and other malaria fighting tactics, you don’t need to import machines or engineers. I bet sub-Sahara Africa already has all the labor and talent it needs to fight malaria. Their societies just have other priorities.
Capital is nice but you cannot eat bonds and greenbacks.
Sure you can, if your capital is a productive farm.
Sure you can, if your capital is a productive farm.
Even if you have a farm the farming cycle can easily take one year between waiting, sowing, growing, and harvesting. Assuming you harvest anything. In the meantime you starve.
Just because you have capital in some form it does not necessarily mean it is convertible, or convertible fast enough into the goods you desire. That is where the expression ‘A horse, a horse, my kingdom for a horse!’ comes from.
Capital is nice but you cannot eat bonds and greenbacks.
I see your confusion. Bonds and greenbacks are not capital. They are a convenient means of conveying capital. Capital would include: knowledge, training and experience of your labor, machinery and other assets that allow you to produce, land with a clear title (until the mortgaged backed security mess, America was pretty good about this) from which you can borrow to trade for other capital (not any form of money. I mean actual capital.)
Anything that encumbers simple capital restricts your ability to grow wealth.
What you are highlighting Godzilla is that the UN caused a large slice of the problems in, say, Somalia. Food Distribution Issues
Cape Cod Times just had an article about the ‘possible’ shutdown of it’s local electrical power plant powered by…oil. Capital cost to convert to gas fired deemed too high.
Well yes. If you give free food you are skewing the food market. It is a kind of extreme dumping. When you are in a country where the productive sector is limited to agriculture, you are basically destroying the only form of working income these people know and have.
If the UN wants to improve living conditions in the 3rd world they would be better off making an investment fund to provide clean water, flood control, and electricity. Infrastructure development. The investment would be paid back by selling the water and electricity to local populations.
The UN would also do good if they worked some more on disease control. The smallpox eradication campaign was a success. Why not do the same for malaria and other tropical diseases? Just by disabling the mosquito attack vectors you could significantly reduce or even eliminate many of these diseases.
Cape Cod Times just had an article about the ‘possible’ shutdown of it’s local electrical power plant powered by…oil. Capital cost to convert to gas fired deemed too high.
Electricity generation from oil is insignificant. The plants remaining are 70s relics used for peaking power whenever the baseload power plants cannot provide enough electricity. Don’t take my word for it, just look at this DOE chart:
http://en.wikipedia.org/wiki/File:USEnFlow02-quads.gif
I am guessing Cape Cod decided to import peaking electricity instead of producing it because of some envirowackos.
So we’ve gone from oil hasn’t been used since the 70’s to it’s only used for peaking. If the cost per Btu gets low enough, almost any fuel will be used.
Looking to the UN or any government to solve problems or create wealth is a mental disease. Most problems are local and that’s where they need to be solved.
@ken:
Try making a highway system or damming some of the largest rivers in the world using only local, rather than national, funding.
@Bill:
You are being disingenuous. Less electricity is generated today by burning oil than by windpower:
http://www.eia.doe.gov/cneaf/electricity/epa/epates.html
Petroleum generated electricity is basically irrelevant today and keeps shrinking further. These plants only exist for legacy reasons. Eventually they will all be scrapped. If you expect the oil price to go down significantly to a place where it can compete with US natural gas and coal for electricity generation, I have a bridge in Brooklyn to sell you.
“If you expect the oil price to go down significantly to a place where it can compete with US natural gas and coal for electricity generation, I have a bridge in Brooklyn to sell you.”
Where did I write that? I didn’t. You’ve dissembled from oil stopped being a fuel in the 70’s to okay, very little is used now. I wrote it was used in the 90’s and into this decade. I’m not the disingenuous one. #6 was competitive with NG long after the 70’s.
There are still people selling horse rides in New Orleans as well. Does that mean the automobile hasn’t replaced the horse?
The “benefits” of coal and natural gas for energy production are not nearly so dramatic though. If there were a major long-term shortage in either we’d slowly shift right back if needed. (Unless nuclear or the other alternatives had finally progressed to the point to make the economic case as opposed to the moral case.)
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There are several locations in the world where horseback is still the only practical mode of transportation. So no, the automobile hasn’t completely replaced the horse. It is a replacement for the horse but hasn’t completely eradicated its use as a meaningful form of transportation.
Really though I just think it is a nitpick. Bill was probably just using a company brand name that people will recognize as an energy provider. Not very many people would know a coal company’s name if they saw one. Plus the argument doesn’t negate the fact that clearly oil is used, was used, and will probably continued to be used as some sort of energy production product. Energy consumption is the direct component of expansive GDP growth no matter how you try to slice it.
But lets not forget also that Americans are clearly not so stupid to understand that many countries just so happen to be situated in regions that do not afford them the good luck of easy access to critical resources. That is why America contributes 40 times more to international care and aid organizations than any other country on the planet. It’s a good thing when people give out of the kindness of their hearts. Not many people I know get a warm fuzzy when they mail in that check on April 15th.
Even if you have a farm the farming cycle can easily take one year between waiting, sowing, growing, and harvesting. Assuming you harvest anything. In the meantime you starve.
Just because you have capital in some form it does not necessarily mean it is convertible, or convertible fast enough into the goods you desire. That is where the expression ‘A horse, a horse, my kingdom for a horse!’ comes from.
Why would you starve? There’s already food here. Look I’m aware of the excuse for farm subsidies. They don’t hold water for various reasons, most importantly because the US would remain competitive in food production and hence, would continue to produce food even in the absence of any subsidies.
It’s also worth noting that in the play that the phrase came from, nobody would seriously believe that the King of England was going to give up his kingdom for a horse. He promised the world, but he wasn’t going to deliver. If he had been sincere in his promises, he may have well gotten that horse he desired.
That was not the only nitpick I found in his speech. There is little in the iPhone which is made in the US. Only the industrial design and pieces of the OS were made in the US. Most of the components are designed and manufactured in either South Korea or China and it is assembled in China. Samsung already figured they can sell their own smartphones. Check out the Galaxy S sometime.
Godzilla, where was the wealth created? I’ll grant 100% of raw materials through assembly for the components is foreign for discussion.
Try making a highway system or damming some of the largest rivers in the world using only local, rather than national, funding.
We had a highway system, before the national highway system. The first thing they did was screw it up by making long straight sections that killed people. It’s better now, but that doesn’t mean it could not have been the same by coordination between the states rather than a centrally planned system. Is this magic money, or did it come from taxpayers that lived in those states. Were some states ‘drive through’ and poor so they wouldn’t be able to support there part of the ‘system?’ Too bad. New Mexico fit that description even with the interstate, but they got better over time.
Dams? You think only the federal government could build a huge dam? If the power potential is there, funding would not be a problem. Again, is this magic money or taxpayer money? You think the most efficient source of electricity would have trouble getting funding?
This idea that only the federal government can do things is just plain wrong. I like the military being centralized, but even that was state militia when we founded this country and we fought and won against that eras superpower of the time.
This idea that the way we do things today is the only way is just a complete lack of imagination and historical perspective.
Godzilla, where was the wealth created? I’ll grant 100% of raw materials through assembly for the components is foreign for discussion.
What do you mean by wealth? Profit? Gross margin? The iPhone4 bill of materials has been estimated at $187.51 USD:
http://www.isuppli.com/Teardowns-Manufacturing-and-Pricing/News/Pages/iPhone-4-Carries-Bill-of-Materials-of-187-51-According-to-iSuppli.aspx
Check out who makes the most expensive hardware components. Not mere plastic or silica. Then tell me how many of those are made in the US. Sure Apple has a lot of profit right now. But what will happen after Samsung gets a decent phone out (Samsung Galaxy S is already here) and LG finally figures out how to make a credible design? They already manufacture all the relevant hardware components and have a good OS available (Android).
Guess which are the most expensive components in the phone? The display, the Flash memory, the CPU. Guess who are the top two worldwide display and Flash memory manufacturers? Samsung and LG; Samsung and Hynix. All South Korean.
The Chinese assemblers at Foxconn will work for anyone willing to pay the price. It doesn’t have to be Apple.
“There are still people selling horse rides in New Orleans as well. Does that mean the automobile hasn’t replaced the horse?”
LOL Now you’re being funny. There’s a difference between technology and price. If oil was still cheap, it would be producing a lot of electricity. Don’t forget the amount of fuel oil burned in homes in the NE displacing electric heat.
Check out who makes the most expensive hardware components. Not mere plastic or silica. Then tell me how many of those are made in the US. Sure Apple has a lot of profit right now. But what will happen after Samsung gets a decent phone out (Samsung Galaxy S is already here) and LG finally figures out how to make a credible design? They already manufacture all the relevant hardware components and have a good OS available (Android).
Apple will still probably have its growing market. Remember there were smart phones before the iPhone. It’s not enough to have a “decent” or “credible” design. It’s got to be better, if it’s going to grab market share from Apple.
“What do you mean by wealth? Profit? Gross margin? The iPhone4 bill of materials has been estimated at $187.51 USD:”
But that’s my freaking point. The foreign companies made somewhere around $190 for the raw materials and all the components (say). That is wealth creation, and good for them. But that isn’t all of the wealth creation. It may seem silly, but it is real wealth. Apple sells it here, and they average a nearly 40% margin. Plus the retail types and the software types – a slice of their pay is a portion of the price of the phone. Rumor has AT&T paying $250 per phone to Apple, so don’t be sidetracked by the $99 selling price.
Then realize that the iPhone is aimed at getting people to buy apps. Lots of apps. In fact, a really ridiculous number of apps – where Apple gets 30%.
I’m not arguing “Hey, they’re invincible”, I don’t much care if Samsung comes out with a crushing phone next week – that doesn’t change the discussion of “Does the iPhone create wealth… now?” Apple going from 10 billion in the bank to 50 (fifty) billion in the bank is a pretty convincing argument that they’re doing something right – and it isn’t the computer division.
What do you mean by wealth? Profit? Gross margin?
These are grade school concepts. Income is not wealth. Income is a means of accumulating wealth. Wealthy people are mostly beyond their peak earning years. How can you have an intelligent conversation without knowing fundamental concepts?
You’re not alone. It’s part of the reason people support class warfare politicians.