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~ USA Headed for a 5th Revolution! Why?

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Monthly Archives: January 2015

#111 Working with “Opinionaters” (Part #7 of Rebuilding Infrastrucutre)

31 Saturday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Societal Issues

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Scene: Jordan alone in office working on the paper for POTUS.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  The paper is overdue, POTUS is frustrated and Jordan struggling to finish.  Original conversation with POTUS Entries #104, #105.

Jordan (mumbling to himself): Need to get this draft finished.  The Super Bowl starts iTurtleneckn a few hours. Usually not a great football game but fun to watch.  Besides I’m supposed to meet some friends at a party.  Get out of here for a while and relax.

The entire project now seems to make sense.  I mean, can you think of a better and more equitable way to fund rebuilding infrastructure than having a fixed price for fuel?  Everyone shares in the funding.  The higher fuel prices are an incentive to increase fuel efficiency on cars and trucks…plus the lower fuel consumption reduces emissions.

So what can sidetrack a perfectly logical, practical plan that should have widespread Congresssupport among the voters, private industry and the Congress?  Should be relatively easy to implement…right?  We’ll be lucky if it flies.

A major question is whether POTUS has the passion to turn the idea into a reality.  No doubt the Republicant diehards will resist the idea.  For Republicants, having private industry lead rebuilding infrastructure would be considered a smart investment and Republicants would support it.  But the very same plan, if lead by government, Republicants would consider wasteful and inefficient.

If private industry raised prices to help fund such an effort, there would be no resistance from Republicants since higher prices were necessary.  When government makes such a proposal, it is considered an unfair tax on the wealthy and any and all effort to raise taxes, no matter how rational the idea, must be thwarted.

POTUS knows all this but is he willing to strong-arm Congress to approve the plan?  Chances of approval are much better since the Revenge Revolution…but many good legislative ideas still seem to get bogged down in Congress.

Plus, the radio talking heads will have a field day with this proposal.  Somehow…and I really do not understand how…the radio psychobabblers and the Fox News bobble heads have brainwashed a large percentage of the population.

Good example is their proposal for an amendment forcing a balanced Federal budget.  Do the idiots proposing the amendment have any idea of the consequences?  Forcing a balanced budget in a recession is exactly the opposite of what should occur.  A balanced budget in a recession creates a death-spiral for the economy.

parrothead_tnsFunny…well, not really funny since the potential effect is so tragic…is the true lack of understanding of economics by these parrot-heads.  At dinner the other night, I was floored when Sonny said to me, “Well you have your opinion and I have mine.”  Sonny, I hate to remind you again that I was dealing with facts and loads of empirical evidence, not just an opinion.

What was even more maddening is when pressed for facts, Sonny – like many others brainwashed – changed the subject and started to blame someone else.  Hey pal, don’t go around spouting off stuff you claim are facts but have no support for.  Oh, well, that’s an ideal world I’m wanting to live in.  I guess “opinionaters” don’t let facts get in their way.

But POTUS is up against some influential “opinionaters” so he will have to make a spoliticstrong case for the benefits of higher fuel prices.  He might even cite some of the opinionaters’ irrational arguments.

Boy, am I glad I am not a politician.  Schmoozing is not my game.  Plus some of the politicians have no shame, which really galls me.

Enough kvetching, already.  Let’s wrap up this draft.  Final check – what are the real problems with the idea to fund rebuilding infrastructure with higher fuel prices?

Real problems.  None, at least from my end.

Perceived problems.  Well, probably three and all about equal.  First is the perception ttaxpayerhat the extra cost for fuel is a tax.  The perception will exist even among those who support the idea.  And, they’re right.  POTUS can call it something like “infrastructure investment” or some other euphemism.  At the end of the day, it’s a tax.  Worthwhile but still a tax.  Let’s just cut the BS and call it a tax.

Second perception is that some of the money will be spent on non-infrastructure issues.  I agree that’s a valid concern.  Addressing the concern would be a good way to get Republicants involved and to claim partial victory with their constituents.

royalty-free-cell-phone-clipart-illustration-1067376Third perception problem is oil-and-gas industry will claim the fixed price takes away their profit potential.  Hooey.  But we need to address and demonstrate how their profits can be more stable and higher over the long-term.

All these problems are theoretically manageable.  What a great term, “theoretically manageable.”  Reminds me of some academic class.  But the problems can be addressed successfully with the right people involved.  We can talk about the right people when I meet with POTUS.  In the mean time I need to talk to my namesake about lining up the oil guys.  I wonder if he’ll be at the Super Bowl party tonight.

N122913_1337_14BringingU2.pngow, time to bail out of here, go have a drink and a good time.

(To be continued)

#110 Does the Plan Pass the “Practical” Smell Test? (Part #6)

29 Thursday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products

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Scene: Jordan alone in office working on the paper for POTUS.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  The paper is overdue, POTUS is frustrated and Jordan struggling to finish because of a series of interruptions.  Original conversation with POTUS Entries #104, #105.

Jordan (talking to himself):  Alright, I really need finish the draft.  POTUS Turtleneckmentioned the need for rebuilding infrastructure in the State of the Union speech.  Now people are asking for details.  Why am I so far behind on this?

I’ve got most of the draft completed.  What’s left to cover?  Plan details will take a while to hammer out.  However, I need to make sure the plan is reasonably practical before it hits the press.

Practicality – does it pass the smell test?  Is the plan practical or is this some ‘inside-the-beltway’ mirage that has no chance in the real world?

do-i-smell-whatSetting a fixed price for fuel – gasoline and diesel – is practical.  Setting the price is the easy part.

What about profit margins?  The oil-and-gas executives and the fuel-station operators could gouge prices under this plan given half a chance.

What if the plan ensured that the infrastructure tax – quit calling it a tax?  The “infrastructure investment” would be limited to say $2.00 to $2.50 per gallon?  Having a ceiling on the amount of infrastructure investment would be an incentive to the oil-and-gas companies to increase domestic exploration and production.  The ceiling would also encourage the companies to reduce costs.

Funny, I suspect the oil-and-gas guys will scream about more government intervention scream-1-1024with this proposal.  But they don’t seem at all upset that the industry and the companies are whipsawed by a limited number of oil traders, who basically decide the price of oil.

I need to ask these guy, “Would you rather have fate in your own hands or someone else’s?”  But Texas being Texas, I can hear them now.

If they’d stop and think about how the proposal could benefit them directly, they might support it.  As crazy as it first seems, under this plan the oil-and-gas companies could increase profits and have a more predictable cash royalty-free-cell-phone-clipart-illustration-1067376flow.  But they’ll never buy that idea on their own.

I need to find a respected oil-and-gas executive who can carry the torch on this idea.  And I know just who to call.  He’ll say no at first, then have a drink or two, sleep on it and call back saying he supports the idea.  I need to call him.  (To be continued)

#109 Privatizing Functions of Gov’t: the Fallacy (Part #5)

20 Tuesday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products, Possible Solutions

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Scene: Jordan alone in office late working on the paper for POTUS.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  The paper is overdue, POTUS is frustrated and Jordan struggling to finish because of a series of interruptions.  Original conversation with POTUS Entries #104, #105.

(Jordan talking to himself.)  Getting support from Republicans for $5.00 gasoline is Turtleneckgoing to be tough, even those elected after the Revenge Revolution.  They seems obsessed with privatizing a whole range of functions of government, including infrastructure.

Claiming societal benefits by privatizing many government functions is a fallacy.  Look, government is not the most efficient organization at many tasks, but…and this is what many people fail to grasp – Republicans and some Democrats…government is a system that works most efficiently when tasks are grouped or integrated.

Any one task might be completed more efficiently by private business.  But “outsourcing” these tasks results in even more inefficient government.  I can hear the RantRepublicans screaming now.

Many Republicans congressman and many business leaders seem to forget a key lesson from private enterprise.  The lesson?  Companies that are more vertically integrated make the most money.

Historical examples.  General Motors, when it was the most vertically integrated might as well have printed money it was so profitable.  More recently, Apple, has become hugely profitable because it controls the integration of apple logohardware and software.

Vertical integration – I wonder if the lawyers in Congress really understand what it means and the potential benefits vertical integration offers.  Probably not.  OK, I’ll need to include a definition for POTUS.   The Wikipedia definition is a good overview.  http://en.wikipedia.org/wiki/Vertical_integration

POTUS will have to link the discussion of vertical integration to why many functions of the Federal government should be vertically integrated and how vertical integration applies to rebuilding US infrastructure.

Maybe we start the conversation with a discussion of roads.  During the Obama Administration Republicans kept pushing to privatize rebuilding the infrastructure.  Many Republicans said the government should have private enterprise provide the capital to rebuild roads, bridges, water treatment facilities…and a bunch of other stuff.  But, with the private capital came one caveat – the companies could charge the public tollfor using the privately funded infrastructure.

What a dumb-ass idea.  It basically turns control of the public infrastructure to the private sector.  Why?  Because some Republicans were opposed to any function run by government?  I dislike the idea intently…and I hope POTUS opposes strongly.

What if the company decides profits are more important and neglects maintenance and repair of infrastructure?  What if the company decides to increase fees or tolls?  The company could also decide the terms of the contract are onerous and then declares bankruptcy.  And what is the public left with?  The tab for repairing the infrastructure.  Meanwhile the company has reaped profits…maybe raped the public is more appropriate.

The idea of private water and sewage treatment is even more risky.  A failure by the company could have a huge negative impact on the public with virtually no accountability by the company.  I need to have POTUS remind people of the financial Prisonercrisis of 2008.  Let’s see, how many executives from the banks and Wall Street firms went to jail?  Goose egg, nada.  There was no accountability then.  The only difference today is the Revenge Revolution and people are fed up with executives and corporations not being held accountable.

The public might not understand effective oversight of private companies requires government staff.  Republicans, of course, will claim “market forces” will keep the companies competitive.

Excuse me…but the last I looked roads, bridges and water treatment facilities were all monopolies, not free-market enterprises.  Monopolies do not have a natural check-and-balance system.

Since we’ve had the Revenge Revolution I think there’s a better chance people will understand why infrastructure should be funded and managed by government.  Using private companies to help rebuild infrastructure is OK and keeps government out of certain businesses.  But government needs to manage the process.

Once POTUS makes this argument, he’ll need to talk about why $5.00 gas is necessary.  Avoid getting into too much detail about cost during the early sessions.  021214_1242_24Resultsof1.gifIt’s an easy way to get sidetracked.  But he needs to make the case that $5.00/gallon gasoline will make enough funds available to fund rebuilding infrastructure.

Maybe he should mention the Apollo program of the 1960’s.  When President Kennedy said the US would put a man on the moon in less than a decade, I think the budget was 3-4% of GDP.  Need to confirm but seems right.  That program was highly successful with vast spin-off benefits.  Rebuilding could have the same benefits.

OK, I think this section is OK for now.  I’ll need to polish and make sure it flows smoothly.  But POTUS needs to make the strong argument that government, not private companies, needs to fund and manage rebuilding infrastructure.

(To be continued)

#108 POTUS Infrastructure Project: Perception (Part 4)

08 Thursday Jan 2015

Posted by Jordan Abel in Economics, Infrastructure & Fixed Fuel Prices, Innovative Thinking: Ideas and Products

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Scene: POTUS’ office calling Jordan.  Earlier POTUS asked Jordan for ideas how to convince politicians and the public that it would be a good idea to fund rebuilding US infrastructure by fixing the price for gas and diesel fuel.  Original conversation with POTUS Entries #104, #105.

Jordan:  “Hello, Jordan Abel here.”

Caller:  “Mr. Abel, this is Harriet Breadsaker in POTUS’ office.  He asked me to remind 021214_1242_24Resultsof1.gifyou that you owe him a draft of how he should propose the idea of a fixed price for gasoline and diesel fuel.  When can we expect the draft, please?”

Jordan:  “Part of its complete.”

Caller:  “Mr. Abel.  Maybe my question was not clear.  When will you send the draft for POTUS to review?”

Jordan:  “Give me another week.”

Caller:  “I’ll tell him more like 10 days.  Hope we don’t have to talk again.  Goodbye Mr. Abel.”

Jordan (mumbling to himself):  “I’ve got to get going on this project.  POTUS is already on my case.  What’s the next item I need to address?

(The balance of the entry is Jordan talking to himself.”

The next “P” is “perception”.  How did I overlook perception?  The issue of perception should be upfront.  Calm down, Jordan, you are where you are.  Just be diligent and plow through the balance of the “P’s” and you will make the deadline.  Besides you told POTUS it would be a “working draft” and not a final recommendation.

“Perception.”  I need to make sure as many people as possible understand the “extra” cost of fuel is really an investment in America…and not a tax.  People should consider cost to rebuild infrastructure as an investment.   Considering as an investment seems so obvious, but not everyone gets it.

I recall before the Revenge Revolution – sometime late 2014, early 2015 – just before the Republican Congress was sworn in, there was an article in the New York Times about the lack of support for increasing the gas tax.  Some Republicans were resisting a Federal tax increase and wanted responsibility for roads transferred to the states.  (15 01 04 NYT re Little Support for Gas Tax

I recall being dumbfounded anyone would think like that.  Can you imagine having a highway system without national standards?  No guarantee of consistency among the states for road quality, signage, bridges, etc.  Talk about a potential negative impact on commerce.  What were these Republicans thinking?

ORantK, there’s a few wackos still in Congress.  Fortunately the public threw out most of them following the Revenge Revolution.  POTUS still might need to throw the wackos a bone to avoid a fight or have the legislation stalled, especially in the Senate.  What bone?  Maybe consider allocating part of the revenue from the fixed fuel price to reduce the deficit.

Another head scratcher.  Why do some Republicans think the US should pay down the Federal debt…and some even want a surplus.  Why they think like that is beyond me.  What I do know is no matter what I say or POTUS’ says, or any professional economist loaded with empirical data says, that group will never change its mind.  Do these same guys really think commercial and investment banks have enough money to pay depositors or pay off their debts?  Wall Street prints money every day.

OK, enough sidebars, back to the issue at hand.  POTUS’ proposal needs to build a credible and well-understood argument that: (i) reinforces why repair to infrastructure is needed; (ii) emphasizes the benefits of a wide range of infrastructure projects, not just road and bridges; (iii) makes it clear the extra cost for fuel is really an investment, not a tax.  Jordan, stop even considering the word “tax.”  Take the word “tax” out of your vocabulary for this project.  Repeat after me: the extra cost is an investment, the extra cost is an investment; the extra cost is an investment.

board-clip-art-300x224An unresolved issue is how to allocate the funds generated.  To avoid the perception of partisanship, maybe the solution is to create a team of different key constituents – business leaders, academic, politicians and citizens.  Need to keep the team small – ideally no more than say 9 members.  Each team member could have a supporting workgroup.  A team larger than 9 will get out of control and not provide real guidance.  Recommendations from a highly respected smaller team will be more cohesive and more difficult for Congress to reject.

Just for fun, who could be on the team?  I’ll make a list and then prune it after checklistreviewing with some other people.  For now, let’s include representatives from: (i) auto industry (ii) airline industry (iii) water transportation (iv) communications industry (v) municipal infrastructure – water, sewer, local roads (vi) environmental groups (vii) 2-3 academics – engineering (civil), business, maybe an anthropologist.  That would make for an interesting group. (viii) electricity generation industry – need alternative energy also (ix) energy producers.  Alright you are already over the limit…but a decent start.

Whew.  Some progress.  No go get some coffee and take a short break, then back to work.  No more calls from old Harriet Breadsaker.  Be nice to Ms. Breadsaker, Jordan.

(To be continued)

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