Read posts about macroeconomics

November 2

Presidential predictions and endorsements (OnThePharm (Hanser)) by RJS

The NYTimes has an interactive map that you can set to how you think each state will go, and you can view each state's polling data from the last election by clicking on it, and what current polls are saying about local trends. It's pretty neat, and I've been playing with it for about two weeks now.

Here are my predictions. You'll note it's Obama by an electoral and popular landslide:

Presidential predictions

I have Nevada going red even though recent polling data suggests that it will go Obama's way. For some reason I'm thinking that it will go Republican.

I'm also fairly certain that the Republican party has some serious thinking to do, and you'll see two schools of thought emerge:

  • A further rightward shift will solve all of their ills
  • A more progressive, center-leaning strategy

A further rightward shift would be suicide for Republicans at this point, just like Governor Palin ended up being the boat anchor for Senator McCain. While the idea was to "re-energize the base" to compensate for Senator McCain's relatively moderate political views, this was the wrong choice because hardcore conservatives were never going to vote for anyone but the Republican candidate to begin with. Rather, he needed to attract those independents that have been left out in the cold these last 8 years, and he only further alienated these voters.

A center-leaning strategy is their best chance, but it's my view that even a radical reinvention of the party will take the full four years to make its way into the American consciousness. The Republicans will not capture the Oval Office again unless they win Ohio, Florida, and Pennsylvania. Neither can the GOP afford to ignore the Northeast and West Coast, either. Most of the economic and educational outputs in this country are from these areas, and they rightly wield enormous political clout. It is my hope that the party does some serious soul-searching in the next few years and comes to the conclusions that it needs to have the best interests of the country at heart rather than the interests of big business and a small subsection of the population consisting of the middling rich and radical conservatives. (The super rich tend to vote Democrat.)

Speaking for myself, I have no particular litmus test for a presidential candidate, though I did when I was younger and the world seemed more black-and-white. Or rather, I thought I didn't have a litmus test, but I discovered — rather unpleasantly — that I do indeed have a few basic criteria that a candidate must meet: competence, curiosity, and equanimity. Governor Palin fails all of these in spectacular fashion, and her incredibly tenuous grasp of Constitutional fundamentals frightens me a great deal. It gives the lie to the McCain campaign slogan "Country First." Fortunately for the country, this short-sighted decision has backfired, and hopefully Governor Palin will go back to Alaska and quickly be forgotten as the national embarrassment that she is. A McCain-Romney or McCain-Lieberman ticket would have been a stronger bet. Coupled with better campaign management, I could see myself happily voting for a Republican ticket on Tuesday, but no longer.

Of course, Governor Palin is not herself running for office, and I have not seen Senator McCain himself exhibit much curiosity or equanimity these last few months. Rather, I have seen an angry man who hops from one stance to the next in an effort to find the most popular footing possible. I've seen a man who has run an campaign characterized by exclusive rhetoric; a man whose running mate has tried to characterize parts of America as being more "real" than others. That is not what this country needs right now. I do not believe that Senator McCain is incompetent, and I don't believe that he wants to see this country further divided into Red and Blue. However he did not choose a candidate who complements him — his admittedly poor grasp of basic macroeconomics coupled with his own lack of curiosity on the topic — makes for a dangerous combination when coupled with the likes of Governor Palin. It is quite clear that Senator McCain's VP pick was entirely political, and not in the best interest of this country.

Senator Obama, on the other hand, has displayed a remarkable sense of curiosity and equanimity throughout the entire campaign, and while his resume is indeed rather thin on both foreign policy and economic issues, I am comforted by the people he has chosen to surround himself with. His off-the-cuff reaction (page 2) to Senator McCain's move to cancel the first debate was certainly Presidential, and entirely unscripted. Senator Obama's VP pick displays a careful consideration of his own real strengths and weaknesses instead of just his political weaknesses. Senator Biden has rich foreign policy experience and is a member of the National Security Council. In economic terms, while a professor of constitutional law at the University of Chicago, Obama regularly spent time with professors from their renowned economics department, which demonstrates a necessary curiosity, and while lunchtime socialization does not equal real experience, Obama has surrounded himself with a team of economic advisors that's second to none. (Though I'm sure Greg Mankiw would disagree.)

I take strong issue with the idea of American exceptionalism, the idea that the rest of the world doesn't matter, and that somehow America operates in a global vacuum. This clearly isn't the case, as the collapse of the American financial markets has had a domino effect on the rest of the world. China's output is slumping due to falling consumer demand from America; Iceland is bankrupt and subsequently decided to go back to basics (i.e. tourism); the UK is on shaky financial ground even as Gordon Brown has engineered a unique bailout of their financial system, and the credit crunch is beginning to make its way down into the real economy. Despite these recent setbacks, globalization will and must continue, and America must repair her tarnished relationship with the rest of the globe, and the world overwhelmingly favors an Obama administration, by margins much greater than my own predictions: 9,115 to 203 electoral college votes. While the rest of the world is not voting, we must take into account their opinion because we have lots of ground to cover as we begin to unmake the current administration's mess.

Healthcare is not an issue that will change dramatically in the next four years. The medical blogosphere, of which I am a part, likes to talk about it regularly, but healthcare is so insignificant in the big picture right now that I view it as a non-issue. This country cannot afford a new social spending program on the order of magnitude that the likely winner, Obama, is proposing. And America will not be in a position to do so until she gets her feet back on solid ground.

Likewise, the educational funding proposals put forth by Senator Obama will also likely take a back seat for several years. When considering the costs of funding large-scale federal programs, one must take into account not just direct costs and where the money will be coming from today, but what spending that money today will mean for tomorrow. We do not exist in a temporal vacuum, and in a time where middle-eastern Sovereign Wealth Funds and Chinese banks are already reluctant to lend the US money, we must strongly consider whether these should be high priorities.

In my opinion, they should not, and should remain further down the list until we've gotten the rest of the country back on track. We must also consider the future, not just the next four years. How do we allocate our capital and labor to achieve the best results both for today and for our children? I believe that Senator Obama's green energy plans are better than Senator McCain's, though his lack of overt support for nuclear power concerns me. I also believe that while the healthcare sector will remain relatively stable even during this recession, it's going to be renewable energy that's going to power us out of our decline. Senator Obama wants to fix the economy and get this country on a path to energy independence. At this point energy independence is the same as renewable energy, and it's inextricably linked to growing out economy.

There will come a time for rethinking the US healthcare system, but that time isn't now. And when that time does roll around, we'll need to be talking more about revamping the system from its educational roots right up to a renewed focus on primary care as a cost saver and then on to our fractured tort system with many smaller milestones along the way.

In the meantime, we need a leader who is inclusive rather than divisive; a leader who can inspire; a leader who will be welcomed (gallery) with open arms by the rest of the world; and a leader can do a great deal for the image of this country simply by taking the Presidential Oath of Office; and a leader who supports rolling back the abuses of Executive power. For all of these reasons and many, many more, I will be voting for Barack Obama on Tuesday, November 4.

Posted in: biden , economics , election , foreign policy , healthcare , macroeconomics , mccain , obama , palin , politics
August 4

An economic case for being "green" (rianjs.net (Hanser)) by Rian

If I were a venture capitalist today, I wouldn't be looking at Internet startups. While the Internet is a sexy market and commands a lot of mindshare, I don't think that it's the future. We're coming to the end of the Information Age. No, the problems uncovered by the Information Age aren't solved. Search isn't solved. Scientific computing as a whole is still quite nascent.

But we are gradually working our way out of this Age and into the next: the Renewables Age. Just like we're still using what was developed during the Industrial Revolution, so too will we continue to use and develop the goods and services developed during this Information Age. So while computing and information management isn't going anywhere, it will be superseded by bigger economic concerns. Namely, renewable energy.

I firmly believe that a few well-placed, relatively modest investments today can very probably yield absurd returns on investment sometime down the road. It would, however, be a very long-run type of play, and many VCs aren't prepared to make an investment that won't pay off within ten years.

With that in mind, I wrote the following as part of a larger essay for an economic history class about a week ago. What is interesting is that when I started the paper, I had no idea where I would end up. Like most Americans, I hadn't thought about the "greening" of the economy at all. I didn't have a conclusion in mind when I began. The final result was this, and I think I make a pretty good case for renewables and investment therein. At the very least, I have convinced myself, and I don't really know how you can argue against it unless you're talking timespans of less than ten years.

I've broken it up into a couple of shorter pieces because it's simply too long to post as-is. No one would read it. Because it's unedited, the beginning of each piece might feel a little jarring beginning on day 2.

  1. Part 1: The Little Things
  2. Part 2: Wind and waste heat
  3. Part 3: Petroleum, plastic, and data centers
  4. Part 4: How it will shake out and conclusion

PDF of the whole thing (2,158 words).

Let me know what you think…

Posted in: economics , environmentalism , green technology , macroeconomics , technology , venture capital