Cellulosic Ethanol

The San Jose Mercury News has had several articles on ethanol just in the last two weeks. Venture Capitalists in the tech sector are starting to invest in alternative energy start-ups. I eagerly await the Merc publishing a series of articles on solar, wind, hydrogen, fuel cells, and hydro power. How about an article on how Nuclear Energy stacks up against these other energy sources? The combination of risk taking from the private sector, goverment funded research and incentives, just might lead to a breakthrough technology that can scale.

The excitement surrounding ethanol revolves primarily around Cellulosic Ethanol. To think that a few weeks ago the President mumbled something about switchgrass. I hope the Prez starts putting some pressure on the automakers.

What has technologists in Silicon Valley and elsewhere buzzing is the emerging science of cellulosic ethanol. The process shreds switchgrass, wood chips or other plant byproducts such as corn stalks, and then adds special enzymes to break down the mass of cell walls of these plants, or cellulose, into sugars. These sugars can then be used to ferment ethanol.

By some estimates, cellulosic ethanol promises to reduce greenhouse emissions by 60 to 80 percent and, once in widespread commercial production, could cost about the same as corn ethanol to make.

But the real bonus, supporters say, is that cellulosic ethanol could radically improve energy output over gasoline and corn ethanol. With gasoline, you only get 0.8 units of energy output for every unit of fossil fuel used in production. With cellulosic ethanol, you get five units out for every unit of fossil fuel used. That's because the sun is doing all the work.

Problem is, most experts say commercial production of cellulosic ethanol is still three years away.

Meanwhile, venture capitalist Khosla is the most high-profile ethanol convert in the tech world. He's pushing policies to speed up the shift to ethanol, advocating a government mandate for car companies to produce so-called ``flex fuel'' cars, or vehicles that can run on fuel that's up to 85 percent ethanol. He's also funding a state ballot initiative to slap a tax on oil extracted in California.

Khosla, who previously funded telecom companies like Juniper Networks, Siara and Cerent, says he now has two investments in companies focused on cellulosic ethanol, including BC International of Dedham, Mass. He still has an office at Kleiner Perkins Caufield & Byers in Menlo Park but two years ago left the firm and formed his own, Khosla Ventures, to invest in new technologies, including ethanol.

At first, he assumed the sector wouldn't be profitable and was committed to ethanol projects out of concern for the environment, he said. But the more he dabbled, the more attractive it became: ``Now I think it makes sense because it's a great investment; that's not where I started.''

Ethanol has the best chance of replacing petroleum, he says: ``None of the other options, including hydrogen, are realistic,'' he says.

Links: Savings, Shareholder Activism, and India

The Christian Science Monitor finance section has two articles worth reading:

• The sad state of personal savings in the U.S. People have the right intention, but they just can't help themselves. No wonder the Current Account Deficit is out of control.

• A look at how Catholic Nuns have been at the forefront of shareholder activism, and the Triple Bottom Line approach.

Fareed Zakaria has a Newsweek cover article on another booming Asian economy, India. An Indian friend, who travels regularly to India, told me India reminds him of Silicon Valley during the bubble. He worries what that the young people may get the shock of their lives, when the economy stops growing at its current pace.

Iraq and Afghanistan

James Hamilton has a nice post, reviewing some recent research out of the Brookings Institution:

"Despite hopes for progress in 2005, data reported in the Brookings Institution's Iraq Index suggest that electricity availability in Iraq averaged 13 hours per day in 2004, 11 hours per day in 2005, and a little over 10 hours per day in January 2006, compared with an estimated 16-24 hours per day prior to the war. The graph below indicates that electricity production was 6% lower in 2005 than in 2004. In part these problems are the direct result of insurgent attacks on infrastructure and personnel, the latter in particular making it extremely costly to bring in outside technicians to train local operators of generating facilities in necessary maintenance and service procedures."



Unless this situation improves, winning the "hearts and minds" of the Iraqis will be unlikely.

That may be the least of our worries: first we have to get Afghanistan right!

Lunar Power

I have to admit to having been unfamiliar with this technology, but Business Week has a nice article about Hydropower. It sounds promising: combined with Solar, Wind, and Ethanol, it is going to be tough for Nuclear to compete on costs:

... hydropower, the granddaddy of green energy, is making a comeback. Think Hoover Dam, but less visible and a whole lot easier on the environment. This born-again breed of clean energy isn't yet on the agenda for George W. Bush, who is out barnstorming the nation on behalf of renewable power. The President is pointing to the earth for plant-based ethanol, to the sky for wind power, and to the sun for photovoltaics. But he should also be pointing to the moon, say fans of the new hydropower, and to the seas that lie below it. Tugged by lunar gravity and stirred by wind and currents, the oceans' tides and waves offer vast reserves of untapped power, promising more oomph than wind and greater dependability than solar power.

The appeal of next-generation hydropower is hard to miss. "It's local, reliable, renewable, and clean. Plus, it's out of sight," says Trey Taylor, president of Verdant Power LLC, the Arlington (Va.) startup developing the East River site. Adds Roger Bedard, ocean energy leader at the Electric Power Research Institute (EPRI), the industry's research-and- development arm: "Offshore wave and tidal power are where wind was 20 years ago, but they'll come of age faster." By 2010, Bedard predicts, the U.S. will tap about 120 megawatts of offshore wave energy -- enough to power a small city -- up from virtually zero today.

... With its vast stretches of shoreline, the U.S. has some 2,300 terawatt-hours of potential near-shore wave power, estimates EPRI. That's more than eight times the yearly output of the nation's existing fleet of hydroelectric dams -- "a very significant resource," says Bedard. What's more, since water is heavier than air, marine systems pack a bigger punch than wind power. Because they work not by impounding rivers behind costly bulwarks but by tapping water's energy as it ebbs, flows, rises, or falls, upfront costs are lower than for dams. Maintenance to keep away barnacles and similar "biofouling" generally runs higher than for wind. Still, on balance, wave energy will evolve to be cheaper than wind was at similar levels of development, Bedard believes.

The power is more predictable, too. Unlike dam-based hydroelectric generators, which depend on rain or snowpack to keep current flowing and which shut down during droughts, newer "hydro- kinetic" systems exploit less capricious natural forces. "Lunar power" is the term offered by experts such as George Hagerman, a senior research associate at Virginia Tech and co-author of a recent EPRI marine-energy study. "You can't know if the wind will be up in an hour," he says, "but you can predict the tide 1,000 years from now."

The Current Account Deficit in a Globalized World

Even if the current administration wants to call the Current Account Deficit a Surplus, renaming something doe not alter reality. That is what is amusing about this Dubai port deal fiasco. The Democrats are wanting to build up their National Security credentials, while Republicans are increasingly nervous that their re-election prospects are getting affected. I still think the Dubai based company should be allowed to buyout the stake of the British company: in a globalized world, capital needs to be allowed to flow freely. Brad Setser does an over-simplified, but illustrative, back of the envelope calculation:

The 2006 US current account deficit looks to be a bit under $1 trillion. $1 trillion sounds big, but remember, the annualized fourth quarter current account deficit will almost certainly be close to $900 b. Continued strong consumption growth suggests that the trade deficit is still trending up, and in 2006, rising interest rates are set to push the income balance into negative territory.

And if US companies want to invest abroad and American investors want to buy foreign securities (and they do - just look at how Brazil's equity markets have performed in 2006?), the US needs to attract inflows of over $1 trillion.

So it is not at all unreasonable to say that financing the US current account deficit requires that the US raise $20 billion a week, whether by selling debt, selling stocks or selling off real US assets. 52 * $20b = $1040.

That is equal to selling one Unocal a week to China (CNOOC was willing to pay $20 billion). Or selling three companies the size of P&O to the Emirates a week.

... Moreover, if foreigners who already hold dollar-denominated bonds ever decided they wanted to shift into equities, the potential sale of physical US assets would be even larger.

So far the US has financed its deficits with debt - and debt doesn't carry with it the right of control. Though countries that are hooked on debt do sometimes find that their creditors have a bit of influence over their policies. But fundamentally, there is no way the US can sustain $1 trillion deficits - the 2006 deficit is not going away in 2007 or 2008 barring a catastrophe, at best, the deficit won't keep getting bigger - without selling off large pieces of itself to the rest of the world.

Actually, on this issue, the U.S. has a pretty decent record compared to the European countries. The French goverment in particular has a tendency to intervene to help fight off foreign takeovers: check here and here. Unlike the E.U., I do not really want the U.S. to send the signal that gloablization is fine, so long as we remain the main benificiaries

Asian News Roundup

• Slowly but surely, the Japanese economy is turning a corner. This time, it looks real.

• Citibank and Bank of America lead a pack of foreign banks looking to cash in on India's banking boom.

• 20 years after the fall of Marcos, the Philippine political system remains a work in progress.

Larry Summers

Slate has a good article on Harvard's outgoing Prez:

"He pointed out, for example, that while it was socially unacceptable at a great university to admit that one hadn't read a play by Shakespeare, you could safely joke about not knowing the difference between a gene and a chromosome."

Gap Minder: Visualizing Development Trends

Nice animated presentations of wealth/health/inequality data. The data really comes alive, you will develop an understanding of how wealthy the OECD are. The section on Health is particularly disturbing.

Make you sure you check it out, I recommend it highly.

Port Security: Don't Single Out Dubai

I think that Bush is right to threaten veto on legislation that blocks a Dubai based company from buying control of some US ports, from a UK company. If anything, it might lessen political grandstanding from both parties. As far as I can tell, this is a financial transaction, day-to-day operations and management will remain unchanged. Based on the reactions to the Danish cartoons (here is my post on that subject), the Arab world already perceives they are constantly being singled out.

Dubai is one of the most forward looking areas in the Middle East. It is the Singapore of the Middle East: striving to be the financial, commercial, and entertainment hub of the region. Unlike Saudi Arabia, Dubai does not prohibit non-Muslims from practicing their faith, and has even donated land for the construction of Churches. Expatriates I have met have had generally great things to say about the place.

Perform due diligence. The Bush administration prides itself on their COMPETENCE, and they have claimed to have vetted this deal. Alas, they said the same thing about the Iraqi insurgency, the Katrina response, the torture of POW's, and the NSA spying. Someone probably should verify they haven't screwed up again.

But let's not single out the one area in the Middle East that is attempting to modernize itself. It should be clear in short order if this deal should proceed, do not let it drag out.

Bush and Alternative Energy: More Gravitas Required

Any publicity for alternative energy is good news. Global warming and energy conservation is a non-partisan issue. President Bush helps raise awareness and news coverage that is hard to match. To see and hear the Prez talk about alternative energy, one still doesn't sense that he is truly passionate about it. For all we know, he just reads and says a few items that aides and speech writers pass along. I am not talking about the known problems with the administration's energy policy:

"Democrats and some Republicans criticize the Bush energy plan as failing to sufficiently address a leading cause of U.S. dependence on imported oil: the fuel efficiency of cars, trucks and sport-utility vehicles. Under pressure from struggling U.S. automakers, which are losing ground to foreign competitors and shedding jobs at plants throughout this region, Bush has not proposed large increases in the gasoline mileage that U.S. automakers are required to achieve, known as corporate average fuel economy (CAFE) standards. Bush has supported slight increases for some light trucks and SUVs but stopped short of across-the-board changes advocated by many lawmakers and environmentalists that could significantly reduce oil consumption."

What we need is for the President to sound enthusiastic and excited about these things. How about an announcement along the lines that the President has decided to use solar panels or wind energy to generate electricity for his ranch? How about urging the federal goverment to start replacing its own fleet with hybrid or other more fuel efficient vehicles? It may be too much to ask from someone who came from the oil industry, and who has yet to acknowledge global warming is taking place. Imagine if Al Gore were President?

But we do need the Prez to keep talking up alternative energy. Maybe he can invite some environmentalists into the White House for private tutorials. Once you hear from those who are passionate about this issue, you get infected with their enthusiasm. We need the Prez to develop some gravitas, and fast.

The Prez needs to start listening to respected Economists, like Menzie Chinn, who believe a rise in the gas tax can do wonders:

"This reliance on subsidies and command-and-control remains true despite the fact that if the President really wished to reduce our "addiction" to imported oil, the most effective way of accomplishing this aim would be an energy tax. That is because on the supply side, production is unlikely to rise strongly given the depletion of onshore reserves, even with the most generous subsidies. In addition, production takes years to put into operation. Moreover, a tax acts immediately, while standards would take longer to have an impact on consumption (since it would have to work through an alteration of the capital stock embodied in trucks and cars). Furthermore, a tax has a further advantage that it reduces the price foreigners -- including Saudi Arabia and Iran -- would receive for their oil exports. In this sense, it has a similar effect as an oil tariff, although it is WTO-consistent, while a tariff would not be.

A back-of-the-envelope calculation can be useful in defining the potential impact of a gasoline tax. In 2004, the United States imported about $180 billion worth of petroleum and petroleum-related products, equal to about one-third of the trade deficit. Ignoring interaction effects, a $1 per gallon tax on gasoline would reduce annual petroleum imports by $10 to $25 billion, or about 1.6 percent to 4 percent of the trade deficit. The calculation relies upon estimates of the gasoline demand elasticity of 0.3 percent to 1.0 percent. Specifically, each barrel of oil yields approximately 19.5 gallons, and U.S. consumption was 19.4 billion gallons. "

Cingular Bucks the Antiunion Trend

From the NYTimes:

"Union officials said that what set Cingular apart from other wireless carriers and cable companies was, quite simply, that it was not actively antiunion. To be sure, the company and the union have clashed in numerous contract negotiations. But Cingular has not tried to dissuade employees from joining the union. At places like Jackson, for instance, the company did not lobby employees to reject a union or argue that doing so would hurt them and the company.

Instead, Cingular has sent the message that labor can be an ally.

The partnership with the union "provides us a competitive advantage," said Lew Walker, Cingular's vice president for human resources, operations and labor relations. "We do believe it has a positive bottom line impact on the company."

Mr. Walker said the company had benefited by getting the union's support with politicians and regulators, including its endorsement for the acquisition of AT&T Wireless. He also said Cingular had benefited in being the wireless carrier of choice among other unions and organizations that want to patronize a union-friendly company, though he declined to specify how much revenue came from those entities."

Trading CO2 Emissions

The EMU has created a market for trading CO2 emissions, now start-ups are seeking to create for-profit companies around it:

"Now that Europe has opened a market based on carbon dioxide emissions, it could work, he insists.

George and his Foster City startup, Planktos, plan to create huge algae blooms at sea that will suck some of the greenhouse gas out of the atmosphere, then sell credits to European companies unable to meet their emissions targets.

Those companies would, in essence, pay Planktos to take out of the air carbon dioxide they are putting in. Should California, New York or other American states adopt similar cap-and-trade systems, Planktos would sell here, too.

George belongs to a small but growing group of entrepreneurs trying to turn carbon dioxide limits into business plans. Spurred by the Kyoto Protocol that mandated greenhouse gas reductions in Europe and Japan, they are dreaming up products and services they can sell to companies that take advantage of cap-and-trade systems.

"That's what we're seeing right now -- this whole industry is really ramping up," George said. "

Squatting in the City of Tomorrow

In Shadow Cities, writer Rober Neuwirth attempts to understand the "squatting" phenomenon, prevalent in developing countries. He spent at least a month each LIVING in 4 of the world's largest slums: Rocinha (a favela in Rio de Janeiro), Kibera (in Nairobi), Sanjay Gandhi Nagar (in Mumbai), Sarigazi (in Instanbul). His graphic depiction of the living conditions along with his conversations with the locals in each area, makes for great reading. Some interesting tidbits:

• In Rio, the favelas can be safer than the "regular" neighborhoods. Inside the favelas, there is an unwritten code that the drug dealers & thieves leave the residents alone, so long as they do not call the cops. In the book, a Western tourist actually moved from a downtown hotel into a room in the favela, so he could feel safer.
• In Kibera, the lack of sewage and easy-to-access clean water is heartbreaking. Ironically, the UN-HABITAT (" ... to provide adequate shelter for all.") program is based in Nairobi itself. As the author points out, well-intentioned development plans are bound to fail if the "planners" do not spend time with and consult the intended recipients, i.e. the residents of Kibera. That in a nutshell is why the UN-HABITAT agency has been ineffective in Kibera and other places.
  
• In Turkey, if you manage to build a house in the middle of the night, and the police are unable to tear it down before daybreak, then you cannot be evicted without due process of law. The caveat is that the house should be of sound structure. The result is a cat and mouse game, between potential squatters and the authorities: the squatters are incredibly skilled at building sound structures in hours.
• 10 to 12 million people live in Mumbai, and 6 million residents are squatters.
  
• Note that in all these places, the term "squatter" does not necessarily imply makeshift structures. With the exception of Kibera, these places provide a range of homes. Mud hats, lack of sewage/toilets, and accessible clean water, does seem to plague Kibera though.
• The economy is mostly informal inside these areas: sales/property taxes are mostly ignored, electricity and water need to be paid for, if not from the people that illegaly "supply" them.
• The story of the "squatter millionnaire" resident of Kibera was entertaining. A rags-to-riches character who chose to remain inside the squatter area.

The book does not dodge any of the underlying structural questions, like the very notion of private land ownership. In Turkey, private ownership of land is a recent phenomenon, which probably explains the existence of the "overnight building" law I mentioned above. In all these communities, the non-existence of a "title" does not mean there are no thriving "real estate" markets. Quite the contrary, people buy/sell/rent/renovate these "squatter dwellings" all the time.

I loved this book and recommend it highly. And, of course the author has a blog!

Philippine Mudslide: Rebuilding and Migrant Workers’ Remittances

My heart goes out to the victims of the unbelievable mudslide in the island of Leyte, in the Philippines. After years of illegal logging and environmental degradation, it appears that the mountain gave out after heavy rains:

"The disaster is being blamed on two weeks of heavy rain and the replacement of the deep-rooted hillside forests with coconut plantations, which have shallower roots and cannot hold soil. Illegal logging is rampant across much of the Philippines, but it is unclear whether the clearances in this area were carried out illegally."

Here is a case where natural resources benefited a few (legally or otherwise), and now the rest of the Philippines is left to deal with the consequences. In some of the remote areas of the planet, illegal logging literally puts entire towns and villages at risk. Logging needs to be subject to environmental oversight: if any industry can benefit from The Triple Bottom Line approach, logging is it.

After mourning their losses, comes rebuilding. OXFAM is one of many possible relief groups one can donate to, and make no mistake, donations will be needed. If the results of a recent study are to be believed, remittances from Overseas Filipino Workers will also play a big role:

Disaster damages due to hurricanes appear to lead to sizeable increases in net financial inflows from several sources: international development assistance, migrants’ remittances, foreign lending, foreign direct investment. This is interpreted as strong evidence of an insurance mechanism operating at an international level and capable of covering around 43% of the disaster damage in the same year of the disastrous event, and up to 85% within four years. Funds from all sources substantially contribute to this result, with a prominent role for migrant workers’ remittances.

In developing countries like the Philippines, the remittance of their overseas workers are a vital part of the economy. Overseas workers, from several Asian countries, contribute to the economies of the oil-rich Gulf States, and they are also valued in developed countries in the West and the emerging economies of East Asia. The Manila-based Asian Development Bank (the Asian version of the World Bank) even has a program devoted to tracking this important sector. Here is a graph indicating the size of these remittances, relative to, Foreign Direct Investments (FDI) and Capital Market Inflows. As the graph illustrates, these remittances are nontrivial.



"Migration, whether permanent or temporary is a global phenomenon with individuals from developing countries relocating to higher income areas such as the United States and the European Union in the hope for a better future. Migrant workers remit funds to their home countries to support family members left behind. The amount of remittances represents a significant flow of income to poor families. If channeled in a more efficient and reliable manner, it can considerably contribute to alleviation of poverty and a country's development."

New System Could Cut Solar Costs

Since the State of the Union, there have been more stories about alternative energy sources. The current administration is still in denial when it comes to global warming and other environmental issues, but at least they have made an effort on alternative energy. It shows what leadership at the national level can do. Luckily, California is even further ahead, and aiming higher than Bush and Company. One can only imagine where we would be if the Supreme Court had not intervened, and Al Gore became our President.

Personally, I prefer more aggressive measures to promote conservation.

From the San Jose Mercury News:

A new solar energy system devised by entrepreneurs in a Silicon Valley garage could cut the cost of solar power in commercial buildings by at least half, Xerox's Palo Alto Research Center is expected to announce today.

The entrepreneurs' start-up, SolFocus in Palo Alto, partnered with PARC to create the technology, scheduled to begin production this year. The first version cuts the cost of power per watt of energy by as much as half, said Gary Conley, chief executive of SolFocus. A more advanced version will be commercially available in two to three years, and save even more money, he said.

The technology, known as CPV for Concentrator Photovoltaic, essentially uses cheap lenses and mirrors to concentrate sunlight on a small, heat-tolerant silicon chip. Because the CPVs focus so much energy in one place, they don't need nearly as much silicon material as normal solar cells, which sit in rows upon large solar panels placed on rooftops. The new technology also collects and stores sunlight more efficiently, Conley said.

``We are harvesting sunlight with mirrors,'' Conley said.

The fact that the technology uses less Silicon, is a big deal as well:

Almost all solar panels are made with silicon -- and makers can't buy enough of it

Sometimes it's possible to be a little too successful. The solar power industry has been on a tear, growing at more than 30% per year for the last six years. It's poised to reach a surprising milestone within two years, when it will gobble up more silicon for its electricity-generating panels than semiconductor makers use in all their chips and devices. The onetime "'tree-hugger' industry is not a niche business anymore," says Lisa Frantzis, director of renewable energy at Navigant Consulting Inc. (NCI ).

So what's the problem? "Global demand is stronger than the existing supply," says Lee Edwards, president and CEO of BP Solar (BP ). His company and others can't buy enough of the ultrapure polysilicon now used in 91% of solar panels. The raw material shortage has slashed growth for the industry from more than 50% in 2004 to a projected 5% in 2006.

The shortage has caused prices for polysilicon to more than double over the last two years. As Economics 101 teaches, that should prompt producers to expand capacity. But for suppliers such as Michigan-based Hemlock Semiconductor Corp., the world's largest producer, the decision hasn't been easy. For one thing, the company was badly burned in 1998. It had just built a new facility in response to pleas from semiconductor makers when Asia went into a slowdown. Demand for silicon plunged, and the factory had to be shuttered. Now the U.S., Germany, and other nations are offering subsidies for solar power -- but governments can take away incentives as easily as they put them in place. "We did a lot of soul-searching," says Hemlock President and CEO Donald E. Pfuehler. "Would the incentives go away? Is the solar industry real or just a flash in the pan?"

Hemlock finally decided that the industry is real, but only after solar companies agreed to share the risk by signing contracts to buy the future output. So in December the company began an expansion worth more than $400 million that will increase silicon production by 50%. Competitors are following suit. On Jan. 12, Munich-based Wacker started construction on a silicon manufacturing plant. The new supply, however, won't be onstream until 2008.

Gas Tax: A Way to Cut Fuel Consumption That Everyone Likes

... Except Politicians. From the NYTimes:

SUPPOSE a politician promised to reveal the details of a simple proposal that would, if adopted, produce hundreds of billions of dollars in savings for American consumers, significant reductions in traffic congestion, major improvements in urban air quality, large reductions in greenhouse gas emissions, and substantially reduced dependence on Middle East oil. The politician also promised that the plan would require no net cash outlays from American families, no additional regulations and no expansion of the bureaucracy.

As economists often remind their students, if something sounds too good to be true, it probably is. So this politician's announcement would almost surely be greeted skeptically. Yet a policy that would deliver precisely the outcomes described could be enacted by Congress tomorrow — namely, a $2-a-gallon tax on gasoline whose proceeds were refunded to American families in reduced payroll taxes.

Proposals of this sort have been advanced frequently in recent years by both liberal and conservative economists. Invariably, however, pundits are quick to dismiss these proposals as "politically unthinkable."

If its such a great idea, why is it considered political suicide to promote it? It turns out the Gas Tax Hike failed miserably ONCE in the past, back in the Carter administration:

Mr. Carter's opponents mounted a rhetorically brilliant attack on his proposal, arguing that because consumers would get back every cent they paid in gasoline taxes, they could, and would, buy just as much gasoline as before. Many found this argument compelling, and in the end, President Carter's proposal won just 35 votes in the House of Representatives.

The experience appears to have left an indelible imprint on political decision makers. To this day, many seem persuaded that tax-cum-rebate proposals do not make economic sense. But it is the argument advanced by Mr. Carter's critics that makes no sense. It betrays a fundamental misunderstanding of how such a program would alter people's opportunities and incentives.

In terms of energy consumption, encouraging less driving is probably the most important component of any energy saving program. See the comment of "Dave in MT" from an earlier post on this subject. It would be naive to think that either the Republicans or Democrats would propose a gas tax hike in an election year. Maybe NEXT year?

Some examples help to illustrate how the program would work. On average, a family of four currently consumes almost 2,000 gallons of gasoline annually. If all families continued to consume gasoline at the same rate after the imposition of a $2-a-gallon gasoline tax, the average family would pay $4,000 in additional gasoline taxes annually. A representative family with two earners would then receive an annual payroll tax refund of $4,000. So, if all other families continued to buy as much gasoline as before, then, this family's tax rebate would enable it to do so as well, just as Mr. Carter's critics claimed.

But that is not how things would play out. Suppose, for example, that the family was about to replace its aging Ford Explorer, which gets 15 miles per gallon. It could buy another Explorer. Or it could buy Ford's new Focus wagon, which has almost as much cargo capacity and gets more than 30 miles per gallon. The latter choice would save a whopping $2,000 annually at the pump. Not all families would switch, of course, but many would.

That Low-Fat Diet Study

About a week ago, the media eagerly announced the results of a landmark study. From the SF Chronicle on 2/8/2006:

"A landmark study that set out to prove that cutting fat from the American diet could reduce cardiovascular disease and cancer in women over 50 has come up short, showing no significant changes in risk despite years on reduced-fat regimens.

Nearly 50,000 post-menopausal women were enrolled in the $415 million study. Twenty thousand embarked on years of low-fat dieting, while the rest were allowed to eat as they pleased. They participated in the study from 1993 to the end of 2005."

Whenever I see something like this, I like to know more about the study, so I can better understand and interpret the results. Statistical studies are only as good as the underlying experimental design. It turns out that initial frenzy failed to mention two important pieces of information, kudos to Business Week for doing some digging:

"Based on its design, the trial had little chance of making major advances in the science of nutrition. It set out to compare women eating normal diets with women asked to eat less fat and more fruits and vegetables. But the two groups' diets really didn't differ all that much. Those with "healthier" diets cut calories from fat by only 8.2% compared with the normal group and ate only 1.1 additional servings of fruits and vegetables a day. That's too small a difference to expect health benefits.

What's more, scientists now know that the type of fat we eat is generally more important than the amount. Monounsaturated fats, such as those in olive oil, or omega-3 fats found in fish are healthier than saturated fat, as in butter or beef. Worst of all are so-called trans fats, which are created by adding hydrogen to natural fat. Trans fats are widely used in everything from margarine to cookies, and have been linked with increased risks of heart disease. By focusing just on total fat intake, the study missed a chance to tease out the effects of these different types of fat. "It's really important not to go away with the message that diets don't matter," says Willett."

So the test or treatment group (these were the people in the low-fat diet group) ate only 8.2% less fat calories, than the control group. Plus, it's not like they ate way more vegetables. Think about it, this is their low-fat group! We also don't know if those in the so-called low-fat group reduced their intake of trans fat and saturated fat. As they say, the Devil is in the Details.

In a subsequent article, the SF Chronicle notes, that the study was conceived before trans fat and saturated fat emerged as THE types of fat to cut back on:

"Like many other scientists, Anderson noted that the study was conceived before evidence pinpointing the chief dietary evils leading to heart disease. ... A strategy that simply cuts back on all dietary fats -- as the women in the federal study did -- ignores this distinction and other knowledge that experts say they've gained."

The Current Account Deficit Re-Branded: Please call it The Current Account Surplus

Nouriel Roubini points out an attempt by the White House Council of Economic Advisors to label the Current Account Deficit as the Current Account Surplus:

"... The latest example of this Orwellian doublespeak is the Economic Report of the President (ERP) published today by the White House Council of Economic Advisers. Its chapter on international macro issues is titled "The U.S. Capital Account Surplus" when the more appropriate and honest title would have been "The U.S. Current Account Deficit" . While Ben Bernanke's name is nowhere in this year's ERP, his heavy hand in this chapter - and the rest of the ERP - is clear. His March 2005 speech on the global current account imbalances being due to a "global savings glut" rather than, in large part in 2000-2004, due to the U.S. fiscal deficit is the intellectual baseline for this "US Capital Account Surplus" interpretation of the US international financial position.

The thesis is clear: we do not run a current account deficit; we run a capital account surplus because the rest of the world wants to invest in the high productivity high growth U.S. Of course, the appropriate economic causality is here reversed. The logical causality is that, if we save less than we invest and if we spend more than we have income, we will run a current account deficit and we will have to borrow from the rest of the world to finance it. But our borrowing - now mostly in the form of debt as net FDI and equity inflows have been sharply negative for the last few years - turns in the Orwellian language of the ERP into a "capital account surplus". Of course, as the BOP is by definition in balance, a current account deficit needs to be financed with a capital inflow that is defined as a capital account surplus. But having the Chutzpah to title this deficit as a capital account surplus and then go on for the entire chapter to interpret all of the global current account imbalances as a matter of capital exporting countries (i.e. countries who run current account surpluses) and capital importing countries (i.e. the few countries who run current account deficits) is to confuse cause and effect."

The fact that a "hard landing" hasn't happened doesn't mean that the odds of one isn't increasing. The common argument is that the US deficit is growing because the rest of World isn't growing. Paul Blustein recently had a nice article on this subject:
"It's true that many of us have been concerned that foreigners will grow tired of financing these ever larger trade deficits, and so far there hasn't been much sign of that," said Jeffrey A. Frankel, a Harvard University economist who served on President Bill Clinton's Council of Economic Advisers.

"But there are plenty of reasons to be concerned," Frankel said. "We know [the trade deficit] means we're borrowing against the future, and that our children will have lower standards of living than they would otherwise. And just because a 'hard landing' hasn't happened yet doesn't mean it won't."

To some extent, every administration paints a rosy picture especially during an election year. The present administration though takes it to another level. When they do get called on it, they don't like to admit mistakes. From the pre-war intelligence on Iraq, to the NSA wiretapping, the Medicare Prescription Drug fiasco, and now on Hurricane Katrina.

The mainstream media is now pushing back -- check out the testy exchange between Scott McLellan and NBC news correspondent David Gregory. I'm not sure that a slight delay in announcing Cheney's hunting accident is really a big deal, but the media just has had enough of the White House, or so it seems.

Buy Nothing NEW, for all of 2006

Wow, Buy Nothing Day, for a whole YEAR! The SF Chronicle has an article on The Compact:

About 50 teachers, engineers, executives and other professionals in the Bay Area have made a vow to not buy anything new in 2006 -- except food, health and safety items and underwear.

"We're people for whom recycling is no longer enough," said one of the members of the fledgling movement, John Perry, who works in marketing at a high-tech company. "We're trying to get off the first-market consumerism grid, because consumer culture is destroying the world."

They call themselves the Compact. They have a blog, a Yahoo group and monthly meetings to reaffirm their commitment to the rule, which is to never buy anything new. "I didn't buy a pair of shoes today," said Compacter Shawn Rosenmoss, an engineer and a San Francisco resident of the Bernal Heights neighborhood. "They were basically a $300 pair of clodhoppers. But they were really nice and really comfortable, and I haven't bought new shoes for a while. But I didn't buy them. That's a big part of the Compact -- we show that we're not powerless over our purchasing."

In SF there are so many well-run thrift stores which carry nice clothes in good condition. Personally, I haven't purchased used shoes yet, but as far as clothes, I've been cherry picking great items from local thrift stores for years. Is this a precursor for a US-based Mitumba industry :-)

The US economy in particular, depends heavily on consumer spending, so if this movement grows, there might be macro-economic implications. Of course, it takes serious commitment to quit cold turkey, and completely. As Buddhists will point out, perhaps there is a Middle Way between mindless consumerism, and complete non-consumption. Then again, the Compact members are having fun and building friendships:

"Compacters can get as much as they want from thrift shops, Craigslist, freecycle.org, eBay and flea markets, as long as the items are secondhand. And when they're in doubt, they turn to their fellow Compacters for guidance.

"We had a little crisis when Matt and Sarah had to replace their shower curtain liner and we said no," said Perry, who lives in Bernal Heights. "But we put the word out and someone found one for them. It's like the Amish -- we help each other out. We raise a barn every week."

... One especially appealing aspect of the Compact is its social component, members say. Fellow Compacters offer advice, moral support, help locating needed items and partners for thrift-store runs."

In a previous post, I argued that Mindful Spending can nurture companies that take the triple bottom line approach: profitability, sustainability, and social justice. By channeling a small portion of our collective purchase power, we could be helping jumpstart companies and industries we can all be proud of.

New Promise For Ethanol

From the San Jose Mercury News:

"It may seem hard to believe that microscopic bugs usually viewed as destructive pests can be so productive. But scientists and several companies are working with the creatures to convert wood, corn stalks and other plant waste into sugars that are easily brewed into ethanol -- essentially 199-proof moonshine that can be used to power automobiles.

Thanks to biotechnology breakthroughs, supporters of alternative energy sources say that after decades of unfulfilled promise and billions in government corn subsidies, energy companies may be able to produce ethanol easily and inexpensively.

``The process is like making grain alcohol, or brewing beer, but on a much bigger scale,'' said Nathanael Greene, an analyst with the environmental non-profit Natural Resources Defense Council. ``The technologies are out there to do this, but we need to convince the public this is real and not just a science project.''

Using microbes may even solve a growing dilemma over the current ethanol manufacturing process, which relies almost exclusively on corn kernels and yielded only 4 billion gallons of ethanol last year (compared to the 140 billion gallons of gasoline used in the United States). There's growing concern throughout the Midwestern corn belt that the 95 U.S. ethanol plants are increasingly poaching corn meant for livestock feed.

The idea mentioned by Bush during his State of the Union speech -- called ``cellulosic ethanol'' -- skirts that problem because it makes fuel from farm waste such as straw, corn stalks and other inedible agricultural leftovers. Cellulose is the woody stuff found in branches and stems that makes plants hard.

Breaking cellulose into sugar to spin straw into ethanol has been studied for at least 50 years. But the technological hurdles and costs have been so daunting that most ethanol producers have relied on heavy government subsidies to squeeze fuel from corn.

Researchers are now exploring various ways to exploit microbes, the one-celled creatures that serve as the first link of life's food chain. One company uses the microbe itself to make ethanol. Others are taking the genes that make the waste-to-fuel enzymes and splicing them into common bacteria. What's more, a new breed of ``synthetic biologists'' is trying to produce the necessary enzymes by creating entirely new life forms by manipulating DNA."

Nuclear Moves to Front Burner

The SF Chronicle gives a summary of the current interest in nuclear power as an alternative to fossil fuels. Some environmentalists are looking at nuclear as a means of generating lots of power, without contributing to global warming. There are a lot of nuclear plants in the planning stage.

I recently heard a debate sponsored by the SF based Long Now Foundation on the topic of Nuclear Energy and Climate Change. Ralph Cavanagh of the Natural Resources Defense Council made a strong case against nuclear energy. He argued that nuclear energy SHOULD be considered, along with solar, wind, and other alternative energy sources, but that the economics will make it hard for nuclear to compete with these other sources. Remember that nuclear HAS TO deal with waste disposal AND extra security against a terrorist attack. We need to insist that all competing technologies be given the same amount of subsidies, that the goverment not favor nuclear over the other choices. Let the market decide what is the most cost-efficient source of "alternative" energy. Interestingly, not one utility company has been willing to construct or fund a nuclear reactor project in the U.S in over thirty years!

"(Ralph) agreed that nuclear should not be considered taboo and should be included as a candidate clean power source, but its history is not encouraging. No new reactors have built in the US since 1973. Nevada has stonewalled on waste storage at Yucca Mountain. The nuclear industry has all manner of government subsidies, loan guarantees, and protections from liability. It has never competed in the open market with other energy sources.

California, Cavanagh said, has led the way in developing a balanced energy policy. Places like China are paying close attention. PG&E has become the world's largest investor in efficiency, led by Carl Weinberg (who was in the audience and got a round of applause). And now there are signs that California may become the leader in setting limits to carbon emissions. Within limits like that, then the private sector can compete with full entrepreneurial zest, and may the best technologies win. Nuclear would have to compete fairly with new forms of biofuels and with ever improving renewables. "

I agree with Ralph, let's make sure that the playing field is level: let nuclear compete with the other technologies. The other technologies need to prove they can scale up and generate the needed amount of megawatts. On the policy side, the goverment also needs to encourage efficiency and conservation. Here is Stewart Brand's summary of the debate.

NRDC has a position paper on Commercial Nuclear Power, check out the Executive Summary and the Introduction:

"Moreover, unless plug-in hybrid, all-electric, or fuel-cell powered vehicles, or electric trains, are commercialized on a large-scale, nuclear power has virtually no role to play in reducing emissions from the transportation sector, which currently depends on petroleum for 95 percent of its energy needs. "

Power Plant Would Reuse Carbon Dioxide

From the NYTimes:

"Subsidiaries of BP and Edison International said yesterday that they were planning to build a power plant that would run on oil residues, and that 90 percent of the carbon dioxide would be captured and pumped into an oil field, where it would help push more oil to the surface.

The $1 billion plant would be adjacent to a BP refinery in Carson, Calif., about 20 miles south of Los Angeles, and would be the first such plant in the country, the companies said. BP is already drawing up engineering plans for a plant in Scotland that would sequester its carbon dioxide in an underground oil-bearing formation; that plant is to run on natural gas.

The companies said they hoped to make a final decision on the plant in 2008 and have it running in 2011. It would qualify for a tax credit as a carbon-free energy source under the 2005 energy bill, company executives said.

The plant would run by mixing an oil residue, petroleum coke, in a chamber with steam and a controlled amount of oxygen. In this technique, called gasification, both the fuel and the water give up hydrogen atoms to form hydrogen gas. This process also produces carbon monoxide, which is converted to carbon dioxide, giving off heat to sustain the reaction.

The hydrogen is then burned in a turbine engine, the kind that electric companies normally run on natural gas, and the dominant combustion product is water. The carbon dioxide is compressed into a liquid and injected into an oil field."

Hugo Chavez

Excellent article on the leader on Venenzuela, the darling of the Western Left for leading the opposition to the Washington Consensus. The article cites many positive programs initiated by Chavez:

"What the government has done is spend billions on new social programs, $3.7 billion in the past year alone. As a result, 1.3 million people have learned to read, millions have received medical care and an estimated 35-40 percent of the population now shops at subsidized, government-owned supermarkets. Elementary school enrollment has increased by more than a million, as schools have started offering free food to students. The government has created several banks aimed at small businesses and cooperatives, redeployed part of the military to do public works and is building several new subway systems around the country. To boost agricultural production in a country that imports 80 percent of what it consumes, Chavez has created a land-reform program that rewards private farmers who increase productivity and punishes those who do not with the threat of confiscation."

But it balances it out by pointing out the personal flaws of Chavez, as well as his consolidation of power:

"Chavez’s mercurial personality, and what seems like an incipient personality cult, also unsettles many. He is prone to making weekend and weeknight television appearances in which, literally for hours, he will ramble on from subject to subject, sing songs and make sexually explicit wisecracks involving anyone from his wife to Condoleezza Rice. The up-close-and-personal profile of Chavez by veteran journalist Alma Guillermoprieto in recent editions of The New York Review of Books does little to dissipate the image of a leader fascinated with, if not drunk on, power...

While Venezuela’s recent human rights record has little if nothing in common with the tainted record of Cuba or, say, Pinochet’s Chile, there are, nevertheless, legitimate concerns by nonpartisan international observers. Amnesty International points to incidents of torture as well as “continuing reports of unlawful killings of criminal suspects by members of the police. Relatives and witnesses who reported such abuses were frequently threatened or attacked. No effective protection was granted to them despite calls by the Inter-American Court of Human Rights for the authorities to do so.” The Amnesty report also accuses Chavez of deliberately exposing human rights workers to dangerous reprisals.

Likewise, Human Rights Watch has criticized Chavez for repressive press laws, including a measure that would impose jail upon those who publicly “disrespect” the president.

The problem with Chavez, says liberal policy analyst Michael Shifter of the Inter-American Dialogue, is that unlike the new breed of Latin American leftist leaders--such as Presidents Ricardo Lagos of Chile, Lula of Brazil, Kirchner of Argentina and Vasquez of Uruguay, who have long histories of fighting against authoritarian military rule and for democracy--the Venezuelan leader is a creature of the military. While these other leftist presidents “eschew any rhetoric or actions that elevate the armed forces beyond their legitimate role,” says Shifter, Chavez extends them excessive power:

'Mr. Chavez presides over an evolving political system that concentrates power and is devoid of checks and balances. He relies chiefly on the armed forces to rule Venezuela. The Fifth Republic Movement, his own party, is a subordinate actor. An unprecedented number of active and retired officers occupy key positions throughout the Chavez administration. More than one-third of the country’s regional governments are in the hands of soldiers linked to Mr. Chavez. The armed forces have increasingly taken on development roles that most of Latin America’s democratic leaders insist be carried out by civilians.'

... Whatever his manifold flaws--and without losing sight of some worrisome trends--Hugo Chavez is the duly elected president of Venezuela. While the power relationship between the two countries is wildly disparate, each side has the equal obligation of working with the other despite policy differences. Chavez has the perfect right to roundly criticize and, if he wishes, denounce U.S. policy and development strategy. But he does his people no favor by unduly exacerbating conflict with Washington. "

Gas Taxes and Hybrids

While I am a strong supporter of hyrbid cars, I've always believed that a higher gas tax and higher fuelf efficiency standards, are more effective tools. If you need a new car, I think you should consider a hybrid -- they are good for the planet, and increasingly, they are the ride of choice for all hipsters.

In this recent NYTimes article, the author makes some important points:

• If you replace your Corolla (29 mpg) with a Prius (44-50 mpg), you will save about $250/year, on average.
• Someone deciding between a Cadillac SRX SUV (16 mpg) and a Hummer (11 mpg) will save about $600/year, on average! Small differences add up, when you are burning gas quickly.
  

For people in the second group, a higher gas tax will make the choice of a Cadillac SUV a no-brainer. Between the two groups, it is clearly the second group that you want to influence ASAP.

While hybids are cool, there is no substitute for sound goverment policy. Hopefully the Dems will retake Congress in 2006! We better hurry, Sweden wants to be oil-free within 15 years.

Growth and Happiness

Growth does not always lead to happiness, at least according to these Ethical Investment Managers:

Is there such a thing as bad growth?
I think that there is. And the classic example is where the buyer and seller are not the only parties to a transaction, so the price doesn't capture all of the implications of the transaction. It might be something like buying a big SUV. The problem is that the buyer goes and says: "I do care about the environment, but I'm one of 300 million people in this country. And whether I buy this SUV or not is really not going to have an impact on the environment at all." But when everybody does that, all of a sudden we have an environmental problem.
...One area that investors are getting very focused on right now is the area of global warming and the risks that are associated with the potential regulation of global warming. The CEO of Cinergy [a leading electric utility] has come out and said: "We know that greenhouse gases are a problem. We know they're going to be regulated in the future. And when we go to invest in a plant, it has a 30-year investment horizon. So there's a real risk to us - not only as managers of a company but also as investors -- if we don't take into account the potential regulatory and litigation risks that come with that." So we're starting to see a lot more research in the area of risk-management around environmental issues.

Conventional growth measures don't work?
We certainly know that GDP [gross domestic product] isn't the end-all, be-all for measuring. There are the intangibles that are important and don't get considered.
The things that we don't measure, we really don't value: time with friends and family, time with your children, volunteer time. These are things don't get counted, and therefore don't get valued in the same way as some other things. [For example:] Buying a home-security system, which does get counted in GDP, because the crime rate has gone up. It's better to have lower crime and fewer security systems.

Do we need a gross happiness product?
I think we do need new measures. The problem is it's very controversial and it gets into the political sphere.... There's a group that [has] the Genuine Progress Indicator or GPI. They actually have statistics where they take GDP and add things and subtract things. Since 1950, on a per person basis, they see on their measure an increase of about 60 percent. So they would say that people are better off now than in 1950 on a per person basis. [But] on a GDP basis, it's 300 percent. So it's not like they're saying there's no progress. But the way they measure things, there's been a lot less [than economists' traditional measure].

Solar Energy: The Largest Solar Photovoltaic Generator

Slated to be built in Nevada, at 18 megawatts, it beats the current record of 10 megawatts held by a German photovoltaic generator. The US Military plans to purchase electricity from the plant!

Details can be found HERE.

Note that Concentrating Solar Power (CSP) plants also hold a lot of promise. CSP plants use solar energy to generate steam which power turbines. Nine CSP plants in the Mojave desert in California generate 350 megawatts, slightly more than the 340 megawatts generated by all the photovoltaic plants in the US. For more details, check out this Annual Report from Clean Edge.

A few weeks ago, I highlighted the incentives being provided by the State of California. Are we at a tipping point?

Time to Move On

The reactions to the offensive cartoons have taken the whole world off guard. Bear in mind that the cartoons were originally commissioned by a respected Danish childrens book author, who wanted images of the prophet for his book. Twelve cartoons were published, some were quite offensive to Muslims. Shortly before his arrest, a Jordanian editor published and commented on the cartoons in an interview with Newsweek:

I think there is a political motive behind the Muslim uprisings. Why are the voices protesting these cartoons so very loud? We are talking here about countries that have taken the step of supporting the uprising and encouraging boycotts.

... We must forgive. We’re talking about a foreign newspaper in Denmark, far away from the Muslim world. Maybe they didn’t know they were doing something wrong and either way, they have apologized and the Muslim world must accept it. I’m not empathizing with them, I don’t agree with them but we can’t just go that far with our punishment. I feel we, the Muslims, are overreacting.

I didn’t publish the cartoons because I support them. My position is to show our leaders how silly they are and how they insulted the Prophet Muhammad. They show him as a terrorist and I’m against this. We must respect not just Muhammad but all religions.

Muslim leaders need to explain to their followers that, in Denmark, and other countries with a free press, the goverment does NOT control the press. It is as if the Wall St. Journal or the Washington Times published something offensive, and the reaction is to either threaten all Americans, or boycott all American companies. Clearly some of the cartoons were offensive, and muslims have a right to express their displeasure, but as more and more Europeans note, in societies with a free press, it has to end right there. You do not burn embassies, threaten citizens of entire countries, or boycott products from entire countries.

One need only go to the Cartoon Museum in SF to find cartoons with portrayals of Jesus that Christians would object to: while objections must be registered, it must not escalate to violence. The reaction is so amazing, that an NPR interviewer noted: "I never thought I would ever here the phrase 'Death to Denmark!' being chanted all over the world."

I heard a spokesman for the Syrian goverment tell BBC that this is the start of a holocaust against muslims! These particular cartoons??? Probably not. The West has a long history of misadventures in the Middle East, but I wouldn't blame all of Denmark for the decisions of a few editors. Unfortunately, unless you understand how a free press system works, it might be hard to see that blaming entire countries is too much.

UPDATE: Here is a Jesus cartoon from TruthDig.com.

Gloom in France

From the Economist:

Thus the 2003 pension reform lengthened the number of years that public-sector employees must work before qualifying for full pensions. But it left unchanged the absurdly generous regimes for the most sensitive (and strike-prone) employees, such as train drivers and electricity workers. A recent study by the government's pensions advisory council concluded that, despite the reform and with no improvement in unemployment, spending on pensions will swell from 12.8% of GDP in 2003 to 14.4% by 2020.

Similarly, the 2004 health reform laid down new rules in an effort to control costs, including an obligation to consult a family doctor before seeing a specialist so as to qualify for full reimbursement, and the introduction of a non-refundable €1 ($1.20) payment per consultation. The aim was to curb a soaring health deficit, which hit €11.6 billion in 2004. Yet a recent government-commissioned report by Michel Pébereau, a banker, said that there would still be at least a €22 billion shortfall in the health-insurance fund by 2015.

All the while, despite frequent promises to reduce the size of the public sector, its ranks have swollen. Since Jacques Chirac became president in 1995, the civil-service payroll has grown by 13%, to 5m. The upshot is unsustainable pressure on the public finances. This year, for the first time, almost the entire proceeds of French income tax will go to pay interest on public debt. In his report, Mr Pébereau said that, on present trends, France's public debt will jump from 66% of GDP to 100% by 2014.

On the labour market, Mr de Villepin has at least grasped the need both to bring down joblessness and to loosen rules that deter job creation. He has made jobs his central preoccupation, conducting weekly pit-stop trips to job centres or training schemes. He has introduced a more flexible two-year contract for firms employing fewer than 20 workers. Now he is trying to rush through parliament a similar contract for those aged under 26, which would make it far easier to shed workers during their first two years. This has prompted an outcry from the unions and the opposition, which accuse him of institutionalising insecurity for the young.

Pandora and The Music Genome Project

If you haven't done so, check this service out, NOW!

What a fun way to learn about new artists and songs. If you like discovering obscure bands, this is an efficient way to do it: simply type in an Artist or a Song, and the Genome Database takes over. Yet another way to bypass the music industry's hype machine. The service gets better as you give it feedback. Discover new Artists, and purchase their CD's from your local music store when you can.

LATimes has a nice write-up as well:

The operation's hub is in a nondescript building in downtown Oakland, where on a recent afternoon a dozen or so "music analysts" sprawled in front of rows of computer monitors, wearing headphones, tapping out rhythms and humming. They get paid $15 to $17.50 an hour to listen to music, and set their own shifts to accommodate gigs and recording sessions.

"This is an ideal job for musicians," says Rick Higgs, 55, a senior analyst who found the company through a "help wanted" poster in a record store. "They pay me for skills I never thought I'd use in a commercial context."

Analysts begin their shifts by selecting a CD from nearby bins and choosing a song, then they log on to the computer system and, using about 400 scales, identify and define the aural traits that make each song unique. They isolate and analyze each vocal thread and instrument, discern melody from improvisation. How lyrical or angular is the principal melody? Does the drummer tend toward sticks or brushes?

... but no average musician would do. Every analyst must have the equivalent of a four-year education in music, pass a music theory exam and complete 40 hours of training. Even then, 10% of the music is analyzed a second time by a "senior analyst," and any difference of opinion over a point on each of the hundreds of variables is flagged and reviewed.

Top 10 Hybrid Car Myths

Business Week has a nice primer.

Energy, Science and the State of the Union

Wow! The President and Ex-Oilman is now pushing alternative energy and improved fuel efficiency, including "switch grass" as a source of ethanol. What is switch grass????

I think we should take advantage of this political gesture and try to get some initiatives off the ground. I'm not as sold on nuclear energy, people are claiming it is extremely safe, but I would like to read up more on this topic.

The same president who supports Intelligent Design, is skeptical of Global Warming, and opposes stem-cell research, wants increase funding for Science and Math education? Hmmmm.

How Wal-Mart Affects Local Jobs and Wages

New working paper, from the Public Policy Institute of California:

The authors find that a eight years Wal-Mart presence reduces local employment by 2% to 4%. There is also evidence that workers’ payroll in the retail sector declines, and that the earnings of businesses fall. Looking at the overall impact of Wal-Mart on the local economy, there is evidence of a slight increase in employment and of a decrease in retail prices. At the same time total payrolls - per worker and per person - decline by about 2% and 5%, respectively. These results imply that residents of a local labor market earn less after the opening of Wal-Mart stores, but that their purchasing power increases.