After years of stalled legislation, federal neglect and successful industry lobbying, it appears there's finally agreement in setting a national fuel efficiency standard. The Obama Administration is modeling the regulations after California's effort, which was introduced in 2002 but stalled by auto industry lawsuits and Congressional debates. Now with the auto industry in bankruptcy protection and receiving billions of dollars from the government, lawmakers see a way toward a national fuel efficiency standard. If everything works out, cars will be running an average of 35.5 miles per gallon by 2016. That's more efficient than my Honda Civic Hybrid in the city.
As I've written in the past, most projections show U.S. oil demand within the next 20 years outpacing oil production and current import levels. The most effective way to confront this problem is to reduce demand by either convincing consumers to drive less, or force fuel efficiency standards.
I'm glad the economic implosion has forced the auto industry to do what's right. Hopefully American cars will redefine the market by creating fuel efficient cars that people will love.
As part of my ongoing quest for knowledge during the downturn, I started another course at Stanford called "What's the Real Deal with Oil, Gas and Coal," taught by Prof. Margot Gerritsen. A mathematician by training, her academic career has evolved towards studying ways to make energy extraction and production more efficient and environmentally friendly. An opinionated realist, she agrees in the need for alternative energy, but believes in a more immediate need to improve our management of fossil fuels.
I respect Gerritsen's perspective, especially when looking at the chart that she provided above. Yes, we must reduce our dependency on oil imports. Yes, we need to make up for eight years of lost time. Yes, I believe that American ingenuity can turn alternative energy into a viable option. But let's put the cart in front of the horse.
I've been noodling on this chart for the past couple of weeks because it's revealing. We hear policy wonks in the Obama Administration talking about a 10-year window to reduce the U.S.'s dependence on oil imports from the Middle East and Venezuela. Here's how the Obama Administration plans to reach that goal.
Very noble. But I wonder if, according to Gerritsen's chart, the American thirst for oil could nullify any policy towards greater fuel efficiency. I can understand the economic incentives, but I'll bet the policies required to make this work will move at a snail's pace through the political landmines in Congress.
The solution for now is simply to use less. Complain all you want about politicians and red tape. If you want to stop our reliance on foreign oil, you can either reduce your own oil consumption and/or consider new ways to extract oil in the U.S., which includes opening up ANWR, re-opening off-shore drilling, or selling swaths of the Rocky Mountain range to shale extractors.
I'm watching President Obama's town hall meeting in Fort Myers, FL. He looks like Obama the campaigner. He's relaxed. He's joking around with the audience. He's walking with a swagger. He's in his element. In White House press conferences and photo-ops Obama looks dreary-eyed and sleep-deprived. I would too if I was forced to live in DC.
On one level he's being his usual long-winded self by trying to explain the macro-economic forces of our current crisis. But he succeeds by connecting the complex with the relevant.
While Obama isn't introducing anything new, this town hall meeting underscores his skill as a communicator. He boils down systemic issues such as energy grids and rural broadband access into singular outcomes such as jobs and commerce. He harnesses the winds of public opinion to power his message. He adds a level of accountability by asking his audience to judge him by his one success metric: job creation.
There's still a populist in him, and I worry he's just telling people what they want to hear. One woman named Henrietta Hughes could barely speak when she got up to the microphone. She begged him for help because she had no job and had lost her home. Obama walked down and hugged her. The crowd stood up and cheered. One woman in the audience looked like she was at the Kentucky Derby, shaking her fists as Obama walked towards Hughes.
Here's his most salient sound bite: "This is about turning crisis into opportunity." So true, given his set-backs since taking office (Republican rejection, Daschle tax evasion).
The New York Times Web site posted an informative series of audio narratives from three economists about how U.S. presidents have used Keynesian ideals in their stimulus plans (although some won’t admit it). The discussions show an interesting dynamic. Presidents want to make their mark on the economy by pumping money into the system or cutting taxes, but oftentimes it’s the Federal Reserve’s actions that make a bigger impact.
This is a good history of the relationship between monetary policy (via the Federal Reserve) and fiscal policy (via the government) in solving U.S. economic problems. Check it out.
As I’m following the debate around Obama’s economic stimulus package, the aphorism “one man’s terrorist is another man’s freedom fighter” keeps ringing in my head. In this case, is one man’s stimulus package is another man’s pork?
The front page of this morning’s Chronicle raises this question. Check out the handy chart at the bottom of the article that shows where the $825 billion in taxpayer money will go.
Much of the money could yield longer-term returns through greater energy efficiency and more better computer systems. But $200 million in renovations for the National Mall, $44 million for repairs at the Agriculture Department, and $426 million to construct facilities at the Centers for Disease Control and Prevention seem weird, and only beneficial to D.C. construction companies.
At first blush, I am echoing Republican concerns that most of this money will do little to stimulate the economy. Obama’s throwing money at federal agencies that starved during the Bush administration. He also runs the risk of picking industry favorites, such as construction and health care, rather than providing relief to middle class Americans. But I’m not convinced that the Republican approach of giving a few hundred bucks in tax cuts for Americans to spend on useless stuff will help us invest for a better future.
I want to see an America that can apply its innovative spirit to fix the inefficiencies of our nation’s critical systems such as energy, food, health care, and transportation. And as a product of Silicon Valley, I’m idealistic that technology can play a big role in building a society that runs on more brains and less fuel than other countries. In order to make this work, government and the private sector must collaborate. Progress cannot be a solo venture.
Some more specifics about Obama’s pending cash avalanche—also known as the American Recovery and Reinvestment Plan— through the voice of his policy team. Yesterday the administration released a video of Christina Romer, who spent 9 rambling minutes explaining how they’ll create up to 4 million new jobs through this plan. Today’s video is different. I have a better idea what his team is trying to do. I see their faces (cool… lots of minorities!). Their talking points are more focused, but some of the ideas are still vague.
Here’s a breakdown:
0:00 Mona Sutphen, Incoming White House Deputy Chief of Staff Main point: The plan will create millions of jobs and at the same time place a down payment on our economic future. Notes: Similar sympathetic vocal tone as a Save the Children commercial
1:00 Carol Browner, Assistant to President-Elect for Energy and Climate Change Main points: Train workers for green jobs in wind farms and solar. Create a green economy by making fed buildings and lower-income homes more weather-efficient. Notes: They have a point. I spent $3 to weather strip my front door and it made a difference. But how does a lower fed energy bill help the economy?
1:51 Madhuri Kommareddi, Economic Policy Team Main points: Filling potholes creates jobs, Bush administration didn’t do jack, build more labs, expand broadband footprint. Notes: I should’ve taken shop in high school. Who needs calculus in times like this!
3:01 Tom Daschle, Secretary-Designate Health & Human Services Main points: Help states who are trying to provide Medicaid and childrens’ insurance assistance. Modernize healthcare IT systems as a preventative measure. Notes: I smell a bidding war between IBM, HP and Oracle. Love the glasses, Tom.
3:46 Melody Barnes, Director-Designate, Domestic Policy Council Main points: Fed will help schools facing budget issues. Superintendents don’t have to lay off teachers, they can keep their programs and maintain their reforms. Notes: Do these policies give under-performing teachers a lifeline too?
4:55 Lawrence Summers, Incoming Director, National Economic Council Main points: War on wasteful spending. Greater accountability of government through a Web site that monitors investment projects and a new board of officials. Notes: Check out Summers’s remarks on monitoring the bailout plan from last fall.
5:37 Mona (encore) Main points: One thousand dollar tax cut! Notes: I know, I’ll invest it. No, I’ll put it in my savings and earn 0% interest. I know—I’ll pay of a percentage of my mortgage with it.
Perception is critical in the early stages of the Obama presidency, especially when it's about economic policy. It's a tough proposition. How do you engage the public without putting them to sleep with wonk speak? People want answers, and they won't settle for platitudes about what The American People want.
It's a good idea, in theory, for Obama to communicate his policies through the voices of his big-brained advisers. Or is it?
In a posting on Obama's Web site today, Christina Romer, the chair-designate for the Council of Economic Advisers talks a lot but explains little. How will they plan create 4 million new jobs (couple weeks ago it was 2.5 million)? What does weatherizing government buildings have anything to do with the economy? How will pumping money into state coffers stimulate spending? Why will it cost an estimated $775 BILLION (some say $1 trillion)? After 9 minutes of rambling, I'm still confused.
After more than a decade of beating up flailing companies as a member of the media, and then working as a strategist for flailing companies being beat up by the media, I’m convinced that the clique about perception breeding reality is true.
No matter how much we try to fight popular perception, it has a way of transforming speculation into a nearly truthy state.
I’ve been thinking a lot about this idea in the context of our financial crisis. Last weekend as I was driving across the Bay Bridge with my fiancée, a piece by NPR’s Guy Raz hit a nerve. He was talking about some indicator revealing crappy data about the economy (big surprise). Guy asked his interviewee whether it was time for us to really panic about our sorry state of affairs, and continued to wonder whether there was any chance for recovery.
I tapped off the power button and mumbled a bunch of expletives. I was upset this doomsayer was ruining my admiration of the brilliant sunset over the San Francisco skyline. Telling people to panic, to roll over and give up, to shame them for poor spending decisions in the past, will do nothing for our country’s recovery.
Back to this perception versus reality truth-ism. There’s a halo effect to doomsday soothsaying that I’d love for someone to quantify. At Yahoo! I watched it happen before my eyes beginning in July 2006 when management announced they’d miss their deadline to launch the Panama search monetization upgrade. The story in the press and blogosphere evolved from “management messed up,” to “Terry Semel doesn’t know what he’s doing” to “Yahoo! is dead in the water versus Google” to “Terry is dumb and Yahoo! needs a new leader who’s as tech savvy as Eric Schmidt.” Down went the stock, out went Terry, in came Jerry. We know how that ended.
You can argue that public perception is a leading indicator of future issues. But maybe it just exacerbates the problem or adds a new negative narrative to the storyline.
Here we are in 2009 and I wonder where we are in the arc of perception. Are we still driving ourselves down with more negative interpretation of data? Sure, the facts are still gloomy. The Labor Department reported unemployment rose to 7.2 percent in December, up from 6.8 percent the previous month. Meanwhile President-elect Obama keeps reminding us that things will get worse before they get better, almost to make people as miserable as possible before he’s sworn into office.
I get it. I get it!
But damn it, I’ll be one of the few optimists in the blogosphere and I'll insist there’s a silver lining to this. Let’s look to the phoenix, that mythological bird that emerges from the ashes of ruin. America was built on people looking for a second chance. We love the comeback story, the beauty of renewal from defeat. Immigrants left their Old World to make a new life in the Zion that’s America to find greater prosperity through the lessons learned from their homelands.
Let’s hope the phoenix that rises is the Harry Potter breed, not the one from X-Men.
Yeah, yeah, the economy sucks. Everywhere you turn there are predictions that our world is crumbling into a pit of hopeless despair. That's why I want to examine the many forces at work that are pulling ourselves out of the ashes and helping our nation emerge stronger and more dynamic. Our recovery is not only political and economic in nature, it's psychological.
