On tomorrow’s page we’ll be running a Tom Friedman piece that holds up Al Gore’s speech as the kind that the actual current president of the United States ought to be making — and the kind that an Energy Party president would certainly make. Here’s how Friedman described it:
… If you want to know what an alternative strategy might look like, read the speech that Al Gore delivered on Thursday to the bipartisan Alliance for Climate Protection. Gore, the alliance’s chairman, called for a 10-year plan — the same amount of time John F. Kennedy set for getting us to the moon — to shift the entire country to “renewable energy and truly clean, carbon-free sources” to power our homes, factories and even transportation.
Mr. Gore proposed dramatically improving our national electricity grid and energy efficiency, while investing massively in clean solar, wind, geothermal and carbon-sequestered coal technologies that we know can work but just need to scale. To make the shift, he called for taxing carbon and offsetting that by reducing payroll taxes: Let’s “tax what we burn, not what we earn,” he said.
Whether you agree or not with Gore’s plan, at least he has a plan for dealing with the real problem we face — a multifaceted, multigenerational energy/environment/geopolitical problem…
Me, I’m really busy trying to get pages out without Mike, which is not easy, let me tell you. But maybe y’all can go read Al’s speech and tell me what you think. All I know is that what I’ve heard about it — from Friedman and others who have filtered and condensed its points — sounds good. But maybe the devil’s in the details.
What do y’all think?
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It’s long overdue. I’ve seen Gore’s ambitious plan compared to the Apollo Program and The Manhattan Project, both of which required the scientists and engineers to develop technologies to achieve their goals. I think it’s more appropriate to compare this goal to the Rural Electrification Act of 1936. Between 1936 and 1950, we moved from about 10% rural electrification to 90%. The Manhattan project took about 5 years to achieve its goal. The Apollo program took about 8 years to achieve its goal. The REA took about 15 years to achieve its goal. Anyone who claims that a 10-year plan to move to clean electricity isn’t something we can do doesn’t truly understand this nation can do when it’s at its best.
Why is it that all the really good big ideas in the last hundred years have occurred when we have a Democratic President and a Democratic Congress?
Delirous.
What made that awful accent return?
I’ve been working on something like this, but this guy – he’s a rocket scientist — does better than I could ever hope to do in explaining that putting a man on the moon and developing the atomic bomb — remarkable achievements s — were simply well-defined engineering challenges needing only massive public expenditures to bear fruit.
He concludes with this:
There’s some pretty specific criticisms of Gore’s plan that I’ll add as I get time.
I heard the speech and really liked it. It’s definitely ambitious and I’m sure there are lots of people with good sounding titles that say it can’t be done. But I wonder if part of the problem we have in this country is that no big idea can actually get done because all these people keep giving us reasons not to do it.
Does anyone really think that America is going to get back on its feet again – that we’re going to ever be really competitive with countries like China and India if we keep doing the same things we’re doing now when it comes to energy? The price of coal and oil will only go up – it’s simple supply and demand: They want more every day and everyone in the world will sell it to them. No matter how much more we drill, we will never catch up.
So the choice seems to be more of the same or trying something different so our economy isn’t completely trapped by oil and coal.
You may not agree with his timing, but Gore’s logic that these problems (economic, foreign policy and environment) are tied together is pretty hard to rebut.
Kris –
Gore’s plan does little to wean us from oil, and why worry about coal when the US has it in abundance?
Here’s a detailed summary of Gore’s plan and its impact. Gore called for America to be running on 100 percent zero-carbon electricity in 10 years, a grand idea that does little in reducing petroleum consumption.
Gore being Gore, the author of the first link (yeah it’s long and has grammatical errors, but it’s not bad for a first draft and has oodles of links) focuses on the fact that because it focuses on generating clean electricity, Gore’s proposal does little to combat pollution, whether particulate or greenhouse because it ignores petroleum-fueled transportation needs. We’ve got around 240 million vehicles on the road today with 14 – 16 million new vehicles sold each year, and only one, the $100K Tesla, is fully electric. We’ll need petroleum for far longer than ten years.
I’ll add that Gore’s plan is inefficient because, backing out tax credits and other incentives, today wind power is ten times more expensive – solar is at about 20 times –than current conventional sources. So while a crash program to replace cheap power with expensive power over ten years can be done, why do that? Why not gradually add the alternatives gradually to the existing supply as their costs come down. And why ignore nuclear? It’s more reliable — 24 x 7 — and cheaper than wind and solar.
Norm — The REA is a great example of massive public expenditures to deploy an existing technology, a fact that does not necessarily make it bad or inefficient. Moreover, considerable pubic benefit was derived during a period of mass unemployment and abysmal economic conditions. I wonder if the same thing could be done in today’s litigious and environmentally sensitive culture.
In these times we should ask if a crash program to generate stationary power with solar and wind over ten years is really the best way to spend public funds. I think not.
I gotta drive 500 miles back home to SC tomorrow, so this is the last item I’ll bother you all with for the time being.
You may not agree with the following, but I recommend that you recognize these principles for what they are: reality.
Read the comments too because you’ll find oodles of supporting information.
More on Gore:
Heck, just read the whole durn thing.
When you’re done dissecting Al, consider this: what current candidate for the top job has proposed anything that could even come close to pulling this nation together? This is not pie in the sky. This is real stuff that can be done, at a price less than war, the Mideast be damned, and to the benefit of our own country, if we were only strong enough to turn off our TVs and get to work.
even approaches Al’s simple vision for a way OUT of our current sinking everthings. …
Al “Do As I Say, Not As I Do” Gore has made his pitch for an energy program that uses taxation to control behavior in what may one day become known as the “Warthen Way,” should the “Draft Brad” movement achieve its end.
Gore’s plan won’t work, and surely he’s smart enough to know that, because, after all, he invented the Internet and spent eight years playing second fiddle to a president who raced his staffers everymorning at the White House to see who could finish the New York Times crossword first, which meant President Clinton was no intellectual slouch, a supposition supported by his eventually redefining “is.”
So, the question must be, why does Al Gore want our attention?
To get Obama elected, I suppose. But is there more still?
Time will tell.
If we’d just kept up with the Carter-era conservation efforts, this conversation might be a vastly different one these 3 decades later. What a shame.
When will the presidential candidates step up and propose something meaningful and doable about energy like dropping speed limits again? I am driving much slower than most people these days, and it is a dangerous proposition with sociopaths on cell phones doing 80, 90, 100 in 60 & 70 MPH zones…ah, it’s America, though, do what you want.
I’ll add that Gore’s plan is inefficient because, backing out tax credits and other incentives, today wind power is ten times more expensive – solar is at about 20 times –than current conventional sources.
-Mike
Mike, I’m sure you’re using a bit of hyperbole to make a point so I’ll cut you some slack on the 10/20 times more expensive comment. To suggest that wind and solar are vastly more expensive than fossil fuels is simply incorrect. Wind is in approximate parity with natural gas on a per-kilowatt basis and will become very economical as natural gas prices rise and economies of scale bring wind costs down. If we include all the negative spillovers from coal it’s probably competitive with that filthy, dangerous energy source also.
T. Boone Pickens has figured this out. It’s time for everyone to get on the wind bandwagon. Can’t you feel the breeze?
Let’s take Mike’s 5 points one at a time comparing wind with coal to generate electricity.
1. It has to be huge. There is enough wind in North Dakota to provide all the electricity needs of the U.S. Coal, on the other hand, is limited to the amount in the ground and it’s becoming more expensive and dangerous to extract with each passing day.
2. It has to be reliable. Given the vast size of our country wind is blowing somewhere at all times. If we expand the transmission lines to windy areas of the country wind becomes very reliable. Coal on the other hand is subject to the vagaries of human beings. A big coal miner strike or an accident could shut down the mines and thus our supply. This will become an increasing problem as the mines become more difficult to access and the labor costs need to increase.
3. It has to be concentrated, not diffuse. Why? Neither wind nor coal are concentrated. They both require a huge infrastructure to bring to market. The difference is coal mines run out and the infrastructure has to be re-built each time a new mine opens. Those costs increase as diminishing returns set in. Wind on the other hand, remains pretty much in the same location forever. Once the infrastructure is in place it just has to be maintained, not re-built.
4. It has to be possible to utilize it efficiently. In the long run nothing is more inefficient than coal. It has to be mined, transported and stored. It’s filthy to both the miners and the environment. Wind on the other hand will be extremely efficient once the nationwide transmission lines are constructed. If an efficient storage system is developed wind becomes even more efficient.
5. Capital costs have to be competitive. This one is a no-brained. The capital costs of wind are dropping fast as economies of scale are achieved. Wind can be scaled from a small, home built unit that generates less than 20k watts up to the massive 7 gig units currently under development in Germany. All sizes will benefit as mass production reduces the per unit costs. Coal on the other will only become more expensive. The machines will become increasingly more complex and the labor more specialized. Costs will rise as the more accessible, higher grade ores are depleted.
With wind costs now pretty much in line with fossil fuels the future looks bright for this clean, infinite source of electricity. Coal will continue to slide as a fuel source and is likely to disappear altogether within 50 years. With a bit of a push from the government we can make this happen faster and rid the world of filthy coal. An accurate pricing mechanism would render coal obsolete very soon if the pollution, health costs are included. Only by ignoring these costs is coal even remotely competitive with wind. It’s time to alter this dynamic and begin the phase-out of coal.
I’m all on board with trying to get the oil monkey off our back, but when I hear people like Norm and others say “We made it to the moon in 10 years..” I just want to pull my hair out. It cost approximately $135 billion in 2005 dollars for the entire Apollo program. Gore’s program will cost $1.5 to $3 TRILLION!!! And that’s just the estimate. History shows us that the actual cost of any program the government gets involved with doubles or triples over time. Gore justifies it by saying that’s the amount we’ll spend on coal fired plants anyways, but his assumption is that we’ll divert all of the funds for building new plants directly to alternative sources (which, mind you, have not been proven and power nothing on a large scale today). Gore’s plan says nothing of how we’ll handle energy in the transition to alternative sources. In addition, how will air transportation work with alternative energy? As of yet I’ve seen nor heard of any viable alternative energy source to air transportation other than good old oil. I’m all on board with Gore’s message (not global warming, mind you, but alternative energy), but his methods are as whacked as his stupid movie.
I doubt the NWO will be shipping thier cargo on sailboats. Also, what exactly did Americans sacrifice to put a man on the moon? Whatever it was I am sure it will not compare with the TRILLIONS that Al Gore wants to transfer to the unelected World Government that Al Gore is pushing.
Gore has no clue. He is just pulling time frames and figures out of the air. He has no clue.
I watched him for 15 seconds before I could find the channel changer, and he was talking about “updating the grid” so we could send power from wind and solar in the West back to cities in the East. He lacks even the most basic understanding of electricity, and transmission losses due to resistance in the cables and transformers.
The only people who believe Al Gore for one second are people like him, illiterate in basic science.
Gore talks of wind and solar, but he’s just looking for his place in the sun.
How might anyone be such an arrogant hypocrite as to have asked folk to ride their bicycles to the conference to make an energy statement, but then showed up himself in a limousine cavalcade that kept its motors and air-conditioning running while he was inside speaking?
That’s Al Gore — the self-chosen, self-centered messiah.
By the way, bud, are you aware that carbon, which is all your “filthy coal” is, is the basis of all life on this planet?
And why ignore nuclear? It’s more reliable — 24 x 7 — and cheaper than wind and solar.
-Mike
Oh really. Remember Three Mile Island and Chernobyl? I doubt they’re running 24 x 7 now. Nuclear has big problems. First, it relies on a limited source of fuel, just like coal and NG. Eventually all the problems with mining and refining will catch up with nuclear just as it will with coal and oil. Second, it takes lot of water to keep the reactor cores cool. Water shortages could be severe if we build too many of these plants at a time when we’re having droughts. (So much for reliability). And of course the bigee. What do we do with all that messy spent fuel?
Sure, nuclear should be in the mix. But don’t for one second think this is some proven panacea to solve all our problems.
Is it true, that Al Gore arrived in 3 cars with family etc along and they parked in front of the building? The announcement was that people were supposed to ride their bicycles, walk, take public transpotation etc to come to hear him make the speech.
Of the 3 vehicles (all large), one was kept running by the driver with the air-conditioner on so that Al and Tipper would step into a cool car after the speech.
The moral to the story is do as I say do and as I do. How much energy does it take to heat and air-condition Al and Tipper’s mansion? Al needs a wind machine in his yard just to provide electricity to his mansion. He could find out from T. Boone where he might buy one.
How much did someone pay Al to make that eye opening speech?
Bud,
As of 2007 there were 439 operating nuclear power stations in the world. There have been over 150 nuclear powered naval vessels built. You name two incidents; one which doesn’t even help your case because it proves that nuclear is a safe alternative. Three Mile Island proved that the fail safes work. And to further dispute you, Three Mile Island is in operation 24/7 now. In fact, the operator just applied for a renewal of its license to extend operations through 2034. As an average US citizen, you’re exposed to approximately 360 millirem of radiation per year. The highest exposure to anyone living within 10 miles of the reactor at the time of the accident was 100 millirem, only a third of what you get in a year. So you really can only use Chernobyl as an example, which means you’re hedging your argument against nuclear energy on the grounds of safety on only 1/10th of 1% of all nuclear power reactors. Not really good odds if you ask me. I certainly wouldn’t try to build an argument on it. In addition, to your waste argument, if we were to accumulate all of the nuclear waste produced in the US to date and stack it side-by-side and end-to-end, it would be about the size of a football field and 10 feet high. When you consider the vast size and land resources of the US, that’s an infinitesimally small drop in the bucket.
But the problem with your wind argument is that you can only glean energy from the wind while it’s blowing. There’s no way to store the energy for when the wind stops blowing. I’m sure that problem is being worked on, but you’re hedging your entire argument on a resource that does not have the technological fortitude to meet our nation’s power needs at this point. Sure, wind is a viable alternative that we should explore, but you seem to be blindly preaching it without realizing that we’re still going to have to use coal, natural gas, and oil in order to run this country for a long, long time to come. I’ll join you in saying that we should explore wind, but you’re being quite unrealistic in devotion to wind power.
In addition, are you using your same water shortage argument for hydrogen as well? To be intellectually honest you’ll have to.
When I worked in DC in the early 1990s, Al Gore’s personal car was a Mercury Marquis (same as the Ford Crown Victoria), and the Sierra Club owned a stretch Cadillac limo.
Do as they say do, not as they do.
Tim, I’m just responding to Mike’s repeated claims that wind energy is not viable. Wind is a relatively mature energy option that is now generating about 1% of our power needs. My suggestion, along with T. Boone, is that we can and should expand the use of wind. This is not a matter of “exploring” the possibilities and waiting for the technology to emerge. Wind is already a good source of energy. It’s clean, reliable and safe. The argument that the wind doesn’t alway blow is fair enough and that’s why wind alone cannot supply all our power needs. But with enough wind turbines in a wide range of locations that problem is not as big as detractors make it out to be.
Wind will slowly gain if left to fend for itself in the market but given the enormous subsidies given to other energy sources, especially oil, it seems only fair to level the playing field. (Coal is indirectly subsidized by allowing pollution costs to be passed on to the environment). The government can and should subsidize the wind market by investing in an expansion of the grid to make windy areas more viable for wind companies to invest in. We did the same thing with the electric coops in the 1930s. We certainly helped nuclear get started with a huge investment in the technology during the 40s and 50s. So why not invest in wind? I think it’s the smart way to go and our children will thank us for getting us off all the dirty, dangerous energy sources we use now.
Bud,
Just a little piece of advice, I and many others would gladly join you if you could tone down some of the rhetoric on coal and other natural resources. This is a rather faceless forum, but if we were arguing the merits in person you’d have lost me by now with your arguments against using our natural resources. That’s our ace in the hole until we can find alternatives. In effect, you’re chicken little screaming that the sky is falling and the majority of us just aren’t buying it.
Ok Tim I’ll concede that coal will be with us for a while. But it’s an aging technology with a dim future. If we can keep it clean by sequestering the CO2 and by keeping our miners safe (something that seems to be lost on our current president)then perhaps it will survive a few more years.
But I’ll shed no tears for the passing of an energy source that’s claimed the lives of thousands of miners through accidents and coal dust illness. Coal has kept us warm and powered our lives for 2 centuries now. It’s time to pass the baton to new and better ways. And that better way includes wind.
And now I can join you by the campfire and sing Kumbaya…
Maybe Al Gore will turn out to be the VP on the ticket with Obama. Gore is certainly having his face and voice heard a lot lately for some reason. Could he say something that could be of interest to the voters that might pull a vote away from McCain?
Take the teleprompter away from Obama and maybe we could find out what he plans for the people if elected. We know that Nancy P. wants to join him in sharing the wealth along with Reid.
The people that live on a retirement income with a 40lK etc are expected to give up 20% of their portfolio to pay for the share the wealth programs endorsed by Obama and Nancy P.
Al Gore and Nancy P. have more money than the average American can possibly acquire in a lifetime (they are old enough to have put it aside during times that people with large salaries could invest into tax shelters). So, they can be kind to the poor and raise their standard of living to hopefully eliminate the poor class of people and we will have only the middle class and the rich. There is only one thing wrong with this picture. There will not be enough taxpayers to take care of all the needs of the poor. The only way to bring this nation back to greatness is education of the people. It seems that other countries know this.
Take for example the State of SC. We had Tanenbaum and Riley running the education process for years. Riley failed miserably but was appointed to run the education of our children by Bill Clinton. Every year we are at the bottom in education achievement and graduates in the country.
How is South Carolina ever going to have industry coming that requires high paying jobs with minimally educated people?
India and China are competing for industry that require educated workers. The State of SC certainly could not (on a high school level) supply industry with trainable graduates.
I will stop my fault finding and only add one thing. We must have an educated word force in South Carolina to attract industry. We have to long depend on low educated jobs and low paying jobs. We must not waste our money and time on those that will not learn but put our effort towards those that can and will learn.
There shouldn’t even be any income taxes on interest, dividends or capital gains. Many of the European countries do not have such taxes, because they realize that with just modest inflation, a 20% tax on investment income is really 100% or more. The people who make initial investments which create the new stock issues for secondary investors, are smart enough avoid something with a 100% income tax. When they stop investing in a nation, that economy dries up.
Obama and Gore are not smart enough to realize this, and their followers lap up the hate speech about “taxing the rich”, too dumb to realize that Obama and the Democrats are talking about confiscating their meager 401k money.
At Three Mile Island, even when the operators panicked or froze and did wrong things, the safety system kept bringing the reactor back under control.
During the worst of the episode, you could stand at the fence and receive less radiation than the residents of Harrisburg were receiving in their homes, from the soil.
Chernobyl was a socialist project, just like Al Gore proposes. Of course it failed. Others failed, too. The USSR is lucky all their nuclear plants didn’t fail.
If all the “all-government-is-evil” people instead joined the moderates to push for competent oversite of government operations and rules that let you fire incompetent workers, why shouldn’t the government be able to effectively run operations? If you set up the reward system to actually pay the managers based on performance I don’t see why it shouldn’t actually outperform many “free market companies” where executive pay is completely decoupled from performance.
When we were working on the callenge to ‘send a man to the moon’ it cost money, but folks, that money did not go to the moon! It went into the pockets of the people who mined the ores, who manufactured the metals, who built the electronic parts, who manufactured the fuel, etc. And the same will be true in this case. We have some choices here; we can keep the oil monkey on our back and continue to pay the petro-dictators vast sums for their oil, while competing with China and India. We can wander about, putting some money into alternative fuel, but not enough to build the systems we need. We can put together a program that pushes available alternative fuels (solar, wind, geothermal, nuclear, hydroelectric) hard enough to build a network that makes these much more affordable, and much more available. While we are doing that, we can fund research to look for ways to store that power effectively (‘sunshine’ on a rainy day) and to transmit it from 1 place to enother efficiently. We can also push a real effort to find those ‘over the horizon’ fuels and technologies. We can either trail the world in producing these, and end up buying them from the highest bidder, or we can invent them ourselves and sell them to others. These are our real choices.
just saying –
Executive pay is not decoupled from performance in the private sector, at least not in any successful business, despite what the elites say, but can be in the public sector.
For example, a long-standing systemic issue with Freddie Mac and Sallie Mae is that profits are privatized and losses are socialized, creating strange incentives for their leadership and prompting them to purchase political support for their private gain. I would wonder why Friedman doesn’t focus his considerable talent at remedying this, but realize that most of the beneficiaries are Dems.
A lot too has been written about how bonuses are handed out in government. Locally we’ve seen some strange happenings too, with this county board or that agency paying off a pension to reward or get rid of some idiot.
This is s systemic issue, not personal failure, but folks in government don’t know the true cost of the resources they apply to a problem. In fact, they shouldn’t care because their role is to administer a function within the DMV or serve as the critical cog in some other part of the government machine, with the legislature doling out funds to fuel the process.
Karen –
We have an excellent example of your call for a comprehensive. Top-down program to cure our energy ills and it’s killing poor folks: US ethanol policy, destroying corn to produce fuel. It is systematized and subsidized in our tax, agricultural, and trade policies. It is worse than wrong — it’s inefficient — and should be ended now before it kills more and bankrupts our nation.
What’s wrong with modesty and diversity? Today lots of faceless, nameless gnomes are developing alternatives in labs public and private. Okay, some are not so nameless, but T.J. Rodgers’ flamboyant style is supported by a track record of success and the knowledge that private enterprise and free markets can do more with less than the government can. What kind of guy is he?
BTW, the solution to the rainy day problem is hydrogen, using excess capacity to produce it to fuel transportation or later conversion back to electricity when it raidns. This works for any power source and we’ll see it expand gradually as it fuels the hydrogen economy of the future.
Tim – thanks for the hand. When I think of all those who died at Three Mile Island…
“This is s systemic issue”
I guess my question is, what exactly is stopping the services mandated by the legislature from being run just as efficiently as a private business could run them? What is stopping them from having the same services for the same cost to the “company” but then returning the “profits” back to the state instead of the share holders?
Is it just having stupid people at the top who won’t run them that way? Or is there something more?
When are the so-called “moderates” going to demand that government become more moderate in its size and power, instead of siding with socialists and uber-liberals in demanding more and bigger government programs?
Right now, it is only the most conservative and libertarian citizens who are asking for any moderation, any honesty, any efficiency and any accountability in government.
When you breath clean air, thank a liberal. If we had allowed the free-market to continue unfettered, as conservatives wanted, we’d still have smog chocking us in every major U.S. city.
When the safety devices in your car save your live thank a liberal. The auto industry, along with the conservatives in congress fought safety standards for years. Thankfully they lost.
When you go to a restaraunt and are able to enjoy a meal or work in an office or ride and elevator smoke free thank a liberal. Conservatives would force people to breath in second hand smoke until they suffocate.
When you see healthy, well fed people on the streets, even those with little income thank a liberal. Conservatives have always been willing to allow the poor to starve.
When you see your low medical bills while you take advantage of the excellent health care system in America thank a ……
Well the job isn’t quite finished. Given the excellent track record of liberals in promoting a wide assortment of positive movements over the years it’s something to be very proud of. The American liberal has persevered and triumphed over all manner of roadblocks thrown up by the reactionary right over the years. With energy, healthcare and war at the forefront of the 2008 election we can look foreward to thanking a liberal one day for the future triumphs of the progressive movement. But only if we overcome the fear tactics of the right. It’s time to elect Barack Obama and good liberals to congress so we can get the job done. Eight years of GOP terror is enough.
So, how exactly (besides you just wanting to be an insulting jack-ass) are there only two choices: 1) more and bigger government programs, or 2) fewer programs, honesty, efficiency, and accountability? Why can’t we stop with what we have now and make it more honest, efficient, and accountable?
Back to my earlier question (that I’m hoping Mike will share some thoughts on): What is there inherently about something run by a governmental agency that prevents it from running similarly to a private company in terms of those things? (Would laws to allow incompetents to be fired help? Would an intelligent system to reward success help?)
The government we have now is too large to be made honest. Where would you get all the honest workers to replace the crooks running it now?
Government has to be reduced to its proper size, its legal role, of only those activities specifically enumerated in the the Constitution. What we have now is too big for anyone to manage even a department.
“Where would you get all the honest workers to replace the crooks running it now?”
The same place the private sector would find the workers when it took over the functions the government was providing?
Who endorsed Sen. John Edwards as their candidate for President?
He is so smart that he fell into the oldest trap known to man if it is true that he has a pregnant girlfriend.
just saying –
Imagine two restaurants starting off with the same menus, hours, etc., the only difference being that one is privately owned — call it “Mike’s Perfect Grill,” the other is the cafeteria for the US Senate and we’ll call it “bud’s Buffet” with bud, a hard-working GS-14 reward for years of service with this gig.
Both shops start out opening at 7 in the morning and close at 8 in the evening and offer identical menus, portions, furnishings, and everything else right down to the hand-driers in the restrooms. After the first week I look over receipts to see what’s sold, adjust my orders, fiddle with staffing, look at the net, and get ready for the next week. Bud does too, but he doesn’t worry about the net, just about the budget he’s been allocated.
At the end of week 2 I see that I’ve got really strong early sales and think that starting several of folks an little earlier might increase sales enough to wring more profit from idle capital, so I plan to open at 6:00. The meatloaf at lunch has been selling out three days per week, but I’ve had to throw out tuna casserole, so I adjust what the prep folks are doing. I had to warn a short-order cook about coming in late the first week, but she keeps it up, so she’s gone as soon as I find a replacement. And on and on.
At the end of week 2 bud’s making plans for the holidays; he’s taking three weeks this year, and his assistant, a nice enough GS-13 that used to work in Ag, will have to fill in if he can talk him into it. He added fried chicken and okra because Senator Bling wanted it, but he’s the only one and he doesn’t come in every day, but you never know when he’s going to come it, so okra gets added to garbage can almost daily. He’s started the paperwork to replace some of the staff and should be able to fire the one cook and hire a replacement in another couple of months, provided that the EO folks don’t jump in. But he’s still in budget.
Several weeks later, I’ve added several high-profit breakfast items and have a deal on breakfast sandwiches to go; I added a fancy coffee pot and now get loads of folks running in for breakfast goodies and the premium coffee. I added whole wheat and multi-wheat buns for the grill and sales have shot up. I finally hook into the office catering market in the area and have added more folks to handle that during the lull between breakfast and lunch rushes.
And on and on. You can give bud a performance bonus, but what do you base it on? Meeting his budget? Do that and he’ll skimp on ingredients or variety of foods offered. Bonus on profit? What profit? He has no real estate lease payments, no capital lease payments, has to buy his food through GSA, gets the employees from civil service, etc. Read anything and everything you can on the Soviet economy to find out about perverse incentives. You will realize what an important concept “price” is; it’s the basic unit of information that tells you all you need to know about an item.
Performance translates directly to the owner’s bottom line in a private operation, so he’s always alert for ways to improve customer service and his bottom line. Most businesses today are capital-intensive and you have to work hard to make maximum use of what you’ve invested in. As for talent, I could give an employee a bonus anytime I want and would plan on that and other incentives because good hands are hard to find. At the end of a year, bud’s and Mike’s will be quite dissimilar, with different hours, menus, and sales. Mike’s has to be customer driven because without them, the business folds. bud get’s a budget and makes changes only when he feels like it or is forced to. That’s nothing against bud, but rather a critique of the system. He does not depend on the restaurant for his livelihood because he can apply for another position in the civil service; the restaurant is the current driver of my livelihood and the source of wages for my employees, so we’re motivated to perform and I’m motivated to find better ways to increase business and profits.
A real-world example is with the SC DMV. I love our DMV folks, but they operate under political rules that would strangle any business. Did you ever wonder why offices are located where they are and why / how they get modernized? Members of the state legislature play a big role in that. If you have two areas with identical population density, the one represented by the more powerful legislator will have more service lanes, more employees, a newer building, etc.
I hope that helps.
Mike, as a state employee you are kinda sorta correct. I see much waste in government. There are lazy people galore and incentives are generally lacking. I’m not sure your DMV example is the best. They actually do a pretty good job now. Frankly they are much more efficient than Burger King. Just try ordering a Whopper with extra ketchup, hold the onions some time. Half the time you’ll get it not your way. Yet they stay in business. Go figure.
But that’s only part of the story. If Mike’s restaraunt can get away with it he’ll pay slave wages, hire 12 year olds and maintain a generally dirty, dangerous work environment. All to cut corners in order to make a buck. That’s where inefficient government comes in. With all it’s problems it’s a necessary evil to help fight battles for those who have no practical recourse to fight their own. It’s government that helps regulate our economy to address negative spillovers that are just not addressed by profit motive.
Of course the biggest problem of all with government is when it is abused by the politicians in charge. That’s why we’ve wasted 4100 lives and $3 trillion dollars on a wasted war in Iraq. Can government abuse it’s power and waste money. Absolutely. Is it necessary? Yup. Sometimes it’s the only way to curb abuse. That’s why voters need to make good decisions. Let’s hope the good guys win in November.
just saying –
It’s very hard for government entities to avoid politics simply because their masters are political.
So let’s say that you run a government-owned gas station in, say, Denver. Your job is to dispense gas to city vehicles and, presumably, charge the appropriate city agency. What’s so special about your station? Your fuel prices do not include state and federal fuel taxes, so it’s a great deal for the city and its taxpayers, because they’re not being taxed to pay the federal taxes and state taxes on the fuel that the cops and other city agencies burn up out the wazoo. That’s a savings of 40.4 cents per gallon.
So what happens when a political party — pick one, any one — decides to hold its quadrennial convention in your city? It’s great that they’re coming, but the city’s taxpayers have already coughed up quite a bit to snare the convention. How does any of that affect you?
You of course let them fill up at your tax-free station meant only for city business, of course. There’s a boatload of planners in the city for months before the event. Even though they are party employees or volunteers, some city official approved their use of stations like yours. Fortunately, word about it got out earlier this week and the practice has ended. Too bad, because the story has too many ironies:
By all means, keep the Dems safe in their loaner cars.
Mike, I understand where you’re coming from, and I highly commend sane oversight of budget, but I think that in order to accomplish a change of this magnitude we need the big shoulder of government behind it. Businesses (or at least most) do not have the money to push it, because we don’t have the infrastructure to insure success. If we want to do this, we need to treat it as a cross between rural electrification and the manhatten project; we need to put the research in quickly and effectively to give us the best direction in which to head in the future. Meanwhile we need to provide the infrastructure to allow electrical generation appropriate to each area, and storage of reserve, to work effectively. This will, ultimately, be longer than 10 years, but with any luck, we’ll be around the bend, and ready to profit from it by then (if we don’t think we’ve already found the pot of gold, and quit).
bud –
You got me good. Conservatives do like building their fortunes on the backs of the too-young, the too-old, the too-stupid, and, in the case of the great opera / ballet companies, the tutu. Shall I sing my ode to indentured servitude now?
Sorry, but anybody who’s going to succeed in running a business has got to pay folks what they’re worth for the job available. You need to understand that much of what kind-hearted progressives promote, such as the minimum wage, actually hurts the less skilled by making it more difficult for them to find jobs. This is no assertion, but fact based on evidence as explained by Dr. Thomas Sowell. In a nutshell he says that minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers and that some workers are not worth the minimum wage to virtually every employer in every industry, so they remain jobless until they acquire enough skills to qualify for whatever basic jobs are available.
He goes further, demonstrating that until the 1950s, when minimum wage laws became prevalent, black teenagers and white teenagers had roughly the same employment rates. Since then, the black unemployment rate has been significantly higher. The villain? Minimum wage laws.
The problem in many urban areas, including especially Columbia, and the reason why your Burger King fails you, is that there are too many folks suffering from poverty, and that’s not a problem of money, but a problem of problems. They’ve so few skills, so little education, such an attitude of helplessness, quite counterproductive habits, that there’s no minimum wage job they can do credibly. I wrote about some this week. Imagine being 40 years old and actually telling folks that you don’t have a high school degree and have never worked because a car accident 17 years ago left you depressed and disabled, incapable of getting a job. But for the generosity of Social Security Disability payments, that woman would penniless and without her subsidized house.
So what do employers in the area do to find minimum wage workers? First, they often have to pay a little more because the standard for minimum wage — breathing — is so low. Then they pay a lot more for very little additional capability. Once they find a capable shift supe or shift manager, they pay almost whatever it takes to keep that person because good workers with good habits are so hard to find.
I used to dash off a letter to McDonald’s or BK whenever I had a Why-That’s-Fantastic moment at one of their establishments, but had to give that up because of the price of ink refills, time spent blogging, and the fact that I no longer go to the places to pick up their specials for my mother-in-law. In response they tend to have the franchisee send a letter and coupons, so I would always follow-up with a “I don’t want coupons, I want you to get your act together so that I can leave your place with a smile, not an aneurism” letter. (Hey, it’s not much of a life, but it’s mine.)
Among the effective responses I got was one from BK, but that was after a second letter that suggested that they either send in a district team to fix a place obviously gone real bad or demolish the building and pour salt on the ground so that nothing would grow there for a century in atonement for the establishment’s sins. They actually send a crew in for a couple of weeks to get the place straightened out.
We all want to get more for less, employers are no different. But anybody who plans to be in business for the long haul has to be fair in hiring and retaining good folks. It may surprise you, but a lot of employers are skittish about hiring over-qualified folks because the nature of their work and job structure demands less than what the candidate brings. They recognize the market and sense the salary that some folks can command in the right organization, and realize that the person will leave when that opportunity comes along. Imaging that, they’re human, humane, and intelligent, and yet they run a business!
Karen –
That “big shoulder of government” you summon is also known as the Leviathan, so be careful about what you ask for.
But I’ll go along and suggest some minor measures as test cases to see how this works.
First, are we agreed that current ethanol policy — using one gallon of petroleum-based fuel to produce about 1 ¼ gallons of ethanol from food (corn) — is insane and all tax and agricultural subsides for it should be ended? Good. Then let’s have Congress end it now.
Second, are most in agreement with Jim Clyburn that nuclear power is a viable, clean, and cost-effective long-term energy solution? Good, then go for the twofer:
Killing current ethanol measures will save money and reduce prices for food and fuel. Removing obstacles to nukes will save money too.
If we can do those two, I’m ready to move on to new interpretations of eminent domain to allow transmission lines to carry the power generated by Gore’s and Pickens’ remote power plants to populated areas. I won’t even demand that I be allowed to install one of them Navy nuke power plants in my backyard.
Mike, I agree on ending the subsidies for ethanol. I don’t agree that fuel prices will drop. But given the likely reduction in food prices this would be a good tradeoff.
Nuclear is risky regardless of what anyone claims. To suggest it’s completely safe is just a bit Pollyanish. But life is full of risks so let’s move forward and accept some of the risks and build a few nuclear plants. Eventually though the huge requirements for water, declining supply of nuclear fuel and the rising costs associated with storing the waste will make this a limited source of energy just like oil.
Of course if we remove ethanol subsidies we need to also end oil subsidies. No more tax breaks for big oil and they certainly need to pay much more for our military since it is largely used to protect the world’s oil supplies. Gasoline prices will go up of course but if we’re going to have a free-market system ALL costs should be included in the price.
And of course let’s do the wind thing. I suggest we do subsidize wind for a while. The electric coop subsidies in the 30s worked. Why not just expand this to run the power lines out to western Texas, Kansas and the Dakotas? There is so much potential there. It just needs a little push.
And above all let’s try to conserve. Given the sharp decline in oil prices resulting from the modest drop in gasoline demand shows just how effective this can be.
One thing I don’t think is very useful is drilling in the ANWR. Frankly that’s just a waste of time and money. It should only be used to attract a few conservative congressmen to support legislation that would actually work. If we can elect enough sensible liberals then I would suggest we drop this whole drilling-in-the-ANWR nonsense.
A subsidy is a direct payment or a credit reducing another obligation, such as the tax credits for producing ethanol and for buying a hybrid car, which reduce their retail price.
What “subsidies” are you wanting to end for petroleum production?
bud,
You opinion about the risk and value of drilling in ANWR is irrelevant, because you are not in the oil business. It is not your decision to make, and you are unqualified to make it, if you suddenly were placed on the board of directors of Exxon.
ANWR is the size of South Carolina.
The drilling spot is the size of the Columbia Airport.