January 17, 2015

Study Finds Flu Vaccine is 23 Percent Effective

Source: WDET


A study from the Centers for Disease Control has found a person’s risk of contracting the flu is reduced by about 23 percent after getting this year’s flu shot. However, older adults and young children are at a higher risk for getting the flu.

Arnold Monto is a professor of epidemiology at the University of Michigan School of Public Health and an author of the study. He says the outcome is not unexpected.

“We had predicted that we might have lower than usual efficacy this year because the virus has changed since the vaccine was formulated, and the vaccine is now not quite performing as well as we would like.”

Monto says typically, the flu shot reduces risk by 60 to 70 percent. He says people should still get the flu shot since it can reduce the severity of the illness.


Read more: http://wdet.org/news/story/study-flu-vaccine-23-percent-effective-01-16/

January 17, 2015

Down the Plughole 40 Years of Economic Policy in One Chart By Mike Whitney

http://www.counterpunch.org/2015/01/15/40-years-of-economic-policy-in-one-chart/



Growth of Real Hourly Compensation for Production/Nonsupervisory Workers and Productivity, 1948–2011

Is America in the throes of a class war? Look at the chart and decide for yourself. It’s all there in black and white, and you don’t need to be an economist to figure it out. But, please, take some time to study the chart, because there’s more here than meets the eye. This isn’t just about productivity and compensation. It’s a history lesson too. It pinpoints the precise moment in time when the country lost its way and began its agonizing descent into Police State USA. That’s what it really means...It all began in the 1970s, that’s when everything started going down the plughole. Once wages detached from productivity, the rich progressively got richer. They used their wealth to reduce taxes on capital, role back critical regulations, break up the unions, install their own lapdog politicians, push through trade agreements that pitted US workers against low-paid labor in the developing world, and induce their shady Central Bank buddies to keep interest rates locked below the rate of inflation so they could cream hefty profits off gigantic asset bubbles. Now, 40 years later, they own the whole f*cking shooting match, lock, stock and barrel. And it’s all because management decided to take the lion’s share of productivity gains which threw the whole system off-kilter undermining the basic pillars of democratic government. Here’s how FDR summed it up:


Are we there yet?

Pretty close, I’d say. The only way to preserve democracy is by keeping one hand firmly clasped around the windpipe of every rich bastard in the country. If you can’t keep your tycoons in check, you’d might as well throw in the towel and accept a life of indentured servitude now, because that’s where you’re headed anyway. Here’s a short rundown of the changes that took place in the ’70s by economist Lawrence Mishel:



When was the last time you heard Obama talk about “improving labor standards” or “collective bargaining”? Don’t make me laugh. It’s not even on his radar. Did you know that inequality has actually gotten worse under Obama? Much worse. It’s true. He might proclaim his determination to “tax millionaires” in one of his blustery orations, but it’s all just rhetorical fakery. The fact is, the 1 percenters have done better under Obama than they did under Bush. Check this out from Naked Capitalism:




93 cents of every buck has gone to the 1 percenters under Obama. And you wonder why Wall Street loves this guy? It’s because he’s bent over backwards to make them richer, that’s why. Just look:



Graph (4) above: the blue line across the bottom of the graph represents the wealth of the bottom 90% of U.S. households. The red line represents the wealth of the richest 0.1%. Source: Emmanuel Saez (The Climate Crisis is Capitalism, Rob Urie, CounterPunch)

The rich are making money hand over fist, and it’s all due to President Twoface and his dodgy friends at the Federal Reserve. Of course, Obama would like everyone to think that he’s really rooting for the little guy, doing his best to boost wages, create more jobs and raise living standards for ordinary working people.

Right. Check out this speech he gave in 2013:



Got that? Obama is all about closing the gap between the rich and the poor. Just don’t look at his record or you might notice a slight discrepancy between what he says and what he does...The fact is, stocks have surged under Obama as have corporate profits which “have doubled since he took office in 2009″. At the same time, he’s overseen the slowest recovery in the postwar era, stood idle while middle class incomes were shaved by nearly $5,000 annually, and refused to intervene when over 700,000 public sector jobs were slashed in the early days of his administration. And we won’t even mention the health care debacle, the endless spying, the perennial warmongering, targeted assassinations or Gitmo.

But as bad as Obama may be, the problem didn’t start with him. It goes back decades as the first chart indicates. The steady erosion of workers bargaining power, changes in the tax code favoring capital, anti-worker trade agreements, deregulation, loosey-goosy monetary policy and, of course, the “biggie”, financialization, have all contributed to the evisceration of the middle class which now appears to be hanging by a thread. Check out this clip from authors John Bellamy Foster and Fred Magdoff who researched the roots of financialization and wrote about it in an article in The Monthly Review titled “Financial Implosion and Stagnation”:



Let me get this straight: Persistent stagnation paved the way for financial engineering and asset bubbles where investors could make beaucoup dough regardless of the (abysmal) condition of the underlying economy? Is that it? Sounds a lot like today, doesn’t it; where corporations are minimizing their capital expenditures, laying off workers, and reducing revenues, but still making record profits by goosing stock prices with buybacks which add absolutely nothing to productivity. But, then again, why expand your business if you can make piles of moolah by just loading up on your own shares? It’s madness, and it’s all the result of 6 years of zero rates and QE which has lured investors further and further out on the risk curve. The system is so deluged with liquidity that people are taking chances they never would have otherwise....But where do we see “the falling ratio of wages and salaries as a percentage of national income in the United States” that the authors mention in their article? Is there any real proof of a class war or is it just more leftist folderol?

Graph: Compensation of Employees, Received: Wage and Salary Disbursements/Gross Domestic Product



It sure looks like class war to me.

MASSIVE EDIT--SEE LINK

So, is America in the throes of a class war or not?

Indeed, it is. But only one side is fighting.

Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

January 16, 2015

Weekend Economists Revere Two Kings January 16-19, 2015

As promised, we continue the Elvis story, and add the Martin Luther King story. Both men shaped their times, which overlapped, and shaped our culture.

And if some drivel about the Swiss franc, Eurozone, and so forth should leak in, it's all good.

January 16, 2015

Yes, the Federal Reserve has enormous power over who is president

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/13/yes-the-federal-reserve-has-enormous-power-over-who-is-president/

The arc of the political universe is long, but it bends towards monetary policy.
That's the boring truth that nobody wants to hear. Forget about the gaffes, the horserace, and even the personalities. Elections are about the economy, stupid, and the economy is mostly controlled by monetary policy. That's why every big ideological turning point—1896, 1920, 1932, 1980, and maybe 2008—has come after a big monetary shock. Think about it this way: Bad monetary policy means a bad economy, which gives power back to the party that didn't have it before. And so long as the monetary problem gets fixed, the economy will too, and the new government's policies will, whatever their merits, get the credit. That's how ideology changes.

In 1896, for example, Republicans completed their transformation from being the anti-slavery party to the anti-inflation one. Back then, the U.S. was on the gold standard, but there wasn't enough gold. Miners had found so little of it that overall prices were falling, which was particularly bad news for anyone who'd borrowed money. That's because wages fall if prices do, so debts that don't become harder to pay back. The result was two decades of slower-than-it-should-have-been growth where the economy was in recession more often than not. Democrats, for their part, finally came up with a solution: stop crucifying mankind on a cross of gold, and use silver as money, too. They were four years too late, though. Gold discoveries in South Africa in 1896 and the Yukon in 1898 made the gold standard sustainable just in time for the Republicans, who had become the party of the financial elite that stood to lose a lot of money from inflation, to rally to its defense. Wall Street threw more money, as a percent of gross domestic product, into defeating the pro-silver Democrats than has been spent in any presidential election before or since. And it worked. Republicans won, the gold standard survived, and a new old era of conservative politics, of balanced budgets and low inflation, was ushered in.

Well, at least until World War I. That's because Republicans agreed on fiscal and financial policy, but not on regulation. That split let Woodrow Wilson win a three-way race in 1912, and, despite getting reelected on the slogan that "he kept us out of war," he didn't in 1917. Now, gold had already been pouring into the U.S., fueling inflation, as people moved it out of Europe, but once we joined the Allies, we also partially suspended the gold standard by banning gold exports. That left us with higher prices and a big pile of shiny rocks after the war ended. So, in 1920, the Fed raised rates so much that prices not only stopped rising, but actually started falling. A deep recession followed, right before the presidential election. That, together with general war weariness, was enough for an extreme mediocrity like Warren G. Harding to win the biggest popular vote victory, by percentage points, on record just on the strength of three word: return to normalcy. A year later, the Fed lowered rates, the Roaring Twenties were born, and the conservative orthodoxy of low taxes and low spending once again seemed to be vindicated. It wouldn't for long. Households, you see, went on a borrowing binge in the 1920s. They borrowed money to buy cars. They borrowed money to buy homes. And, yes, they borrowed money to buy stocks. So once the market crashed, this pyramid of debt did too. Even zero interest rates weren't enough to stop the economy's free fall. This only got worse when people panicked, sometimes justifiably so, that all these bad debts would make their banks go bust. That became a self-fulfilling prophecy as people rushed to pull their money out before everyone else, and the Fed, which was more concerned about propping up the gold standard than propping up the financial system, let everything collapse.

The craziest part was that the U.S., along with France, had so much gold that they could have created inflation and still stayed on the gold standard if they wanted to. But they didn't. They were so pathologically afraid of anything even resembling inflation that they chose depressions that forced them off gold instead. Hoover tried to run balanced budgets in the face of 25 percent unemployment, and the Fed raised rates in the face of bank runs, all to try to maintain the gold standard that, to them, was synonymous with civilization. This wasn't exactly popular. FDR came in and immediately did everything Hoover hadn't been willing to: going off gold, stress testing the banks, and spending money even if it meant running deficits. Recovery followed, and, in the process, discredited laissez-faire government for more than a generation.

By the 1970s, though, the Fed had made the opposite mistake of the one it made in the 1930s. This time, instead of saying there was nothing it could do about falling prices, it said there was nothing it could do about rising prices. Part of it was because Richard Nixon pressured it not to raise rates before his reelection. Another part was that the oil shocks pulled it in opposite directions—higher oil prices hurt the economy, but also increased inflation—and it didn't know what to do. And the final part was that widespread cost-of-living-adjustment contracts turned price shocks into wage shocks that then made the price shocks even worse. Now, even though this didn't have anything to do with actual Keynesianism, which, remember, is when the government runs deficits to fight recessions, "Keynesianism" became the bête noire of stagflation.

It was more than enough to undo Jimmy Carter, who had the misfortune of appointing the right Fed Chair at the wrong time, at least for him. Paul Volcker, you see, tried raising rates in 1980, just enough to create a small recession, before really raising them in 1981 and whipping inflation for good at the cost of a much deeper recession. This was perfectly timed, though, for Ronald Reagan, who got to run against Carter during a slump, and then watch Volcker engineer an inflation-killing slump that ended just in time for his own reelection. You know the rest of the story: it looked like government really was the problem, not the solution, and now it was Morning in America, etc., etc...Now, it's worth pointing out that politics can change without ideology also changing. Richard Nixon's Southern strategy, for example, created a new conservative coalition, but it didn't create new conservative policies. Instead, Nixon tried to co-opt Democrats by using price controls to fight inflation, setting up the Environmental Protection Agency to fight pollution, and offering a healthcare reform bill to bring down the uninsured rate. Bill Clinton similarly showed Democrats how to win in the post-Reagan world, peeling off professionals and soccer moms, without really challenging the prevailing "era of big government is over," deregulating ethos.

So will 2008 be an ideological inflection point? Well, like the French Revolution, it's too early to say. Turning points come when the old policies aren't working, and the old policies don't work when there's a big monetary shock. That doesn't mean everything else is irrelevant—some policies are good ideas and others aren't—but rather that politics is a status quo business, and as long as the Fed is keeping the economy growing, people tend to be reasonably happy with what they have. But there's something a little false about any "turning point." It's something we half-invent in retrospect. FDR's New Deal took Hoover's half-measures and made them full-measures. Reagan deregulated business like Carter had already started to. And Obama, well, he used the same healthcare plan as Mitt Romney. But if politics is the art of the possible, then these stories we tell matter because they change what we think is possible.

And that only changes when the Fed thinks something isn't.

January 15, 2015

The Failure of a Past Basic Income Guarantee, the Speenhamland System

http://www.nakedcapitalism.com/2015/01/the-failure-of-a-past-basic-income-guarantee-the-speenhamland-system.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The idea of a basic income guarantee is very popular with readers, more so than the notion of a job guarantee. Yet as we have mentioned in passing, this very sort of program was put in place on a large-scale basis in the past. Initially, it was very popular. However, in the long run it proved to be destructive to the recipients while tremendously beneficial to employers, who used the income support to further lower wages, thus increasing costs to the state and further reducing incentives to work. And when the system was dismantled, it was arguably the working poor, as opposed to the ones who had quit working altogether, who were hurt the most...It is also intriguing that this historical precedent is likely to resemble a a contemporary version of a basic income guarantee. Even though some readers call for a stipend to everyone, that simply is not going to happen, at least in terms of net results. It is massively inflationary, since most of it would fuel consumption. More consumption means more environmental damage: more strip mining of the planet, more chemicals, more greenhouse gas emissions, more plastic containers and other waste. Increased consumption also means more profit for the CEO class without necessarily improving the wage share of national income, hence no better and likely worse income inequality. Taxes would therefore need to be increased to offset those effects. The best tax outcome you could expect would be a progressive tax on income. Thus the end result in a best-case scenario would be tantamount to a means-tested BIG, graduated so as to avoid any sudden cutoff for someone who wanted to work. Thus the result (whether achieved directly or indirectly) is likely to resemble Milton Friedman’s negative income tax, with the zero tax rate set at a living wage level.

The experiment was the Speenhamland system, which was implemented in England 1795 and dismantled in 1834, was intended to make sure that country laborers had enough income to live. It was intended as an emergency measure to help the poor when grain prices had risen sharply due to meager harvests. The justices of Berkshire decided to offer income support to supplement wages, with the amount set in relation to the price of bread and the number of children in the household, so that the destitute would have a minimum income no matter what they earned. Even though it was never codified as law, the Speenhamland approach was adopted in country towns all across England and in a weaker form in some factory towns. It was widely seen as a “right to live.” It was neither universal nor consistently implemented, but it nevertheless appears to have been fairly widespread. It reached its peak during the Napoleonic Wars, and was wound down in many small towns before it was effectively abolished by the new Poor Law of 1834. Not surprisingly, the Speenhamland system existed in its strongest and most durable embodiment in areas where the threat of violence by the impoverished was real. But another reason it lasted as long as it did despite the costs it imposed on local landlords was it kept the poor in place with their wages fixed at a bare subsistence level. Rural property owners wanted to keep workers from decamping to towns and cities in search of better paid employment. A smaller pool of local laborers would lead to higher wage levels.

Karl Polanyi explains how a well-intended program over time proved damaging to the very group it was intended to help. And it is critical to keep in mind that Polanyi is acutely aware of how treating labor and land as commodities is at odds with the needs of society. First, an overview from his book The Great Transformation:



Polanyi depicts a dialectical process: the supposedly self-regulating market grinds forward, undermining the foundations of society. Individuals and groups push back and secure amelioration and reforms. But their victories interfere with the operation of the market, leading to more and more stresses on the market system. But notice Polanyi’s verdict: that the effect of the Speenhamland system, which was to blunt the impact of industrialization on rural England, proved in the end to be too costly to the rural poor and laborers. How can he reach that conclusion? Polanyi again:



The backlash against the Speenhamland system, which came via the Poor Law Reform of 1834, was the establishment of workhouses designed to force the poor to work. As Wikipedia explains: “The workhouses were to be made little more than prisons and families were normally separated upon entry.” “Outdoor relief,” which then meant aid to the poor without requiring that they enter an institution, was discouraged in the Poor Law Reform and then abolished in the 1840s. Polanyi again:



AN IMPORTANT, MUST READ ARTICLE

YVES SPEAKS TO POLICY!

January 15, 2015

The Angry Right's Secret Playbook: Confessions of a former conservative blowhard. By Edwin Lyngar

http://www.alternet.org/news-amp-politics/angry-rights-secret-playbook?akid=12678.227380.J2TeDG&rd=1&src=newsletter1030173&t=14

This recent midterm election was my first real setback since I became a committed liberal (after years on the other side), and what I don’t understand is why so many well-meaning liberals refuse to fight dirty. Sure, some Democratic politicians “sling mud,” but the “professional left” (as they are often derisively called) spend too much time debating the exactitude of certain issues and not enough time shutting down the bad ideas of the opposition. It might speak well to one’s character, but it’s an ineffective way to do battle. There is a place for self-examination, but it’s not on the battlefield. Sometimes the proper reaction to cruelty or stupid ideas is disgust or even a well-timed insult. For many on the left this art is sadly as dead as the late hero of mine quoted above.

I got married, dropped out of college, joined the military and became a father all before I was 21 years old, and I spent the next 20 years dealing with my early missteps. It was a painful climb, but one benefit of the circuitous route I took is that I understand the angry, white and rural right wing of America better than most. It’s a group that grows ever more desperate and irrational no matter which way the electoral winds blow.

As a member of the frothing right wing, I always spouted nonsense, even when I wasn’t sure I believed it. Sometimes I would throw out really crazy stuff just to see how it fit the big picture and sometimes to get a rise from the opposition. Rhetorical bomb throwing is well respected on the right, and it’s not always a bad thing. There is nothing wrong with trying out ideas, letting them roll off the tongue to see how they sound. I’m always playing with ideas, most of which get discarded before I let myself believe them or write them down. There is one caveat to this and that’s the racist, hateful and homophobic rants that have become too common among the worst of the Tea Party. This ugly side of conservative rage is one of the major factors that drove me (and many others) away from right-wing politics.

When I lived conservative values, I attended many events with like-minded people. Conservative movements foster a herd mentality. Even when someone stood up to “lead,” he or she often regurgitated well-accepted talking points while crowds nodded in unison. Listen to talk radio or watch Fox News, and you can barely tally the number of times you hear, “yes, I think that’s true.” A perfect example of thoughtless regurgitation is when callers on talk radio mention “Saul Alinsky Democrats.” Still others like to sling the insult of “Obama’s Chicago political machine,” with no context whatsoever. I’m going to make the obvious point that few if any of these callers have read one word of Alinsky, and fewer still have any direct, pointed or even third-hand knowledge of “Chicago politics.” These goofy phrases have become totems of the insider, and like children, these listeners mindlessly repeat what someone else has said as if they had insight.

Now that I’ve been in the liberal camp for a few years, I’ve noticed the complete opposite with the politically engaged left....

MORE

January 14, 2015

America’s Angriest Store: How Whole Foods Attracts Complete Shitheads.

ACTUALLY, THE ISSUE OF HOW THEY DO IT NEVER ARISES...BUT IT IS AN ENTERTAINING STORY.

I'VE ENDURED THE COMPANY OF THE THE ALL-TOO-PRECIOUS AND THEIR DELICATE DIGESTIONS AND HIGH PRINCIPLES...SO I HEARTILY RECOMMEND THIS TO YOU AS STRESS RELIEF.

https://medium.com/culture-club/americas-angriest-store-d778c31aa9be

January 12, 2015

Volkswagen’s New 300 MPG Car Not Allowed In America Because It Is Too Efficient

http://thespiritscience.net/2014/05/25/volkswagens-new-300-mpg-car-not-allowed-in-america-because-it-is-too-efficient/

This 300 MPG Volkswagen XL1 has not made an appearance in any American showroom. In fact it has even been denied a tour of America because it is too efficient for the American public to be made widely aware of, and oil profits are too high in America with the status quo in place. Not to mention the millions that would lose jobs if something like this went mainstream. No tour has been allowed for this car because the myth that 50 mpg is virtually impossible to obtain from even a stripped down econobox is too profitable to let go of, and when it comes to corporate oil profits, ignorance is bliss. This is a perfect example of a technology being suppressed in the name of profit.

Years ago I had calculated that it should be possible to get a small car to exceed 100 mpg by putting parallel direct to cylinder water injectors side by side with the fuel injectors, and using the exhaust manifold to preheat the water so it would enter the cylinders as dry steam, thus providing added expansion (which drives the engine) while allowing the combustion process to proceed without reducing it’s efficiency. But I was obviously wrong with my calculations, because they were in fact over 2x conservative.

The 100 mpg carburetor was indeed a reality, and the Volkswagen XL1 proves it with only straightforward nothing special technology we have had since the 1970s. Though the XL1 can be plugged in to deliver a 40 mile all electric drive, it does not need to be plugged in EVER to achieve 300 mpg. And it does not cheat in any way to achieve the rating, it weighs over 1,700 pounds, has normal tires, and delivers a very good driving experience with a governed top speed of 99 mph. The XL1 could reach a top speed in excess of 110 mph absent governor and turns in a 0-60 time of 11.5 seconds which is by no means leisurly for a car designed for efficiency. The XL1 in no way cheats on performance to hit it’s rating. It is simply the car we should have always had, and have had taken from us in the name of oil profits.

Though the XL1 can hit 300 mpg under ideal driving conditions, it’s combined mileage is usually a little over 200 mpg, and if you do city driving only that will drop to a minimum of 180 mpg under the worst driving conditions. But even still, that’s about 5 times more efficient than an average car. That means you’re spending 5 times less on fuel.





FACT, OR FICTION?

January 11, 2015

IMF sees 140m jobs shortage in ageing China as 'Lewis Point' hits FEB 2013By Ambrose Evans-Pritchard

http://www.telegraph.co.uk/finance/comment/9845959/IMF-sees-140m-jobs-shortage-in-ageing-China-as-Lewis-Point-hits.html

We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so (2020) - enough to bouy global coal, crude, and copper prices for a while - but then it will all be over. China’s demographic dividend will be exhausted. Beijing revealed last week that the country’s working age population has already begun to shrink, sooner than expected. It will soon go into “precipitous decline”, according to the International Monetary Fund.

Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path. The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice. Less known is the parallel - and linked - labour drain in the countryside. A new IMF paper - “Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?” - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing. The surplus will disappear soon after 2020. A decade after that China will face a labour shortage of almost 140m workers, surely the greatest jobs crunch ever seen. “This will have far-reaching implications for both China and the rest of the world,” said the IMF.


Source: IMF

These farm workers are the footloose migrants that pour into the cities from the interior, the raw material of China’s manufacturing workshops They are carefully regulated by the semi-feudal Hukuo system to keep their families tied to villages at home, and to keep the lid on social revolt. There is little Beijing can do to head off the shock. The effects of low fertility rates - and the one child policy - are already baked into the pie. It would take half a century to turn around the demographic supertanker.

The Lewis Point, named after St Lucia's Nobel economist Sir Arthur Lewis, is when the supply of workers dries up and city wages soar. It is when labour turns the tables on capital, and profits crash.

You could argue that such a process already well under way, and is why Chinese equities are trading at a third of their 2007 peak in real terms. Manufacturing pay has risen 16pc a year over the last decade in the East Coast hubs of Shenzhen, Beijing, Shanghai and Tianjin, though this slowed sharply in 2012. Boston Consulting Group says that “productivity-adjusted wages” were just 22pc of US levels as recently as 2005. They will reach 43pc by 2015, or 61pc for the American South. It is a key reason why General Electric, Ford, Caterpillar and others are “re-shoring” from China back to the US, though cheap shale gas, a weaker dollar, and shipping costs all play their part.

This is no bad thing. The world economy is rebalancing. China’s current account surplus has fallen from 10pc of GDP to just 2.5pc.

China’s corrosive gap between rich and poor should narrow. The GINI coefficient measuring inequality should come down from stratospheric levels, 0.61 according to researchers at Chengdu University. Yet it is also a dangerous moment for Beijing. The Lewis Point is the great test for catch-up economies, when they can no longer rely on cheap labour, copied technology, and export-led growth to keep the game going. The air is thinner at the technology frontier. Success depends on such intangibles as the rule of law and the free flow of ideas. Those that fail to adapt in time slide into the `middle income trap’, and most do fail.

The Soviet Union failed. The Philippines -- richer than Korea in the 1950 -- failed. Most of the Mid-East failed. So did most of Latin America in the 1960s and 1970s, and it is far from clear that Argentina and Brazil will break free this time.


AND THE US, AMBROSE? WHAT ABOUT THE US FAILURE?

I PREFER TO THINK OF IT AS "PAUSES" AS READJUSTMENTS ARE MADE BETWEEN GENERATIONS AND CLASSES AND THE FEUDALISM/DEMOCRACY DRAMA PLAYS OUT.

2020--THAT'S WHEN THE BOOMERS (THE PIG IN THE PYTHON) PASS OUT OF THE US LABOR FORCE, TOO.

HMMMM.....

January 11, 2015

Why has US Oil Consumption Steadily Fallen since 2004? FROM FEB 2013 By Gail Tverberg

AND WE FINALLY SEE THE PRICE CRASH--ONLY TOOK 10 YEARS!

http://oilprice.com/Energy/Crude-Oil/Why-has-US-Oil-Consumption-Steadily-Fallen-since-2004.html



United States oil consumption in 2012 will be about 4.7 million barrels a day, or 20% lower than it would have been, if the pre-2005 trend in oil consumption growth of 1.5% per year had continued. This drop in consumption is no doubt related to a rise in oil prices starting about 2004. Oil prices started rising rapidly in the 2004-2005 period (Figure 2, below). They reached a peak in 2008, then dipped in 2009. They are now again at a very high level.



Given the timing of the drop off in oil consumption, we would expect that most of the drop off would be the result of “demand destruction” as the result of high oil prices. In this post, we will see more specifically where this decline in consumption occurred. A small part of the decline in oil consumption comes from improved gasoline mileage. My analysis indicates that about 7% of the reduction in oil use was due to better automobile mileage. The amount of savings related to improved gasoline mileage between 2004 and 2012 brought gasoline consumption down by about 347,000 barrels a day. The annual savings due to mileage improvements would be about one-eighth of this, or 43,000 barrels a day.

Apart from improved gasoline mileage, the vast majority of the savings seem to come from (1) continued shrinkage of US industrial activity, (2) a reduction in vehicle miles traveled, and (3) recessionary influences (likely related to high oil prices) on businesses, leading to job layoffs and less fuel use.

Gasoline Savings from Better MPG, Fewer Miles Traveled



... Under “normal” circumstances, we would expect gasoline consumption to continue to rise, along with oil products in general, as shown in Figure 1 at the top of the post...The amount of gasoline consumed reflects at least two different influences (1) the number of miles traveled, and (2) savings due to more fuel efficient cars. Based on data compiled by the US Department of Transportation, vehicle miles traveled (VMT) were rising by 2.2% per year prior to 2004, then suddenly flattened (Figure 4, below) about the time oil prices started to rise significantly.







...If we apply the 2004 rate of fuel usage (or MPG) to 2012 VMT, we find that the improvement in fuel mileage between 2004 and 2012 reduced fuel usage by 347 thousand barrels a day over the eight year period, which is equivalent to a reduction of about 43 thousand barrels a day, per year. The total reduction in gasoline use between 2004 and 2012, relative to what would have been expected, (based on the trend line in Figure 1, assuming the mix of products each retain their 2004 proportions) is about 1.49 million barrels a day. Thus, this calculation implies that about 23% of gasoline savings is from better mileage; the other 77% is from driving fewer miles.

One point of interest is the fact that US population has recently been growing by 1% per year. Because of the growing population, a person would expect VMT to grow by at least 1% per year, unless per capita miles driven is shrinking. Since 2004, vehicle miles traveled have been growing less rapidly than population growth. As a result, mileage per person has been shrinking, recently by a little over 1% per year. Prior to 2004, vehicle miles traveled were growing at 2.2% a year while population was growing at 1.1% per year, implying that per capita miles traveled were increasing by 1.1% per year. How do vehicle miles per person go from increasing to decreasing? There are a couple of possible ways. One is by a reduction in the number of drivers; the other is by decreasing the number of miles driven for individual drivers. My friends who are automobile insurance actuaries tell me that at least part of the change recently is that fewer young people are driving. This is not too surprising–young people today have very high unemployment rates, so they are less able to afford the cost of a car.

Fuel Savings for Distillate and for Other Oil Products



At least part of the reason the “All Other” portion is shrinking is the fact that the All Other category includes quite a bit of oil products for industrial use, and the amount oil products used by the industrial sector shrank by 7.9%, comparing 2011 to 1994. We can also look at the use of other energy products by sector, to see additional evidence that the Industrial Sector is shrinking, or at least, not growing nearly as much as the other sectors are growing. For example, if we look at electricity use by sector, residential use is up by 41% since 1994, commercial use (office and stores) is up by 44% since 1994, while industrial use is down by 3%.



Also, between 1994 and 2011, use of natural gas by the industrial sector declined by 8.5% further suggesting that it is the industrial sector that is shrinking. One factor in this shrinkage is likely increased competition from China, once they joined the World Trade Organization in December 2001. Of course, part of the reason for the lower growth in oil products use by All Other could be greater industrial efficiency...Another point of interest is the fact that the trend in gasoline and in distillate consumption both roughly follow the trend in the number of jobs available in the US economy.



There is a theoretical reason why gasoline consumption might rise and fall with employment. People who have jobs can afford to buy cars and drive them. People who don’t, often can’t afford to drive...

Summary of Where Oil Savings Comes From

As stated at the beginning of the post, United States oil consumption is about 4.7 million barrels a day lower in 2012 than would have been expected based on pre-2005 patterns. The way that this savings breaks out by product grouping is as follows:



Decreased gasoline usage due to improved gasoline mileage amounts to 7% of the total, decreased gasoline usage because of fewer miles traveled amounts to 25% of the total, and a decrease in distillate use amounts to 17% of the savings. The majority of the decrease, 51%, comes from a decrease in the “All Other” category, which is most closely related to a decrease in industrialization.


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