Our Abundant Energy

Abundant Language

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 ~ Energy is important.

So no surprise much is written about it. But what is surprising is how powerful and deliberate the messaging about it is. That messaging is, in a word, abundant.

It seems no one can talk about drilling without phrasing it as the development of "our abundant oil and gas" resources. You hear it in the Senate, in the House, from the API, from the US Chamber of Commerce, from industry periodicals, from the Obama Administration.

Other words in the English language for relative plenitude are, well, abundant, but when it comes to our oil and gas resources "abundant" is the overwhelming word choice by politicians, lobbyists and journalists.

It's almost as if someone circulated a memo with the talking points and key messaging language!

So why don't we hear so much about our "abundant wind resources" or our "abundant solar resources"?

The Bank Bailouts

"Nobody Learned A Lesson"

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 ~ Last week there was an interesting interview with Sheila Bair, former head of the FDIC by Rolfe Winkler of the WSJ. She's pitching her new book on the bailouts and the politics of why they happened, what happened, and what should have happened.

The key point, made by many others is that "there was no accountability... nobody learned a lesson." Bondholders were made whole and taxpayers took on all the risk. There was no effort to restructure the banks or break them up, with the result that the too-big-to-fail banks are even bigger and even more powerful because they still cannot be allowed to fail (we are told.) Meanwhile, they continue to pay the same massive bonuses to themselves and take the same kinds of huge risks, knowing that they can keep their gains and losses will be backstopped by the taxpayers.

Bair alludes to the famous meme that what's good for GM is good for America, but notes that this would not appear to be true for our big banks. Bailing them out was supposed to help everyone in the economy by enabling them to provide liquidity into the economy, but it hasn't happened. The banks simply became more powerful even as the government was further weakened, becoming even more hostage to banker hegemony when the next crisis rolls around.

Bair:

I look at government these days and its just so frustrating... Public confidence is at an all time low. Regular people would never dream of asking for a bailout... What about public trust and confidence... and making government work for the public again? No one is talking about that in this election.

Tax Cuts and GDP Growth

No Correlation

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 ~ As is true for virtually every trickle-down economic theory, the facts puncture the ideological balloon. Tax cuts haven't resulted in GDP growth:

Have ... declining tax cuts for the rich--the "job creators" who are being given a bigger incentive to invest by the reduced tax rates--led to faster economic growth?

Nope.

... The slope of the solid line in each chart is the key.

The lefthand chart shows that there is no correlation between GDP growth and the top marginal tax rates. The righthand chart shows that there might be a very modest tendency toward faster economic growth with higher capital gains rates. (But those who love today's record-low capital gains rates will be relieved to know that the [non-partisan Congressional Research Service] does not find this correlation to be statistically significant.)

These tax cuts, however, are strongly correlated with surging deficits, mounting debt, and burgeoning economic inequality.

Squeezed

"We Don't Care; We Don't Have To"

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 ~ The "magic" of the marketplace:

• Americans pay four times as much as the French for an Internet triple-play package—phone, cable TV and Internet—at an average of $160 per month versus $38 per month.
• The French get global free calling and worldwide live television. Their Internet is also 10 times faster at downloading information and 20 times faster uploading it.
• America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling.
• Bulgaria is among the countries with faster Internet service.
• Americans pay 38 times as much as the Japanese for Internet data.

Cable has risen 2.6 times faster than the cost of living since 1995. Why do we get less and pay more?

Where's It Wednesday—C

Mixing it up slightly, since this is obviously a view of the Seattle skyline, from where was the picture taken?

Answer next week.

Details on the weekly Where's It Wednesday puzzle here.
Other weeks' puzzles here.
Answer to last week's puzzle, after the jump.

Fostering Entrepreneurship—IV

Standardized Investment Documents

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 ~ Many startup companies seek funding from investors. There are several ways to structure that, but all require a carefully constructed and legally robust set of subscription documents that memorialize the terms of the investment. It is, in essence, a contract between the investor and the company.

It is easy to make mistakes in drafting these documents, so smart entrepreneurs get legal advice in their drafting. That usually means that an attorney creates the documents afresh rather than simply reviewing something the entrepreneur cobbled together from previous documents or from the Internet.

The problem? The cost is breathtaking, and consumes a substantial amount of precious capital the startup would rather use building the product or engaging customers.

Fostering Entrepreneurship—III

Greater Regulatory Simplicity

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 ~ Early stage startup companies have too high a regulatory burden. The recent Pacific Northwest Innovation Summit examined ways to promote a more vigorous entrepreneurial ecosystem, but this issue was explored mostly by participants rather than as part of the official program. As a state, we could improve here, as I've posted before, but what should we change?

Why Clean Energy Matters

It's The Emissions, Stupid

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 ~ It's a significant part of the greenhouse gas emissions problem:

Graphic by Emmanuelle Bournay, UNEP/GRID-Arendal

What part of this surprises you the most?

Learn more about the UN Environmental Programme here.

Download high-resolution versions of this graphic here.

Fostering Entrepreneurship—II

Going It Alone

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 ~ We need an ecosystem for best results. While important, persuasion will only get you so far towards entrepreneurial success.

However, there are limits to capital efficiency.

Fostering Entrepreneurship

Diversifying Into More Sectors

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 ~ What needs to be done to grow the entrepreneurial ecosystem in the Pacific Northwest?

This question was one of the four primary themes of the recent Pacific Northwest Innovation Summit, and the focus of the day's third panel. Everyone is in favor of more innovation leading to more entrepreneurial activity, but the specifics are elusive.

Moderator Luke Timmerman, Seattle editor for Xconomy, asked about barriers to local entrepreneurship. There are several (a few to be subjects of later posts) but one is how concentrated we are in software and life sciences. The Seattle region is an undisputed national, even global leader in those, but we need to expand beyond just two to truly build a stronger innovation-fueled economic engine.

PNW Innovation Summit

Discussing Challenges, Envisioning the Path Forward

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 ~ I was honored on Tuesday to be a panelist at the Pacific Northwest Innovation Summit, part of the ongoing 50th anniversary of the Seattle Center. The all-day event featured keynotes from Washington Lieutenant-Governor Brad Owen and Frank Blethen, publisher of the Seattle Times, as well as four panels on various aspects of entrepreneurship and innovation.

The entire event was streamed live, and you can watch the entire event here. The 3rd panel (of which I was a part) on fostering regional entrepreneurship, begins about 4:49:30.

Where's It Wednesday—XCIX

With an apparent nod to the 1%, where in Seattle is this?

Answer next week.

Details on the weekly Where's It Wednesday puzzle here.
Other weeks' puzzles here.
Answer to last week's puzzle, after the jump.

Tax Burdens—II

Where Are The Jobs?

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 ~ This graph shows even more clearly the declining effective corporate tax rate over the past 50 years.

With corporate cash reserves at record highs and corporate job creation at a nadir, can anyone explain how further corporate tax cuts and credits will do anything beneficial for the economy?

Well, How Did We Get Here?

Same As It Ever Was

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"So, What Are You Doing?"

"(These Days?)"

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~ I get asked this a lot. So, just as I did a year ago on my last lap around the sun, I'll write a quick update.

I'm still doing consulting and contract work, as well as working on some startups (of my own as well as others.) The best description that more or less braids all the strands? Entrepreneur-at-large, pitching in wherever there is opportunity to create or grow an interesting business from idea to revenue.

Some of my current projects are the same as a year ago. A couple didn't work out and had to be put down. There's also a few new ones:

SEC Fail

Proposed Rule 506(c)

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 ~ The SEC has issued its first set of proposed rules to implement the JOBS Act, focusing on the much-anticipated relaxation of the prohibition on general solicitation. It's a disappointing effort.

The new proposed Rule 506(c) adds to the existing Rule 506 exemptions, which are left unchanged. In announcing the proposed rules, the SEC noted:

Section 201(a)(1) of the JOBS Act directs the SEC to amend Rule 506 to permit general solicitation or general advertising provided that all purchasers of the securities are accredited investors. It also says that “[s]uch rules shall require the issuer to take reasonable steps to verify that purchasers of the securities are accredited investors, using such methods as determined by the Commission.”

Regrettably, the SEC largely punted, determining very little of substance regarding the "methods." Instead, the proposed rules largely restate, over dozens of pages, that the steps should be "reasonable" without spelling out any clear standard.

Tax Burdens

Corporate Taxes

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 ~ Corporate groups and their political bagmen have complained for years about high US corporate tax rates. In this election cycle, however, most of the discussion has been about personal tax rates and whether there should be cuts or increases, and for whom.

Corporations have been rather quiet during all this. Not so odd, perhaps, if one takes a look at what's actually been paid in the last many decades:

It would not appear that tax receipts from corporations have remotely kept pace with the asymptotic growth of corporate profits. No wonder corporate cash reserves are at historic highs.

When the subject of corporate taxation comes up expect to hear much angst about the high tax rate. Expect to hear much less about how the figure generally quoted is the nominal rate rather than the effective one. As the chart above shows, the effective rate is much less effective than it could or should be if we chose to get serious about our deficit and debt.

We Must Pay For What We Buy

"It is a Moral Issue; It is an Economic Issue"

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 ~ Only in the bizarro world of Washington do we get what we don't pay for.

This socialist makes a lot more sense than the latest crop of economic fabulists:



Sure, economic performance lags policy, and one can fairly argue about how to apportion blame for economic performance based on policies and conditions from prior presidential administrations and Congresses. Pointing fingers does not, however, solve the problem.

One cannot fairly argue that the current deficit and debt hysteria has reached a febrile pitch for any reason other than politics. Sanders notes the verifiable fact that much of our current deficit and debt are the direct result of not paying for historically massive expenditures, specifically the wars, the tax cuts and Medicare Part D. If anyone is serious about not leaving this problem to "our children and grandchildren" (and maybe their progeny as well) then it will be necessary to actually pay for those things.

Where's It Wednesday—XCVIII

Where in Seattle is this?

Answer next week.

Details on the weekly Where's It Wednesday puzzle here.
Other weeks' puzzles here.
Answer to last week's puzzle, after the jump.

Defending Ourselves

Should We Fear Terrorists?

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 ~ The last two years on this Day of Remembrance I have written of fear, and of courage. Rereading those posts, the words still ring true to me.

Yet I am fearful now.

I won't call them terrorists, but our country is still under great threat, not so much from outside our borders, as from within, and by one of our institutions. The Republican Party has become so unhinged, so delusional, that it poses a threat to itself and to others—to all of us. If it were a person, society would have it committed.

Energy Lies—XIV

"More Domestic Oil Production For More Energy Here At Home"

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 ~ A favorite claim of the Drill Baby Drill crowd is that if we produced more domestic energy (specifically oil) we would produce more gasoline domestically, leading to lower prices at the pump.

There they go again. Like the myth of trickle down economics, they keep repeating the claim, but history shows it to be false.

There are reasons for that of course. A big one is that Big Oil doesn't actually keep that new production here at home:

Debt and Deficit

Which Parties Get the Best Results?

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 ~ For the fiscal scolds out there, which party does best in reducing the deficit and the debt?

It's complicated by our governmental separation of powers, so try to discern the best combination of White House and Congressional affiliation:

It's not clear-cut (in part because Congressional "control" is not a simple Democrat/Republican call with a bicameral structure and the repugnant filibuster.) Still, an all-Democratic line-up looks pretty good, with either downward slopes, or a flattening of GOP-fed upswings.

Why is the Middle Class Shrinking?

Is it Only Economics?

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 ~ Or does one of the major parties not like middle class attitudes?

The middle class thinks the GOP favors the rich, a rather inconvenient perception for that party. Their solution is pretty neat: insist that helping the rich will also help the middle class, and then push for endless and disproportionate tax cuts for the rich while gutting social programs and tax benefits that matter more to the middle class.

By the time enough of the middle class figures out that the GOP is sticking them with trickle down, supply-side voodoo, they'll no longer be middle class.

Problem solved!

Breaking the Vicious Circle

Wages and Profits

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 ~ Our core economic problem of the past 10+ years is lack of consumer (i.e. middle class) demand for goods and services. That lack of demand is the result of wage stagnation and wealth destruction of assets such as housing values. People feel (and are) poorer, so they buy less. Reduced demand impels companies to curtail production and hiring. Fewer available jobs with a greater supply of workers adds to the wage pressure. It's a vicious circle.

Henry Ford, whatever his faults, famously understood that wages and profits are linked. Neither can be sustainably increased alone:

From 1948 to 1973, the productivity of all nonfarm workers nearly doubled, as did average hourly compensation. But things changed dramatically starting in the late 1970s. Although productivity increased by 80.1 percent from 1973 to 2011, average wages rose only 4.2 percent and hourly compensation (wages plus benefits) rose only 10 percent over that time, according to government data analyzed by the Economic Policy Institute.

At the same time, corporate profits were booming. In 2006, the year before the Great Recession began, corporate profits garnered the largest share of national income since 1942, while the share going to wages and salaries sank to the lowest level since 1929. In the recession’s aftermath, corporate profits have bounced back while middle-class incomes have stagnated.

Active Investors

More Than Just Money

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 ~ The best startup investors do more than just write a check and go away.

They provide advice and insight, contacts and introductions, and ideally, have your back.

However, it's best to talk about it first.

Where's It Wednesday—XCVII

Where in Seattle is this?

Answer next week.

Details on the weekly Where's It Wednesday puzzle here.
Other weeks' puzzles here.
Answer to last week's puzzle, after the jump.

National Wonder

Deep Space Dime

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 ~ A view deep into the universe by the Hubble Telescope:

The image shows 1,500 galaxies, but most amazing is that it spans such a minuscule part of the sky—the width of a dime from 75 feet away.

But which is more incredible—the technology and the image it captures, or that we as a nation found the political will and funds to develop, launch and operate such a marvel?