Deinonychus antirrhopus

Oil Prices and Supply

James Hamilton has a contrarian view on the reason why oil prices are so high. There are two factors contributing to the problem.

The first is that about 340,000 barrels/day are still shut in as a result of Hurricanes Katrina and Rita. Further, it there is no plan to bring that production back on-line.

"By and large those production platforms that are out are not going to be put back because it's not economically desirable to reinvest to put those facilities back in place," Bodman told the House Energy and Commerce Committee during a hearing on the Energy Department's proposed 2007 budget.

Bodman said the shut-in production platforms are mostly in old oil and gas fields close to shore.

"They tend to be depleted and it would not economically be viable to reinvest in to rebuild them and the companies haven't done that," he said.

On top of this there are about 470,000 barrels/day that are shut in due to unrest in Nigeria.

In short, current world production is below the peak attained last year and demand shows little signs of easing up. Despite the various conspiracy theories out there about how oil companies are manipulating the price, one significant component seems to be the decrease in supply.

Update: I decided the picture of world oil supply at Econbrowser (and from the Oil Drum) would show this problem quite nicely.

The MTBE Component (and others) to the Gasoline Issue

Lynne Kiesling (your go to gal for everything dealing with energy) points to an article in the Wall Street Journal (subscription required) that points to one reason why gasoline prices are high.

There's been unconscionable behavior all right, most of it on Capitol Hill. A decent portion of the latest run-up in gas prices -- and the entire cause of recent spot shortages -- is the direct result of the energy bill Congress passed last summer. That self-serving legislation handed Congress's friends in the ethanol lobby a mandate that forces drivers to use 7.5 billion gallons annually of that oxygenate by 2012.

At the same time, Congress refused to provide liability protection to the makers of MTBE, a rival oxygenate getting hit with lawsuits. So MTBE makers are leaving the market in a rush, while overstretched ethanol producers (despite their promises) are in no way equipped to compensate for the loss of MTBE in the fuel supply. Ethanol is also difficult to ship and store outside of the Midwest, which is causing supply headaches and spot gas shortages along the East Coast and Texas.

These columns warned Republicans this would happen. As recently as last year, ethanol was selling for $1.45 a gallon. By December it had reached $2 and is now going for $2.77. So refiners are now having to buy both oil and ethanol at sky-high prices. In short, the only market manipulation has been by politicians.

For the record, the FTC has an entire crew that pores over weekly average gas prices in hundreds of cities, looking for evidence of gouging -- to no avail. Perhaps this is because no oil company controls enough of the market to exercise enough power to raise prices. The Hastert-Frist call for an investigation is nothing but short-attention-span political theater.

Now that isn't all of it. With oil prices going up, gasoline prices are also going to go up. On top of this we don't have a national market for gasoline. The boutique blends make it harder for suppliers for one region to offset shortages in another region. This too, we can lay at the feet of politicians. Add in the fact that only new refinery capacity is at existing refineries and you have less competition on top of it.

Another factor appears to be the contango in the oil futures market. A contango, in short, is when the futures price is higher than the spot price. This acts as a signal for higher prices in the future and it induces many in the relevant industry to buy the non-perishable good and sit on it in anticipation of those higher prices. Ideally, this would push up the spot market price so that the two prices move closer together.

Basically it looks like oil prices are going to stay high for awhile.

Update: Also check out James Hamilton's post on Contango, Speculating, and the Price of Oil.

Ann Coulter: Creationist Moron

Via the Commissar comes this annoying bit of news.

Though liberalism rejects the idea of God and reviles people of faith, it bears all the attributes of a religion itself. In Godless, Ann Coulter throws open the doors of the Church of Liberalism, showing us:

Its sacraments (abortion)

Its holy writ (Roe v. Wade)

Its martyrs (from Soviet spy Alger Hiss to cop-killer Mumia Abu Jamal)

Its clergy (public school teachers)

Its churches (government schools, where prayer is prohibited but condoms are free)

Its doctrine of infallibility (as manifest in the "absolute moral authority" of spokesmen from Cindy Sheehan to Max Cleland)

And its cosmology (in which mankind is an inconsequential accident)

Then, of course, there's the liberal creation myth: Charles Darwin's theory of evolution.

For liberals, evolution is the touchstone that separates the enlightened from the benighted. But Coulter neatly refutes the charade that liberals are rationalists guided by the ideals of free inquiry and the scientific method. She exposes the essential truth about Darwinian evolution that liberals refuse to confront: it is bogus science.

Also an extended review can be found here that veifies my worst fears,

Writing with a keen appreciation for genuine science, Coulter reveals that the so-called "gaps" in the theory of evolution are all there is -- Darwinism is nothing but a gap. After 150 years of dedicated searching into the fossil record, evolution's proponents have failed utterly to substantiate its claims. And a long line of supposed evidence, from the infamous Piltdown Man to the "evolving" peppered moths of England, has been exposed as hoaxes. Still, liberals treat those who question evolution as religious heretics and prohibit students from hearing about real science when it contradicts Darwinism. And these are the people who say they want to keep faith out of the classroom?

Liberals' absolute devotion to Darwinism, Coulter shows, has nothing to do with evolution's scientific validity and everything to do with its refusal to admit the possibility of God as a guiding force. They will brook no challenges to the official religion.

For example, Piltdown Man. This actually shows that science works not that it doesn't. Scientists actually came to the conclusion that Piltdown Man was a hoax and it was removed as evidence in favor of evolutionary theory. And as has been noted by myself as well as an army of others every scientific theory has gaps. According to the above logic they should all be rejected.

Like the Commissar, I've never really been a fan of Coulter's. I have been, at times, mildly amused by her ability to send liberals into a frothing rage with her rhetoric. However, the idea that believing in evolutionary theory is a liberal belief is just stupid. Evolutionary theory and evolution itself are a scientific thoery and fact (respectively). This is like saying that the theory of gravity is really a commie plot. It is just stupid.

Now just to be clear, my view isn't that believing in Creationism is what makes Coulter a moron. No, it is the use of Creationism in politics and the desire to politicize science. I find the latter in general to be contemptible. And Coulter's stance appears to be 100% unadulterated anti-science. Yet, oddly enough this might be the one and only book by Coulter I buy and read. I'm morbidly fascinated by how dimwitted she can be on this topic.

Why Stop At Junk Food and Cigarettes

Also from Radley Balko comes this story about how smoking bans in English pubs is expect to lead to a rise in female binge drinking.

Smoke-free bars and public houses will attract more female customers and could fuel the rise in binge drinking among women, a report warns.

It points out that as bars and pubs become more appealing venues to women, female customers are more likely to consume larger amounts of alcoholic drinks than before.

And because women are marrying later, they are spending more time in pubs and other venues that serve alcohol, where they are more likely to meet men.

The rise in alcohol consumption among women is causing serious concern for the Government. Doctors say liver disease is now being seen in younger people.

Since the government has seen fit to intervene in what its citizens elect to put inside their bodies, I think it is high time that we reconsider prohibition. After all, cigarettes are bad and becoming more and more restricted and subject to heavy taxation. Junk food seems to be the new target with legislation aimed at fattening snack items becoming more frequent. And of course, there is the laundry list of illicit drugs that are currently illegal. It is high time to take another look at banning alcohol and protecting citizens from themselves.

And think of all the money that can be saved. Less money spent on medical treatment for the side effects of alcohol abuse, less drunk driving incidents, and so forth. Heck, even feminists should get behind this as banning alcohol will mean fewer drunken men and women at things like frat parties.

Frankly, if any American opposes prohibition, why I think they are downright unpatriotic.

That last bit there was sarcastic for those who are sarcasm impaired.

So Much for the Autism Epidemic

Orac at Respectful of Insolence points to some new research that strongly suggests that the Autism "epidemic" either doesn't exist or is much smaller than many have claimed.

The big problem is something called "diagnostic substitution." In special education programs, "autism" was not a required category until created by the Americans with Disabilities Act of 1990. Suddenly, "autism" diagnoses for special education sky rocketed. At the same time things like "mental retardation" and other categories for mental disabilities declined. The researcher, Dr. Paul Shattuck, notes that this pattern has been observed in the past and that it was not the case that there was epidemic. In short, the problem is that there was a better diagnosis/classification scheme put into place and the primary data source that is often used to justify the "autism epidemic" claim is tainted and cannot be used to determine if there really is an epidemic.

Now, that last part does leave open the possibility that there was a surge in the rate of autism in the population precisely at the time that there were new diagnosis/classification categories. However, this research still implies that even if there is an increase that such an increase is not as was initially suspected. Here is what Dr. Shattuck has to say on this,

Steep growth in administrative prevalence after introducing a new category is a common pattern that was also seen in the other 2 reporting categories newly introduced in the 1990s (TBI and DD). As with autism, in the first few years these categories were used it was not uncommon for states to report very few children with a primary diagnosis of TBI or DD. The prevalence for these categories also had nowhere to go but up. Suggestions that special education trends substantiate the existence of an autism epidemic would logically also have to either claim an epidemic of brain injury and DD or explain why the same pattern of growth in these 2 categories does not represent an epidemic as it does for the autism category.--emphasis added

(Orac also provides the helpful hint that TBI= traumatic brain injury and DD=developmental delay.)

In short, if we are going to use the trends in a dataset to justify the existence of an epidemic for a given ailments, then logic requires that we do the same whenever we see other similar trends. Why would we expect an epidemic of TBI? Seems kind of weird to me, and given that in three cases where a new category is added we see similar trends in the data it seems that the most reasonable explanation for the observed trends was the introduction of the categories. The other option is to attribute epidemics to completely unknown causes.

This was one of the my first guesses as to the "rise in the number of cases with autism" back when I first heard about it. I was assured by people who were in favor of the epidemic hypothesis (e.g. Dwight Meredith) that this was not the case. However, autism was not even a required category in virtually all special education programs across the nation until after 1993.

Here is how Dr. Shattuck puts it with an example in an interview he gave,

For instance, consider data collected in Wisconsin: In 1992, 18 children were counted in special education programs as being autistic. By 2002, that number had jumped to 2,739.

"The conclusion is that the prevalence of autism has grown by 15,117 percent. This is ridiculous," Shattuck said. "No credible clinician or scientist in the field would ever suggest there were actually only 18 children with autism in all of Wisconsin in 1992."

The idea that rate of growth of autism is over 15,000 percent isn't ridiculous, it is blindingly ludicrous.

A quick Google search turned up this kind of nonsense that careless research can lead too. Add in opportunistic politicians and you have a recipe for junk science. Lets look at the dates here. Hmmm...the article is published in 1999, so just in time for that new category to pop into the "developmental services system" under the new category. Now how many of those children were already in the system, but under a different category? Whoops, didn't think to stop and ask that question.

The Department of Developmental Services report, "Changes in the Population of Persons with Autism and Pervasive Developmental Disorders in California’s Developmental Services System: 1987--1998" was released to the legislature this morning. While it confirms the increased incidence, the report does not examine factors leading to the increase. The report was required as a result of legislation developed after parents, human services professionals and educators expressed concern that they were seeing a dramatic increase in children with autism.

Gee, could it be because in 1993 there was no autism catagory for special education, and then in 1994 there was and all those kids who had autism were now migrating to the right catagory? Also, I strongly suspect that the report looks at the number of people entering the "system" and not things like, the number of people per 1,000 people in the state, or looking at population growth in California as well. That is, if the population of California grows by say 3% from 1987 to 1998 then there are 38% more people in California which, holding all other things constant there would be 38% more people with Autism entering the Department of Developmental Services simply due to population growth.

The bottom line is that large changes like a 273% increase could have very reasonable explanations and shouldn't necessarily lead to hysteria. And as Orac has already discussed, it makes the chemical castration of children with autism even more dubious.

Update: I found the report (pdf), it is on the Department of Developmental Services website. Here is a nifty tidbit,

In this report the incidence of autism is not measured. The unit of measure reported here is the rate of occurrence of persons with autism or other PDDs in the regional center and developmental center system during a specified period of time.

In other words, the 273% number isn't the same thing as there has been a 273% increase the incidence of autism--i.e. it isn't necessarily becoming more frequent.

Also of interest is this picture from the report. Note that the population the picture refers to is the State population. If Autism were increasing in the population that time series for Autism would show an upwards trend. If there is one there it is very, very slight and possibly statistically meaningless.

Little Miss Atilla On Immigration

With a name like that you might think her solution is to just unleash her Mongol hordes, but in actuallity she has two posts on the topic that I think have some very good points.

In the first post Atilla Girl lists three points,

...1) secure the border; 2) streamline the legal immigration system for those who truly want to come here and assimilate; and 3) offer some sort of guest-worker program for young people who simply want to be here temporarily to make a few dollars, and then go home.

I think all three points are quite on the mark for a number of reasons. First, securing the border makes sense from national security stand point. We don't want the next terrorist cell that carries out a successful plan to cross over from Mexico practically on a red carpet. Second we do need more people in this country. I've touched on the Social Security and Medicare issues before, and the bottom line is if we aren't going to reform those systems and we aren't going drastically increase taxes last year, then we simply need more bodies working and paying into the system before they become so burdensome as to drive our economy right down the crapper. The final point, is also the best of both worlds. If a person comes here and works for 10 years then bails for back home, well we get his contributions to Social Security and Medicare and he gets nada. Almost as good as a smoker who kicks it at 64.

In her second post Atilla Girl develops the problem with legal immigration further.

Right now, our attitude toward immigrants—whom we need, by the way, given our system of entitlements and falling birth rates—is, "welcome to the United States. Fuck you."

That is pretty much it. You want into the U.S. for a better life, to work hard, and raise your children to love America and Freedom? Well tough shit. Get at the back of that long line and we'll call you in 15 years. One reason that there are so many illegal immigrants is that immigrating legally is very, very difficult. Make legal immigration easier, and make illegal immigration harder and you'll see changes in those two flows. Legal immigrants will increase (with background checks, etc.) and illegal immigrants (are are less likely to assimilate due to their illegal status) will decrease.

Note that this isn't merely flinging open the "doors to the country" and letting in every Tom, Dick and Ahmed with a suitcase nuke. Recall again point number 1: securing the border. Tightening up the border is fine, and combining it with easier legal immigration will mean we wont have to spend huge sums of money watching each ant crawl back and forth across the every inch of the border.

Trusting the Mind

Over at the Evangelical Outpost there is an old post of Joe Carter's that has been annoying me, but I've never really had the time to respond...until now. The gist of the post is based on Alvin Plantinga's supposed defeat of methodological naturalism. The argument is a probabilistic one and can be summarized thusly,

Prob(E & N | R) = Prob(R | E & N) Prob(E & N)/Prob(R)
• E represents evolution,
  
• N represents naturalism,
  
• E & N is the intersection of these two events,
  
• R represents that our brain and senses are reliable.

Plantinga essentially argues that Prob(R) pretty close to 1, that Prob(R | E & N) is going to be small and that Prob(E & N) is "comparable" to Prob(TT) where TT is traditional theism. With these assumptions Plantinga points out that Prob(E & N | R) is going to be small no matter what value is chosen for Prob(E & N). Go ahead, try it out, set Prob(R) to something like 0.99 and randomly pick Prob(E & N) both high and low values, and set a low value for Prob(R | E & N) (say .02). If you are really serious about this select a low Prob(R | E & N), say 0.02, and set Prob(R) = 0.99 and then graph Prob(E & N | R) for different values of Prob(E & N). The values will all be very low.

That looks pretty darned convincing, eh? No matter what we observe for Prob(E & N) it means we should reject R, which means we should end up rejecting E & N since that is based on R. Neat trick. But there are some problems and these are very neatly described by Branden Fitelson and Elliot Sober (pdf).

First off, there is something interesting with Plantinga's initial assumption that Prob(R) is close to 1. In Bayesian statistics the researcher likes to use the following relationship:

Prob(H | O) = Prob(O | H) Prob(H)/Prob(O)
• H represents an hypothesis we are interested in,
  
• O is an observation--i.e. data,

Now we can re-write the above so that we have,

Prob(H |O)/Prob(H) = Prob(O | H)/Prob(O).

With Prob(O) = 1, the above can now be written as,

Prob(H | O) = Prob(O | H) * Prob(H).

But it is also true that 0 < Prob(H) < 1, hence it is the case that observation O, does not confirm hypothesis H. Another way of thinking about this is that observing something that is common no matter what hypothesis we are considering does nothing to help us validate our hypothesis. Think of it this way. Suppose we could observe O₁ and O₂ where Prob(O₁) = 1 and Prob(O₂) is pretty small say 0.05. Observing O₁ is no big deal since we expected to observe it whether H is true or not, hence its value in evaluating H is minimal or non-existent.

While this problem is as acute for Plantinga's argument it is still a problem when one sets Prob(R) close to 1. What it means is that R has little or no bearing on the hypothesis of E & N in terms of confirmation. This is a pretty serious problem for Plantinga in that it does have serious repercussions for his entire argument.

However, that isn't the only problem. Recall that Plantinga argues that Prob(R) is close to 1, Prob(R | E & N) is low, and that Prob(TT) and Prob(E & N) are "comparable". Also, Plantinga argues that Prob(R | TT) is also high. Now using the theorem of total probability we have,

Prob(R) = Prob(R | E &N) Prob(E & N) + Prob(R | TT) Prob(TT).

Now, if Prob(E & N) and Prob(TT) being comparably means that they are equal then we have a problem. It follows that we have,

1 aprox. low*(0.5) + high*(0.5).

But this violates the axioms of probability. To see this, pick any number really close to 1, say 0.99999999, and pick a low number say 0.01, now add them together and multiply by 0.5. You should get a number close to 0.05 which last I checked is not approximately 1. No matter how close you pick a number to 1...Hell, go ahead and even pick 1, the result is still the same, a very small number that is nowhere near 1.

Fitelson and Sober note that there is one way out, but that it isn't particularly palatable to Plantinga nor his argument. That is there is a third possiblity, X. Thus, using our friend the theorem of total probability we get,

Prob(R) = Prob(R | E &N) Prob(E & N) + Prob(R | TT) Prob(TT) + Prob(R | X) Prob(X).

But recall that Prob(R) is close to 1, and that Prob(E & N) is comparable to Prob(TT) and P(R | E & N) then it has to be the case that Plantinga assigns both Prob(E & N) and Prob(TT) negligible probabilities. If this is the case, then it turns out that Prob(X) must be close to one and we can reject both E & N and TT in favor of whatever X is (Raelians must be loving this kind of stuff, eh?).

Fitelson and Sober point to a third way out, which Plantinga also seems to endorse (via private communication) which holds that "comparable" means that Prob(E & N) and Prob(TT) are "not too far apart". The probelm with this is that it also removes undermines Plantinga's argument. To see why going back to our first expansion of Prob(R) via the theorem of total probability,

Prob(R) = Prob(R | E &N) Prob(E & N) + Prob(R | TT) Prob(TT)

1 aprox. low*(?) + high*(?).

While the above is no longer in violation of the axioms or probability, it still remains that we must set Prob(E & N) very low and Prob(TT) very high. The problem here though is that this is basically stacking the deck against E & N. No matter what value Prob(R | E & N) takes, Prob(E & N | R) is always going to be smaller than Prob(E & N). Plantinga has basically come up with a system that is self-reinforcing and impervious to any and all data by assumption.

So what does this mean for Joe Carter's post? Well since it is largely based on the writings of Alvin Plantinga and these problems are pretty devastating to Plantinga's argument, by extension Joe's post is pretty devestated. The same goes for Joe's other posts that rely on Plantinga's argument as well. For those of you interested in this kind of thing, I also strongly recommend the article by Fitelson and Sober, it discusses additional problems with Plantinga's leaving it in pretty bad shape. They also point out that despite its serious problems Plantinga's argument does pose a serious question for evolutionary theory and its adherents, one that is pretty much unanswer (AFAIK). The question is, if evolutionary theory suggests that our cognitive skills are in some contexts unreliable, how is this factored into our own theoretical beliefs?

Help Out if You Can

Andy over at the World Wide Rant has lost a good friend to cancer. If you can either link to the post, donate some money, or best of all both.

Another Reason to Wonder if Michelle Malkin Is All That Smart

The guest blogger Allahpundit is guest blogging form Michelle and points out that Friday was the anniversary of Terri Schiavo's death. Allahpundit says,

Michelle's Schiavo archive runs to eleven pages on Google, but for me it's this short post that resonates the most.

The link to another post by Michelle points to this article by economist Steven Landsburg. In that article Prof. Landsburg writes the following,

Now, Michael Schiavo, it seems to me, is in something very like the bluenose position here. If he had a use for his wife's body—if he wanted to cook it up for dinner, let's say—then I'd have more sympathy for him. (On the other hand, I don't think we should make a habit of letting people cook their spouses up for dinner, because it creates very bad incentives with regard to keeping your spouse safe and healthy.)

Which is precisely what Michelle Malkin also quotes, but under the heading "Dehumainizing Terri" and also with the implication that it is tasteless. On that last part, the quote by itself is tasteless, but there is a tiny weenie problem for Michelle Malkin (aside from the fact that Michelle is missing the gallows humor here): Landsburg ultimately comes down on her side of the issue. At the end of the article Landsburg writes the following,

You could argue in response that Michael Schiavo has signaled an equally strong desire to bury her (by turning down an offer of $1 million and by some reports $10 million), but I see an essential difference between the two desires. One—the desire to feed—is like the desire to read Saletan or, more precisely, the desire to read some other writer in whom I personally see no merit. The other—the desire to prevent others from feeding—is like the desire to censor, and I recoil from censorship even when a strict cost-benefit analysis recommends it.

Earlier in the article Landsburg had noted that as a libertarian he would recoil at the notion of banning the reading of author he does not like. In short, he thought that siding the parents wishes would have been better for everybody involved since Michael Shiavo's interests were to essentially "throw away" Terri, and Terri's wishes were no longer relevant since she was no longer concious. So while it might have been useful to point to Prof. Landsburg's gallows humor and feign outrage and disgust, perhaps Michelle would have better served to read the damned article to end and find out that Landsburg is on her side (and the same goes for Allahpundit...next time read the damn article all the way through and engage brain).

My Views on Immigration

In many of the posts below you'll note that I don't stake clearly my position on immigration. Basically, I am not an open borders kind of guy. I feel that there is a sufficient national security issue to necessitate a pretty sweeping change in how the U.S. handles its borders. However, I also realize two things:

1. The economic arguments of the anti-Immigration crowd is...well not to put too fine a point on it, stupid.
2. With the considerably higher wage for low skill jobs here in the U.S. there are going to be people taking risks, even very large risks, to get here to take advantage of the wage differential.

As such, I think that an uncontrolled border is a bad thing, and something needs to be done to get control back and fast. Building a wall is, in my view, not feasible. It will be costly to build, maintain and to monitor for things like people climbing over, tunneling unders, etc. So the solution is to make it easier to enter the U.S. to work legally. This has two benefits that I can see.

The first is that by entering legally these immigrants will be known to the U.S. authorities. Thus, it will be easier to check out these people. This should help at least reduce the risks of terrorism (assuming the U.S. government has the balls to do such investigations). The second benefit is that these workers will now be legal which means taxes. Not just Social Security and Medicare taxes that many already pay with forged Social Security cards/numbers, but also income taxes, state taxes, and so on. Thus, while these people will mean new demands on various government programs, they will also be a revenue source as well.

Granted, on the last point they wont be a huge revenue source. After all most of the illegal immigrants are low skill/low pay. However, the idea that people can't avail themselves of various government programs unless they pay more into the various federal, state, and local treasuries is specious. There are plenty of Americans that benefit from these programs that do not pay in taxes that exceed the costs to the average taxpayer. If this really bothers you, then perhaps you should really be aggitating for the end of such programs.

So to give a quick summary,

• Immigration illegal and legal is going to continue so long as there is a difference between wages in the U.S. and the home countries for these immigrants.
• Increasing the costs of illegal immigration is itself likely to be very costly.
• Decreasing the costs of legal immigration means that people who would otherwise enter the country illegally will now try to do so legally.
• This would return control of the U.S. border the U.S.

Pretty simple.

The Flavor of the Month

As many of you may have noticed right now the flavor of the month for politics seems to be immigration. Among many in the anti-immigration crowd, there is quite a bit of down right pathetic economic reasoning. This reasoning basically can be summarized as:

1. Close the borders and hence competition for low skill jobs.
2. Wages for low skill jobs (all else being held constant) will rise.
3. This increase in the wages will induce more Americans to take low skill/low pay jobs.
4. For some reason 3 is a good thing.
5. Mysterious fifth step.
6. Nirvana.

I find it rather disquieting when conservatives, who at least mouth the economic lingo of free markets, are actually aggitating for a restriction in competition and granting suppliers more market power. Market power which these very same suppliers will use to raise prices. But then again given Bush's apparent coziness with things like tariffs, and big government programs, maybe it isn't all that shocking that many conservatives have jumped on this bandwagon.

Anyhow, below are a number of posts I've written over at Outside the Beltway on the issue of immigration. And lest people think I'm picking on the Republicans note I do have at least one post pointing to the ever ridiculous Howard Dean and his attempts to demagogue the issue. And the silly economics isn't confined to the Republicans/Conservatives alone. I just tend to expect better, in general, from conservatives when it comes to things like market oriented economies and the such.

Howard Dean Plays the Race Card

Seems to be the day to whip out the race card. Howard Dean has also played the race card by trying to tie President Bush to the House legislation on immigration that is considerably tougher than the Senate version which both Dean and President Bush have supported.

One interesting thing about the article is this bit,

During his remarks criticizing Bush, Dean was interrupted by a shout of "Impeach!"

It doesn't mention if it was a person in the crowd or Dean himself who shouted out the word "Impeach". Given Dean's previous verbal gaff's I'm putting the odds at 50-50 either way.

What Congress Should Do About Immigration

This Cato Handbook For Congress (pdf) is a bit old, but the recommendations for immigration sound pretty good to me.

Congress should

• expand, or at least maintain, current legal immigration quotas;
• focus border-control resources on efforts to keep terrorists out of the country;
• create a temporary worker visa for less-skilled immigrants from Mexico to work in the United States to meet labor shortages and reduce incentives for illegal immigration;
• repeal the arbitrary cap onH1-B visas for highly skilledworkers;
• reinstate and make permanent the 245(i) provision to allow foreign-born residents who are legally qualified to live in the United States to remain in the country while they readjust their status; and
• reverse the recent decline in the number of refugees accepted by the United States.

I'm not sure that they are talking about in regards to the 245(i) provision, but all the other points sound good to me. The problem for me isn't that immigrants come here and take jobs at lower wages. After consider what those who oppose this are basically advocating:

• A group of suppliers want to insulate themselves from competition.


• This group wants to use this lack of competition to raise their prices so that they increase their profits.


• This group wants to do this by spending already scarce resources by lobbying Congress and other elected officials so that they can maintain their market position.

This is different from oil companies (or any other industry) using the political process to limit competition, thereby driving up prices and their profits how? Looks to be pretty much the same damn thing to me: rent seeking. Nevermind that from what I've read immigrants tend to have distribution of jobs that is inverted in that they take low skill/low pay jobs or they take high skill/high pay jobs (most of these immigrants are legal though). Yes it is true that in regards to the low pay/low skill jobs these are jobs that Americans wont do for the prevailing wage. So, am I to understand the anti-illegal immigration crowd correctly, that the solution is to restrict competition for the low wage jobs and drive up the wages for these low skill jobs?

I understand the problem with just letting anybody traipse across the border. In fact, I still maintain that the strongest argument against illegal immigration isn't the economic argument, but the national security argument. So why not allow a guest worker program and/or increase the immigration quota. If getting into the country legally and with the proper background check becomes easier (read less costly) then the notion of taking risks to cross the border illegally becomes relatively less attractive.

As for the problems with things like education costs, health care costs, and so forth, legalizing what are currently illegal immigrants via something like a guest worker program would help. Those immigrants currently not paying taxes would start paying taxes. Further, the problems with health care while somewhat impacted by illegal immigration the bigger problems are how things like insurance and health care are treated in this country (somewhat simplistically it is an issue of spending somebody elses money, so why not spend lots). Overall, though I see this aspect of the argument as being nickel and dime stuff. We have a Medicare system that is going to start eating up huge chunks of our GDP (and not because of illegals for you mono-maniacs out there). We have two political parties that seem unwilling to address this kind of issue and reign in spending. In fact, both parties seem Hell bent on making the problem worse. But lets worry about a few billion here or there in a $10-trillion plus economy. Have I got that right?

A Note on the Economics of Immigration

This morning on the radio the talk show host made the following claim (as best I can recall), "And the free marketers will tell you that the illegal immigrant workers make for cheaper products. But look at Las Vegas, there was a time when the rooms there cost $14, now they cost $300. You're getting ripped off!" The implication here is that the free marketers are lying to line their own pockets. There are a number of problems with the above nonsense the one of which is that most people who are in favor of the free market don't own hotels in Las Vegas.

The biggest problem is that the price of a good is not determined by supply alone--i.e. costs. The price of any good is determined by supply and demand. Let me repeat this since it seems to be lost on many people. The price of any good is determined by supply and demand. Thus, while labor costs might go down somewhat, it is also entirely possible that demand has increased or other factors of production have gone up so that in the end the price is higher. Take for example Las Vegas. What was there to do in Las Vegas say 25 years ago? Go watch one of the Rat Pack, maybe do a little gambling and that was about it. Now what is there? Theme parks, ginormous malls, a manmade lagoon where pirates battle it out, and erupting volcano, IMAX theaters...in short a great big amusement park with gambling and shows by various performers. Gee...could demand be higher in terms of non-gambling related activities meaning that the resorts and hotels have to raise the price of a hotel room?

It is this kind of brain-dead idiotic nonsense that tends to turn me off to the anti-immigrant movement. When one puts forward dumb arguments that with just a little bit of thought are seen to be rather dubious at best; it is hard not to think that perhaps a big part of the reason for opposition immigration is xenophobia and/or racism. So a word of advice to those of you who are opposed to immigration, sit down and think through your economic arguments. In fact, take a page from the Evil Overlord List, run them past a five year old child any flaws in the argument should be immediately excised. In fact, I'd recommend sticking just to the national security issue, it doesn't require these kinds of dopey arguments.

The New Xenophobia

I read posts like this which spawns further posts such as this one and I can't help but think that we are looking at the new xenophobia (a term I've shamelessly stolen from Arnold Kling).

Let's look at the bit that Michelle Malkin highlighted.

Dale Baughman, who has lived in Northwest Arkansas all his life, has had a different experience. Three years ago, the BB-gun manufacturing plant where he worked for 29 years closed and he lost an $18.50-an- hour tool-making job. "It's hard to find a job and the ones you can find don't pay anything," says the 52-year-old, who has a high-school diploma. He looked for machine-maintenance jobs at factories that would match his old pay but found only ones paying $12 to $13 an hour. He partly blames a rise in immigration, which he says is keeping wages low for less-skilled labor.....

Other workers agree that immigrants from Latin America are helping employers push wages down in jobs such as construction, where some native-born workers say they earn less now than they did 10 years ago. According to the Census Bureau, 6.9% of the area's population was foreign-born in 2000, up from 1.5% in 1990. In addition to Latin Americans, Springdale has the largest concentration of people from the Pacific Ocean's Marshall Islands outside of their native land -- an estimated 4,000 people, many of whom work in local factories and poultry plants.

James Bishop and Lisa Broadwell are longtime residents of Northwest Arkansas and both have years of experience in a trade: Mr. Bishop in machining and Ms. Broadwell in dry cleaning. Yet both are underemployed. "Hispanics are taking over the jobs in the poultry industry -- jobs that used to go to people who live here, and as a result, those people that used to be in the poultry industry are taking over our jobs," Ms. Broadwell said.--Full article available here.

Let's stop and consider the situation of Dale Baughman. He says that his plight is due to the immigrants who have depressed wages. But is it? Is it that alone? Let's also stop and consider that manufacturing jobs have been on a downward trend for the last several decades, and there has been a substantial drop off in manufacturing jobs starting around the begining of 2001.

So is it reasonable to assume that Mr. Baughman's woes are due solely to those brown people scuttling across the border to take good jobs from hard working Americans, or is it that competition in the manufacturing labor market has risen as more and more people with manufacturing work experience find themselves back looking for a job? Or is the more likely explanation that in addition to some additional competition due to illegal immigrants Mr. Baughman is the victim of what has been going on for a very long time, technological advancement? With improvements in technology many manufacturing jobs are disappearing (pdf file).

Similalry for Mr. Broadwell. You can see this in the full article that notes the following,

He has applied for several factory machinist jobs paying up to $11 an hour, but competition was heavy and he didn't get any.

A quick check of the Bureau of Labor Statistics data will show that there has been a significant decrease in the number of manufacturing jobs in Arkansas. How significant? Well, if we look at the above graph we can see that around the start of 1998 there was a resumption in the downward trend in manufacturing jobs after a leveling off for several years. Using 1998 as our starting point we are talking of a decrease of about 45,000 jobs.

On top of this, many of the good paying jobs that are not in manufacturing these days require an educational level that is not typical for somebody who was working at a manufacturing job. While it seems "obvious" to blame these kinds of things on the "furriners" the actual explanation is probably more complicated. Have immigrants had a downward impact on wages? Probably, but I have doubts it is the single biggest impact.