Coyote Blog

It is pretty much a law of nature that issuers of securities hate short-selling.  They have tried for years to paint it as somehow unethical or at least unseemly, though it has always befuddled me as to why short-selling is any different than taking a long position on a security.  In both cases one is making a bet on future prices of the underlying asset, the only difference is in the direction.

But issuers of securities, whether they be corporate equities or government bonds, generally have strong personal incentives to see asset prices go up, or at least remain flat.  No CEO thinks short-selling is justified, but in fact the ability to sell short is critical to having quality pricing signals (see below for a discussion of how short-selling helps limit bubbles).

Of course, Corporate CEO's may gripe about short sellers, but they basically have to just live with them.  But governments are different.  They can actually ban what they don't like and have done so now in Germany.  What's next, a law saying that once you have bought a government security you are never allowed to sell it?

Postscript: Here is an example of how short selling reduces volatility.  First, some background

Chester Spatt, who was chief economist at the U.S. Securities and Exchange Commission from 2004 to 2007, said that Germany's short-selling ban would probably end up causing more market turbulence and not less.

"Like many types of well-intentioned regulation, this is likely to misfire," he said in an interview. "During our financial crisis in 2008, there was a ban on short-sales for about three weeks .... That ban was very counterproductive. It didn't help stabilize asset prices at all."

Here is an example of why this happens, as I discussed in an earlier post during that temporary US ban:

At the start of the bubble, a particular asset (be it an equity or a commodity like oil) is owned by a mix of people who have different expectations about future price movements.  For whatever reasons, in a bubble, a subset of the market develops rapidly rising expectations about the value of the asset.  They start buying the asset, and the price starts rising.  As the price rises, and these bulls buy in, folks who owned the asset previously and are less bullish about the future will sell to the new buyers.  The very fact of the rising price of the asset from this buying reinforces the bulls' feeling that the sky is the limit for prices, and bulls buy in even more.

Let's fast forward to a point where the price has risen to some stratospheric levels vs. the previous pricing as well as historical norms or ratios.  The ownership base for the asset is now disproportionately made up of those sky-is-the-limit bulls, while everyone who thought these guys were overly optimistic and a bit wonky have sold out. 99.9% of the world now thinks the asset is grossly overvalued.  But how does it come to earth?  After all, the only way the price can drop is if some owners sell [remember, we are discussing a world where naked shorting is banned], and all the owners are super-bulls who are unlikely to do so.  As a result, the bubble might continue and grow long after most of the world has seen the insanity of it.

Thus, we have short-selling.  Short-selling allows the other 99.9% who are not owners to sell part of the asset anyway, casting their financial vote for the value of the company.  Short-selling shortens bubbles, hastens the reckoning, and in the process generally reduces the wreckage on the back end.

Without short-selling, the only folks involved in the price-discovery process are those who have self-selected as being more bullish than average.  Short-selling vastly broadens the number of people, and thus the perspectives and information, involved in the pricing process.

I think "cargo cult" is a great moniker for this kind of regulation.  The price of European bonds are declining as lots of people sell?  Then lets ban selling, that will take care of the problem.   Just ignore that large government deficit behind the curtain.

More here on the failure of European green energy subsidies.

At a speech a while ago, I told this to an investing group a while back:  Do the math.  You can't build a growth company on public subsidies.  It may be possible to grow at first when the subsidized activity (e.g. solar) is a tiny percentage of the market.  But once it starts to grow, the projected subsidies are astronomical.  The German solar subsidy is something like 50 cents per KwH -- to give one a sense of scale, the typical electricity price from fossil fuels there or here is something like 8-10 cents per KwH.  Subsidizing just 20% of US electricity production at this kind of rate would cost $50 billion a year.  Subsidizing all production would cost a quarter of a trillion dollars a year.

Take a company dependent on subsidies, figure out what their implied size is in 10 years based on current stock multiples, and then calculate what the public subsidy at current rates would have to be to support that size and a reasonable market share (because competitors are following the same model).  Investors who do this will quickly figure out that the subsidies needed to support their favored company are unsustainable.  Phoenix-based FirstSolar, a sometimes-darling of Wall Street, has had  a rocky year.  Its stock price has had several steep falls, each one just after rumors that Germany would cut its solar subsidy rate (actually its feed-in tariff, but the same idea).

My advice to the group was that if you were investing in green energy, either your company had a three year plan to reduce costs to be able to compete profitably in a subsidy-free environment, or else you are investing in pets.com.

Update: If you have Nancy Pelosi's husband on your board, you can probably extend your window to five years.

This post and this post came up back to back in my feed reader this morning.  The first explored per capita GDP between Greece and Germany, and wonders why the published numbers can be so close when visual evidence is that the average Greek is far less prosperous than the average German.  Brian Caplan explains the largest difference between Greece and Germany in terms of public sector productivity, with 10% of the workforce in Germany working for the state while a third of Greeks do so.

Knowing the Germans, it's easy to believe that its government employees accomplish as much as the Greeks' despite their smaller population share.  This implies that 25% of the Greek labor force is, contrary to official stats, producing nothing.

So using Sumner's other numbers - and assuming output is roughly proportional to labor force - per-capita GDP is more than 50% higher in Germany than Greece.  First-hand observation tells me that's still an understatement, but it still closes a big chunk of the gap between official stats and reality.  How's that for a mental image?

UPDATE: The NY Times apparently overstated the 1/3 figure, see here.

Right after reading that piece, I read this from Jim O'Brien via Tad DeHaven:

Back in 1990, Halstein Stralberg coined the term "automation refugees" to describe Postal Service mail processing employees who were assigned to manual operations when automation eliminated the work they had been doing. Since the Postal Service couldn't lay off these employees, they had to be given something to do, and manual processing seemed to have an inexhaustible capacity to absorb employees by the simple expedient of reducing its productivity. The result was a sharp decline in mail processing productivity and a sharp increase in mail processing costs for Periodicals class. Periodicals class cost coverage has declined steadily since that time.

O'Brien then tells of visiting seventeen mail processing facilities as part of a Joint Mail Processing Task Force in 1998. During those visits he noted that the periodical sorting machines always happened to be down even though the machines were supposed to be operating seventeen hours a day. Although the machines weren't working, manual operations were always up and running.

A decade later, O'Brien points out that the situation apparently hasn't changed:

More Periodicals mail is manually processed than ever, and manual productivity continues to decline. Periodicals Class now only covers 75% of its costs. How can this dismal pattern of declining productivity and rising costs continue more than two decades after it was first identified, especially when the Postal Service has invested millions of dollars in flats automation equipment?

Years ago, I briefly consulted to the SNCF, the French national railroad.  I say briefly, because thought they technically asked us to benchmark them against US firms, its clear they did not really want to hear the results.  The one figure that sticks in my mind is that they had something like 100,000 freight cars, but 125,000 freight car maintenance employees.  I remember observing to a highly unamused SNCF executive that they could assign one maintenance worker to his very own freight car and still lay off 20% of the staff.  And apparently France is an order of magnitude better on stuff like this than Greece.

Next week I am on a panel talking about alternative energy.  These guys have already told me they don't want to re-fight the global warming science battle at this venue, and my guess is that there will be a lot of pragmatist corporate types who won't really care about individual liberty or role-of-government issues  -- they will only care if there is money to be made, even if it is by rent-seeking.  My best bet, I think, will be to discuss why alternative energy is a bad investment.  My sense is that it is a bubble investment, like goofy Internet stocks in the 1990's or housing in the 2000's.  Already, I think we see the crash in the corn ethanol business.

My two assumptions are

• I can't think of any industries that were initially heavily subsidized that eventually found their way to competing successfully and growing without subsidies.
• With the exception of agriculture, the public's tolerance for growing subsidies to a single industry eventually wanes.

I would love for commenters or emailers to send me contra-examples if they have them to either of these assumptions.  In particular, can you think of an industry that could not have grown initially without subsidies eventually prospering without subsidies.

To the second point, I looked at the numbers two ways.

1. In Germany, which is often held up as the model, feed-in tariff subsidies are between $0.06 (wind) and $0.50 (solar) a Kwh.  If the US reached a goal of 20% of its production in wind and solar (total production today is about 4000 billion KWh) then the subsidy would be between $50 billion and $400 billion a year.  It is hard to imagine these remaining popular for any period of time.  (lots of German numbers here and in the linked PDF)
2. Venture capitalists and investors are expecting the growth stocks they invest in to grow at, say, 30% a year.   Let's assume alternative energy companies grow at 30% a year and the number of companies, attracted to the growth and subsidies, doubles every two years.  In this scenario, assuming unrealistically that the supply curve for alternative energy is flat rather than upward sloping, the amount of subsidies to support this growth would have to nearly double every year.  They would increase 21-fold in five years and 440-fold in 10 years.   In fact, given the shape of real supply curves, new more expensive capacity at the margin is replacing cheaper and cheaper alternatives, resulting in the need to grow subsidies even faster to keep up.   Never has happened, never will.  Once the industry outgrows the government's willingness to grow subsidies, the whole thing crashes.

(PS - the subsidy could also be in the form of taxes that increase the cost of alternatives, or production and/or import restrictions on the alternatives).

Any help along these lines in the comments is appreciated.

Update: This seems relevant:

First Solar shares skidded 8% Friday to close at $116 after the company issued a murky business outlook beyond June. Until then, however, "orders look very strong," First Solar CEO Robert Gillette said in a post-earnings conference call.

This commentary, along with price pressure and expected subsidy cuts solar panel makers get from the German government is making investors a bit more wary of First Solar, whose shares have been on a bumpy ride the past 18 months....

First Solar, helped by government tax credits extended to businesses for using solar power, has rewarded its investors since going public in November 2006 at $20 a share. The stock peaked at $317 in May 2008. But the shares have been skittish ever since.

Germany, the world's biggest solar market, is weighing a 15% cut on so-called solar feed-in-tariffs. This could make solar installations less attractive.

First Solar projects 60% of its 2010 sales from German-related contracts, according to Wedbush Securities analyst Christine Hersey.

Remember from above, the German feed-in tariff for solar is around $0.58 per KwH, or fully $0.50 above the price paid for the fossil fuel base load.  At this subsidy level, the US would be paying $400 billion a year in subsidies and/or higher prices.

First Solar has grown at over 150% per year for the last 3 years so the 30% assumption above is conservative, as is the assumption about the number of competitors doubling every two years.

Another interesting note - First Solar makes a pre-tax margin around 33% of sales, which is over 6x larger than health insurance companies make (and are excoriated for).  Is it any wonder Germany no longer wants to keep subsidizing First Solar's bottom line to levels far above most equipment manufacturing companies.

The other day I was happy to see lefty Kevin Drum pointing out the obvious problems with subsidizing Edit Post "¹ Coyote Blog "” WordPressethanol.  This is a step forward, when smart people on both sides of the aisle can agree that a certain approach is dumb.  Of course, given the incentives in government, that doesn't mean that ethanol subsidies will actually stop.

So we make some progress on ethanol, but just replace it without another absurdly dumb subsidized energy technology, in this case wind.  Wind is not even close to being ready for grid service, and given the hot backup power one needs to cover its unpredictability, it does about zero to reduce CO2 emissions.  A series of studies have shown that it has done nothing to reduce fossil fuel consumption in either Germany or Denmark.  And the whole green jobs thing is even more absurd -- it makes no sense theoretically, as shifting private investment to less economically viable uses has never, ever created jobs -- and has been debunked in practice in both Denmark and Spain.

Unfortunately, the Obama administration has bent over backwards to ignore the science and push wind, for no other reason I can figure out except to avoid admitting he was wrong when he campaigned on wind.  This makes for a pretty depressing story, and, given there are more documents the Administration is resisting releasing under FOIA, probably more ugly news to follow.

Postscript: One way you could use wind is with some kind of storage system, of which I can think of two.  The first is to use wind to pmp water up hill into a reservoir where the potential energy could later be harvested as hydroelectric power.  The other is to use the wind power to make hydrogen from water.  You need some sort of process that can be stopped and started on short notice.

What is it about intellectuals that seem to, generation after generation, fall in love with totalitarian regimes because of their grand and triumphal projects?  Whether it was the trains running on time in Italy, or the Moscow subways, or now high-speed rail lines in China, western dupes constantly fall for the lure of the great pyramid without seeing the diversion of resources and loss of liberty that went into building it.  First it was Thomas Friedman, and now its Joel Epstein in the Huffpo, eulogizing China.    These are the same folks who tried, disastrously, to emulate Mussolini's "forward-thinking" economic regime in the National Industrial Recovery Act.    These are the same folks who wanted to emulate MITI's management of the Japanese economy (which drove them right into a 20-year recession).  These are the same folks who oohed and ahhed over the multi-billion dollar Beijing Olympics venues while ignoring the air that was unbreathable.  These are the same folks who actually believed the one Cuban health clinic in Sicko actually represented the standard of care received by average citizens.  To outsiders, the costs of these triumphal programs are often not visible, at least not until years or decades later when the rubes have moved on to new man crushes.

Epstein, like Friedman, seems to think that the US is somehow being left behind by China because its government builds much more stuff.  We are "asleep."  Well, I have a big clue for him.  Most of the great progress in this country was built when the government was asleep.  The railroads, the steel industry, the auto industry, the computer industry  -  all were built by individuals when the government was at best uninvolved and at worst fighting their progress at every step.

Epstein in particular thinks we need to build more trains.  This is exactly the kind of gauzy non-fact-based wishful thinking that makes me extremely pleased that Epstein in fact does not have the dictatorial powers he longs for.   High speed rail is a terrible investment, a black hole for pouring away money, that has little net impact on efficiency or pollution.   But rail is a powerful example because it demonstrates exactly how this bias for high-profile triumphal projects causes people to miss the obvious.

Which is this:  The US rail system, unlike nearly every other system in the world, was built (mostly) by private individuals with private capital.  It is operated privately, and runs without taxpayer subsidies.    And, it is by far the greatest rail system in the world.  It has by far the cheapest rates in the world (1/2 of China's, 1/8 of Germany's).  But here is the real key:  it is almost all freight.

As a percentage, far more freight moves in the US by rail (vs. truck) than almost any other country in the world.  Europe is not even close.

(source)

You see, passenger rail is sexy and pretty and visible.  You can build grand stations and entertain visiting dignitaries on your high-speed trains.  This is why statist governments have invested so much in passenger rail -- not to be more efficient, but to awe their citizens and foreign observers.

But there is little efficiency improvement in moving passengers by rail vs. other modes.   Most of the energy consumed goes into hauling not the passengers themselves, but the weight of increasingly plush rail cars.  Trains have to be really, really full all the time to make an energy savings for high-speed rail vs. cars or even planes, and they seldom are full.  I had a lovely trip on the high speed rail last summer between London and Paris and back through the Chunnel -- especially nice because my son and I had the rail car entirely to ourselves both ways.

The real efficiency comes from moving freight.  More of the total energy budget is used moving the actual freight rather than the cars themselves.  Freight is far more efficient to move by rail than by road, but only the US moves a substantial amount of its freight by rail.    One reasons for this is that freight and high-speed passenger traffic have a variety of problems sharing the same rails, so systems that are optimized for one tend to struggle serving the other.

Freight is boring and un-sexy.  Its not a government function in the US.  So intellectuals tend to ignore it, even though it is the far more important, from and energy and environmental standpoint, portion of transport to put on the rails.  In fact, the US would actually probably have even a higher rail modal percentage if the US government had not enforced a regulatory regime (until the Staggers Act) that favored trucks over rail.   If the government really had been asleep the last century, we would be further along.

The US has not been "asleep"  -- at least the private individuals who drive progress have not.  We have had huge revolutions in transportation over the last decades during the same period that European nations were sinking billions of dollars into pretty high-speed passenger rails systems for wealthy business travelers.   One such revolution has been containerization, invented here in the US and quickly spreading around the world.  Containerization has revolutionized shipping, speeding schedules and reducing costs (and all the while every improvement step was fought by the US and certain local governments).  To the extent American businesses are not investing today, it has more to do with regime uncertainty, not knowing what new taxes or restrictions are coming next from Congress, than any lack of vision.

I would argue that the US has the world's largest commitment to rail where it really matters.  But that is what private actors do, make investments that actually make sense rather than just gain one prestige (anyone know the most recent company Warren Buffet has bought?)  The greens should be demanding that the world emulate us, rather than the other way around.  But the lure of shiny bullet trains and grand passenger concourses will always cause folks like Epstein to swoon.

Update #2: The author Joel Epstein emailed me a response to this post.  I will give it to you in its entirety:  "You should get out of the country more often."  Wow, he played the provincial American card on me.  Except that I have been to about 20 countries, from Singapore to Argentina to Hungary.  Besides, I really don't understand what the hell he means by this in the context of my post, except as a bid for some sort of intellectual superiority.   Anyone else understand?

Postscript

Boring, but environmentally friendly and cost-effective:

Sexy, but environmentally useless (at best) and tremendously costly:

So, explain to me what drives these guys investment thinking.  Can it be anything but triumphalism?

Update: Energy use comparison of passenger modes. Note how close rail transit and cars, both at average occupancies, are in this analysis.  The differences in freight are much larger:

We associate photos like this one with the devastation of post-war Europe.

In fact, this is a post-war photo, but it is of Charleston, South Carolina after the Civil War.   We seldom think of such scenes as being relevent to the US, but the South was at least as destroyed after the Civil War as Germany was after WWII.   Sherman's march to the sea in Georgia was famous for its devastation, but in their letters, many of Sherman's soldiers say they were particularly ferocious in South Carolina, the state that they most associated with the war and its start  (though much of the devastation in Charleston was self-inflicted, as a fire to burn the remaining cotton and keep it out of Yankee hands spread to the rest of the city).

Full sized image at Shorpy

I could link Mark Perry almost every day, and have to restrain myself.  If you like my blog, you should be reading his too.  Anyway, here is his take on US manufacturing figures:

If the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world's third largest economy. It would also be larger than the entire economies of India and Russia combined. As much as we hear about the "demise of U.S. manufacturing," and how we are a country that "doesn't produce anything anymore," and how we have "outsourced our production to China," the U.S. manufacturing sector is alive and well, and the U.S. is still the largest manufacturer in the world.

The fall of the Berlin wall is probably one of the 3-4 "Where-were-you-when..." events that I remember in my lifetime.  I remember turning on the TV and seeing people dancing on top of the wall and being struck with a strong sense of cognitive dissonance, wondering if I was watching some war-of-the-worlds style fiction.  I don't remember even today if this was a surprising event to the whole world, of if it was just I who was holed up in some ignore-the-outside-world zone, but it certainly was a stunning surprise to me.

It was truly a great day, in my mind more great than 9/11 was bad, so it is kind of amazing to me how much it is already almost forgotten.  In the late 1970's, I had the opportunity to take the East Berlin tour through Checkpoint Charlie to see the wrong side of the wall.   Many Americans I have talked to had the same reaction to this tour -- that it was meant to be one long propaganda spiel for communist East Germany but in fact was pathetically self-mocking.  The propaganda failed because even the writers of the propaganda could not conceive of how wealthy the west was compared to the East.  So when they bragged that 70% of the residents had running water or that "almost" all of the city had been rebuilt from the war 30 years later, Westerners were unimpressed.

Update: Remembering the victims of communism.

Cameron Scott argues this when he says:

It's funny how green-haters accuse greens of being catastrophists, and then argue that cutting carbon emissions will destroy our economy and send us back to the Dark Ages. (See the trailer of Phelem McAleer's Not Evil Just Wrong for a prime example.)

Well, the last pooh-pooh is on them: It turns out we're already cutting emissions in the United States. Sure, some of that is due to a sluggish economy. But negative economic circumstances don't account for the 9 percent reduction in carbon emissions since 2007. In fact, the amount of carbon dioxide produced for every dollar of economic output declined by 3.8 percent in 2008.

I responded:

I really wish you would apply your analytical abilities to equities so I would have some way to bet against you.

Had you looked, you would see that the US has been reducing the CO2 intensity for a unit of economic output for decades. Here is the first source I found online but there are zillions.  In terms of improvement, the US has done better on this metric in the last 20 years than nearly any other country in the world, and just as well as the best (e.g. Germany)

So what you tell is not a new story, and has nothing to do with recent governmental dictats or pleas by environmentalists and everything to do with the ongoing incentives of individuals and businesses to reduce costs and be more efficient.

The reason our total Co2 output has not decreased is that while CO2 per unit of GDP (I will call this CO2 efficiency) has improved 2-4 percent per year, our GDP has grown the same rate or faster. So our overall CO2 output is flat to up (and has actually been down the last few years). One of the main reasons Europe has done better than the US in total CO2 reductions is not improvements in CO2 efficiency, but because their economies have lagged. They bent over backwards in Kyoto to make 1990 the baseline year, so they could include the horrible economies of Russia and East Germany which were in the process of crashing, thus giving them an automatic CO2 reduction for nothing.

Anyway, just look at your own numbers. In the year before, we got about 3% improvement in Co2 efficiency and had about 3% economic growth so CO2 output was flat to down. Last year we had about 3% improvement in Co2 efficiency and the economy was down a lot and thus CO2 was down a lot. When there are two variables in a function, and only one is changing, most logical people attribute the change in output of the function (ie changes in total CO2 output) to the variable that changed (ie economic growth). You, for some reason, attribute changes in the output to the variable (co2 efficiency improvements) which basically remained unchanged. Nice analysis.

You can even see it in your numbers. If CO2 efficiency is up 3.8 percent and Co2 output is down 9 percent, then that means the economic growth/size component has to be down 5.4% (.91/.962 - 1). So almost 60% of the "improvement" is due to a very bad recession and 10% unemployment, but you attribute it to the unchanging 40% piece.

Did anyone in the environmental movement study math or economics?

We Phoenicians, who live in one of the best solar sites in the world, have been anxiously awaiting a solar electric technology that makes economic sense.    I have a couple thousand square feet of nice, flat room that is just begging to get be off the grid.  Already, solar is economic for individuals in Phoenix, but only if you are willing to soak American taxpayers and your neighbors for 85% of the costs.  It would be nice if it were, you know, actually economic and not just subsidy bait for tens of thousands of dollars.  I have dug into many analyses that claim that solar has a 5-7 year payback, but never seen one that achieved these returns without substantial subsidies and rebates (beware the term "energy payback" which is not the same thing as investment payback (pdf))

For a while I have said that I thought traditional silicon/germanium IC-like wafer processes for making solar cells was just never going to get there, and that some other technology was necessary.   This might be one such example:

JA Solar, one of the big players in the solar industry, is working with Innovalight to commercialize the latter's method for making silicon-ink-based, high-efficiency solar cells, the companies said this week.

... The solar cells are created by pouring an ink solution incorporated with silicon nanoparticles and then decanting the excess liquid to leave behind a crystalline silicon structure.

At the time of the 2007 announcement, Sunnyvale, Calif.-based Innovalight claimed its method not only resulted in solar cells that were cheaper to produce by as much as half, but that the crystalline structure resulting from the process made its cells more efficient at converting electricity.

Those claims now appear to be validated.

On Tuesday, Innovalight announced that an independent study of its method by the U.S. Department of Energy's National Renewable Energy Laboratory and the Fraunhofer Institute for Solar Energy Systems in Germany confirmed that its silicon ink-based cells "demonstrated a record 18 percent conversion of efficiency."

The 18% conversion efficiency is close to a record for thin films, but must be the "record" for production models, since higher conversions have been achieved in the lab.  18% is very good for a production device, particularly if it is cheaper to manufacture than current cells.

This is awesome, from Carpe Diem:

On a purchasing power parity basis, France, Japan, and Germany would all be the poorest states in the United States, based on per capita GDP.  People on the coasts don't benchmark their education or health care spending against Mississippi, except perhaps to make the case that Mississippi is spending too little.  So why do they benchmark their spending against Germany or France.  Of course we spend more on health care per capita - we spend more than these countries per capita on everything from TV's to cars to movie tickets.

A number of folks, including myself but more prominently Megan McArdle, have argued that a big problem with nationalized health care schemes is that these plans threaten drug innovation in the US  (which is really the last remaining source of drug innovation in the whole world).

The argument is that nationalization schemes will likely hammer drug prices through price controls down to marginal cost, eliminating any profit motive for expensive drug development.  Further, new drugs will be hampered by having to convince government health care czars that the drug should be allowed under proposed proscriptive, top-down systems of allowed medical procedures.  Risk-adverse beauracrats faced with inevitable budget overruns are unlikely to take the chances with new procedures that the private world takes every day.  (And if you don't believe that budgets will be immediately overrun, look at cash-for clunkers, where 5 months of funds were used up in 5 days -- people may not like the government, but they will take free money and services in near infinite amounts).

Well, I had thought that the response to this argument from health care "reform" supporters would have been something like "private incentives to develop drugs will still exist because of X or Y."   But apparently, they have given up on that argument and jumped all the way to the argument that even without any private drug companies, Dr. Robert Stadler and the State Science Institute will do all the drug development we need.

Megan McArdle responds in depth here.  I think there is a simpler argument.  Look at something like computers or machine tools.  Innovation in these free markets occurs all over the world, and new inventions and products are as likely to come from Korea or Japan or Germany than from the US.  But in the world of pharmaceuticals and new medical devices, a wildly disproportionate share come in the US, the last semi-free health care market in the world.  And even those new products developped in other countries are funded and capitalized based on their profit potential in the US.

I have an innate confidence in technology.  For example, while I understand solar to be uneconomic for powering my house today, I fully expect that to change.  I look forward to the day, not that far in the future, when I can take my Arizona house off the grid, at least during the day.

In contrast, though, it may be that wind power can't be fixed, in large part due to its inherent unpredictability.  Sure, solar has a problem as well, in that it doesn't work at night.  But at least the times when solar is off here in Arizona (ie when it is dark) are predictable and coincide with lower load periods.  Wind is utterly unpredictable and variable, and its peaks and troughs are unrelated to peaks and troughs in electricity demand.

So, if the grid is to reliably supply sufficient power to meet demand, wind must have a backup.  And there is the rub.  Because just about every technology that might currently be used as a backup takes a really, really long time to start up.  Small gas turbines can be producing electricity from a cold stop pretty quickly, but a large coal-fired power plant can take days to go from a cold stop to producing electricity.  This is in part because there are a series of steps where A has to precede B which must come before C to start plants up, and partially just because immediately heating the whole system up would cause the plant to blow up just from the thermal stresses.

So, to back up wind power, traditional fossil fuel plants have to be kept warmed up with turbines spinning.  This means that fossil fuels are burned but no electricity is produced.  I mentioned in a previous post that the largest utility in Germany estimated that 48,000MW of wind capacity was in fact allowing the shut down of just 2000MW of traditional fossil-fuel powered capacity.

A recent article in the National Post argues the Danes are seeing absolutely no substitution from their substantial investment in wind.

There is no evidence that industrial wind power is likely to have a significant impact on carbon emissions. The European experience is instructive. Denmark, the world's most wind-intensive nation, with more than 6,000 turbines generating 19% of its electricity, has yet to close a single fossil-fuel plant. It requires 50% more coal-generated electricity to cover wind power's unpredictability, and pollution and carbon dioxide emissions have risen (by 36% in 2006 alone).

Flemming Nissen, the head of development at West Danish generating company ELSAM (one of Denmark's largest energy utilities) tells us that "wind turbines do not reduce carbon dioxide emissions." The German experience is no different. Der Spiegel reports that "Germany's CO2 emissions haven't been reduced by even a single gram," and additional coal- and gas-fired plants have been constructed to ensure reliable delivery.

Indeed, recent academic research shows that wind power may actually increase greenhouse gas emissions in some cases, depending on the carbon-intensity of back-up generation required because of its intermittent character.

It probably comes as no surprise that the Danes have the highest electricity costs in Europe.  The article goes on to call wind power in the US a "huge corporate welfare feeding frenzy."

Update: Well, the Danish wind industry certainly seems to be in good hands (via Tom Nelson):

Ditlev Engel, president and chief executive of the Danish wind-energy company Vestas, said anecdotal evidence about birds being caught in turbine blades and other environmental horror stories do not usually hold up under scrutiny.

"Do people think it's better all those birds are breathing CO2? I'm not a scientist, but I doubt it," said Engel, whose company is expanding its U.S. manufacturing and distribution operations. "Let's get the facts on the table and not the feelings. The fact is, these are not issues."

LOL - Nothing like a paragraph that simultaneously includes the phrase "Let's get the facts on the table" with the hypothesis that a couple hundred ppm increase in CO2 concentrations hurts birds.  By the way, from the same article, a lot of discussion of the environmental impact of renewables due to their out-sized use of land.  Clearly an issue for solar and wind, and possibly for others:

One of the biggest challenges renewable-energy projects pose is that they often take up much more land than conventional sources, such as coal-fired power plants. A team of scientists, several of whom work for the Nature Conservancy, has written a paper that will appear in the journal PLoS One showing that it can take 300 times as much land to produce a given amount of energy from soy biodiesel as from a nuclear power plant. Regardless of the climate policy the nation adopts, the paper predicts that by 2030, energy production will occupy an additional 79,537 square miles of land.

I am always amazed at the number of environmentalists that laud the Brazilian ethanol push, given the out-sized effect that industry has had in carving up the Amazon rain forest.  As a disclosure, I am a member of the Nature Conservancy, and wild land preservation is my environmental interest of choice, though I prefer to pursue it through private means (ie via private purchases of land for conservation purposes).  The Nature Conservancy used to spend most of its money for this purpose, though of late it has diverged, as so many environmental groups have, into lobbying government to force people to achieve its ends for them rather than to pursue these ends through non-coercive means.

There is a quote from Robert Redford in Three Days of the Condor** that honestly reflects my opinion on the topic of leaving the US  (Redford is Joe Turner, running away from the CIA, while Joubert is an assassin-for-hire):

Turner: I'd like to go back to New York.

Joubert: You have not much future there. It will happen this
way. You may be walking. Maybe the first sunny day of the spring. And a
car will slow beside you, and a door will open, and someone you know,
maybe even trust, will get out of the car. And he will smile, a
becoming smile. But he will leave open the door of the car and offer to
give you a lift.

Turner: You seem to understand it all so well. What would you suggest?

Joubert: Personally, I prefer Europe.

Turner: Europe?

Joubert: Yes. Well, the fact is, what I do is not a bad occupation. Someone is always willing to pay.

Turner: I would find it"¦ tiring.

Joubert: Oh, no "” it's quite restful. It's"¦ almost peaceful.
No need to believe in either side, or any side. There is no cause.
There's only yourself. The belief is in your own precision.

Turner: I was born in the United States, Joubert. I miss it when I'm away too long.

Joubert: A pity.

Turner: I don't think so.

A great line, particularly in a movie steeped in cold war weariness.  Anyway, I was listening to some rant on NPR about leaving the US if McCain won the election, and I asked myself if I had to leave the US, what would be my rank order of countries to which I might move.  My list is highly influenced by language (at 46 I hardly feel like learning a new language) and by countries of which I am knowledgeable.  Here is what I came up with:

1. Australia
2. Bermuda
3. UK
4. Canada
5. Singapore
6. the Netherlands
7. Switzerland
8. Spain
9. Germany / Austria
10. Costa Rica

Here are some notes on the list, as well as some explanations of countries left off:

• I have yet to meet an American who did not enjoy living in Australia (and many long to go back).  I came within about 5 minutes of living in Bermuda about seven years ago.  I have always liked the UK and have spent many summers there.
• Ireland might belong high on the list, but I have never been there and am not that familiar with it.  But my sense is that if I really were to research it, Ireland would make the top 5.  I could also probably have rattled off a number of other British island colonies, but kept it to Bermuda.
• Canada ... its like a whole other state   (this is a line I uttered at business school once, echoing the then-current "Texas ... its like a whole other country" advertising campaign.  It was not well-recieved by our northern neighbors.  I still think a few Canadians are trying to hunt me down up there
• Been to Singapore a few times.  An odd place, but certainly a liveable one.  Last gasp of the English speaking choices on the list.
• Netherlands and Switzerland are both fairly capitalist-friendly nations with good support for a displaced English speaker.  I have spent more time with the Dutch, so it is a bit higher, but Switzerland is freaking gorgeous.
• Spain is on the list mostly as a language play.  Not a huge fan of the Spanish government, but I speak the language well enough to pick it up quickly.  Good beaches, and the south coast has many of the appeals of Provence without the prices (and the French).  A couple of years ago this probably would have been Argentina.  I really loved Argentina when I was there, but I am scared a bit by the current political and economic climate.
• I like Austria, and Germany is OK.  Not America but perfectly reasonable places to live.
• If I am really running not just form the US but the first world in general, I might pick Costa Rica.  A pretty good government, particularly for Latin America, beautiful, and plenty of places to be secluded (and/or hide, if the need were to arise).
• I considered the Czech Republic.  Prague seems to be the white-hot destination for American tourists, and they certainly know their beer.  But I suspect that Eastern Europe has several more decades of work before the every day conveniences and creature comforts to which I have become accustomed in the US are prolific there.
• Scandinavia is too freaking cold.  Maybe if I were single I might find some appealing reasons to reconsider...
• There may be some country like Monaco that would suit me perfectly but of which I am wholly unfamiliar.

Readers are welcome to propose their own priorities in the comments.

** Postscript: Three Days of the Condor is one of my favorites, for a couple of reasons.  First, I always loved Faye Dunaway.  Second, and more important, I like thrillers that have a more languid pace.  I know that sounds weird to say, and if I were a film critic I might have the right words, but there is something about the music and the editing and the pacing that almost stands in contrast to the urgencies of the plot itself.  Despite being on the run through the movie, Redford never actually runs.  No car chases either.  Sort of the antonym to the shaky rapid-cut camera action of, say, the Bourne movies.  Other movies I would put in this same category are LA Confidential (maybe my favorite movie) and perhaps the newer version of the Thomas Crowne Affair. I might put Chinatown on this list too, but then since 3 of the 4 would include Dunaway, one might think my first rather than my second criteria was driving the list.

By the way, even action movies could learn something from this.  The first Indiana Jones movie was great in part because the action scenes were interspersed with quiet scenes.  The audience gets to rest from time to time, and the action is highlighted by the contrast.  You can even have some token character development.  Later Indiana Jones movies fell into the trap of going for non-stop adrenalin.

Yesterday I posted on the irony that in the name of "change" and "dynamism," the Democrats are pushing for what basically is an inherently more conservative (little-c), less dynamic economic system that mirrors that of many continental European countries.

Daniel, an American reader who does quite a bit of work in Europe, wrote me:

1) The static nature of the Euro mentality assigns a high cost to ... people ... who try to break the mold. Cost of failure is relatively high. In Italy if your small business declares bankruptcy, you forfeit the right to vote.

2) In Germany, workers are sorted at an early age into "blue collar schools" and "professional schools". I know from my youth, if I had grown up in Germany instead of America, I probably would not be a consultant but more like a janitor (not that there is anything wrong with janitors...).

3) Social services in Europe are hit and miss. In Germany, many people carry private insurance despite the availability of public insurance because of the lack of quality.

4) (this may be a good thing) Italian school children go through a less harsh puberty than American kids. Society has drilled into them that it's not cool to be different, so there are less cliques. When I share my experiences in school with most Europeans they usually make some snide remark about how growing up in a battle zone (primary school) has caused the Iraq war.

5) Highly skilled workers are in many cases no better paid than unskilled staff. In the south of Italy a senior programmer may make 2K euros per month. A secretary might make 1.5K a month. If it weren't for most Europeans fear of moving to new cities, there would be no programmers to hire.

6) Speaking of being afraid to move, many Europeans find the thought of moving to a different city complete alien concept.

7) Life in Euro is a much more comfortable than in America *if* you are European. If you are an immigrant, forget it. After two years of pitching companies in the South of Italy, I have never seen a black person be more than a street side vendor of trinkets. In Italy, there is an unsaid rule that you must be an Italian to ever be a professional.

8) Don't get me started on France.

9) It is illegal for a business to stay open more than it's quota in most European countries. It is illegal to operate a barber shop on Mondays.

US unemployment in August "jumped unexpectedly" to 6.1%, by the oddest of coincidences in the first full month just after new, 12% higher US minimum wages took effect. 

The unemployment rate is higher than it has been in the United States in the last 5 years, but substantially lower than the rate most Western European countries like France and Germany experience even during peak economic times. 

In response, the Obama campaign is urging further increases to the minimum wage and emulation of labor policy and legislation in France and Germany.

I say a sign the other day at the airport that full-body millimeter-wave imaging was coming soon to the Phoenix airport.  I guess this was pretty inevitable, and has certainly been predicted in many movies, including Total Recall:

I can't really decide if this is any more invasive and humiliating than what we already do, ie get undressed, put our medications and creams in clear plastic bags for all to inspect, and subject ourselves to full-body pat downs.  For my part, based on this and numerous other humiliations, I am working as hard as I can to minimize how often I fly.  JD Tuccille has more, and observes that body cavity searches aren't just for airplanes any more:

If you think that air travel is starting to resemble a very-expensive
East Germany-nostalgia tour and you'd prefer a less-intrusive
alternative, you might consider traveling by train. Well, except, not
on Amtrak, which implemented random bag searches, armed guards and bomb-sniffing dogs earlier this year.

Even local travel is iffy, since New York City has been subjecting subway passengers to annoying searches for the past three years. Los Angeles's MetroLink implemented a similar policy this week, apparently just so officials there wouldn't feel left out. Metrolink spokeswoman Denise Tyrrell told the Los Angeles Times

As a postscript, I had a meeting the other day with the National Park Service in Denver.  To get inside - remember this is the park service, no other agency shares this building - I had to give up my driver's license, have all my bags searched, and go through an X-ray machine.  Does anyone think that maybe we have lost some perspective when I have to go through full-on invasive security to discuss merchandising at a gift shop?

Though I would not want to trade my income taxes with those paid by Europeans, there is at least one area where the US has the worst tax regime in the world.  The specific area is the double standard the US applied on eligibility of income when other countries are involved.  For citizens of other countries, the US applies the standard that taxation is based on where one earns their income, so citizens of, say, France that are working in the US must pay US taxes.  However, for citizens of the US, the government reverses its standard.  In this case, the US applies the standard that taxation is based on citizenship, so US citizens must pay taxes on their income, even if it is all earned living in a foreign country.  Since most countries of the world apply the first standard  (which is also the standard individual states in the US apply), US expats find their income double taxed between the US and the country they are living in.

But now, it is just getting worse:

Queues of frustrated foreigners crowd many an American
consulate around the world hoping to get into the United States. Less
noticed are the heavily taxed American expatriates wanting to get out "”
by renouncing their citizenship. In Hong Kong just now, they cannot.
"Please note that this office cannot accept renunciation applications
at this time," the consulate's website states. Apart from sounding like
East Germany before the fall of the Berlin Wall, the closure is
unfortunately timed. Because of pending legislation on President Bush's
desk that is expected to become law by June 16th, any American who
wants to surrender his passport has only a few days to do so before
facing an enormous penalty.

"¦Congress has turned on expats, especially those who, since new tax
laws in 2006, have become increasingly eager to give up their
citizenship to escape the taxman. Under the proposed legislation,
expatriates surrendering their citizenship with a net worth of $2m or
more, or a high income, will have to act as if they have sold all their
worldwide assets at a fair market price.

"¦That expats want to leave at all is evidence of America's odd tax
system. Along with citizens of North Korea and a few other countries,
Americans are taxed based on their citizenship, rather than where they
live. So they usually pay twice "” to their host country and the
Internal Revenue Service. As this makes citizenship less palatable,
Congress has erected large barriers to stop them jumping ship. "¦[I]t
may have the opposite effect. Under the new structure, it would make
financial sense for any young American working overseas with a
promising career to renounce his citizenship as early as possible,
before his assets accumulate.

This is simply awful, and is another example of fascism in the name of egalitarianism (the fear is that a few rich people will move to tax havens to avoid US taxes).  Add up your net worth - equity in your house, retirement savings, etc - and imagine having to pay 35% of that as a big bribe tax to the US government to let you leave the country. 

I have always wondered how people could describe European countries as more egalitarian than the US.  Yeah, I know the income distribution tends to be flatter, but that is almost entirely because the rich are richer in the US rather than the poor being poorer.  But pure income distribution has always seemed like a terrible way to make comparisons.  My perception has always been that class lines in Europe are much harder than they are in the US.  The elites in Europe have made a sort of arrangement in which they pay off the masses with an income floor and low work expectations in turn for making sure that none of the masses can in turn challenge their elite status or join their ranks.  The government protects large corporations form competition, foreign or domestic.  The government protects existing laborers against new entrants into the labor market.  The government makes it virtually impossible for the average guy to start a business.  The result is a lower and middle class who won't or can't aspire to breaking out of their class.  Elites are protected, and no one seems to care very much when political elites enrich themselves through public office and then entrench themselves and their families in the power system.  This, presumably, is why the American political class thinks so much of the European model.

Bryan Caplan writes via Marginal Revolution:

In the U.S., we have low gas taxes, low car taxes, few tolls, strict zoning that leads developers to provide lots of free parking, low speed limits, lots of traffic enforcement, and lots of congestion.

In Europe (France and Germany specifically), they have high gas
taxes, high car taxes, lots of tolls, almost no free parking, high
speed limits (often none at all), little traffic enforcement, and very
little congestion. (The only real traffic jam I endured in Europe was
trying to get into Paris during rush hour. I was delayed about 30
minutes total).

If you had to pick one of these two systems, which would you prefer?
Or to make the question a little cleaner, if there were two otherwise
identical countries, but one had the U.S. system and the other had the
Euro system, where would you decide to live?

Much as it pains me to admit, I would choose to live in the country
with the Euro system. If you're at least upper-middle class, the
convenience is worth the price. Yes, this is another secret way that
Europe is better for the rich, and the U.S. for everyone else.

As a follow-up to this post on gas-price demagoguery, I would like to observe that the very same people who are most likely to demagogue about high gas prices in this country are the very same ones who advocate that the US adopt European-style taxation levels, regulatory policy, and CO2 targets, the results of which can be seen here:

If you can't read the colors on the scale well, I think you can guess which is the US price line and which are the European gas prices.  Source here.  Just to be clear, this has nothing to do with wholesale gasoline prices, which are substantially similar between the US and Europe:

Since the difference in price does not go to the producer, I will leave it as an exercise to guess where the extra $5 per gallon is going (hint:  Uncle Francois)  The cognitive dissonance required to call for 80% CO2 reductions while simultaneously decrying $3.50 gas prices is just stunning to me.

Update:  From the same source, here are the gas prices in dollars per US gallon EXCLUDING taxes:

Update #2:  More here on Hillary's sleight of hand.  And this from Robert Samuelson, at how this cognitive dissonance extends to exploration limits:

We could be producing more, but Congress has put large areas of
potential supply off-limits. These include the Atlantic and Pacific
coasts and parts of Alaska and the Gulf of Mexico.
By government estimates, these areas may contain 25 billion to 30
billion barrels of oil (against about 30 billion barrels of proven U.S.
reserves today) and 80 trillion cubic feet or more of natural gas
(compared with about 200 tcf of proven reserves).

What keeps these areas closed are exaggerated environmental fears,
strong prejudice against oil companies and sheer stupidity. Americans
favor both "energy independence" and cheap fuel. They deplore imports
-- who wants to pay foreigners? -- but oppose more production in the
United States. Got it? The result is a "no-pain energy agenda that
sounds appealing but has no basis in reality," writes Robert Bryce in
"Gusher of Lies: The Dangerous Delusions of 'Energy Independence.' "

Hillary has jumped on the gas tax holiday along with John McCain.   Kevin Drum calls it pure demagoguery (he probably wouldn't have been so blunt about Hillary, but since he already derided McCain for the idea, he has the good grace to apply the same criticisms to Hillary:

I'd say there's approximately a zero percent chance that Hillary
Clinton or John McCain actually believe this is good policy. It would
increase oil company profits, it would make hardly a dent in the price
of gasoline, it would encourage more summertime driving, and it would
deprive states of money for transit projects. Their staff economists
know this perfectly well, and so do they.

But they don't care. It's a way to engage in some good, healthy
demagoguery, and if there's anything that the past couple of months
have reinforced, it's the notion that demagoguery sells. Boy does it
sell.

I tend to agree with Drum.  The gas tax, at least when applied to its original purpose of funding highways and roads, is one of the better taxes out there, doing a pretty good job of matching the costs of roads to the users of the roads.  However, I did make this point in Drum's comment section:

I am glad you see that an 18.4 cent gas price reduction is small compared to the total price and proposing such a reduction by government fiat is pure demagoguery. 

I would like to point out that most oil companies have a profit on a wholesale gallon of gas that is also about 18-20 cents.  The reason they make so much money is that they sell a lot of gallons of gas (plus many other petroleum products).  So is it similarly pure demagoguery to blame oil company profits for the price of gas, or to suggest government schemes (e.g. windfall profits tax) to reduce these profits?

By the way, Hillary is particularly hypocritical on this, because she has adopted the 80 by 50 CO2 target (80% reduction by 2050).  To meet this target, which I think would be an economic disaster, is not going to require an 18.4 cent gas tax, but something like a $10 a gallon gas tax, or more.  Since she has adopted her 80 by 50 target, her correct answer on gas taxes should not be to propose a holiday, but to say "suck it up, because taxes are going to go a hell of a lot higher."  McCain, who has also adopted a CO2 target, though a less stringent one, is in the same boat.

Update:  OK, the $10 per gallon tax is probably gross under-estimated.  The number is likely to have to be much higher than that, given that Europeans are already paying nearly $10 a gallon and are not even in the ballpark of these CO2 targets.

Cost of gasoline
(U.S. Dollars per Gallon)
Date___     Belgium  France  Germany  Italy  Netherlands  UK  _ US
4/20/98     3.43___  3.44__  3.25___  3.48_  3.56_______ 4.04  1.21
4/21/08     8.62___  8.34__  8.58___  8.32_  9.51_______ 8.17  3.73

HT:  Hall of Record

Sixty-six years ago today, the Japanese attacked Pearl Harbor, which turned out to be about as smart of a strategic move as taunting the New England Patriots just before the game.  During subsequent years, there was an inevitable investigation into why and how the US got caught so flat-footed, and who, if anyone, was to blame.

Decades later, revisionist historians reopened this debate.  In the 1970's, not coincidently in the time of Watergate and lingering questions about the Kennedy assassination and the Gulf of Tonkin, it was fairly popular to blame Pearl Harbor on ... FDR.  The logic was (and still is, among a number of historians) that FDR was anxious to bring the US into the war, but was having trouble doing so given the country's incredibly isolationist outlook during the 1920's and 1930's.  These historians argue that FDR knew about the Pearl Harbor attack but did nothing (or in the most aggressive theories, actually maneuvered to encourage the attack) in order to give FDR an excuse to bring America into the war.  The evidence is basically in three parts:

• The abjectly unprepared state of the Pearl Harbor base, when there were so many good reasons at the time to be on one's toes (after all, the Japanese were marching all over China, Germany was at the gates of Moscow, and France had fallen) could only be evidence of conspiracy.
• The most valuable fleet components, the carriers, had at the last minute been called away from Pearl Harbor.  Historians argue that they were moved to protect them from an attack known to be coming to Pearl.  They argue that FDR wanted Pearl to be attacked, but did not want to lose the carriers.
• Historians have found a number of captured Japanese signals and US intelligence warnings that should have been clear warming of a Pearl Harbor attack.

I have always been pretty skeptical of this theory, for several reasons:

• First, I always default to Coyote's Law, which says

When the same set of facts can be explained equally well by

1. A massive conspiracy coordinated without a single leak between hundreds or even thousands of people    -OR -
2. Sustained stupidity, confusion and/or incompetence

Assume stupidity.

I think it is more than consistent with human history to assume that if Pearl Harbor was stupidly unprepared, that the reason was in fact stupidity, and not a clever conspiracy

• The carrier argument is absurd, and is highly influenced by what we know now rather than what we knew in December of 1941.  We know now that the carriers were the most valuable fleet component, but no one really knew it then (except for a few mavericks).  Certainly, if FDR and his top brass knew about the attack, no one would have been of the mindset that the carriers were the most important fleet elements to save.
• I find it to be fairly unproductive to try to sort through intelligence warnings thirty years after the fact.  One can almost ALWAYS find that some warning or indicator existed for every such event in history.  The problem occurs in real-time, when such warnings are buried in the midst of hundreds of other indicators, and are preceded by years of false warnings of the same event.
• I don't really deny that FDR probably wanted an excuse to get the country in the war.  However, I have never understood why a wildly succesful Japanese attack on Pearl Harbor was more necessary than, say, an attack met strongly at the beach.  I can understand why FDR might have allowed the attack to happen, but why would he leave the base undefended.  The country would have gotten wound up about the attack whether 5 ships or 10 were destroyed.

It is interesting how so much of this parallels the logic of the 9/11 conspiracists.  And, in fact, I have the same answer for both:  I don't trust the government.  I don't put such actions and motivations past our leaders.  But I don't think the facts support either conspiracy.  And I don't think the government is capable of maintaining such a conspiracy for so long. 

The amount I know about Belgium could probably be written on a post card (except for its role in military history, which is substantial due to its location and its famously brave stand against Germany in the opening act of WWI).  So this article about the tremendous split developing between French (Wallonia) and Flemish (Flanders) Belgium was new to me.  In particular, I noted this:

Every year 6.6% of Flanders' GDP is spent on welfare in Wallonia.
The money has not helped the Walloons but turned them into welfare
addicts. Belgium is a case study of how socialist redistribution
schemes lead to economic perversions.

It appears that 60% of Wallonians are either unemployed or on the government payroll (roughly the same thing in Europe), vs. just 28% in Flanders.  And this despite the fact that Brussels and the EU HQ are in Flanders.

Apparently, the French government is planning to sink a couple of Billion euros into a risky new technology called an "internet search engine." (via hit and run)

Germany and France had initially discussed plans to commit €1 billion
to €2 billion, or $1.3 billion to $2.6 billion, over five years to
Quaero. The project was to have been paid for by the French and German
governments, with contributions from technology companies like Thomson
and France Télécom on the west side of the Rhine, and Siemens and
Deutsche Telekom to the east.

In related news, the French government also announced a massive technology development effort to invent some kind of round thing for cars to roll around on.