[EconProf]

What is the benefit to average families of the decline in oil prices?
One of the many benefits is a $2000+ annual savings via the lower price of gasoline.
This assumes a 2-car family, driving each vehicle 15000 miles per year, and a $1.50 drop in the price of gasoline from the roughly $4 per gallon price peak of the past. Feel free to adjust the assumptions, but this looks pretty close to what happened. Thank you fracking (plus a few other lucky developments).

[EconProf]

Thanks, FlyerInHi for reviving my thread from over a year ago. And reviewing the comments, I see that your predictions from January, 2015 were pretty accurate. And my 4 predictions from the original post, which were contrary to the consensus of other economists, turned out to be largely on target.

[EconProf]

If you look today at the YouTube video, you can see an update among the choices of related videos to the right. It shows a lot of new info that makes one a lot less sympathetic to the “victim”.
The $1500 loan from 29 years ago is undoubtedly well over $10,000 now, including penalties and interest charges. And the guy undoubtedly had regular notices during those 29 years which he ignored. He is blowing off the money that we taxpayers loaned him and he presumably earned more in the last 29 years as a result. He now appears to live in a nice house. Time to pay.

[EconProf]

[quote=FlyerInHi]Econprof, I suppose if capitalism can do its magic for oil and energy, it should do its magic for other desired goods too.
So no hyperinflation or currency debasement, at least not for a top economy with a reserve currency.

I’ve watching things in the past 30 years. Products that were luxury eventually become widely available commodities. What is valuable is services to put those products to use.

Granite and marble were products of kings when the rock had to be chiseled and polished by hand. Now, thanks to innovation, we install it, replace it and throw it away by the tons.

Another example, everyone can by a large flatscreen tv. But installing it beautifully could easily cost several thousand $.[/quote]
Yes, FIH, goods are getting increasingly cheap and of better quality, like your examples of flat screen TVs and granite, while services get expensive. Goods production can be automated and offshored. But services have a high labor content and are more difficult to automate and offshore (but not impossible).

[EconProf]

Barnaby: Wow. So many mistakes I don’t know where to start.
“Our economy is collapsing”. We continue to muddle along at about 2% real growth per year, which is the envy of Europe, Japan, South America, etc.
“Peak oil is still with us…” And I suppose it always will be. The term was popular 2 – 4 years ago when oil was consistently above $100 per barrel. It is now around $40, and many say headed for $20. If that is peak oil, let’s have more of it.
“The core of the theory (of peak oil) was merely extrapolating the curve of a well’s production life.” No it wasn’t. It was the idea that accessing nature’s limited supply of oil will get increasingly expensive such that world oil prices will rise inexorably.
Fracking: “Its existed for years…” True enough. It existed, I believe, in the 1920’s. But in the last decade or two technology has enabled fracking to be so much more efficient that we can extract oil and gas from weak fields. Result: cheap oil and gas for the consumer thanks to technology and capitalism.
Yes, America is destined to be a net energy exporter. And no, I never said we would become a net oil exporter. But a week ago congress passed a bi-partisan bill revoking our 40-year ban on exporting oil, so who knows?

[EconProf]

[quote=barnaby33]You are trolling! I suppose it’s winter and you need a hobby.
Wow. So many mistakes I don’t know where to start.
“Our economy is collapsing”. Really? It is muddling along at about 2%, which isn’t great, but is the envy of Europe, Japan, South America, etc.
“The core of the theory (of peak oil) was extrapolating the curve of a well’s production life.” No it wasn’t. It was the idea that the world will exhaust nature’s supply of easily obtainable oil such that prices will rise drastically, to way above existing prices (then over $100 per barrel). How is that working out?
“Peak oil is still with us.” Oil is now about $40 and many predict it will go to $20.
Fracking: “…its existed for years.” True enough. Fracking on a small scale has been around for many decades. But with the improved technology of the last few years, we can squeeze much more oil and gas out of weak sources such that fracking gives America at least ten times more oil and gas than a decade or so ago. That’s technology and the profit system at work for the good of the consumer.
I stand by the idea that America will become a net energy exporter, and I never said we would become a net oil exporter. But in the last week congress, in a bipartisan vote, ended the 40-year old ban on oil exports, so who knows?

Remember Peak Oil? A few years ago we were all told that oil prices, then over $100, would soon double and then double again, as the world’s supplies became exhausted.
Then along came fracking. Good old capitalism harnessed technology to again stymie the doomsayers. Now the US will become an energy exporter to the rest of the world. In some previous years we imported about half of our oil. Soon we will produce more energy than Saudi Arabia. Once again the market system comes through.

I remember Peak Oil, I remember it well. No serious proponent of it forgets that the core of the theory was merely extrapolating the curve of a well’s production life, can be used to predict when a given well or field of wells will become unproductive, in an economic sense.

So who said a few years ago that doubling and doubling again was the course of our future? Certainly not I. Nor anyone who’s analysis I’ve read.

Then came along fracking? Came along, really? It’s existed for years. It wasn’t economically viable and still isn’t unless you ignore all the externalities. Capitalism is REALLY good at ignoring externalities. I’d say the only reason we even have an EPA is because capitalism you love so much is great at ignoring externalities.

The US an energy exporter? Wow now you’re into troll country. It probably doesn’t look anything like those Marlboro ads, but bless yer heart fer tryin! Yes we export a lot of coal and we always have. That too, we are past the peak on, but that’s a totally different discussion. We aren’t in any danger of being a net oil exporter anytime soon and if we are it’s because holy shit our economy is collapsing. That’s one place in which capitalism does work, until it doesn’t. You know when we can no longer get energy cheap enough to heat our homes, we don’t rely on capitalism, we go to war.

Never mind that the entire global energy complex is only made possible by the largest socialist enterprise in American history, our military. It safeguards all of that energy we so capitalistically want.

So when I accuse you of trolling, I’m being quite accurate. Peak Oil is still with us, no super giant has been discovered or exploited since Cantarel and the cost of extracting most of the new discoveries is high enough that our globalized system can’t afford it. So to speak in Capitalistic terms. Energy cheap enough to maintain our status quo kills the energy companies. Energy expensive enough to generate a consistent profit for those companies, kills their consuming economies. That sir in a nutshell is Peak Oil and it is absolutely with us today.

Unless somebody gets a fusion reactor working we are going to keep living with declining EROEI. Symptoms may include temporary gluts of oil as economies collapse and temporary shortages as we all fight over the scraps at the table. Your mileage may vary.

Josh[/quote]

[EconProf]

In this long-running debate about whether public pension plans will bankrupt us or not, there is one decisive data-point. The government-run pension plans assume a rate of return of near 8% for the indefinite future, while the private sector pension plans assume a rate of about 4%.
The pension plans constructed and run by politicians is keeping present taxpayer and employee contributions low because they want to avoid the pain that being honest would entail. The private sector, company-run plans are forced by their auditors and actuaries to be honest and assume a 4% rate of going into the future. The politicians know they will not be around in a few years, and want to look good only for the next election. The private sector companies have to consider their long-run survival prospects, and they act accordingly.
If the public sector were forced to be as honest as the private sector, many California cities and counties would instantly be bankrupt. As it is, public sector pensions are already squeezing budgets for schools, parks, libraries, etc. across the state, and it is soon to get much worse, all because of the pension promises politicians made.

[EconProf]

FLU: you have all the attributes of an entrepreneur, so work toward becoming one.
It may be in some field related to your current occupation where you can use your tech skills. Or it might be related to real estate rentals, where you already have some experience. But you know how to plan and to calculate, and you show a bent toward risk-taking, so go for it.
There is nothing more satisfying than making it on your own, cutting your dependency on an employer, and learning from your own mistakes (which will happen).

[EconProf]

Its also worth noting that CA may have the highest, or nearly the highest, state income taxes, sales taxes, and corporate income taxes, our property taxes, in terms of dollars paid, are about in the middle of the 50 states. That’s because while Prop 13 caps rates at about 1% of property value (or less, due to the following Propositions), our real estate prices are so much higher than average. So you may move to another state to pay half as much for the same house you had in CA, but you will pay the same dollar amount in property tax, thanks to Prop 13.

[EconProf]

BG: Not everyone wants to be a landlord.
The decision of heirs to rent out rather than sell an inherited SFR depends upon a whole host of considerations. First, most heirs, especially if they are several, may have differing liquidity needs. They also face the question of managing the property, perhaps from afar, and dealing with all the headaches of landlording. SFRs are the least profitable of real estate categories from a cash flow standpoint. Yes, they may appreciate, but CA has had years-long episodes of depreciation at times, and having a tenant for a few years usually hurts the value.
Property taxes are only one of many expenses involved in making this investment decision, so it alone will not be the deciding factor.
BG, I agree with your opinion about the unfairness of the present laws. They grant an unearned tax break to an underserving population. This “subsidy” must be made up by other taxpayers.
But you have a tendency to jump to broad and unwarranted conclusions based on your own experiences in your particular older neighborhood. What’s needed are in-depth, unbiased, peer-reviewed studies of the total revenue loss due to these two Propositions.

[EconProf]

OK BearishGirl, you can do all that if you want, but I question how that can be a valid measure of what the total revenue loss is due to Propositions 58 and 193.
This question would be a great research paper for someone’s Master’s Thesis. I googled several terms and could not find any published works that could tell us.
BTW, it was not the CA legislature that gave us these laws–propositions, it was the voters, and they did so overwhelmingly. Just shows how attractively-worded propositions get passed by our shallow electorate.

[EconProf]

BG: I fully agree that when Prop 13 allowed relatives to keep the same assessment as the original owners a huge and growing “welfare” benefit was created. And it is welfare that is totally unwarranted, as it confers benefits on those with above-average net worth.
Blame the CA legislature, which responded to a small cry-baby segment of the population, ignoring the long-term implications.
Having said all that, I’m not sure a lot of money is involved, since properties constantly change hands, and heirs can’t always take over properties for a variety of reasons.
Do you have any hard numbers of how much this unwarranted benefit is costing in lost CA property tax revenues?

[EconProf]

FlyerInHi: Singapore is indeed a prosperous and successful city-state that is a strange mixture of capitalism and heavy-handed government. I’d say their wealth is more a result of their culture and work-ethic as harnessed by their long-time leader, President Lee Kuan Yee, recently deceased. Not sure it has much relevance to New York City’s rent control.

[EconProf]

Like so many government interventions into free markets, rent control laws make no sense for a whole host of reasons.
One reason not mentioned here so far is how it discourages the building of more apartment supply, which would lower rents and thus help the poor. What investor would build into a city that can forever limit their future rents?

[EconProf]

First, the lease language controls, so both LL and tenant need to follow it strictly.
If it says nothing about the locks, then tenant cannot change them without permission. If locks are changed, LL needs to get copy of keys for several reasons: to gain access in the future (with limitations spelled out by law and in the lease), and in the event tenant loses keys or locks himself out.
Also, if tenant is given permission to change locks, LL must demand ALL the parts to the original locks. The tenant may put on a cheapo lock which could be replaced by the original lock when they leave.

[Author]

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