Wednesday, January 20, 2010

Obama, Lame Duck

How easily the Democrats fold. And just how predictable it all was.

Martha Coakley's election defeat in Massachusetts deprives Democrats of their 60th seat in the Senate. The Republicans can now block Obama's major priority, health care reform. The stimulus was too small, so the economic recovery will soon peter out. There will be big Democratic losses in this fall's off-year elections, and Obama will be rendered a lame duck.

Obama will try to follow Bill Clinton's "triangulation" between liberal Democrats in Congress and right-wingers in Congress. The strategy won't work, because Obama does not have Clinton's moderate credentials. When 2012 rolls around, the front runner will be Mitt Romney, and he'll pick Tim Pawlenty, the governor of Minnesota, as his running mate. Obama won't have a chance.

That's the baseline scenario now, and many people will trace it back to yesterday's Massachusetts senatorial election. Even though that loss was much more a function of a lazy candidate and a complacent and divided Massachusetts Democratic Party, the consequences are much wider.

Coakley and the Massachusetts Democrats: Oil and Water

This scenario was in the cards well before Coakley came along, but it's probably worth pointing out a thing or two about her and her campaign. Or more to the point, her lack of one.

I lived in Massachusetts for 11 years, and recall Coakley as a cipher and a cold fish whose claim to support seemed rooted in her gender. Women staff the middle levels of the Democratic Party; without them, you wouldn't have any phone banks or campaign rallies. Women badly wanted one of their own in a visible position, and Coakley was their vehicle.

I can't blame the Democratic women of Massachusetts for wanting to break the hold of the old boys club, but good intentions aren't enough. Coakley was arrogant, reserved, entitled, and lazy, refusing even to shake hands with voters. Once the Senate race came along, she decided that she had already "earned" it by serving time as the state's attorney general. After handily winning her primary election and looking at polling that gave her a 30-point lead, she literally went on vacation -- a trip to the Cayman Islands. Until the final week of the race, there was no Coakley campaign apparatus at all. Between the primaries and the special election, she made 19 campaign appearances; her opponent made more than 60.

Then there is the Massachusetts Democratic Party, which itself tends toward arrogance, laziness, and factionalism. Coakley was from the western part of the state, and began her career as the district attorney for Middlesex County, which comprises the northwestern suburbs of Boston. The bulk of the party apparatus is controlled by the Irish of Suffolk County, i.e., Boston. They don't get along too well.

When Coakley crushed the Boston faction's candidate, Michael Capuano, in the primary, Boston washed its hands of the race. For example, Boston's mayor, Tom Menino, didn't even endorse Coakley. The Boston Globe noted that, along Blue Hill Avenue, a major arterial through the heart of Jamaica Plain, a heavily Democratic neighborhood, there were only two -- count 'em, two -- Coakley signs to be seen on Election Day. Coakley won the usual big percentages in Boston, but the Democratic organization there did not mobilize to produce a high turnout.

Barack Obama, Meet Jimmy Carter and Bill Clinton

President Carter entered office with 62 Democratic senators to 38 Republicans, and 292 Democrats in the House to 143 Republicans. He should have had clear sailing, but the result was very different. Carter's first act was to clash with Democrats on the issue of water projects in the western United States. He was soon derided within the party for his aloofness and arrogance. Throw in a narrow personal base of popularity, a troubled economy, and a prolonged crisis following the seizure of the U.S. embassy in Iran, and Carter was toast.

So, too, was the Democratic Party's congressional and institutional apparatus, which had failed to adapt to the social, economic, and demographic changes of the 1960s and '70s, and changes in the global economy. Out of ideas and split between its liberal and conservative wings, it was ripe for a well-planned conservative invasion. Ronald Reagan was the vehicle, and thus ended a half-century of Democratic dominance in Washington

All of those conditions pretty much hold today; the Democrats have done little repair work. Democratic presidential victories in 1992, 1996, and 2008 have been narrowly-based flukes, based on popular unease about the economy and the personal appeal of presidential candidates. The Democrats have no unifying ideas to match extraordinary Republican unity behind a mixture of economic fascism and right-wing Christian social reaction.

Democratic presidential candidates are elected not for their ideas, but on their "buzz," their p.r. skills, and on public economic dissatisfaction of the moment. Once in office they sputter, and when they hit a setback they sound a retreat. It happened to Carter and Clinton, and now it's happening to Obama.

The 2012 Election Should Be Strictly Economic, Right? Maybe Not.

Ever since 1948, it's been possible to call presidential elections by observing the direction of the national unemployment rate in the second quarter of a presidential election year.

If unemployment rises between March and June, as it did in 1952, 1976, 1980, 1992, and 2008, the incumbent party will lose decisively. If it stays level, as it did in 1960, 1968, and 2000, the incumbent party will lose narrowly. If it falls, as it did in 1964, 1972, 1984, 1988, 1996, and 2004, the incumbent party will win. Only in 1956, when unemployment rose in the second quarter, did the incumbent win anyway. And that's only because, unlike in other years, the change was small and did not represent an overall direction.

Obama's only hope is that the economy begins a real recovery by early 2012. Even then, however, I wonder whether the rule will hold. In 2008, the 0.5% rise in unemployment was very large by historical standards, but Obama won by only 7 percentage points. I think his race shaved about 5 points from his margin, and will do the same again. It's going to take a major economic upswing in early 2012 to save Obama.

But Is Obama Worth Saving?

What change have we seen from this president? The U.S. is engaged in two wars, like it was before. Health care reform will collapse, and the next act in the play will be the radical scaling back -- if not outright destruction -- of Medicare. Various Democratic constituencies will lose on the so-called "values" issues, such as gay rights and abortion. The Supreme Court will move to the right, as the emerging de facto Republican control of the Senate forces Obama to appoint conservatives to fill vacancies.

It's not an encouraging picture. I'd like to imagine that the Democrats will rally, but what is there to rally to? What do Democrats believe? Half of the party clings to the New Deal and the social liberalism of the 1970s. The other half of the party appears to be essentially Republican. There is little underlying consensus about what defines Democrats, something that the Republicans have no trouble doing.

Some will trace Obama's fall to the Massachusetts election, but I trace it to the spring and summer of 2009, when both the White House and the congressional Democrats refused to respond to the Republican Party's scorched-earth opposition to the stimulus and to health care reform. It was plain to see, but Obama and the congressional Democrats did nothing. I think it's because they didn't really know what they believe. That's a fatal problem in today's American politics.

Bottom line: Democrats, what do you believe in? Anything? Is it time to think about replacing the Democratic Party, and if so, with what?

Thursday, January 7, 2010

Electric Car Costs

As the p.r. campaign for the Nissan Leaf starts to heat up, we're going to be hearing about cost comparisons between electric vehicles (EVs) and existing types.

Here in Seattle, electricity costs 9.14 cents per kilowatt hour (kWh). The Leaf will use 24 kWh to go 100 miles, which works out to a fuel cost of $2.20 for 100 miles, or 2.2 cents per mile. Gas is on the expensive side here, at $3 a gallon for regular. For a gas-fueled Japanese compact of Leaf's size, I'd estimate 30 miles per gallon, which is $10 for 100 miles or 10 cents a mile. The new diesels get 50 miles a gallon, and hybrids range from 40 mpg to 50 mpg, making their cost per mile 5 cents to 6 cents.

So, the Leaf kicks ass, right?

Not so fast. The Leaf's "gas tank" is a lithium-ion battery, and they wear out. Nissan says it will lease the batteries separately. It's reasonable to include those leasing charges in the fuel costs. Nissan hasn't said what the lease rate will be. In Seattle, the break-even point relative to a gas car would be $78 a month in typical use (12,000 miles a year), and $28 a month relative to a diesel.

Hybrids Use Batteries Too

Even though hybrid batteries aren't leased, their replacement cost is properly included in fuel costs. How much are those costs? Hard to say. A new one from the dealer costs $3,500 including installation, but no one knows how long they last. Toyota warranties the Prius battery for 8 years/100,000 miles, and the word seems to be that in normal use they last quite a bit longer.

There are a few ways to skin that cat. One would be to assume that a typical buyer of a new Prius would never have to replace a battery, and therefore the Leaf's battery leasing break-even point relative to a hybrid would be the same $28/month relative to a diesel. Some other hybrids get closer to 40 mpg, so the Leaf battery lease break-even points relative to them would be $50 or $55 a month. Another method would be to add a penny or two a mile to hybrid fuel costs (and therefore $10 or $20 a month to Leaf break-even battery leasing rates relative to hybrids) to reflect the reduced value of a used hybrid emanating from the buyer's realization that he will be on the hook to swap out the battery.

In the real world, the battery cost issue doesn't look like much of a problem for the hybrids. All of this might be cause for Nissan to forget about battery leasing and grant the same warranty that Toyota does. In that case, there'd be no leasing charge to add onto fuel costs and the fuel cost comparisons would look great. Could it be that the leasing idea is just a security blanket for customers worried about battery life? If so, then Nissan's leasing fee should be nominal, no more than $5 or $10 a month.

The alternative might lie in the nature of a true EV's battery versus a hybrid's battery. As the sole power source, an EV's battery is larger, heavier, and more expensive than a hybrid's. What about its longevity? The gas engine in a hybrid could mask battery run-down in a way that would be impossible in a true EV.  Nissan will have a pretty good idea along those lines, so to the extent that battery leasing charges are more than nominal, the message will be that EV batteries won't last very long.

Other Gas/Diesel Costs

Anyone who thinks that the price of gas at the pump reflects its full cost is either blind, crazy, or Dick Cheney. Some time ago, I calculated the cost of the wars in Iraq and Afghanistan at 60 cents a gallon, or 2 cents a mile for gas cars and 1 cent for diesels. You'd probably have to double that cost in real life, to reflect opportunity costs, i.e., the benefits lost by not deploying the same resources in the productive economy.

So, we ought to raise the cost of gas to 14 cents a mile and diesel to 7 cents a mile. Which does not include the cost of the tears from the families of the dead in those wars, the agony of the wounded, the stress of division at home, or the irritation of having to learn about why Sunnis and Shiites hate each other and the Pashtuns hate us.

Then there is pollution, both smog that aggravates heart disease and asthma, and carbon dioxide that causes global warming. Gas and diesel are culprits, but so are the coal-fired power plants that will make electric cars go. My strong gut feeling is that internal combustion engines, in the aggregate, are worse for the environment than coal fired plants, but I don't know the numbers.

Of course, if we had good leadership, a reasonably clean government, and clear vision, we'd erect windmills to provide the fuel for EVs. But that is almost certainly an impossible dream, given the sorry state that we're in. Alas, for the foreseeable future, just about everyone outside of hydro-powered Seattle is going to have to assume that EVs will add to pollution generated by coal-fired power plants, and waste from nuclear plants.

The Bottom Line

Nissan has said that the cost of battery leases will not bring fuel costs for its Leaf above that of gas-powered cars. Nevertheless, I expect that the first Leaf will not be a value proposition. It'll cost more than a conventional car, and I expect that fully-loaded fuel costs will be higher than a diesel and close to those of a gas-powered model, if not higher.

But that's not unusual for the first version of a new technology. Over time, I expect the comparison to move inexorably in favor EVs, as gasoline gets more expensive and volume production of EVs and components brings costs down. EV mechanics are radically simpler than gas and diesel vehicles, and hybrid batteries are already getting cheaper. Alternative forms of electricity storage -- larger-scale capacitors -- are on the drawing boards, and they'll be cheaper and offer much better range.

You can expect the oil companies to mount a stealth p.r. blitz against EVs soon. All kinds of numbers will be thrown around. Whopping lies will be told, and the stenographers of the media will be all too happy to pass 'em along under the guise of "reporting" on the "controversy behind the numbers." But from what I now know, I'll be in the EV camp.

Addendum: "Miles Per Gallon"

EVs face an issue when making fuel economy comparisons with conventional vehicles. Because a true EV doesn't use any gas, any "miles per gallon" figure is theoretical, based solely on comparing the costs of electricity and gasoline. And then there is the battery cost issue; should that be included in an "mpg" figure, or not?

At 2.2 cents a mile for electricity, and gas at $3 a gallon, and without battery leasing or replacement included, the Nissan Leaf gets "136 mpg." If gas goes to $4 a gallon and electricity stays the same, then the Leaf gets "181 mpg." In the summer of 2007, I paid $5 a gallon for regular at a station near L.A. That year, the Leaf would have gotten "227 mpg." All without using a drop of gasoline.

The point: Beware of "MPG" claims for pure EVs. Think "fuel cost per mile" instead.

Tuesday, January 5, 2010

Advice To An Aspiring Journalist

An old friend's niece wanted advice on a future career in journalism, including whether or not she should pursue the editorship of the University of Illinois' Daily Illini. I sent two replies, one a brief note urging her to try for the job, and later the one below.

I decided to put down some thoughts about the crisis in journalism. In doing so I risk the sort of pedantry that begins to afflict people once they hit the age of 40 or so, and typically keeps growing over time. I'll try to steer as clear of it as I can, but some of it is inevitable.

Newspapers have been the heart and soul of journalism for a couple hundred years, and they are dying. It's not simply a shift of publishing technology. The Internet, which is misunderstood, has made it possible for everyone to be an unfiltered publisher, and censor, and more importantly it has steadily eroded the financial base that makes newspapers possible. I doubt newspapers as we know them will exist in 20 years, and maybe not even in 10 years.

A side note about the Internet. There is no “Internet,” per se. Rather, it is a label applied to the family of technologies that allow access to data libraries stored on computers connected to the telecommunications network. What once existed to carry voices between two points now carries digital codes that evoke sounds and visual images. The telecom network itself has been a series of computers since the 1970s, and the peripheral devices connected to that network have been computers since the 1990s.

In the last 15 years or so, the peripherals have envolved to facilitate very cheap mass storage of coded data, high-capacity transmission all the way to the endpoints, and easy manipulation and transformation of data to allow its presentation as sounds and images. The effect has been to critically undermine a publisher's ability to control what information he possesses, and to create alternative means of delivering it.

It Started With The Loss of Classified Advertising

Before E-Bay and Craig's List existed, I created a business plan for computerized classified ads. I did it as a business school exercise in 1989. I noted that 40% of newspaper revenue consisted of classified advertising broken down into four categories: employment, housing, automobiles, and general merchandise. Classified ads were ripe for the picking. Newsprint rubs off on readers' hands; space limitations prevent full descriptions and pictures; searches and comparisons were tedious; rates were expensive; distribution of information was local and therefore inefficient.

Today, Ebay and Craig's List dominate the advertising of general merchandise. Auto dominates the advertising of used cars. Housing is a mixed bag, with the newspapers hanging on mainly because all real estate is local and they've gone on-line themselves. Employment is also an area of strength for newspapers, because it lends itself to centralization yet is local. The alternative press, which once rested heavily on personal ads, many of them explicit, has been decimated by the growth of online personals, including but by no means limited to Craig's List.

None of this will change, and the result has been the gutting of newspaper budgets and staffs. There has been a downward spiral in which there is less and less of interest in the newspaper, because there aren't the staff members to produce original content. Meanwhile, the Internet's facilitation of easy, unfiltered publishing alternatives has created a thriving competitive threat among the blogs. None of this has been helped by the newspaper industry's general lack of management vision and talent, as exemplified by the inability of virtually every one of them to charge their readers for online access.

I think that readers eventually will pay for online access, but by the time it happens newspapers will be dead and their content will be changed forever. As an old guy, I find this lamentable, and worry that we will lose some critical benefits newspaper journalism has delivered over the years, most notably the detailed scrutiny of government, and their function as a shared reality tying communities together. If I were younger, I might be more inclined to see the great opportunities ahead. You're in college and an aspiring journalist, which means that you are heading straight into a tornado. I hope you're a storm chaser is all I can say, because this is one hell of a storm.

The Traditional Journalism Career Path Is Dying, or Dead

The old model of attending journalism school and then getting a job at a small market newspaper, and then climbing the ladder toward the major metros, is dying fast and in fact may well already be dead. The major metros are getting rid of people, and soon enough I think we'll start to see some major cities without even a single newspaper. At or near the top of my list would be San Diego, but maybe it'll be a different place. I'm not sure that it really matters.

So, if you still want to be a journalist, what do you do? For starters, I don't think it's possible to make any fixed plans in that industry past college. What you can do, though, is take advantage of the opportunities within the college environment to think about what's happening and prepare yourself for what's coming in your life.

The economic underpinnings of newspapers, and their function in society, are vanishing, but where they still exist you should be involved. The opportunity to be the editor of the Daily Illini is not to be passed up. The only way to learn about journalism is to practice it, and the campus paper is an excellent vehicle for that. Also, as I noted in a prior e-mail, it is an executive, leadership position that will augment your appeal to any potential employer in any field. Of all the decisions you face, that one is the easiest.

Beyond that, I think you'd do well to explore the elements that go into journalism. Study the history of journalism. I don't think you need a full course in the subject; instead, ask a professor for a book or two. Basically, you need to understand where journalism came from to begin with, so you can understand its essential appeal over time. It started as travel writing, including specialized reports from diplomats, traders, spies, and military forces. Journalism was in demand by people who needed reliable information.

From there, it grew into political activism. All of the American newspapers prior to the Civil War were controlled by political factions. The first amendment says nothing about accuracy or objectivity; it was assumed that out of the cacaphony, people would glean the truth. Today's blogs are pre-Civil War journalism, with all of the same warts. The next phase was introduced by the Civil War; people wanted reliable, truthful battle accounts. Objectivity was a creature of the marketplace, and it was facilitated by technological advances that permitted wide, cheap distribution of the product. It was supported by paid advertising from businesses who also had a commercial interest in a credible product that would be widely read.

The Timeless Elements of Journalism

What's relevant about all of that is that people have a hunger for reliable information. Newspapers will die, but the demand for reliable information will not. That's the key here. It is enduring and timeless.

In considering what's reliable, a journalist needs to be able to separate fact from opinion. Even if the objective model that predominated after the Civil War, and especially after World War II, goes away for a time, those who present slanted viewpoints need to grasp and accommodate objective reality. There are eventually limits on what level of propaganda readers and/or viewers will accept. So, if you have the time left to do it, I'd recommend an introductory philosophy class, and if it's offered, a logic class.

Journalism has always been a rapidly spoiling product, so I think there is only limited utility in detailed study of great journalism of the past for its own sake. To the extent you do study past journalists, do it as a means of getting to the timeless essentials. There, I'd recommend Mark Twain and H.L. Mencken for their descriptions and commentaries on their times. I think they were the greatest we had, and that their critical methods go to the heart of what journalism will always be.

As for writing itself, most journalism is forgettable, hackneyed crap. People rarely have the time to do it any other way. Two exceptions that I know of were the Kansas City Star of the 1950s, and the New York Times of the 1980s and 1990s. The Star of that era produced something akin to daily poetry, using an economical, unvarnished, factual, direct style that was also wryly humorous (often hilarious) and somehow left enough room for the reader to do some thinking on his own. The New York Times, at its peak, was complete yet concise and occasionally even lyrical, and got to the essence of the matter. Even today, albeit diminished, the Times has moments of greatness. In any case, it is worth finding and reading archives of the Star from the '50s and the Times from the '80s and '90s as models for great daily exposition. 

Campus Journalism: Look Past Student Government

If you wind up as the editor of the Illini, latch onto anyone who has a passion for telling stories in a clear, concise, economical, relevant, and interesting way. In college newspapers, the prize goes to those who show up. One thing I would point out (and tried to point out to others when I worked on my college paper) is that a university is a treasure of interesting people and topics. The average college paper spends way too much time on the student government, and far too little time on the amazing things happening in the various academic departments.

Find yourself a Mark Twain, or better yet two of three of them, and send them into the biochemistry department to see what diseases they are getting ready to loose upon the world, or cure, or both. Ask the history department what parallels they see between now and then. Explain why so many English majors want to kill themselves. Are football players really that stupid, or do they just inhabit a non-Euclidean alternate universe? The list is endless, and just about all of it is ignored by the average college paper. Report it with style, grace, verve, passion, acceptance, some mercy, and a great sense of humor, and you'll be shocked at how many people will be clamoring for what you produce.

I've gone too far already, so I'll wrap this up with my sincere and heartfelt best wishes. I hope you apply for that editorship, win the job, and then run with it. I don't think you'll regret it. I tell my nieces that nothing they read is ever wasted, and I pretty much think the same about anything you write, as long as you care about the subject, respect your reader's intelligence, and value his time. Good luck!