Wednesday, June 11, 2008

Random Stuff

For a while, I've dried up and had nothing to blog about. The only strong view I've felt recently is that I would like to hear Ben Bernanke explain in detail what is the economic model in his head about how the "real economy" and government policy interact to determine growth and inflation? Is he a short run Philips Curve guy? What ideas embodied in the last 30 years of Chicago/Minnesota/UCLA Macro does he take seriously? Which Prescott/Lucas ideas bounce around in his head as he makes policy? I'm not a macro economist but I'd like to believe that our head macro-guy has kept his credentials up to date.

Switching gears. Is this an exciting time in academic economics? One way to judge is to thumb through the papers that will be presented at the Summer Institute.
NBER Summer Institute Sessions

Finally, if everyone is saying to not buy a Hummer maybe now is the time for the plunge?

http://www.latimes.com/news/local/la-me-lopez11-2008jun11,0,3959657.column
From the Los Angeles Times
Steve Lopez: Deriding the mayor's aide and his Hummer
Steve Lopez

June 11, 2008

A gazillion people are stuck with cars the size of oil tankers as gas prices close in on $5 a gallon, but the guy I really feel sorry for is Jaime de la Vega.

Not only is Los Angeles Mayor Antonio Villaraigosa's transportation deputy shelling out a small fortune to fuel his Hummer, but he's got the added pressure of setting an embarrassingly bad example.

Even as people switch to smaller cars and public transportation in droves, he's sticking with a monster.

I know, because just before noon Tuesday, I happened to be wandering around the City Hall basement and came upon De la Vega's copper-colored H3 in Space 26, under a sign that says "Mayor/Council Staff."

Out of the goodness of my heart, I've decided to help him out. I've called and e-mailed him, offering to take the insatiable hog off his hands. Even though the H3 is the smallest Hummer model, it still gets only 14 mpg in city driving.

"My offer is $75 cash," I said in an e-mail. "If it's in really good condition, I might go as high as $100, but only if you fill the tank first. My plan is to donate it to the National Guard."

Good deal, right? Everybody wins, including the Armed Forces.

But so far, De la Vega has not answered.

If he worries about how he'd get to work, he should do what I did and talk to some people who have recently switched to public transit. Tuesday morning at Union Station, Tustin resident Karen Park, who commutes to an advertising-marketing job in downtown L.A., told me how the switch to Metrolink was saving her money. Leaving her crossover SUV home seems like the right thing to do, she said, given the traffic and the environment.

Maybe she'd like to be deputy mayor for transportation.

This would be a great time for some leadership in that position, if you ask me. Traffic is lighter because of gas prices, and there's an excellent opportunity to capitalize on that momentum and heavily market flex time, working from home, carpooling, riding a bike and taking the train.

I checked Craigslist to see what De la Vega might get for his car if he sold it there. But it seems to be a buyer's market. As of 3 p.m. Tuesday, 18 Hummers had been posted for sale since Sunday.

"Take over our lease," pleaded one ad.

In another attempt to help the deputy mayor, I drove out to Pasadena to see what he might be able to get on a trade-in.

The Hummer part of the Team Chevrolet, Hummer and Hyundai dealership on Colorado Boulevard is housed in a building the size of an airplane hangar. But on Tuesday, it was as empty as a schoolhouse on Saturday morning. It can't help that there's an Arco station across the street selling premium for $4.59 a gallon.

Before I could find the showroom door, a salesman with a toothy smile hurried over from the Team Chevrolet and Hyundai side of the lot. I thought I detected the kind of desperation you might see on a hiker who'd been lost and alone for weeks, surviving on squirrel meat. But the salesman said he'd sold a Hummer just a day earlier.

"Most people who can pay $70,000" for the souped-up, locomotive-sized H2 "don't worry about the price of gas," he said.

I'll bet that's true.

Managers Jose Nunez and Chuck Bontempo told me Hummers still go out the door occasionally, but sales are much better on the Hyundai and Chevy side of the lot, with smaller cars doing well.

I'm sorry to report, for De la Vega's sake, that they're not paying top dollar on Hummer trade-ins. In fact, some Hummer owners have been so insulted by the trade-in offers, they decided to buy small commuter cars and park their Hummers in the garage until the price of gas dips.

A salesman named Adrian Morales, just 19 years old by his count, seemed to think he could sell me on the appeal of a Hummer despite it all. They're "stuck with" two 2007 models, he said, and I'd be saving $16,000 in discounts and rebates.

Morales opened the door of a $66,000 black-on-black H2 so galactic in size that it is exempt from having to post miles-per-gallon estimates in the window.

So what does Morales say if he's asked about mileage?

"I just tell them 'Don't worry about it,' " he said, adding that it's a low-maintenance vehicle, so they'll save in the long run.

He threw open a door to reveal an interior slightly smaller than the Staples Center.

And what if someone asked him about the vehicle's impact on global warming?

"I'd just ask them how much longer they're going to be living."

Is De la Vega taking notes? These aren't bad lines to use when someone asks why the transportation chief in a city with legendary pollution is driving a Hummer. And Morales wasn't finished extolling the advantages of super-sizing.

"If you get into an accident, nothing will happen to you," he said. "You'll just kill the other person."

Why is this kid not the sales manager?

Call me, Jaime. If you're reluctant to sell to me, I can hook you up with Morales.

He'll buy and sell your Hummer before lunch and send you back to work in a fuel-efficient Hyundai the size of a clamshell.

And remember, I'm only trying to help.

steve.lopez@latimes.com

1 comment :

John Dewey said...

Professor Kahn,

Switching to public transport might save money for one commuter. But if hundreds of thousands of commuters did likewise, wouldn't the cost be outrageously high?

From what I've read, all public transport is hevily subsidized. The largest and most complex projects are generally the most subsidized, as these require huge upfront investments. In general, bus transit is much more efficient than rail transit. But transit authorities everywhere champion the trains, and successfully convince voters to continue funding them.

If a large percentage of Los Angeles or Dallas or Phoenix commuters began to use public transport, the highly organized rail transit lobby would ensure that governments use trains to meet the demand. That would, of course, increase commute times for everyone, increase commuting costs, and sharply increase pollution during the lengthy construction period. Who wins? The rail industry, of course. And the transit authority executives, whose salaries and egos will no doubt inflate enormously.