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- THE FRIDAY LETTER -
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| http://www.gilder.com/
| Issue 278.0/January 5, 2007
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HEADLINES:
- The Week / Economics Is Not For
Actuaries
- Friday Feature / Some Strange Ethanol Projects
- Friday Blogger Bonus / Net Neutrality Smoke
- Readings /
|
George
Gilder’s talent for discovering companies with superior |
The Week / Economics
Is Not For Actuaries
George Gilder, The Wall Street Journal (01/02007):
Would
conservatives please forget the Social Security "problem"? As Peter
Drucker once wrote in these pages, "Don't solve problems, pursue
opportunities." When Republicans solve "problems," they feed
their failures, starve their strengths, and fritter away their remaining power
in political imbroglios and special interest pork-fests.
Nothing
good is going to come from political haggling over some hypothetical Social
Security crisis decades in the future, when our economy will be vastly
different and hugely more productive. From the completion of a worldwide fiber-optic
broadband Internet to cornucopian energy and medical advances, the global
economy is engaged in a siege of accelerating innovation that will unify it and
enrich it increasingly as time passes. But no legislative reshuffling of taxes
and spending today will enhance the economy's ability to support medical care,
housing and transport for the aged in the future. That will depend not on
actuarial trumpery but on the realities of productivity, technology,
immigration and global trade and investment.
The
key is keeping the economy open to outside investors as our population ages and
as the productive center of the global economy shifts toward Asia. As Michael
Milken points out, the younger workers around the globe will use their
increasing savings to buy the assets of American seniors as they grow older,
thus offering liquidity to our retirees, sustaining U.S. asset prices, and
expanding U.S. opportunities.
Social Security can become a crisis only if we try to stop this process by insulating our aging middle class baby-boomers from the world economy -- if we raise tax rates and regulations, bash China, debauch the dollar and cripple the GOP and our defenses with delusionary spending cuts. Yet that sums up the likely grand compact, doesn't it? Higher tax rates in some covert form or other, some jerrybuilt pension scheme full of government regulations on our financial markets, new subsidies and protections for the "middle class" so-called victims of trade, and gimcrack spending cuts that end up focusing on defense.
Instead
we should take the offensive. Lower tax rates will yield the additional
revenues and borrowing power we need to sustain social programs for the aged
for decades to come. As a pay-as-you-go transfer scheme, Social Security is
currently working fine. But we have to stop driving aged workers out of
employment through implicit Social Security taxes on their incomes….
Read George Gilder’s complete WSJ article:
http://online.wsj.com/article/SB116768413349764065.html?mod=googlenews_wsj
|
The Friday Letter Book of the Month By Ken Fisher, with Jennifer Chou, Lara Hoffmans and
James Cramer (Forward)
|
Friday
Feature
/ Some Strange Ethanol Projects
Excerpted
from “Extravagant
subsidies and low coal prices have made for some strange ethanol projects” by
William Sweet.
Making ethanol from crops has considerable, and
growing, allure. As an energy source, bioderived ethanol is renewable, and its
by-products are biodegradable. And, most important, to the extent that the
ethanol takes the place of gasoline, it economizes on imported oil and can
reduce greenhouse gas emissions.
Many
countries are promoting use of the fuel, but so far Brazil is the ethanol
exemplar. The alcohol accounts for about 20 percent of the fuel burned by
automobiles there. About 70 percent of new cars sold in Brazil are flex-fuel
vehicles that can run on a blend of biofuel and gasoline, and the country’s
ethanol exports to Japan, Sweden, and other countries are expected to double
during the next five years to more than US $1.3 billion [see “The Omnivorous Engine,”
in this issue].
Even the United States—where ethanol is made from corn rather than sugarcane, a
relatively expensive and inefficient process—is experiencing an ethanol boom.
Besides the 100 ethanol plants already operating, at least 40 more are under
construction, and another 100 or so are planned.
Some
of those projects make more sense than others. Among the least sensible is a
facility near Richardton, N.D., that was scheduled to open last month. The Red
Trail Energy plant, which is fueled by lignite, a dirty and inefficient type of
coal, is scheduled to produce 50 million gallons of ethanol per year. Mick
Miller, Red Trail’s chief executive, points out that the plant would comply
with all relevant air pollution regulations. But carbon dioxide is not
regulated in the United States, and per unit of energy used, the plant’s CO2
emissions will be high….
___________________
What the Experts Say, NICK TREDENNICK [Editor, Gilder
Technology Report]: It is ridiculous to make ethanol from corn rather than
sugarcane. The craziness comes from government interference in the market in
the form of sugar subsidies and tariffs, reflecting politics and special
interests.
___________________
Read Sweet’s complete article:
http://spectrum.ieee.org/jan07/4832
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The Gildertech Blog, http://blog.gildertech.com/ | Logon now to see what’s new. for FREE
audio downloads of select speakers and panel sessions. |
Friday Blogger Bonus / Net Neutrality Smoke
From the Gilder Technology Report subscriber-only message board on
www.Gildertech.com.
GTR Subscribers (1/2/07): After
the "Net Neutrality" discussion/ argument at the Gilder/Forbes Telecosm 2006 Conference,
I came away with the opinion that NN = Lawyer fees + Further Broadband
Stagnation. Does AT&T’scapitulation really mean anything?
Paul McWilliams, GTR subscriber & Editor, Next Inning
(1/2/07): The
net neutrality issues that were supposedly capitulated were not the ones we
specifically opposed in the debate. IPTV and enterprise applications are
not subject to net neutrality - these are specific applications where customers
buy QoS. It wasn't a perfect win, but I'll bet T finds a way to
include features they would like to sell with QoS in the IPTV package.
Besides, they aren't ready to sell these features and this agreement only runs
for two years.
The real concern that remains is what will Dingell try to
pull when he comes to work tomorrow. I've checked with my local
Democratic rep and he opposes Dingell's net neutrality push, but is fine, like
am I, with HR5252.
George
Gilder (1/2/07): Thanks Paul for the excellent clarification. Net neutrality is mostly
smoke. The danger is in the litigation and resulting distraction and
uncertainty that such murky concepts can foster when put into the law.
Paul
McWilliams (1/2/07): That
is my point as well - it will simply slow the inevitable. However, the
contestants in this race are technically and financially ready to run and a
delay would be costly for us all. As [John] Rutledge said from the
[Telecosm 2006] stage, the Dingell backed network neutrality legislation is the
greatest economic danger we're presently facing.
To
read more posts by George Gilder and the GTR subscribers, logon with
your subscriber ID at www.Gildertech.com.
__________________________________________
Readings /
SIA’s
Scalise Warns Of Tight Supply Of Memory ICs
http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=196800296
Booming
LCD-TV Market Could Still Disappoint
http://www.edn.com/article/CA6403424.html?partner=enews&nid=2019&rid=2052959400
China’s
Number Of Internet Users Rises 30% To 132 Million
http://www.technologyreview.com/read_article.aspx?id=17958&ch=biztech
Will
This Laptop Save The World?
http://www.technologyreview.com/read_article.aspx?id=17722&ch=biztech
Why
Fewer U.S. Jobs Are Going Overseas
http://articles.moneycentral.msn.com/Investing/JubaksJournal/WhyFewUSJobsAreGoingOverseas.aspx
Kudlow:
The Poverty Of John Edwards
http://article.nationalreview.com/?q=ZDEzYWNhYTk3MDhiMTM4ZGFkODg5ZWNlMjA0YmYzMzI=
Murdock:
A Price-Control Virus
http://article.nationalreview.com/?q=NDRiZTY4ZTYzYjFiM2FkNzM4NzMwMzM4MTQ3MWI3NTc=
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