A simple electric micro-car

Simple design, low speed, low range. Read about it.

San Fancisco congestion problems

Good reporting by City Fix about the SF congestion pricing debate just beginning.

According to the Advisory [On congestion pricing] Committee’s memo:

• “On average, peak-period travel times are about twice as long as in the off-peak”
• “In 2005 alone, San Francisco sacrificed over $2 billion in lost time and out-of-pocket costs such as excess fuel for individuals and commercial transportation.”
• “Transportation is responsible for about half of greenhouse gas emissions in San Francisco, with 47 percent of the total contributed by private automobiles”

A good article from SFGate about congestion pricing in the city:

"Planners are still considering where to collect the tolls. Initially, they considered establishing a downtown zone - a twin triangle area bounded by Washington, Jones, Turk and Harrison streets and Van Ness Avenue. Then they looked at charging fees at the city's major gateways: the Bay and Golden Gate bridges, Highway 101 and Interstate 280.

But the downtown zone was too small, and drivers would just avoid it, causing problems in adjacent neighborhoods, Bent said. And charging at the gateways would reduce traffic from outside San Francisco but might end up encouraging more driving among city residents, she said."

My comment.

Technology being deployed today would allow the city to charge variable rates for various parts of the city at various times. Not only that, we can give drivers a cue about pricing in real time. Not only that, the city should share pricing data with on-line commute and freight planners. Car owners who obtain the standard device will soon get an insurance discount. Traffic accidents likely will drop by a third. Transportation costs drop in the trade off between congestion fees and delivery delay. The on time rate for all traffic, public and private, will increase. BRT is a natural outcome. Whichever city implements a successful ITS network will reap large gains. San Francisco teamed with Silicon Valley?

Odds and ends

Congestion pricing makes it to Utah.
Congestion pricing has some support in the Arlington transportation board.
Automobile restrictions , trials on Market Street, SF have been ongoing and data will be out soon.

Oakland Airport connector, with new conditions. The new conditions should raise the price tag from $500 million to $700 million.

Volvo is in final tests of its pedestrian detection system for cars. Pedestrian detect and avoidance is a key technology for Robocars.

Pioneer introduces DSRC communications into its line of portable navigation system.

The DOT is reporting that collision detect technology should eliminate 50% of rear end collisions. This British "Best Truck in History" winner has all the driver assist technology.

And Gov Pawlenty joins the Intelligent Traffic movement with both feet, including lane guidance for buses. Or buy the portable Navigon with lane assist aids while driving.

Speaking of automatic lane guidance, here are some field trials in the US. And the European ITS Congress trials of full driver assist.

So we live in a world in which we can assemble all the parts for a deliverbot, and deliver groceries to poor people at 1/4 the delivery costs.

Deregulate the Suburban Mail Box!

The USPS has monopoly access to the suburban mail box. Restricting mail box use impedes transportation efficiency. By raising suburban delivery costs, house utility is reduced.

I start with this report. Then imagine the life of the United Parcel Service delivery person. 40% of the cost of the last mile is the time spent from the delivery seat to the front door. The mail box monopoly restricts a more ambitious, and secure use of home delivery. Even with limited automation, adding quality to the mail box, and placing it near the curb offers enormous advantages in options for last mile delivery. If the pizza delivery boy carried wireless tracking then the customer would know the exact second the pizza was delivered to a curb side delivery box.

The fear in the government mail industry is that their monopoly hold on the mail box and inflexible pricing go together, exactly the opposite of what we want.

Digitizing the Clunker

Prediction:
Cars will be talking to each other and to the traffic web within one year.

Humans and their clunkers will embrace two way digital traffic radio. I call it Digicom for this post, but the system is a combined wifi and GPS for the auto. Digicoms continually receive information about the traffic around the the car and present it in display to the driver. Both dashboard and built in digicoms will be popular. They come with a manually transmit off switch for the paranoid to avoid being tracked. But someone is going to track traffic and distribute the information. There is nothing to stop the industry, as long as cameras and radio can be mounted near traffic.

Using the technology, drivers with similar vehicles and routes will demand the right to rent time and space on our roadways. They will digitally organize their convoys. traveling in constant speed with signal assist. Microcars travel in protected groups, as do large cargo rigs.

We will enter the era of pulsed traffic. Convoys coagulating out of nowhere, and following a computed route, aided by signaling back to the driver. Drivers can pre-plan their routes with path reservation, minimizing travel delay and enabling constant speed movement.

Insurance will push safety advantages, shipping companies will push the gas savings. Consumer commuters will embrace the enhanced level of commute choices on the road. Drivers will embrace the enhanced digital information and warnings. Metropolitan planners will embrace the flexible revenue stream and low infrastructure costs. Transit managers will utilize space reservation to remove bus delay and implement virtual BRT.

Market Segmentation
Overall, the American market will support a total of 300 million Digicoms over the next ten year period. at a unit price from $50 to $200 for typical installations and features. Large integrators like Google, IBM, and AAA will team up in various coalitions to act as interface between metropolitan districts and the auto driver. I would expect major chip vendors to participate with chip sets. Device vendors will market better features, faster response times and more accurate positioning. On line travel agents will resell space on our roadways.

Transportation
Lane reservations allows the trucking industry to experiment safely with longer configurations. The same effect occurs in high density districts where larger bus configurations are supported. This enabling of choices accelerates the microcar movement. Efficient insurance companies will be keen on selecting insurance risks who stay in digitally reserved routes, being the safest and most monitored.

Technical features
Device vendors will advertise ping capability and accuracy of collision warnings. Pinging with roadway radios allow precise positioning of the care and the lane. Drivers could get early warnings on signal changes. Real time lane pricing with driver cues will maximize throughput and minimize lane changing. Light signaling systems will be able to avert accidents by ensuring collisionless light change, while adding congestion fees for fast running of yellows. Cars will signal each other on lane changes and turns. Tracking for car theft should be a market driver.

Enabling technology
Initially 100% market absorption is not possible. The traffic network information must come from cameras which can derive approximate tracking information for cars. Thus will early adopters have advantage of a known traffic map in real time. THe concept is called a bridge technology, in this case, software that transcribes images of traffic into digital position transmissions.

Sales
Fleet sales will be first; commercial, fire, bus, police. Initially supported from existing cell towers.

Digicom consumer sales will start when automobile owners hear about variable traffic choices, rather than congestion pricing. We need to talk to the automobile owner about enhanced road and traffic information, lower insurance rates, low automobile maintenance, shorter trip times, and fewer traffic fines.

We need to develop markets for resale of traffic space and to define on-line sales models for group road rental.

And the big three is worth repeating, IBM, AAA, and Google; systems, safety, and applications. These three need to approach metropolitan transit planners with similarity of ideas.

New Yorkers, get a Clue!

About congestion pricing.

David Weprin, a Democrat representing parts of Queens on the City Council, is a bit confused about how to help the working class. Congestion pricing offers the working class the least cost path into the city to work. It allows them to tailor their arrival times somewhat, and in return get a much better congestion free commute, saving money on the margin.

This New Yorker complains that congestion pricing will force her into a long bus commute. I agree that any given city will likely screw the buses up, but congestion pricing should result in substantial faster bus routes, and hopefully better bus routes.

An interesting poll of New Yorkers regarding traffic issues. But mayoral candidates misunderstand the congestion issue anyway. The idea is not to get people out of their cars, actually, but let them use their cars in Manhattan more efficiently, having some a pricing system that achieves more flow through and less stop and go. If system wide two way traffic communications were a reality, then Manhattan actually ends up with more cars, as they become more efficient.

Congestion pricing is simply one toe into the world of full two way traffic communications enabling the synchronization of traffic in New York that benefits everyone. New Yorkers need to embrace the concept and they will see a greater economy across the board.

More robots

A skiing robot, HT HotAir And a two wheel drive hospital deliverbot. The MARTI teams attempts off the shelf integration of an autonomous vehicle.

And this About Mitsubishi Concept PX-MiEV :

" * The "New Multi-around Monitor" system uses cameras located at strategic points on the body to provide the driver with a combined image of the full perimeter of the vehicle. The combined image is displayed for the driver on a monitor from an overhead view for improved safety around the perimeter of the vehicle.
* The Mitsubishi Concept PX-MiEV is equipped for the Driving Safety Support System (DSSS (Level II)) currently being promoted by the Japanese National Police Agency. In this advanced vehicle-infrastructure safety support system, an on-board receiver picks up signals transmitted by roadside optical beacons and the system urges the driver to take extra care when other vehicles or pedestrians have been detected by roadside sensors and cameras at intersections and pedestrian crossings.
* Employing a system that uses wireless technology to ascertain the position of other vehicles and warn the driver when their proximity so requires, the Mitsubishi Concept PX-MiEV also supports the Advanced Safety Vehicle 4 (ASV4) project being promoted by the Road Transport Bureau of the Japanese Ministry of Land, Infrastructure, Transport and Tourism.
* The vehicle is also fitted with a Dedicated Short Range Communications (DSRC*1) system, employing the road-to-vehicle communications capabilities used in Electronic Toll Collection (ETC) to determine the position of the vehicle and whether it is parked or not."

Real Time Pricing

An incomplete post on the economic effects of real time pricing for the essentials of life. I include, congestion control from the dashboard, electricity pricing from a kitchen based meter, insurance by the mile, airline tickets, event tickets, or any freight movement. Real time pricing incentivizes the consumer to force smooth, constant quality inventory flow (most goods and people shipped "as is" during some optimum period). Most real time pricing is digital enabled.

Real time electricity pricing gets a smart grid that can utilize solar during optimum sun hours. Insurance by the mile can also be insurance based on congested-mile, getting you lower rates for minimal driving, but driving on safe, predictable routes. When transportation costs are lowered, then shopping on-line become closer to real time.

Reading electricity rates at home is cheap, a few dollars per home. Why isn't the DOE out pushing real time pricing?

The Traffic E-Zone

We need a technical aside here, allowing planners and investors to get a feel of the emerging software in vehicle management.

An E zone is the region in which all vehicles communicate with a traffic manager and to nearby cars. In reality, the traffic managers runs both wireless comm and cameras in intersections and along lanes. Vehicles have the Dashboard Device, or equivalent. E zone intersection light signals transit their states and events to surrounding cars, for example. The driver receives merging signals designed to enforce pre-planned priority lanes.

The DuraCOR auto comm/navigation system.

The market for e zone equipment, the dashboard market, would be quite lively as additional traffic information and capability is opened with e zone expansion. As the market expands, insurance rates drop as collision and lane warnings warning become ultra reliable. Applications like vehicle priority on demand, reserved parking, and group purchase of right away all provide gains in efficiency.

The dashboard market will include options for forward looking vision and radar, prices dropping as volume increase. As automobile companies try to push the line on automatic lane guidance, increased driver education is necessary.

Toyota offers the first dashboard device. Another DSRC module. European standard on congestion pricing by DSRC. An ITTS proof of concept, used the DuraCOR system above. And a software developer job opening. A trade article from Delphi Automotive on the topic. Another trade article. An expensive marketing report on Auto Telematics.

Cohda claims a breakthrough in DSRC data rates. An article about using DSRC to protect motorcycles.

Oregon bill to try out congestion pricing moves forward. UK third phase DSRC trials report and putting a DSRC in a mobile phone. Mitsubishi has a DSRC product line. The AIDA system.

Testing at the Michigan Speedway. A European effort at DSRC integration. IBM has a glowing self account about intelligent traffic.

E Cars and more

E Car Technology:

One to watch and learn about. With hub motors.

About hub motors and Siemens and Hi-Pa Drive. This looks like a new division, now named Protean Electric, the e-Traction hub

More on the Sabaru. The Micro-Vett from Italy. The Mini-e from Mini-Cooper. Earth2Tech reviews six at once.

Intelligent Traffic

Earl Blumenauer (D-Oregon) wants to try out per mile vehicle taxes using vehicle trackers. $154 million he wants to spend, with the usual skullduggery of supporting lobbyists.

The bill wants to try out GPS trackers and transmitters. But I say, change the bill to include receiver and display for the driver.

In this blog Adam Stewin talks about pricing by the mile and mentions Holland:

"Before delving into the specific arguments for and against a mileage tax, it’s worth noting that the entire country of Holland is doing exactly what commentators have deemed stupid or impossible: starting in 2011, the Netherlands will phase in a vehicle-tracking scheme that applies dynamic pricing to every mile driven. Pricing will vary by vehicle type, time of day, and location, in order to curb both congestion and carbon emissions. The program is designed to be revenue-neutral, and because the government is simultaneously phasing out a steep motor vehicle tax, the plan should end up reducing the burden on low-income drivers. I mention this not to suggest that the U.S. can or should do exactly as Holland does, but just to point out that the concept isn’t quite as crazily unworkable as some seem to think."

Comment

In digital traffic zones all vehicles and their weight class are known to the system. The addition of indicator lights on the dashboard allow driver interaction with system traffic. ,Hence, the system can minimize interaction between heavy and light weight vehicles. The E-Zones make unlimited use of the E-Car possible, with very short pay backs on the digital upgrades. As the volume of light weights grow, so does their road space with virtual dividers. All parties gain from insurance savings.

Secretary of Energy Chu and his views on E cars.

Recalculation in Action

Tail Trimming the Inflation Distribution

Macroblog has a great post on the relative distribution of inflation over the array of consumer goods used by the BLS. He uses the trimming method.

Let me try and walk through it. There is a distribution of consumer goods in the inflation basket. We would expect that the array of consumer goods smoothly and symmetrically distributes price changes during stable periods. Some of these change price fast, some slow; the CPI number reported is the average. When trimming they remove both the good that changes the least and one that changed the most, the goods at the both extremes of price changes. So, when we start removing the goods at the extremes ends of the inflation distribution, we would want the average inflation of the remainder to be stable, if inflation is stable.

The graph above takes the inflation data for the few months previous, but the X axis, shows the inflation after some percentage of the extremes have been removed. As more of the extremes are removed, the remaining inflation stabilizes, the bulk of consumer goods having a common level of inflation.

What I want to point out is that since Jan, the trimmed inflation series have become more stable; there are fewer extremes in the data. We see this if the data series smoothly stabilizes as the line moves right. Earlier series show more rapid excursions than later, implying that we are Recalculating the best way to use the scarce resources.

Gov Peterson and GPS truckers

They are having a dispute because low bridges are not mapped well and truckers using optimum GPS routing sometimes do not pay attention.

The problem for the State are individuals using advanced technology ahead of the government. Gov. Peterson would be better served to push the Albany legislature on adding intelligent communications along their highways.

Zubin Jelveh reports on the oil boom

Was the mini depression caused by low interest rates, tight money, or oil contraints?

Zubin of the New Republic reports on research that confirms the view of this blog, the oil price shock was a real supply and demand result. Oil supplies are tightly tuned and a world productivity growth without corresponding growth in oil productions caused the oil shock. Information technology stresses transportation technology.

The Dashboard Device

It is a digital wireless device that sticks to the dashboard of any car. It has systems communications and GPS. It communicates with the human driver with a few navigation display lights; left, right, fast, slow indicators.

Thus we get the smooth traffic management system. Allowing run time congestion choices, pre-planned routes, automated convoys, virtual BRT lanes. We replace unrealizeable infrastructure plans. Rather distribute simple $50 device in each vehicle, and two extra pages in the DMV manual. That alone will reduce accident costs by a third. Increase transportation efficiency by a third. Probably generate $300 billion in yearly savings.

With a bit extra driver education, we get managed zones in which lightweights, BRT, and personal auto co-exist in harmony. As automation increases, there remains a $50 electronic pass for the human driver and his clunker. Electrics get virtual channels in space and time, for safety. Enabling electrics thus, generates an additional $100 billion in savings.

Other enabling. Easy insurance by the mile, raises driver awareness. Smooth pricing for various lane options at various times. Immediate identification with local traffic, plus warnings yields additional savings. Light synchronization with the digital devices is another benefit. Adding blinkers that send the signal from stop signs is priced near zero. Freight companies can adopt optimum fchannelized traffic routes, minimizing variances in speed getting optimum mileage. Pedestrians can carry a two dollar blinker.

The investment in fixed and mobile wireless network is only a few billion, but we get a few trillion in net present productivity in transportation.

The little dashboard device would be V shaped, as in V shaped recovery.

EconomistMom captures the lunacy of Congress

Here she talks about Congress targeting seniors with a stimulus check because they did not get their positive COLA. The whole problem with COLAs is that they do not deflate, positive only. Our governance is riddled with unidirectional paymet adjustments, which eventually cause bankruptcy of government. Yet the same senate with the same ignorance of economics wants a debt commission when they raise the debt limit. What is the debt commission going to say? That Congress is composed of idiots?

London Congestion relief, an age old story

Forbes reports on the success of the London congestion price system for London. The story is standard. Listen to the quotes:

"Congestion in London's central business district got very bad a few years ago. So bad, went the wisecrack, that the average travel speed of 8mph in the 1890s (by horse) was now, in the era of the automobile, still 8mph."

Review the Asha Elizabeth Weinstein dissertation about Boston transportation development from 1890 to 1925. Very interesting, the same quotes about New York in 1880 and Boston 1922. Search the link.

Note the solution to the London problem, adapt technology to synchronize traffic. They use license plate cameras to bill users.

A common pattern. Information technology expands and pressures transportation. Transportation follows and utilizes the information technology pathways.

Justice Roberts curls into fetal perpetual thought

..finding his way out of the corporation freedom of speech quagmire.

When we left the plot, the Supremes were deciding if there was even a victim, or even if it matters. No person of human descent claimed their personal rights had been violated.

So, left with contract law, and in particular corporate law, the Supremes need to connect due process in corporate law with personal freedom of speech. What due process? Well, Congress changes the corporate rules in mid-stream, violating their original provision. Congress broke its contract to the corporation during one of its fiddles with the First, but so what.

For the Supremes to broaden the First across all of Congressional operations would be impossible. So the Supremes need to make Corporations a Tradition, a claimant for general access to the Rights. I hope their verdict comes out in Halloween, for the Spirits will be arising.

Mish checks out the possible Baltimore pension bankruptcy

Mish's Global Economics etc., always on the case of public service unions and their aristocracy over the taxpayers.

Are we in rebellion against government workers?

Lexington at The Economist claims, among other things, that the average taxpayer is in rebellin against more gold plated government jobs while they struggle to make ends meet:

"Meanwhile, they can see that one group of Americans has been practically unaffected by the recession: government employees. Their hours have not been cut, their benefits are gold-plated and they are almost impossible to sack. In good times, few Americans notice these things, but in bad times, the disparity grates. Cops and firefighters can retire in their 40s and draw defined-benefit pensions for life. With overtime, one tenth of the police in Massachusetts made more than the governor’s annual salary in 2006, according to the Boston Globe. Including benefits, the average employee of New York City makes more than $100,000, according to Forbes, while some Californian prison guards “sock away $300,000 a year”.

And what do taxpayers get for their generosity? The bad bargains get all the publicity. Union contracts force the postal service to pay thousands of unneeded workers to do nothing. In New York, public-school teachers who can’t be trusted to teach but can’t be sacked either are paid to sit and do crosswords.

One should not overstate the rage of taxpayers against public servants. Most Americans admire firemen, teachers and cops. They like receiving government benefits, too. And roughly half of them will pay no federal income tax at all this year. The problem is that this is not sustainable. During his election campaign, Mr Obama promised not to raise taxes on anyone except the rich, but with the deficit so vast, the question is not whether he will break this promise but when."

HT to Instapudit

A better micro electric.

Peugeot has a new electrict car prototype. Mail Online has the details. These cars belong in the lightweight lane.

The perfect reserve currency

Oil paper. A fiat currency bank run by the worlds association of oil producers. The currency is backed by proven oil production capacity. The bank will adjust oil supply to protect the currency. Oil producing nations can fix their domestic currencies to oil. Such a world's currency would drive oil efficiency on an optimum path. The oil dollar might have an expected life of 50 years.

Follow the oil

Monthly Oil

What a shock.

The gap to look at is the rate of consumer inflation and the price of producer oil. When that gap is large, the consumer chain will deflate, drop in rank. It changes the mix of goods, having fewer choices over time and geography. So is the choice, more oil efficiency in the consumer chain or a simpler consumer chain. The problem is the next step up in oil prices, it is large. Oil sets the new "positive" in the economy, the "positive" is the standard supply chain form that minimizes inventory zero crossings. Change is asymmetric because of the high cost of negative inventory, so deflations happen faster.

The Remarkable:
The peak of the chart, a sudden, but smooth ride to $100, tells me something. The peak tells me that some large proportion of American suburbs had managed to continue on, with nearly double the oil efficiency than previous oil shocks.

If oil next breaks resistance, up, then this "smart" consumer group is more prepared, larger, and better. This larger group may hold, with oil at $100, and the message of oil efficiency spreading.

The issue of quantum jumps is another matter. It comes from the requirement of obtaining the optimum consumer group to maximize use of the constrained resource with the smallest supply chain. We are near the point where we canot guarantee the average household the average tank of gas for the average auto transportation. But, the technology that allowed oil at $140 will spread, fairly smoothly, to solve the problem.

License plate readers

Back to working my pile of potential investments, been going through vendors who have contracts in this title. I mean, that pile of notes I keep on the lower right, investment stuff. Really just a pile of unorganized notes, but somewhere in that pile are companies who will do very well making traffic synchronize on our roads.

Using cameras and digital to read license plates is great, cheap, no hassle, works great. Companies who have their nose in that door get bigger opportunities later. Like this article in photonics. I go through that market, what I can see on the web, and try to filter in a bunch of companies who show up.

Manhattan is doing license plate reading, London does it. Congestion pricing ultimately allows communities to sell low cost, guaranteed flow to freight. Gaining that economy of scale from channelizing traffic, transportation costs drop fast.

For traffic planners, here is a note from the article:

"Advanced Technologies srl of Milan and Sinartis srl of Cassano Magnago, both in Italy, took up the task of designing and installing the system in just six months. License plate reading equipment is in use in many places around the world, and the companies met the key requirements for this project by using an off-the-shelf system, rather than starting from scratch."

Key 'get off the shelf', go modular and easy to install.

Yields and waves and asymmetry

If I go grocery shopping can I buy an order for the future delivery of tomatoes, perhaps at a discount? Sure why not. One problem, I wasted part of my trip to the grocery sore, no tomatoes, just paper. Negative inventory, in the same bag as bankruptcy, is very very inefficient. The inefficiency of bankruptcy is a non linear break, that is bankruptcy doesn't last long, it is short term with exrtra-ordinary transactions costs. So, goods flow always favors positive inventory, and when retail goods depreciate, that means positive growth.

So, even absent structural limits, the economy always engages in rapid deflation, slower inflation. If the yield curve were a Fourier transform, it would be a tall peak, and when that tall peak tlits right, it tilts toward negative frequencies, downturns, bankruptcies. It's tendency would be to deflate rapidly back to a positive inventory flow. taking depreciation of infrastructure as necessary. The economy would always favor overproduction for fear of negative inventory.

Better sailing

I stole their photo, now go read the article.

Traffic, NYC Albany, congestion pricing

Recall this dissertation?

I have more to say, because in 1925 and 2008, something similar happened between state and local government regarding traffic congestion. Asha Weinstein details a similar puzzle, unsolved, regarding Boston traffic congestion and Mass government.

Throughout modern American economic history since 1820, we, predictably, have suffered severe gridlock shock, and other transportation collapses; a hard hitting against the limits of traffic capability. Another is the The Great Epizootic of 1872 halting local traffic for weeks.

Interesting, recurring theme. I need to do a technical aside.

Congestion pricing is congestion optimizing, like the Internet, but we really want to add in density pricing. This should include a device on the driver's dashboard, with system generated signaling for left, right merge. Now, we would like to include lane guidance with steering assist, but we can do without it. Manhattan becomes channelized at times for high speed BRT, then traffic slow down for mini-cabs and pedestrians. All range of cargo size and arrival time combinations can be priced. From BRT, mini-cab, personal car, truck; and the per car technology additions drop below a few hundred in volume.

The inner economist tells me a system would make Manhattan richer and more powerful then ever before, feeding a great manufacturing metropolis around NYC. Albany should be on board, I cannot think of what is holding them back, except possibly graft.

Then this story, where the Ultra PRT is getting interest elsewhere in the west coast. Looking through the comments is talk about virtual gridlock in the local highway system. What does PRT mean? A lightweight concrete guideway, makes sense sometimes to be sure.

Getting energy efficiency out of transportation is top priority.

Public Sector Unions exposed.

Fred Siegel and Dan DiSalvo expose the shadow government, public sector unions. The public sector mafia rules my hometown, Fresno, CA, and are running it into bankruptcy.

Key summary:
"Public sector unions have become a labor aristocracy--and they are bankrupting states and municipalities. "

HT to Peter Gordon.

To see in real time how our metropolitan governments are being destroyed by public sector unions one needs to bookmark Pension Watch. Pension Watch documents the step by step dismantling of local government by money and greed from the public sector.

All sales final!

I think of that phrase as a short hand pointer to asymmetry in the economy. Ultimately, there is no reversible flow of goods, so flows are best treated as positive. Consumers generally do not take inventory from their homes and return them to the store for cash. So, the result is that a store in equilibrium has to account for reverse flow, or else inventory grows definitely positive forever. As Arnold Kling points out, that would be slow steady positive growth, mixed with sudden occasional bankruptcy. The economy Recalculates with only positive numbers.

The Great Recalculation debate

This debate about why we deflated starts with Arnold Kling and his theory about a recalulation. His theory, as near as I can tell, states that we are in a recalculation, tying to find production systems for goods that meet stability requirements. Something is not working in the economy and we have stopped to figure out a better way. He has a summary, and I will link to it in this post when I locate it.

On the other side of the debate are some monetarists who think we are recovering from a mild recession mad much worse by central bank mistakes.

The chart above is the central issue. The chart shows the amount of financial paper in the market and the velocity at which that money changes hands. The switchover point is the point of collapse for the current economy. In QM Theory, we might say that money velocity is the transaction rate(s), and total money is proportional to the lot size for each transactions. The deflation event consisted of slowing down the number of transactions and increasing the size of each transaction, (in standard units of Good). Hence the yield curve shrinks and the short end has zero interest rate at the one year term, rather than the overnight term. Essentially, the economy is seeking economies of scale by reducing the number of steps in the production of goods.

In QM Theory, then, we expect the transaction rates for all goods to fall in a general deflation, not necessarily just money. The velocity computed above is based on money, but I would expect the same velocity collapse in shoelaces as well as other goods. In particular, I think that oil collapsed and seeks economies of scale. John Taylor expressed it succinctly when he said "everything slows way down", the economy wants to mainly go wholesale, the retail sector cannot find an equilibrium.

Now money and oil are both highly correlated with economic activity. We need money and transportation technology to go to the store. Did something happen to money or oil to cause the deflation? That is the question.

More later.

New reasearch on productivity and recessions

Kahn and Kressel report their findings. HT Milton Recht

Bottom line, when get growth, sometimes exuberant growth, when productivity increases. When productivity declines, after some lag, the economy tanks. Basically. Their model seems to fit the housing market.

So the question is, why did productivity stop growing? My answer, accoding the to the whole point of this blog, is that productivity does not have a driver's license, so productivity advancements stopped at the roadside. We are in a recession because of the failure of the DOT to make the case for more automation on our roads.

Krugman nailed it in May 2008.

Repost

The weirdest Robot.

Velocity, oil and money

The issue of Whodunnit, specifically did the Fed have tight money. Beckworth discusses it, and the Everyday Economist kicks in. Can we tell from money velocity if there was an error in Fed policy.

Here is my problem with the velocity issue. On July, 2008 oil crashed. The change in money velocity occurred in late Aug 2008, about a month later or coincident. So, yes, the velocity of money changed, but the velocity of oil changed a month earlier. We would expect the velocity of money to change if the velocity of oil deliveries suddenly collapsed. The Fed acted by early September, 2008; oil cashed to the bottom and the ten year yield followed.

Beckworth's VAR study and Hamilton's VAR study disagree. But look at the miles driven chart, showing a drop in personal transportation since Jan 2008, before the monetary velocity shock.

A Comment on VAR

The Vars are algorithms we run to estimate future economic trends, namely prices.

So, we are running these Vars, predicting the future flows of goods, hence minimizing inventory costs. Going in to 2005 and up, our estimating errors grew. Most var people got that, most consumers did, most employee groups. All of our Var error terms were growing, and we knew it.

So, how does the Var work when agents conspire to suddenly change the rules? We would have hidden our deflationary conspiracies; and we might even have planned, in stealth, for deflationary economies of sale. In doing so, we would have minimized switchover costs.

Ride in a Driverless Van

Says American Industrial Magic, a small group working on automated conversion kits, mainly for the military. The van is from from Cybernet Systems Corp, one of the entrants in the DARPA urban driving test.

Costant uncertainty and Ramsey

Ramsey tells us that there is an efficient structure for spreading information when the agents have some common structure. We expect a spanning tree like structure spreading information at NlogN rather than N squared.

Humans and other mammals with a predilection for a comfortable certainty band for life would offer efficiencies of scale for herd operations. The broader the uncertainty range, the smaller the N in NlogN. That leads to the best measured result with the fewest transactions. Herds would adapt themselves to spanning tree like organizations.

So there is a balance, lowering the dimensionality increases measurement efficiency but increases the probability any agent will be out of the comfort zone. Call that the optimum Ramsey number, or optimum rank.

No way out for the Supremes

Supremes have a tough job ruling on corporate publishing rights.

I am still perplexed on the Congressional election law limiting the right of corporations to publish. In the best of arguments, a publishing corporation shareholder could claim that Congress distorts their access to limited immunity. Limited immunity might be peculiar to the right to publish.

But the argument is still stuck because the right to publish predates the right to incorporate, so what right of individuals to group together and publish was eliminated?

Answer? It doesn't matter, because that is a different case between the unincorporated group and the defenders of right to assembly and publish. That group is not part of this case, this is corporate law, contracts. It can only be argued in terms of contractual due process, a civil jury.

What is worse is that Congress already has a proven right to regulate corporate publishing via SEC law and NASB standards.

I suggest the Supremes deem this case a civil contracts law and pass it back down. Don't try heroics, that means you Sotomayor.