EconAir

Introduction The United States has been the world’s only superpower since the collapse of the Soviet Union in 1991.   In some ways it is more difficult to manage foreign policy without concentrating on one big rival. The United States is vastly stronger in military strength than any possible coalition of enemy forces.   But since 9/11 we are feeling less secure despite huge military and domestic security expenditures.   Our military and national security expenditures of around $1.1 trillion are greater than the military expenditures of next ten countries combined (and most are allies).   This is a consequence of a professional military, a result of eliminating conscription after the Vietnam War, and the highly technical (capital intensive) nature of American military forces and strategy.   There is almost no national debate on U.S. military interventions in other countries.   One reason is that most Americans have no direct involvement...

Americans love their suburbs.   Suburban living almost defines the American way of life.   Privacy, both homes and backyards.   Space.   Peace and quiet, except for power mowers and leaf blowers.   Compare this with the high cost of space, peace and quiet in cities. Suburbs are a refuge from the stress of live and work in America.   They are places where nothing happens.   Little or no violent crime.   No class conflict.   Family oriented.   Acceptable schools at a lower cost than private schools in cities.   Lots of space for playing fields and organized sports for kids.   I sometimes think this is the main activity in suburbs. When Americans retire, they move to “senior citizen” suburban developments that are often even more isolated and further removed from urban life than the suburbs they came from. But what about the excitement of a city?   For example, the live cultural events.   There is...

Baldwin Locomotive Baldwin, the largest producer of steam locomotives in the                 nineteenth century, faced problems typical of a dominant company in a bilateral oligopolistic industry.   Almost everything that               happened at Baldwin was conditioned by a highly cyclical, almost   unpredictable competitive environment.   A high level of business       risk followed from sudden, large fluctuations in demand. This         meant that Baldwin often had excess capacity with substantial         fixed investment, leading to a strategy based on economies of scope and not economies of scale.   Baldwin also depended on a skilled       labor force with firm-specific knowledge and experience that was    exposed to sudden and massive layoffs followed by the company’s   attempts to rehire the sam...

  The high and sustained price of crude oil is having unintended consequences.   Global consumption of crude oil rose by 14% between 2000 and 2010, about equal to the increase in population.   Almost all of the increase was in Asian countries, especially China and India, and, surprisingly, the Middle East and other oil-exporting countries.   The Middle East as a whole increased oil consumption by 56%, led by Saudi Arabia with a 78% increase.   Heavily subsidized and inefficiently used, domestic consumption of oil accounts for about one-fourth of Saudi Arabia’s huge oil output, about 2.5 million barrels a day.   In contrast, the U.S. and Europe decreased oil consumption by a small amount, less than 1% in the U.S, over the same period.   Some of this is due to the recession, but there are longer-term trends that might lead to continued decreases in total oil consumption. It is important to remember that crude oil is an input; peopl...

The post-war rule of autocratic, secular strongmen backed by their military and secret police is coming to an end.   Last year saw the fall of regimes in Egypt, Tunisia, Libya and Yemen.   There is open revolt in Syria.   Demonstrations continue in Bahrain, even after earlier demonstrations were suppressed by Saudi Arabian troops.   The kings of Morocco and Jordan have made concessions towards democracy.   A democratic election that went against the ayatollah-supported regime in Iran was disqualified and leaders were arrested; despite this, anti-government demonstrations continue.   Then there is the special case of the overthrow of Hussein in Iraq. The immediate issue is the lack of economic growth and development, the inability to provide jobs for its young population.   The demographic clock is ticking.   Within a generation or two, the Middle East will have a smaller, older population, with the possibility of far fewer resources t...