Cheap Consumers force Airlines to Charge Fees

Posted by PITHOCRATES - November 10th, 2013

Week in Review

It is very difficult to get people to complain about high taxes these days.  They’ll just keep voting in Big Government candidates who just keep raising taxes to pay for more and more government.  When it comes to the huge tax burden on Americans you hear nothing but crickets from the American left and center.  But impose a transaction fee on using an ATM and holy hell breaks out.  And don’t get me started on airline fees (see Where Did Airline Fees Come From, and How Did They Get So Bad? by Derek Thompson posted 11/5/2013 on The Atlantic).

In the 1960s, the airlines were regulated and practically nobody could afford to fly. But in the last few decades, the real cost of flying has fallen by 50 percent, even after you include the most annoying charges. Intense competition and the quiet power of comparison shopping online have devastated profits, and the airlines have turned to fees to rescue their business.

People will complain about airline fees despite the cost of flying falling by 50% in the last few decades.  Taxes have only gone up and yet no one bitches about that.  But airline fees?  That’s just highway robbery.

There is a reason why so many airlines go through the revolving door of bankruptcy.  Between fuel costs, union labor and customers squeezing every dime they can out of the price of a ticket it is very difficult NOT to operate at a loss.  More people than ever are flying.  Because flying has never been cheaper.  Or safer.  But people can’t appreciate that.  All they see are the fees above the cost of their ticket.

If only these people would turn their anger over ATM fees and airline fees onto those high taxes.  Maybe we could make government work on the thin margins we force airlines to operate on.  So we can keep more of our money.  Which is why we’re probably bitching about ATM fees and airline fees in the first place.  As we have so little money left after all the taxes we pay that we can’t afford ATM fees and airline fees.

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The French People have reached their Limit on Taxes and Protest their Government

Posted by PITHOCRATES - November 10th, 2013

Week in Review

The American left wants what Europe has a lot of.  Social democracies.  They want a great nanny state in the United States that provides cradle-to-the-grave welfare.  All funded with lots and lots of taxes.  Look to Europe, they say.  No one there complains about their high taxes.  And they enjoy wonderful cradle-to-the-grave welfare.  This is what the American people want, too.  So they can be as happy and content as Europeans (see French riot police use tear gas on anti-tax protesters by AFP posted 11/9/2013 on France24).

French riot police fired tear gas at hundreds of anti-tax demonstrators in northwest France on Saturday after protesters pelted them and tried to drive a tractor through a barricade, an AFP photographer said…

Demonstrators chanted slogans against France’s Socialist government, which earlier this month suspended the application of the so-called ecotax…

There were more anti-tax protesters elsewhere in Brittany and also around the country, including near the major cities of Lyon and Marseille, and in the capital Paris.

The ecotax, aimed at encouraging environmentally friendly commercial transport, imposes new levies on French and foreign vehicles transporting commercial goods weighing over 3.5 tonnes.

Well, apparently the French have reached their limit on taxes.  And this after they elected a socialist to office.

This is why there is such a sense of urgency on the left.  When Barack Obama became president what did the left do?  Address the horrible economy?  No.  They passed one of the largest welfare programs in history.  Obamacare.  While they held the House and Senate.  So instead of trying to make life better for all Americans by cutting taxes and regulations to stimulate economic activity they rammed Obamacare into law.  While they could.  For it isn’t often when the Democrats control the presidency and both houses of Congress.

And now there is even greater urgency.  For Europe’s social democracies are imploding.  And these nations are even turning away from their socialist pasts.  Turning back towards capitalism.  Which explains the urgency.  They want to hurry up and get a European-style social democracy in America before all of Europe abandons them.  Severely weakening the ‘look to Europe’ argument.  Especially if Europe embraces capitalism following the collapse of their social democracies.

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Diversity Goals sometime place Diversity over Ability

Posted by PITHOCRATES - November 10th, 2013

Week in Review

I had a friend who hated women.  He watched his mother break up her marriage with his dad.  And saw his beautiful sisters manipulate men to get whatever they wanted.  And then laughed at the men afterward.  He hated women so much he was going to be a confirmed bachelor.  Right up until he met a woman.  Got married.  And lived happily ever after.

He went to college under an ROTC scholarship.  After the divorce his dad didn’t have the money to pay for his college.  So he took the only scholarship he could get.  From the military.  And he hated it.  Especially the marching.  For the guy had two left feet when it came to marching in formation.  He got a lot of demerits for that.  And for shoes he never could shine as well as they should be.  Until he bought the plastic ones you didn’t have to shine.  The other thing he hated was the physical training.  Especially the run tests.  For he was no great athlete.  But it is amazing how anyone can improve when you have to take remedial physical training over and over again.  He eventually graduated.  And earned his commission.  But he hated every minute of it. 

There was one thing he hated even more.  There was a black woman in the program.  Who was even worse than he was.  This woman struggled to pass her run test.  Was even in the same remedial physical training as he was.  But one thing my friend had no problem with was self-confidence.  As he was an angry, arrogant guy.  Who might have mouthed off a time or two under his breath at an officer.  Especially when they made his life difficult.  Unlike this woman.  Who didn’t understand that there is no crying in the military.  As she cried.  A lot.  Especially when things got stressful.

My friend never saw her pass her running test.  Or hold a position of responsibility.  But she graduated, too.  Got her commission.  And went on to serve as an officer somewhere in the military.  A woman who was a far worse cadet than my friend was.  But suffered nowhere the amount of abuse my friend had to.  For he was a white man.  And they had plenty of those in ROTC.  But they had few women.   Even fewer black women.  And they didn’t want to lose her.  Because they were under pressure to diversify more.  Which made my friend hate women even more.  Until he got married and lived happily ever after, that is.

That was a long time ago.  But it seems like some things don’t change (see Meet the seemingly unfirable female firefighter by Susan Edelman posted 11/10/2013 on the New York Post).

Despite failing a required FDNY running test five times, Wendy Tapia was allowed to graduate from the Fire Academy and become a firefighter. On Dec. 2, she is taking the test for an unprecedented sixth time.

Tapia was one of only five women among 285 new firefighters who graduated from the FDNY’s Randall’s Island training academy on May 17.

The class was hailed as the most diverse group of rookies ever, all of them EMTs or paramedics seeking promotion to firefighter. She joined a group of just 35 women among the 11,000 Bravest…

Normally, probationary firefighters who fail the running test at the end of academy training don’t graduate — period. They flunk out but can join the next academy class, start over and get another chance to pass the course…

[A female firefighter] said FDNY brass, under pressure from a court order to hire more minorities, “want their numbers — that’s all it is.”

But that does female firefighters no favors, she added.

As well-intentioned as diversity is it comes with a price.  When people are under pressure to show diversity they may make that the determining factor.  Not ability.  Which may anger some people who feel they were passed over.  But it infuriates those who these diversity programs are designed to help who didn’t need any help.  Like this female firefighter.  Who no doubt had to put up with a lot of crap until she proved herself in the field.  Because of stories like this.  Causing these people to forever live with an ‘asterisk’ by their life.  Knowing that whenever they meet someone new that person may be wondering did they earn this?  Or were they given this?

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Will Three Model S Fires make Tesla join the Long Line of Green Car Company Failures?

Posted by PITHOCRATES - November 10th, 2013

Week in Review

Tesla has had three car fires with their Model S in six weeks.  Causing their stock price to slide after surging earlier in the year.  Forbes wrote about those better days in a May article that is making the rounds again.  Explaining why Tesla was escaping the fate of so many other green car companies (see The Real Reason Tesla Is Still Alive (And Other Green Car Companies Aren’t) by Joann Muller posted 5/11/2013 on Forbes).

Add VPG to the growing list of recent green car failures: Bright Automotive (electric delivery vans) , Carbon Motors (clean diesel-powered police cars), Aptera Motors (three-wheeled electric cars), Coda Automotive (inexpensive electric sedans) and, arguably the most infamous, Fisker Automotive (plug-in hybrid sports cars).

All had applied for financing under a $25 billion U.S. Energy Department loan program to promote development of cleaner cars, but only Fisker and VPG managed to draw the lucky tickets. Fisker was awarded $529 million (but received only $193 million before the DOE cut them off because of missed milestones) and VPG received $50 million. But now, they’re all dead, or almost dead. (One exception: tiny Wheego Electric of Atlanta, an EV start-up that started out making glorified golf carts and now sells a handful of bubble-shaped two-seaters with a top speed of 65 mph. The company is talking about introducing a $44,000 electric SUV next, but I wouldn’t hold my breath.)

That leaves only Tesla Motors TSLA -1.27%, maker of the plug-in Tesla roadster and the new Model S sedan, still standing. Which begs the question: why has Tesla made it when so many others have not..?

Experience, for one thing. While most of the other green car start-ups were founded by traditional car guys with a dream but little experience running a company, Tesla founder Elon Musk, with degrees in physics and business, had already built and sold one successful company, PayPal, (to eBay in 2002 for $1.5 billion) and also runs SpaceX, a maker of rockets and spacecraft. He had the stomach to push through difficult times, and the chutzpah to twist the arms of reluctant investors…

Tesla has been clever in other ways, too. It sells credits it receives from the state of California for producing zero emissions vehicles to other automakers that aren’t so clean. At up to $35,000 per vehicle, it’s a windfall that has helped keep the company alive, according to Gartner analyst Thilo Koslowski. “At the end of the day, other carmakers are subsidizing Tesla,” Koslowski told the Los Angeles Times.

While true until now, Tesla says those credits will decline as sales spread beyond California and into Europe.  In the first quarter, Tesla said credits sold to other automakers amounted to approximately $68 million or 12% of its revenues.

So the long list of green car company failures tells us there is no market for these cars.  Making it a poor economic model.  Companies that have depended on selling cars to succeed have failed.  But if you’re creative and can think of other sources of cash you can keep a green car company in business even without selling cars.  But tax credits and government loans still weren’t enough to fund Tesla.

Musk, luckily, is a billionaire. He pocketed roughly $180 million as a cofounder of PayPal, and helped get Tesla off the ground in 2004 with an initial investment of $6.3 million. He put in another $20 million in 2007, and then in fall of 2008, with the company on the verge of collapse as the economy seized to a halt, Musk was virtually broke. He spent his last $20 million trying to keep the company afloat, while living off personal loans from friends.

The $465 million government loan helped, as did Tesla’s initial public offering in 2010, which raised $226 million.

Today, Musk is worth almost $3.8 billion — $1 billion more than Forbes estimated less than three months ago. Tesla stock has surged 40 percent this week alone, following the positive earnings report and the Consumer Reports review…

Musk could well make it happen because unlike those other green car companies, he has things you can’t get from the government: huge skin in the game, passion and talent.

This is why Tesla is still in business while those other green car companies are not.  Passion.  Something that is hard to truly appreciate unless you’re an entrepreneur.  And lots and lots of money.  While other companies ran out Musk was still able to go on by putting his money where his passion is.  Makes you want to cheer him on to success.  Even if you don’t believe the electric car is a valid economic model.  You love gasoline.  And you love the internal combustion engine.

Will those three fires in 6 weeks be too great an obstacle for Musk to overcome?  Will the passion and cash last?  Time will tell. 

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After Fukushima Meltdown shuts down Nuclear Power Industry Japan turns to Solar Power

Posted by PITHOCRATES - November 10th, 2013

Week in Review

Japan shows how easy it is to go green after the Fukushima Nuclear Power Plant meltdown.  Nuclear power is unsafe.  Coal-fired power plants are too dirty.  So what to do?  Why, go solar, of course (see Kyocera launches 70-megawatt solar plant, largest in Japan by Tim Hornyak posted 11/8/2013 on CNET).

Smartphone maker Kyocera recently launched the Kagoshima Nanatsujima Mega Solar Power Plant, a 70-megawatt facility that can generate enough electricity to power about 22,000 homes.

The move comes as Japan struggles with energy sources as nuclear power plants were shut down after meltdowns hit Tokyo Electric Power Co.’s Fukushima plant in 2011.

Set on Kagoshima Bay, the sprawling Nanatsujima plant commands sweeping views of Sakurajima, an active stratovolcano that soars to 3,665 feet.

It has 290,000 solar panels and takes up about 314 acres, roughly three times the total area of Vatican City.

Wow, 70 megawatts.  Sounds big, doesn’t it?  With 290,000 solar panels on 314 acres.  An installed capacity of 0.22 megawatts per acre.  It must have cost a fortune to build.  And they built it on a bay.  At sea level.  In the shadow of an active volcano.  It would be a shame if that volcano erupts and covers those solar panels in a layer of ash.  Or if another typhoon hits Japan.  An earthquake.  Or a storm surge.  For if any of these things happen those 22,000 homes will lose their electric power.

So how does this compare to the Fukushima Daiichi Nuclear Power Plant?  Well, that plant sits on 860 acres.  And has an installed capacity of 4700 megawatts.  Or the installed capacity of 67 Kagoshima Nanatsujima Mega Solar Power Plants.  And an installed capacity of 5.47 megawatts per acre.  Which is perhaps why they built this on the bay.  Because it is such an inefficient use of real estate in a nation that has one of the highest population densities that they put it on the water.  To save the land for something that has value. 

We used the term ‘installed capacity’ for a reason.  That reason being the capacity factor.  Which is the actual amount of power produced over a given amount of time divided by the maximum amount of power that could have been produced (i.e., the installed capacity).  Nuclear plants can produce power day or night.  Covered in volcanic ash or not.  On a sunny day or when it’s pouring rain.  Which is why a nuclear power plant has a much higher capacity factor (about 90%) than a solar plant (about 15%).  So the actual power people consume from the Kagoshima Nanatsujima Mega Solar Power Plant will be far less than its 70 megawatts of installed capacity.

So in other words, solar power is not a replacement for nuclear power.  Or any other baseload power such as coal-fired power plants.  Power demand will far exceed power supply.  Leading to higher costs as they try to ration electric power.  And a lot of power outages.  Some longer than others.  Especially when powerful typhoons and/or storm surges blow in.  As they often do in the Pacific Ocean.

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