Lost On The Shore

A Wiser Choice

Energy prices are high.  For all intents and purposes, they are going to stay high - maybe get higher.  While the price of oil might fall back to a previously unimaginable $100 per barrel, the long term trend is going to be for it to increase.  Why?  Because demand is increasing much faster than supply is able to increase.  And, as I pointed out in an earlier post, even the Bush administration doesn't think that opening up ANWR and the offshore continental shelf will do much, if anything to reduce prices.

So, with the reality that gasoline is going to stay expensive, what should the state of Maryland do for its citizens?  The citizens of Maryland have already voted on that; ridership on MARC and on the Washington Metro is setting new records regularly.  Ridership on Amtrak is up sharply and, in fact, may trains are sold out well into the future.  Ridership on local and regional bus systems has increased sharply.  Maryland needs to invest more in mass transit.

And we need to begin now.  Like anything else, mass transit takes time to build.  While the state is spending more than a billion dollars building the Inter-County Connector, passengers are flocking to MARC and Metro trains and to the Baltimore light rail, and the overcrowding is just going to get worse.  Now is the time to begin expanding the infrastructure, building the new stations and parking for the new residents that will be coming with BRAC and ordering the new cars that are already needed.  The state needs to invest in expanding and modernizing its long-distance commuter bus network and beefing up the weak public transportation networks in its rural areas.

And we can do more than that.  The photo above shows the Eurostar and Thalys trains side-by-side at the Gare du Nord in Paris.  While we've been fiddling around in this country with slow and inefficient long-distance rail passenger service, the Europeans have built an efficient network of high-speed passenger rail trains, among them the Eurostar, which runs between London and Paris and between London and Brussels and the Thalys which links Paris, Amsterdam, Brussels, Antwerp and Cologne. 

These trains run on dedicated rail lines at top speeds of 186 mph.  Travel time, for example, on the 190 mile route between Paris and Brussels is one hour and 22 minutes.  At those speeds, the travel time by train between Washington and New York could be one hour and 40 minutes or less.  We just need to spend the money (which would be a lot) to upgrade the track.

So Maryland should partner with the other Northeastern states to upgrade rail passenger service in the Northeast corridor.  The congress will never appropriate the kind of money that Amtrak nees to upgrade its service nationwide and that wouldn't make any sense anyway - rail travel - even high speed rail travel - will never compete with air travel in the wide open spaces of the great plains and the west.

But here in the more densely-packed northeast, high-speed rail travel can and should be the first option for intercity travel.  It's something we can and should do to help reduce our transportation costs and energy use.  In the meantime, we need to get to work here in Maryland building a mass transit system that will get us off the roads and help us use less gas. 

What Kind of Jobs, What Kind of Education

Bernie Hayden, over at Maryland On My Mind, writes a nice post about jobs and education questioning whether our education system is preparing people for the jobs that are available.  There are plenty of careers where there are far more jobs than qualified people to fill them.  Two stand out here in Maryland - education and nursing.  Let's start with nursing.

The Maryland Hospital Association reported that the vacancy rate in the nursing profession was thirteen percent last year.  In a few years, Maryland's nursing shortage could reach 10,000 positions, just as those aging baby boomers begin to increase the demand for skilled nurses.  We're producing fewer trained nurses than we need and can't seem to retain the ones we have.  This is very costly because hospitals must bring in agency nurses from outside at a very high cost. 

The demand is real.  One of my daughters, I'm happy to say, recently graduated from nursing school in Maryland, passed her licensing exam and received her RN license.  But even before she graduated, she had a job offer from a large Maryland hospital with a good signing bonus.  Of course, it was a long time getting there.   

In education, Maryland colleges and universities annually produce only about half the teachers that Maryland schools require. More than half of new teachers leave the profession within the first five years.  This is very costly because of the substantial investment school districts make in recruiting and initial training. 

So what can be done?  The state recognizes the problems with the nursing shortage.  My daughter received grants to cover her tuition on the condition that she work in a Maryland hospital one year for each year's tuition reimbursement she got.  This seems like a reasonable deal for the state and for the hospitals and last year the Governor increased the amount of money the Higher Education Commission has to offer these grants. 

Of course, to get tuition reimbursement, one has to get into a nursing school to begin with and there is a problem there.  Nursing schools in Maryland are having a great deal of difficulty finding and retaining faculty.  In February, the Governor announced an additional $3.4 million allocation to the Maryland School of Nursing to hire additional faculty and expand their program.  Still, there will be far more qualified applicants than openings in Maryland's nursing schools.

In education, the problem seems to be more one of retention.  If the 50% quit rate in the first five years could be substantially reduced, it would greatly reduce the need for expensive teacher recruitment programs.  Surprisingly, according to the Maryland State Teachers' Association, the problem is not inadequate salaries, but inadequate support for new teachers during their first few years on the job.  While it will require a greater investment to support teachers in their early years, this will have a significant payoff in greater retention down the road.

Now, as the 1917 poster above shows, the nursing shortage has been an issue for some time.  And I remember the teacher shortage being an issue when I was young.  But that's no excuse for ignoring these problems.  As I've written many times before, a well-educated and trained workforce is one of the best things Maryland has going for it.  We need to make sure that continues to be the case.   

We're Number Two!

The Milken Institute recently released their 2008 State Technology and Science Index recently.  The Index ranks states in their ability to succeed in the technology-driven information age.  Maryland was ranked number two, just behind Masschusetts.  The author of the study pointed out that states that invest in their science and technology assets are creating a strong environment for building and retaining high wage jobs.  The Index gives a good idea of who is ahead in the race for scarce human capital and other resources needed for succesful high-tech industry.

I've written before about the importance of a strong educational system in creating and keeping good-paying jobs in Maryland.  A look at some of the factors used by the Milken Institute in making their rankings is informative.  In the human capital area, for example, Maryland ranked first in the percentage of adults with bachelor's degrees or better, third in the percentage of population with advanced degrees and third in the percentage of population with PhDs.  Maryland also ranked among the top three states in the number of computer scientists, database and network administrators, microbiologists, physicists and software engineers per 100,000 people.

In research funding, Maryland ranked first in per capita Federal research dollars, first in per capita academic research spending and first in per capita R&D spending on biomedical sciences, engineering, life sciences and physical sciences.

The big investment the state is making in education will help ensure that Maryland maintains its leadership in this crtical area.  The recent announcement by the governor that more than a billion dollars will be devoted to developing and supporting the state's biotech industry will also help. 

There was much concern after the tax increases that were voted through in the recent special legislative session that people and businesses would leave the state - and perhaps some will.  But the kind of enterprises that stand the best chance of succeeding in today's and tomorrow's global economy are those that are attracted by just those factors cited by the Milken Institute.  They don't locate in Maryland because of the low cost, they locate here because of the highly skilled and productive workforce we have.

If they really want low taxes there's always Mississippi...which ranks 50th out of 50 on the index.

[The painting of Archimedes was made by Domenico Fetti in 1620.  It hangs in the Alte Meister museum in Dresden]

Oil Follies

Certainly one of the issues on everyone's mind these days is the price of gasoline and the price of oil.  The runup in the price of both over the past couple of years has everyone wringing their hands and looking for solutions.  Every politician from the local dogcatcher to the President of the United States (and more importantly, the King of Saudi Arabia) has either come up with a plan to address the 'oil crisis' or is working on one. 

Andy Harris, the Republican nominee for Congress in Maryland's First District recently released his plan.  As I understand it, the plan includes:

1. Temporarily suspending the Federal and state gasoline taxes from Memorial Day to Labor Day.
2. Temporarily reducing the 40+ gasoline blends used in the United States to four blends in an effort to simplify refining and improve the efficiency of refining and transporting gasoline.
3. Opening the Arctic National Wildlife Preserve, the Aleutian Islands and the US continental shelf to oil and gas production.
4. Increase long-term oil refining capacity by establishing fast track approval for new and expanded refineries.
5. Provide incentives for technological innovations in alternative forms of energy such as nuclear, solar, geothermal, and cellusolic ethanol.

Before analyzing the plan, let's take a look at the background of the problem. 

World Petroleum Production and Consumption (Millions of BBL/day)

	2003	2004	2005	2006	2007
Production	79.6	83.1	84.6	84.6	84.6
Consumption	79.6	82.3	83.7	84.6	85.4

These figures are from the US Energy Information Administration.  Note that production has stagnated since 2005 while world consumption has continued to grow.  Consumption by industrialized countries (OECD members) in 2007 was basically the same as it was in 2003 - a little under 49 million barrels a day.  Consumption in other countries, however, increased from about 31 million barrels a day in 2003 to 36.4 million barrels a day in 2007.  Every indication is that the demand from non-OECD members will continue to increase.  Demand in China, with its 2 billion citizens and India with its billion or so will continue to grow at a rapid rate.  Demand in the former USSR is also growing. 

Production, on the other hand, isn't increasing at all.  While new fields are coming on line, in the Caspian Sea area for example, and new discoveries are being made, they are insufficient to overcome the long-term decline of three to four percent in the production of existing fields.

Many blame speculators for increasing the price of oil by driving up demand and, in fact, they do contribute to some of the wild fluctuations and instability in the market, but they never actually take delivery of the oil and thus don't contribute to the ultimate demand.  So what we really have is a growing imbalance between a static supply and a growing demand that is driving prices higher.

With that in mind, let's take a look at Andy Harris's proposed energy plan.

First he proposes eliminating the gasoline tax - both Federal and state - between Memorial Day and Labor day.  This will have the effect of increasing demand but will do nothing to boost supplies.  In addition, of course, hundreds of millionss of dollars that should be used to ease traffic bottlenecks, maintain roads and expand mass transit will be lost.  Sure the price might drop a bit initially, but will creep back up as demand returns and we'll have nothing to show for it.  I've written about it before, but I have to say it again - this is a bad idea.

Second, he wants to reduce the 40 or so different gasoline blends in the United States to 4 - he doesn't say how.  The reason these different blends exist is to mitigate air quality problems in many large metropolitan areas around the United States.  They are designed to reduce emissions of volatile organic compounds which, combined with sunlight, produce ozone.  Some also are formulated to reduce emission of nitrogen oxides which pollute air and waterways and can contribute to acid rain.  Certainly a reduction in the number of blends will reduce transportation and storage costs for the oil companies.  The effect on consumer costs is uncertain.  Many of the blends cost more to produce than conventional gasoline but pollute less.  It's hard for me to see how this will save money for consumers without increasing ozone pollution in our metropolitan areas.  I don't see any additional production or reduced demand from this.

Third, he wants to open the Arctic National Wildlife Reserve (ANWR), the Aleutian Islands and the US Continental shelf to exploration.  The US Geological Survey estimates that there are between 7 and 8 billion barrels of recoverable oil in ANWR.  The Energy Information Administration estimates that opening ANWR to production would result in a peak production of 780,000 barrels per day in 2027 which would reduce the price of a barrel of oil by about 75 cents - not quite two cents per gallon. 

I have no idea how much recoverable oil is in the Aleutian Island area - I haven't been able to find much about it.  It appears certain there are significant amounts of recoverable crude oil in the unexplored parts of the US continental shelf - perhaps more than exist in ANWR.  Americans need to decide what kinds of risks they want to take to obtain additional domestic oil supplies - even if they are small compared to our imports.  It's worth noting, though, that we seem unwilling to allow even wind turbines to be built offshore, much less oil platforms, pipelines, etc. that would come with significant oil production.  This proposal does add something to production, albeit not for ten or fifteen years at the earliest.  

Fourth, he wants to increase long-term refining capacity in the United States, presumably by eliminating some of the environmental and safety reviews that are now required.  Refining is an interesting problem.  Over the past year, the price of oil has increased much faster than the price of gasoline, sharply reducing the profits levels of refineries.  Oil companies like Valero and Sunoco which refine oil but don't produce it have dropped sharply over the past year.  As a result refiners are shifting their operations to produce more distillate (diesel and heating oil) which has a relatively high price and less gasoline from each barrel.  

Harris's proposal ignores the real problem with refining - it's not consistently profitable.  If companies can't earn a reliable and fair return on investment in new refinery capacity, none will be built, regardless of any loosening of regulations.  I don't see anything here which will alter the supply/demand relationship.

Fifth, he wants to provide incentives for technological innovations in alternate forms of energy.  I'm all for this, provided the incentives don't turn into long-term subsidies.  We need to find alternatives and, in the long run, this will help to reduce demand for petroleum and all that comes with it.

So what does all this do for Marylanders and the voters of the First District?  Not much in the short term except for the ridiculous and self-defeating gas tax holiday.  But maybe there's not much that can be done in the short term.  I do note that Harris's proposals contain nothing about mass transit or public transportation, nothing about smart growth that would reduce transportation needs, nothing about increasing corporate fleet mileage requirements and nothing about alternative fuels such as the plug-in hybrids being developed by General Motors and Toyota and the hydrogen fuel cell car recently introduced by Honda, but that may be too much to ask.

[The photo (click on it to see the large version0 is of the Thunderhorse production platform built by BP at a cost of about $1 billion.  It was struck by hurricane Dennis in 2005 before it was in production and partially capsized due to a construction error.  It's a reminder that there are risks to offshore drilling and production that need to be balanced against the potential rewards]  

 

Wealthy Maryland? - 3

Average incomes on the Shore and in Western Maryland are much lower than in the Baltimore/Washington corridor and poverty rates are, by and large, higher.  What, if anything, can or ought to be done about that?  Not surprisingly, I have some suggestions.

I've written often here about the relationship between education and income.  Maryland, as a whole, has one of the highest household incomes of any state in the union and also has one of the highest rates of educational attainments.  That's no coincidence.  Many companies choose to locate in Maryland, despite its relatively high cost, because of its highly-educated and productive workforce. 

But almost all of those companies locate in the wealthier sections of Maryland - not on the Shore and not in Western Maryland.  There are a couple of reasons for this - the workforce they need is there and major government installations - NIH, the Food and Drug Administration, Fort Meade and NSA and Aberdeen Proving Grounds are all in the area.  For years, these areas forged ahead because their excellent school systems produced the kinds of workers that high tech industry needed and because of the presence of these important magnets.  The presence of major universities at College Park and Johns Hopkins in Baltimore helped too.

With the approval of the Thornton program, the state began to provide substantially increased funding to schools in the poorer parts of the state and there has been considerable progress in those areas.  Recently, for example, Ocean City Elementary School, here in Worcester County, became the first school in the state in which every student passed the state achievement tests - certainly something to be proud of.

But education by itself isn't enough.  Plenty of bright and well-educated students graduate from school on the Shore, go away to college and never come back - primarily because the kind of jobs they're looking for don't exist here.  So the kind of industry that provides good, high-paying jobs won't locate on the Shore because the workforce they need isn't here.

A couple of days ago the Governor unveiled a proposal for the state to spend as much as $1.1 billion over the next ten years to attract and support biotech firms in Maryland.  That's a good thing, I guess.  The state is uniquely positions to become a 'biotech hub' with the National Institutes of Health, the Food and Drug Administration, Johns Hopkins University and the army's biological warfare center at Fort Detrick all within about forty miles of each other.  But how much of that money will support new or existing industry on the Shore or in Western Maryland - areas where income is lowest and the needs greatest?  None.

So what can be done?  I think there are a number of things.  First, the state should provide a bit more support for infrastructure development.  The Rural Broadband Initiative is currently building a fiberoptic line linking Wallops Island, Salisbury and the Western Shore.  This will bring true high speed internet to many parts of the Shore that don't have it now.  There's also investment needed in other areas.

Second, the state should invest some money to capitalize on the presence of the two universities on the Shore.  The Shore is an ideal place to expand their environment and marine biology programs to eventually  serve as magnets for companies in those areas. 

Third, the governor should establish a small office to focus on the Shore and on Western Maryland.  The announcement about the biotech initiative is a good example of how these regions get left out of things - not out of malice but simply because they are overlooked by those whose focus is solely on the Baltimore/Washington corridor.  By having an advocate for these regions in the executive branch, there's a better chance we won't be overlooked.

And fourth, the influx of retirees to the Shore should not be overlooked. Rural life has its charms and here on the Shore, where there are plenty of quiet bays, rivers and creeks, life can be quite pleasant.  The retirees bring money and a heighted demand for medical services which provides some good-paying jobs. 

So let's all recognize and applaud the high incomes that many Marylanders enjoy, but let's not forget those who don't share in the wealth.

[ Boating  was painted by Edoard Manet in 1874.  The original hangs in the Metropolitan Museum of Art in New York City]

 

Wealthy Maryland?

 We were all pleased to see the announcement from the Census Bureau last year that Maryland had become the wealthiest state in the country as measured by median household income ($65,144) - edging out New Jersey and Connecticut.  At the other end of the list, Mississippi ($34,473), West Virginia and Arkansas were the poorest.  I've often written here about how the high levels of educational attainment in Maryland contribute to our relatively high incomes.

But not everyone in Maryland is pulling down those high salaries.  There are significant differences regional differences as well as a wide spectrum of income even in the wealthier jurisdictions.  Let's start by taking a look at salaries. 

According the the Bureau of Labor Statistics the average wage in Maryland in the third quarter of 2007 (the last period I could find county by county data) was $892 per week - a good wage and significantly higher than the national average.  But that statewide average hides wide regional variations. 

The highest wages in Maryland are, not surprisingly, in Montgomery County where the average wage is $1,090/week.  Second place is St. Mary's County at $989/week.  I suspect the high average there is due to a relatively low employment level and the increased employment at Patuxent River NAS and surrounding defense contractors.  Howard County at $945/week, Baltimore City at $937/week and Prince George's County at $901/week round out the top five.

Now let's look at the other end.  The lowest average weekly salary in Maryland is right here in Worcester County at $484/week followed by Garrett County all the way at the other end of the state at $514/week.  Allegany County at $580/week, Dorchester County at $603/week and Caroline County at $617/week round out the bottom five. You can find the rest of the numbers here. 

The pattern is easy to see.  The highest salaries are, by and large, in the Baltimore/Washington corridor.  The lowest salaries are in Western Maryland and the Eastern Shore. 

Of course, average salaries don't tell the whole story.  Baltimore City, which has one of the highest average salaries in the state also has the highest poverty rate.  We'll look at that and more in my next post.

[Note:  I'm sorry for the long delay in posting.  We had an unexpected and tragic death in the family.]

  

The Heart of Maryland

 Summer is upon us and lots of Marylanders will be heading to the Eastern Shore this weekend, perhaps to do a little boating.  More precisely, a lot of Marylanders will be heading for the beaches this weekend.  For many, the Eastern Shore is just a place they have to get through between the Bay Bridge and the beaches. 

Maryland is a small state in area (we're number 42!) relatively wealthy and highly educated.  But these generalities hide wide diversity in population density, income levels, education, culture and, of course, politics. 

Let's take a look at some numbers.  According to the Census Bureau, the population of Maryland was about 5.6 million in 2006 (we're number 19!).  But the population is heavily concentrated in the Baltimore/Washington area (eight counties plus Baltimore City) which account for 4.6 million of the 5.6 million - a little more than 82 percent. Western Maryland, Southern Maryland, the Upper Eastern Shore and the Lower Eastern Shore together have a population of a little under a million in fifteen counties.  Fewer than 200,000 people live in the four counties of the Lower Eastern Shore.

Almost all of the money seems to be in the Baltimore/Washington area too.  in 2005, per capita personal income in the Baltimore region was about $41,339.  In the Washington region it was $47,096.  By contrast, per capita personal income in Western Maryland was $29,045 and here on the Lower Shore it was only $30,062.

Of course, political power goes with the population and the money.  Of the 47 members of the Maryland State Senate, for example, 3 are from the Eastern Shore, 2 from Western Maryland.  So the result is that decisions that primarily affect the Eastern Shore are usually made by people from Montgomery County and Baltimore. 

This year, the ban imposed by the state on commercial clamming in the coastal bays goes into effect.  The most recent legislative session produced a law strengthening the Critical Areas Act, which governs shoreline development.  The state has imposed new restrictions on the crabbing industry and is preparing to impose more regulations on the poultry industry. 

Now don't get me wrong, I support all of these.  But I'm not from here.  If these laws and regulations, which primarily affect the Eastern Shore, were put to a vote here, they would all fail by large margins.  The reality is, that despite the heroic efforts of the few legislators we send to Annapolis, we are basically a colony - governed benevolently by the fine people of the Baltimore/Washington area who no doubt know what's good for us and have our best interests at heart.

And make no mistake; we're grateful when they send us a few bucks to build a little piece of road or part of a school.  It's the first weekend of the summer and we're happy to have you visiting.  We can certainly use whatever money you can leave here because wages are low, poverty is high and, for many on the Shore, things are getting decidely worse.  I'll have more on that in my next post.

[The image is of a painting by Edouard Manet - "Boating" - completed in 1874 and found in the Metropolitan Museum in New York City]   

Items of Interest

It's been a soggy couple of days on the Shore and we're looking at a few more before we finally break into our late spring and summer weather.  While I'm waiting I want to catch up on a few items of interest that caught my eye over the past week.

Energy prices continue to rise. Gasoline prices set a new record in Maryland this week.  Gasoline prices nationwide reached an average of $3.67 a gallon and oil reached $126 a barrel.  Gas prices here on the Shore ranged from about $3.55 to $3.65 while in the high priced areas of Montgomery County prices were in the $3.75 - $3.85 range with one station posting $3.97 and a station in DC was asking $4.05 for regular.  Diesel prices are higher everywhere. 

The tourism industry here on the Shore relies heavily on vacationers driving over the Bay Bridge from the DC/Baltimore area and down from the Philadelphia area.  With the peak summer driving season starting in a few weeks, the ability of consumers to absorb these increases could have a dramatic impact on the economy here.

On the electricity side, BG&E posted their new rates and PEPCO Holdings announced that their first-quarter profits doubled from last year.  It looks like a difficult summer on the electricity front, also.

Transportation  In a related development, the New York Times today reported that higher gas prices are driving record crowds to mass transit.  Mass transit systems are struggling to cope and equipment shortages are becoming apparent as is apparent both in Baltimore and Washington.  With a huge proportion of the state's transportation budget tied up in the InterCounty Connector, the state and local jurisdictions are going to have to look hard at their budgets to see where they can free up some funds to expand mass transit options.

Here on the Shore, there's little mass transit to speak of.  In Ocean City, though, the town is encouraging visitors to rely on its bus system while visiting there.  A crowded summer weekend can easily overtax the system there and they are going to have to be careful to ensure they have enough capacity.

On a brighter note, the state has announced that construction will begin next year on the MARC station in Edgewood.  With thousands of new jobs coming to the Aberdeen Proving Grounds, this station will be a critical part of the transportation infrastructure there. 

Health  A recent study in New England shows that teenagers in places with strict smoking bans in restaurants were forty percent less likely to become regular smokers.  Apparently, huddling outside restaurants and bars to take a puff isn't 'cool'.  Lower smoking rates among teens will help keep health care costs from growing so fast.  Every little bit helps.

Real Estate The number of home sales continues to decline in Maryland.  The National Association of Realtors, as they have every recent month, said that the turnaround is about to start, but almost no one else seems to think so.  Spring is normally the peak selling season, but it doesn't seem to be happening, at least here on the Shore.

In many states, local jurisdictions are facing severe budgetary problems as falling assessments lead to reductions in property taxes.  Here in Maryland, the problem is not quite so urgent as our three-year assessment system means that assessed values are still rising in most jurisdictions.  Some counties, though, like Montgomery and Prince George's, which have come to rely heavily on transfer taxes, are suffering as home sales decline sharply.  All local jurisdictions need to be very careful in committing to future costs, though, as the same three-year assessment cycle which is helping them now will be hurting them in the future as new assessments drop.

[The photo is of Thomas Point Shoal Light] 

And The Hits Just Keep On Coming

Pilgrim's Pride is the latest chicken producer to report a loss.  The report by this company, the largest chicken producer in the country, follows the loss reported by Tyson Foods, the world's largest meat producer, of a loss for the third quarter.  Purdue Farms, the largest poultry producer on the Shore, is privately held and doesn't report profit and loss, but I would be surprised if they were not struggling also.

The primary culprit in each case is high grain prices with some contribution from high energy prices and transportation costs.  The companies have been unanimous in blaming flawed government ethanol policies for contributing to the higher cost of grain.  To a significant extent, they are right.  The huge subsidies for ethanol production has led to an explosion in the number of ethanol plants that now suck up about a quarter of our total corn production.  Further, the demand for corn has led many farmers to shift production out of wheat and other grains into corn.

This demand, coupled with crop failures overseas and increased demand from rapidly developing countries like India and China has sent grain prices up substantially and has affected the price of many other foodstuffs.  But anyone who shops for food already knows that. 

On top of all this, of course, the congress is prepared to pass a wasteful and grossly inflated farm bill which will increase subsidies to farmers and significantly increase consumer prices for many things.  But I digress.

It seems that a cutback in poultry production may be coming and that will be just another hit for the Eastern Shore, where the economy is already hurting due to the sharp decline in residential housing construction.  With the cost of gasoline more than $3.50 a gallon, it's likely we will see a reduction in tourism too.  We already know the crabbing industry is taking a hit. 

So it could be a difficult year here on the Shore.  We'll have to see what comes next.

Stimulating Someone's Economy

Well, I received my 'economic stimulus' yesterday.  I'm not sure what we'll do with it.  Probably it will go into a money market account for the time being.  The total tab for all of these economic stimulus checks (actually, wire transfers in most cases) is about $150 billion. 

Of course, the government doesn't have that kind of money.  In case you've been asleep somewhere, the US Government is running a huge deficit thanks to President Bush.  So the government is borrowing the money to pay us all the tax rebates which are supposed to stimulate the economy.  I presume the cost of this will fall on my children or grandchildren, so thanks kids!

From what I read, a lot of the money will be used for one-time purchases - that high definition TV people have been wanting, or or to pay down credit card debt - I'm sure Citicorp will appreciate that - they could use the money. 

I guess the sad thing about this is that there are so many useful things the congress and the president could have done with the $150 billion that would not only stimulate the economy but would address some of our problems too.

For example, the money could have been used for school construction - distributed to the states and then used to fix up existing schools or build desperately-needed new schools.  Or the money could have been used for highway and mass transit construction - a way to reduce the amount of gas we use either by reducing congestion or getting us out of our cars altogether.  Or to make long-deferred repairs to facilities in our national parks. 

These are just some examples, but they have something in common.  They are construction-oriented to provide jobs for the many displaced from the home construction business and they leave something of lasting value for our children, who are going to pay the bill anyway. 

Of course, all of these would take a bit longer to get started than just shoveling money at the voters, but virtually all of the jobs created would be here in the United States, not in China, Taiwan or South Korea where they make those great TVs and the Wiis. 

There was a time when our leaders, in times of economic downturn would look to solutions that would not only stimulate the economy but would provide employment for Americans and use the money to provide a lasting benefit for the future.  Look at the Tennessee Valley Authority, the Bonneville Power Authority, the Hoover Dam, the Civilian Conservation Corps and the Works Progress Administration.  What we're doing now is pretty dismal by comparison.

And it's easy to blame our leaders for this, but the problem is really with us.  We demand instant gratification.  We want everything now and don't want to pay for it.  Let our kids do that.  And President Bush has learned this perfectly.  If he had his way, he and his Republican cohorts would eliminate every tax and push government spending and borrowing to a new high.  As another famous leader said a few years ago: 'Après moi le Deluge', and he was right. 

I guess I'll just wait; the bread and circuses can't be far off.