Nobrainer’s Think Tank

Via the OrangeCoat Blog, I followed a link to ADynammic’s post about Tom’s Shoes and their “amazing” business model.

I think Tom’s is great because they are more than just a shoe company (they aren’t even a pretty shoe company). They are a company who set out to do good, and they’ve done that. Mr. Mycoskie says the shoes sell themselves because almost everyone who buys a pair and hears the story tells someone else the story and it goes on and on. He rarely pays for any traditional advertising because the story sells it’s self. Now people like Ralph Lauren and other big designers are signing on to design special additions because they love the story as well. This is capitalism at it’s best. So check out the embedded video and maybe you’ll want to get a pair as well.

In other words, he collects a premium from gullible, probably guilt-ridden, customers, gives them a shitty pair of shoes in return (that no one even pretends are worth wearing), convinces some of them to work for him as free interns, sends a pair of shoes abroad to some poor kids, and then pockets the tidy profits.

This is not capitalism at its best. A fine case of charlatanism, perhaps. Or maybe charity at its worst.

Not that “best” capitalism is easily defined. But were I to venture a definition, Tom’s would sell shoes that were worth buying and that competed in the marketplace based on their own merits as shoes. He would also put his production plants in these poor countries (he may do so, but the video doesn’t say) so that he could provide jobs instead of handouts. But this is obviously just me being silly.

And then I’m going to stick one on every fucking Prius I see with an Obama sticker.

Ok. Deep breath.

Exhale.

All right. Immediate reactions aside. This can’t be real. Mr. Wordly, Mr. Improve our Image Abroad can’t seriously be behind something this stupid. It has to be part of the vast right wing conspiracy. Has to be. Right?

Recent headlines have blared that 2/3rds of companies pay no corporate income tax. If you have read the initial news reports about the report authored by the GAO you realize that the headline was correct, but that almost nothing else could be drawn from the reports. Dreadful politicians of course roared that corportations need to pay their fair share, yada yada freaking yada. Well today the Wall Street Journal was nice enough to remind us that we have the 2nd highest corporate tax rates in the world. Their report also contained the text below, which I think deserves to be read with a British accent:

Well, the Tax Foundation looked at those [GAO] numbers and found that, among the large companies that paid no taxes, 85% of them also made no profits that year. American Airlines and General Motors escaped income tax for 2005 through the clever tax dodge of losing $862 million and $10.5 billion, respectively. How unpatriotic.

The Chinese have apparently had capped electricity prices for some time. Well, when the cost of coal went up, the generators started losing money and some of the generators shut down, leading to some electricity shortages. So the Chinese gov’t imposed price controls at the mines. So the price of coal arriving at the ports went up. And now the Chinese gov’t is imposing price caps at the ports. Talk about chasing your tail!

The world’s fastest-expanding major economy faces such acute power shortages that electricity-sapping industries including aluminum smelters have had to halt production.

Energy supply shortages have become a “key factor” in holding back the nation’s economic and social development, the Chinese government said in a statement yesterday.

To conserve energy and cut the nation’s demand for oil, Premier Wen Jiabao ordered the nation to cut back on summer air conditioning and drive less, according to yesterday’s statement. The nation will also shut more oil-fired power generators, it said.

Of course, more price controls will invariably lead to greater shortages. I really don’t see the benefit of low prices if there is nothing there to be bought.

It’s worth pointing out that the Chinese are facing actual shortages, whereas we are having to cope with ample supply @ higher prices. We tried the price control and shortages thing a few decades ago. Fortunately we still seem to have enough sense to try to avoid repeating that. Anyway, let’s welcome the Chinese to the 1970s. I hope they like disco.

In January, the inflation rate in Zimbabwe was estimated to be 150,000% even though the official rate was much lower. Now the official inflation rate is 2,200,000%. That’s quite a rate!

As such, the Zimbabwean central bank has had a tough time keeping up. They’ve just now released a new $100,000,000,000 (that’s 100 billion) bill. The new notes trade for approximately $1 US.

Fortunately, for Zimbabwe, they were able to “democratically” re-elect their fearless and entirely benevolent leader.

A couple things:

1 - I’m getting really sick and tired of people blaming oil prices on speculators. As far as I can tell, this widespread fascination and belief is pretty much akin to Big Foot. There’s no real evidence to support the belief, but since no other explanation is palatable, the explanation about speculators holds. And it holds well, I think, because upset people can blame some small, mysterious group of nefarious rich people.

Today a column on MarketWatch showed great “evidence.”

A boom in speculation and trading by investment banks and hedge funds has put our energy markets on steroids. Contract volume in the futures markets has risen by a third in just the last year. Oil closed at a record high of $125.96 a barrel on the New York Mercantile Exchange on Friday. That’s double the price two years ago, a difference clearly caused by market manipulation.

He used the word “clearly” so he must be right.

2 - Refineries aren’t the problem. The EIA breaks down gasoline costs and shows to what extent refining contributed to the cost of gasoline. Right now, it’s about 8%. Yes, in the summer, the cost of refining can go from the ~26 cents it is now to maybe even 90 cents. But if we average it out over the last few years, refining has contributed only about 44 cents to the cost of every gallon. Reckoning that refining isn’t going to be free any time soon, we can build all the refineries we want, but we’re not going to save tremendous amounts of money as a result, at least not at current trends. So good luck convincing refiners to build gobs of new capacity (and it’s capacity we need, not “refineries,” per se) so that they can ramp up production, collapse premiums, and try to make up hundreds of millions of dollars in investments while operating at cost.

Some dolt writing at Foxnews was the motivation for the 2nd bullet point. He, like many, is willing to list refining capacity as a problem even though he admits that he has no fucking idea about anything relating to refining other than that it exists and, shockingly, costs money.

Although, there was a comment at the Coalition of the Swilling which, at least approached the refining issue in a better way.

I’m more concerned about supply than price, truth be told. Refining is a genuine bottleneck in the system. Witness the problems in the gasoline supplies post-Katrina.

I think that is a valid point, and it may even be worthwhile to pursue. However, we’re talking about an insurance policy. We’re talking about adding a premium to every gallon of gas just to be better prepared in case of an emergency. We’re talking about paying to either create huge stockpiles of refined product, or we’re paying for refineries to be built and not run. That may sound bad, but it is actually fairly analogous to the electrical grid. At any hour of the day, generators are being paid to be ready, but to not run. So, all in all, it’s not a bad idea, but it’s definitely not free.