SpaceX: A New Monopoly, Great Opportunity

      On Monday night, December 21st, 2015, SpaceX made history again. The private space rocket firm launched 11 satellites into orbit for ORBCOMM, but that has become the norm for them. What was impressive was the achievement of their secondary objective: successfully landing the primary stage rocket on land. That has never been done before, by anyone, and it is a big deal.

      The biggest problem for space travel, tourism, research, and really anything involving putting stuff into orbit is costs. Making a rocket is very, very expensive. It is made even more expensive by the fact that they are not reusable. Upon launch, the rockets and fuel chambers, which cost millions of dollars to develop and build, are jettisoned into the ocean, or burn up on reentry.

      To understand the immense waste this causes, think about a commercial airplane. A Boeing 747 costs hundreds of millions of dollars, and seats less than 700 people. If the plane were to be built, carry 700 people across the country, and then immediately be dumped into the ocean, that would be something like what space travel is currently like. To make a profit, each passenger would have to pay hundreds of thousands of dollars for one plane ticket. The result: very few people, if at all anyone, would fly. That is the current state of space travel: only big governments and corporations have the money to even think about going to space. Several months ago, SpaceX's website listed the cost of one flight on their Falcon 9 rocket as over $60 million dollars. Their larger Falcon Heavy model was over $90 million per flight. At the time, however, that was the cheapest anyone could get.

      The significance of SpaceX landing the rocket in one piece is that now it is reusable. Now that we are no longer dumping multi-million rockets into the ocean after one use, the cost of building a rocket can, like the cost of building a plane, be spread out over many flights, making each individual flight much, much cheaper. As of today the prices on SpaceX's website have been taken down, and not yet replaced: likely while they recalculate the new cost of space travel. This raises the question: exactly how cheap will such a future be?

      SpaceX now has the closest thing to a monopoly possible in today's space age. Already the cheapest way to transport goods to space, no one can now compete with them on price. Traditional basic monopolist theory would suggest that they would artificially keep the price high to boost profits. This would be a shame. Fortunately, basic monopolist theory assumes that the producer is pursuing profit, and SpaceX is not. Elon Musk has made it his goal to drastically reduce the cost of space travel, with the eventual goal of sending humans to Mars in large numbers to establish a colony. This means that the price of space travel is likely to fall dramatically.

      The changes of reusable spacecraft, and thus cheap space travel, cannot be understated. Commercial aircraft have revolutionized the world, accelerating globalization, and connecting us across continents. How much easier it is to travel to Europe by plane rather than boat. A cheap way into orbit and beyond will mean many more satellites, which could, say, give internet access to everyone in the world. It will drastically reduce the cost of research, and allow much more accurate weather and climate tracking networks. Already there has been talk of sending fleets of nano-satellites into orbit, and even plans for asteroid mining. All these plans and more have just become much more feasible.

      There will likely be many more changes brought about by this revolutionary feat: the future is coming, and it really doesn't look so grim.

By: Jonathan Wood

Carbon Taxes

      With the ongoing Paris talks, many ideas are being floated to combat changing climates. Many are complicated and technical, others involve quotas and strict regulation. A straightforward way to address consequences caused by human actions would be to change those human actions. Economics shows that generally, when an activity becomes more costly, it is done less. Thus, to reduce the burning of fossil fuels and the emission of carbon, tax carbon, a lot. Small taxes on carbon emissions, and activities that promote it, such as Mexico's $1 per ton, would be nice efforts to raise a little cash for governments. To effect real change, much larger rates must be implemented, particularly given the currently low base prices of oil and gas.

      The effects of taxing carbon would be straightforward. Higher costs of crude oil, coal, and natural gas would reduce consumption of gasoline and electricity. It would make renewables more attractive for many people, and spur investment in alternative forms of energy, as well as in more efficient appliances and products. Even for those whom a carbon tax does not make renewables profitable, taxing emissions would encourage many firms to switch from coal fired plants to gas fired ones, which produce far fewer emissions. This would have a huge impact, since coal fired plants make up such a large portion of electricity generation world wide, while China burned 3.8 billion tons in 2011, and is expected to grow. BP has estimated that switching 1% of the world's coal fired plants to gas fired would cause an equivalent carbon emission decrease to increasing the amount of renewables by 11%. A carbon tax would certainly help nudge energy companies in that direction.

      Beyond merely reducing global warming and hopefully keeping temperature low, there are other reasons for adopting a carbon tax. Air pollution is harmful to human health, as emissions release tons of particulates, tiny particles that clog the lungs and cause a number of ailments, and a variety of harmful chemicals that humans inhale. In India, research done by Greenpeace, the Conservation Action Trust, and Urban Emissions recons that coal emissions kill at least 80,000 people, and result in heal care costs of at least $3.3 billion. The health benefits alone of reduced emissions would, some argue, justify a carbon tax of $30 per ton. Of course, due to different needs, local costs, or economic conditions, using a tax to establish a world carbon tax may be very unsustainable. More likely, prices will remain different between region or countries.

      To be sure, such a high tax would not be without costs. Higher prices in the short run will hurt consumer demand for many goods, reducing consumption. However, the case is easy to make that the long run benefits of moving quickly to a cleaner and more energy efficient society will outweigh the short term pains of change.

By: Jonathan Wood

TPP: Environmental Protection

      Chapter 20 of the Trans Pacific Partnership deals with Environmental regulation among the 12 member Parties (countries). Generally, there are calls for greater information sharing and publication of programs and activities relating to such environmental assets as the ozone layer. The agreement also encourages nations to enact regulations to preserve a variety of areas, from wild fauna to marine life. Importantly, Article 20.3.6 clearly states that no exceptions to environmental laws are to be made merely to attract or encourage trade with a preferred partner. This will help to ensure that environmental regulations are implemented fairly and equally from country to country.

      Of course, the matter of establishing regulations leads to the question of what to do if one is broken. To establish a violation of some of these steps to protection, a Party must show that the failure impacted their trade. For example, Article 20.6.1 calls upon each Party to “take measures to prevent the pollution of the marine environment from ships”. To establish a violation of this clause, another Party must “demonstrate that the [first] Party has failed to take measures to prevent the pollution of the marine environment from ships in a manner affecting trade or investment between the Parties.” So, once a Party demonstrates that another Party’s actions failed to protect the marine environment, and that the failure affected their trade, what penalties are available? Sadly, that question is not sufficiently answered in the current TPP.

      If a violation is detected, there is nothing specifying what penalties may be enacted. In Chapter 20, it does state that “sanctions, penalties, or other effective measures” may be taken in order to deter harmful trade, specifically relating to illegal trade in wild fauna and flora. However, even here, no specific actions are spelled out. This is one of the places in which the TPP acts not as a regulation, but as a framework for future coordination between its Parties for enacting specific legislation as the specific situations between each Party requires.

      The reasons for this can be many. The TPP, already making great reforms in pharmaceuticals and tariffs, cannot be the tool by which every interaction between its members are measured. Indeed, within Chapter 20, as within other chapters, the TPP relies on outside treaties and agreements, referencing previous deals such as 1993 FAO and 2001 IUU Fishing Plan of Action. This lack of substance in the framework that the current TPP agreement sets up is a stark reminder that this agreement is not meant to stand alone, and is the first step in greater cooperation among its members. That was, after all, one of America’s goals in these negotiations: to set the agenda for future dialogue among Pacific nations, and to secure its place at the table for future talks, which will decide much about the nature of Pacific nations’ interactions with one another, and not simply in trade. In short, while the TPP marks great change in many areas of international relations, it also marks the start of closer cooperation between its members.

You can read more about these and other environmental regulations in Chapter 20 of the TPP.

By: Jonathan Wood

The Trans Pacific Partnership Agreement

What It Means For Global Trade

"Imports create competition and keep domestic industry more responsive to consumers."
-- Senator Chuck Grassley, IA (R)
The one thing almost any economist will agree to is that free trade is nearly always a net benefit, and almost never creates net losses. When nations remove tariff and non-tariff barriers (NTBs), such as quotas, it allows resources to be used more efficiently across those countries and increases competition. Firms gain because now they can sell their products to much larger markets. Consumers gain because they have a greater variety of goods and services to choose from. As companies merge or out compete inefficient rivals, economies of scale allow them to more efficiently (ie more cheaply) use resources which lowers prices for consumers. As some industries contract from competition, their capital and workers are absorbed into the expanding industries. Importantly, while their are losers and winners, the gains by the winners will outweigh the losses to the losers, and on net the countries involve in opening up trade will benefit.
Because there are losers in large scale free trade agreements, there tends to be vocal opposition to such deals, usually fueled by the interest groups that stand to loose. One common argument that has been raised around the Trans Pacific Partnership, or TPP, is that it is a "corporate power grab". In essence, runs the argument, large companies are forging new laws behind closed doors that will boost their profits at the expense of domestic jobs and the common man.
This argument has two flaws. Firstly, corporate bodies are not involved in the negotiations, and in fact have no more information or access than the general public. Secondly, corporations are among the loudest opponents to the TPP. Big pharmaceutical companies in America fear it will reduce the duration of their patents, allowing generics to enter the marketplace and drastically lower the prices of medications sooner. Dairy farmers in Canada fear that foreign firms will be able to outcompete them, luring away customers with cheaper milk and cheese. Free trade means greater competition for many industries, leading to lower prices. That is bad news for corporate profit margins, but an exciting prospect for the average consumer, both in America and abroad.
Another major complaint is that the negotiations took place in secret, and only the final deal is being released to the public and legislature for approval; thus, it must certainly be undemocratic. This overlooks the fact that if the negotiations were public, the citizens, companies, and interest groups of every one of the participating countries will holler and scream at every single development, and nothing would progress. With the current situation, each nation had representatives negotiating on their behalf, and the final version will be publicly released. The US people will still be able to become informed, lobby their congressional representatives, and put the TPP through the democratic process before we decide whether or not to adopt it. This way, none but a select few, and that excludes any mega-corporations, have access to details before everyone else; and the negotiations can progress in relative peace and quiet.
The TPP has the potential to become one of the largest trade agreements ever created, and its exact effects will not be known for some time. On October 7th, it was announced that the exact, full text of the final agreement will be released within 30 days to the general public. Each nation will have to ratify the treaty independently, and the US Congress will have until early 2016 to do so. Over the weeks following the release of the full text, this department will publish articles of the TPP's potential effects on the 12 member countries, looking and the potential impacts of specific policies.

By: Jonathan Wood

Why D.C. Teenagers Have Taken a Stand Against Police Brutality

By William Bates and Yared Lingo

          This past Wednesday, December 17, The School Without Walls High School of Washington, DC held a protest in front of the White House.  The school was protesting police brutality and unpunished violence against African-Americans. School Without Walls students were outraged by these crimes, particularly the recent deaths of Eric Garner, Michael Brown, and Tamir Rice.  The students marched from their school at 21st and G street NW, DC to the White House. At the foot of the White House, the students staged a “die-in”, wherein they laid together on the ground for over 30 minutes before marching their way back to their school in time for their midterm tests.

          The demonstration accomplished one thing without a doubt: proving that the youth of America care about this pressing issue. The protest was conceived by teenagers, organized by teenagers, and enacted by teenagers. The student organizers of the demonstration went above and beyond social media posts and hashtags to incite real action. The amount of time and effort put forth by the students, not only the organizers but also the participants, would be noteworthy even in adults. So this protest raises an important question: why is it that a demographic generally viewed as apathetic would take a stand, and in a huge way, on their own volition?

Students marching to the White House (The Nation).

School Without Walls Protest. Digital image. The Nation. N.p., n.d. Web. 22 Dec. 2014.

        Social media, most notably Twitter, has been monumental in influencing this phenomenon. There is a clear relation between the online movement and the physical actions, as suggested by the chants used by the students during their demonstration. In recent days, masses of Twitter members have used the platform to post their feelings about some of the recent police brutality-caused deaths, including those of Michael Brown, Eric Garner, and Tamir Rice. Common Twitter hashtags #icantbreathe and #blacklivesmatter were then transformed into call-and-response protest chants by the School Without Walls student body. The students’ yells of “Black Lives Matter!”, “No Justice! No Peace!”, “I Can’t Breathe!” and more could be easily recognized by anyone involved in the movement, largely thanks to their vast popularity on Twitter and other social media.

        Social media also provides accessibility to the movement for the students and helps to explain why this issue in particular garnered support from America’s youth. According to a 2013 Pew Research poll, 96% of black people in the United States aged 18-29 (the youngest age demographic with available data) use a social network, compared to 90% of white people in the same age group[1]. The difference is even more significant on Twitter specifically, where the number for white young adults becomes 28%, and for black young adults becomes 40%[1]. Black youth in particular have taken their outrage at police discrimination and brutality to social media outlets, especially Twitter; this online outrage has, in turn, morphed into student protests including (but certainly not limited to) the one by School Without Walls.

The School Without Walls die-in (The Nation).

School Without Walls Protest. Digital image. The Nation. N.p., n.d. Web. 22 Dec. 2014.

An important part of the responses to the recent deaths is that young people (especially African-Americans) are realizing that this could happen to anyone. This attitude is shaping responses on social media and also leading to protests all over the United States. Such racial discrimination against African American youth by the judicial system has been occurring for a glaring number of years, as seen in the case of George Stinney (a 14-year-old African-American who was wrongly convicted of murder and executed in 1944). The ages of the recent victims of police discrimination give further explanation as to why teenagers are protesting. They can empathize with Michael Brown, Tamir Rice, John Crawford III, and Trayvon Martin, who were aged 18, 12, 23, and 17 respectively at the time of their deaths.

Student speakers at the die-in (The Nation).

School Without Walls High School Protest. Digital image. The Nation. N.p., n.d. Web. 22 Dec. 2014.

There is currently a process within the United States in which black people are becoming increasingly aware of the fact that they could lose a friend, an acquaintance, or a family member at any time and they might not get any help from the American justice system. Students, especially black students, have seen that the police do not necessarily only harm people guilty of a crime, and that the justice system might not protect them if they are the victim of a crime at the hands of another civilian. This concept was expressed vehemently when the murder of Trayvon Martin was in the news thanks to the “Skittles and Iced Tea” campaign (naming the only items an unarmed Martin had with him at the time of his death). It was also seen at the protest when Aram Barnett, a School Without Walls student, spoke to his fellow students and surrounding observers during the die-in. His speech ended on a powerful note, stating that the next victim of police racial bias could be one of his friends or even himself.

           The unique nature of this movement has been able to emotionally charge the American youth. Largely thanks to social media, an attitude of “anyone can be murdered by police”, and the relatability of the recent victims, teenagers are taking a huge part in protests and (as seen with this event) even organizing their own. Only time will tell if this newfound solidarity will ultimately lessen police discrimination, militarization, and brutality, but support by teenagers gives the movement much-needed youthful hope in the mean time.

[1]Smith, Aaron. "Detailed Demographic Tables." Pew Research Internet Project. Pew Research Center, 06 Jan. 2014. Web. 20 Dec. 2014.

I Got 71 Problems and the House is One

By Brian Contreras

On Thursday night, the 11th of December, the House of Representatives passed a Congressional spending bill that, if made law, will dictate government spending and appropriations for much of the bureaucracy until late next year. They also crucially extended the deadline for the Senate to vote on this vital legislation by two days, staving off yet another government shutdown by a matter of hours.

This bill, in addition to funding many major federal agencies, supplies money to deal with the ongoing issues of Ebola and ISIS, as well as (in a move that has angered leading Democrats like Nancy Pelosi) reducing regulation on Wall Street bankers and increasing the donation cap for individuals to the RNC and DNC.

However, amid all the tension, one seemingly minor inclusion in the bill is drawing much attention from the nation's capitol - not necessarily by those within Congress, but rather the people who call the city home.

The bill, at least as interpreted by the Republicans who are pushing for it's passage, would stop the District of Columbia from legalizing marijuana; a decision that passed with the vast majority of support in DC's November elections as the widely popular Initiative 71. This has led to a planned march by supporters of legalization in DC and a sit-in in Senate Majority Leader Harry Reid's office, as well as claims by legalization advocates that the bill's language could be interpreted in such a way as to still allow the change (since it had already been passed by voters). Whether such a loophole is available or not remains to be seen, but judging by the climate in Congress at the moment, things don't look good for supporters of DC's right to self-determination.

http://dcmj.org/ballot-initiative/

A campaign poster from the movement which, if the Congressional spending bill passes the Senate in it's current form, will likely be invalidated.

Why You Should Care About the Ebola Outbreak in West Africa- in 5 Paragraphs

by Fox Meyer

If by some rare chance the news hasn’t reached you, West Africa is experiencing the largest recorded outbreak of Ebola Virus Disease (EVD) ever. Many people are not sure what this means or why it matters because there seems to always be a disease spreading, but EVD is a particularly interesting case due to its rather interesting characteristics. If that wasn’t enough, it also has a 55% mortality rate. That’s just in this instance - in previous outbreaks of this strain 90% of cases have been fatal!

Map of the Ebola outbreak in West Africa

First of all, the actual symptoms of EVD aren’t all too wild in the realm of diseases: infected people usually experience vomiting, diarrhea, aches and fever. Not so bad, right? On the surface, maybe not. The symptoms themselves are survivable, but they lead to more extreme symptoms, including dehydration and failure of the liver and kidneys. It is from these effects that the deadliness of Ebola emerges.

One aspect of the uncertainty surrounding EVD’s rise is where it actually comes from. While it is agreed that the virus likely makes the jump to mammals, including humans, through ingestion, the disease's origin is unknown. It has been observed, however, that bats harbor it in their digestive tracts. Once in a human host, the virus spreads through most bodily fluids. This fact is especially dangerous for the people taking care of the sick due to the sheer amount of bodily fluids released by the infected. Two American health workers have so far been infected, and have been flown to the U.S. to undergo tests and treatment at an Atlanta, Georgia hospital.

Doctors treating Ebola patients in the capital of Guinea

In addition to spreading to doctors, the virus actually has the ability to keep a host infective after death, creating the risk of infection for those who attend or officiate burial ceremonies and those who handle the bodies.

Although the Ebola outbreak has reached a record level of over 1,300 reported cases, there is little need to worry for your own health. The success of this outbreak can be attributed to the poor living conditions in the countries it has spread to, Liberia, Sierra Leone, and Nigeria, and the nation where it began, Guinea. The developed world has little to fear from Ebola, but still ought to focus on developing a cure for this dangerous and deadly disease.

What FDI Means for Southern Europe

Economics Article

The euro crisis has hit southern Europe hard. Billions of Euros have been spent to keep the economies of Greece, Italy, Spain and others afloat. Millions of people, particularly among the young, remain unemployed. However, there are some signs that the worst has past. No country has needed another bailout for some time; talk of a ‘Grexit’ has all but vanished, and perhaps most promising, people are regaining confidence in these markets. This is most apparent in the rise of foreign direct investment (FDI). In Greece and Portugal, FDI has remained consistently positive over the past few years. In Italy, reports the OECD, annual FDI has recovered to its 2009 levels, of approximately 16 billion Euros, and in Spain it has reached nearly 30 billion Euros, as it was in the early 2000’s. Foreign Direct Investment is important because it indicates opportunity in domestic markets that outsiders seek to benefit from, and so they invest. That investment helps the domestic markets to grow.
It is important to analyze the form of FDI, that is, how the money gets there. Much of the FDI has been in the form of large acquisitions of domestic companies by foreign private-equity firms such as Bain Capital, KKR, and Lone Star. In December of 2012, Bain Capital bought a Spanish call-centre business, Atento, which was struggling with debt. Atento is now growing strongly and plans to make an IPO in the near future, and it is far from alone.
Additionally, positive FDI represents net inflows of capital. Since many local banks are crippled by bad debts – owed to them by struggling companies unable to pay those debts – they are unable to lend as much money to others, money which would have funded a start-up or new enterprise and supported growth. FDI helps to increase the availability of capital, and meets the demand that the debt-laden banks are unable to meet. PwC, a consultancy, states that this year, in part due to FDI, southern European banks will shed over $20 billion in loans, and the EU as a whole will settle as much as $109 billion.
This form of FDI is beneficial for Southern Europe, because it means that foreign firms are not just snapping up domestic companies, sucking them dry, and making a quick buck. They are selecting promising companies, re-structuring them and paying their debts, allowing them to thrive. This pattern of investment has helped improve conditions. In the first quarter of 2014, Spain’s GDP grew for the first time in two years, and unemployment is falling, according to figures by Moody's Analytics. Meanwhile Portugal’s GDP has grown for the past two quarters, with industrial production rising.
While the euro crisis tunnel is still dark for many countries, these signs of life bring much welcomed hope that some may have already begun to climb back up on their feet.

By: Jonathan Wood