Philip Greenspun’s Weblog

The July 14/21 New Yorker carries “Beneath the Sand”, an article by John Cassidy on Iraqi oil.  According to the article, despite massive reserves production is very low due to a lack of investment in the 1980s and 1990s and recent looting (Iraqis have been stealing massive oil processing equipment and taking it over to Iran by boat then selling it for $50/ton as scrap steel).

Under the most optimistic assumptions it seems that Iraqi oil production will rise to 6 million barrels per day by 2010, which will be worth $55 billion/year at $25/barrel.  The population of Iraq meanwhile is expected to balloon to 30 million people by 2010.  So on a per-Iraqi basis the oil revenue would only be about $1500 per year.  If half of that money goes for the cost of production, as a return to investors who rebuilt the industry, plus maybe some payments on Iraq’s foreign debt, we’re down to $750 per capita.  Let’s assume that income is distributed as fairly as it is in the United States.  The bottom 40% of Iraqis would therefore receive 12% of the income.  I.e., a poorer-than-average Iraqi in 2010 could expect to receive perhaps $200/year or so in oil money or benefits derived from oil revenues.

Having Iraq cranking out lots of oil and holding down oil prices will be good for American SUV owners but even under the most optimistic assumptions it looks as though it won’t do much for the Iraqi in the street.

Perhaps there are some readers from Maine who can answer this question…  Why are there any jobs at all in Maine?

One thing I noticed from reading the local newspapers up in Moosehead Lake is that the non-tourist economy of Maine seems to be in trouble.  Wood and paper products can be obtained more cheaply from Canada under NAFTA.  The fishing industry is in decline due to lack of fish.  Tax rates are the highest in the U.S. because state and local government wants to pay itself and operate just like the Massachusetts government, for example, but without the high salaries that enable Massachusetts to be both profligate and rich.  (E.g., the average schoolteacher in Maine earns $37,000 for a 9-month tour of classroom duty, maybe 20 percent less than in Massachusetts, but her students’ parents may be earning less than half of what their counterparts in the Boston suburbs earn.)

You’d think that the answer would be tourism but most of Maine is too far from the crowded cities of the East Coast to make a practical weekend getaway.  The locals in Moosehead say that the amount of business from hunters is way down; the average hunter is getting to be very old.  Telephone customer service centers for banks have been important sources of employment for the last couple of decades but today most companies would probably send those jobs to India.

What is the role of Maine in the U.S. economy?  The workforce doesn’t seem to be especially well educated.  The climate is not attractive to most people, except for a few months in the summer.  Taxes are higher than almost anywhere else in the country.  Transportation of products to or from Maine is expensive because it is at the end of the road.  Are states like Maine to become the first victims of globalization?

One thing that always strikes me when I visit a Third World country is how aggressive the drivers are.  People who own cars feel rich and powerful.  They assume that pedestrians are poor worthless members of society whose job is to get out of their way (or die across their hoods; whatever).  Egyptian families near my sister’s house in Cairo would have 7 or 8 kids, let them play in the street, and not be too surprised when one got run over by the maniacal, yet not skilled, local drivers.

The European Middle Ages seem to have been a similar period as far as transportation was concerned.  The nobles would ride horses and kick the peasantry into the mud by the side of the road.  Being on a horse made a man feel that he was superior, hence the expression “Come down off your high horse.”

The U.S. used to be different.  Drivers stopped for pedestrians and yielded to each other.  Behind the wheel of a car, it wasn’t necessarily correct to assume that you were more privileged than a pedestrian.  He might have been walking back to his brand-new Cadillac, after all.

Today Alex and I were nearly run over by a yuppie woman in the largest Lexus sedan.  She was gunning her massive V8 engine at 45 mph down a Cambridge side street.  I remembered the aggressive SUV drivers on the way back from Maine.  If you drive a 2000 lb. Toyota Echo (one of the emblems of Robin Williams’s loserhood in the fabulously art-directed movie One Hour Photo), you really need to drive defensively so that you don’t get flattened by a 6000 lb. SUV or a 4500 lb. luxury car.  But if you drive one of the largest cars on the road, strapped inside a steel cage with a seat belt and protected by air bags, you might not feel the need to pay attention to other cars.  If you can afford to spend $50,000+ on a car, plus whatever gasoline you require at 12 mpg, perhaps you would come to think of those on foot as not worthy to get in your way.

Thoughts anyone?  Is the U.S. going to become more like Egypt in terms of driving?