The "real" fiscal cliff

From Tyler Cowen at the Marginal Revolution blog, what he terms "the truly important news". I'll agree with his assessment.

Forget post-election dissection and the fiscal cliff, here is the stunner: 

The U.S. birthrate plunged last year to a record low, with the decline being led by immigrant women hit hard by the recession, according to a study released Thursday by the Pew Research Center. 

The overall birthrate decreased by 8 percent between 2007 and 2010, with a much bigger drop of 14 percent among foreign-born women. The overall birthrate is at its lowest since 1920, the earliest year with reliable records. The 2011 figures don’t have breakdowns for immigrants yet, but the preliminary findings indicate that they will follow the same trend. 

That’s the real fiscal cliff.  Yet The Washington Post reports that its most popular article today is “Starbucks’ new $7 coffee is its priciest ever."

Yeah, that's not good. As I mentioned on Twitter this morning, over the long run, without population growth there can be no economic growth. Worse yet, a steady decline in the ratio of non-working (retired) citizens to working age citizens means that there's virtually no way to keep Social Security solvent, or to have any hope of paying down our national debt.

Want to know why Japan's economy can't seem to get out of its own way? This is why:

Too few working people (we could also call them "taxpayers"), too many unproductive people to support, and not enough aggregate savings among the latter to support themselves without help from the former. That's a problem, and it's one that's difficult if not impossible to reverse.

When a population ages dramatically, in relative or absolute terms, that always creates issues from an economic standpoint. It's a simple problem, and yet it's one that no amount of modern economic complexity (or monetary policy) can overcome. As Tyler wrote, this is the real fiscal cliff.

[Marginal Revolution]

Clip of the Week

Time to go into the weekend strong with a couple of posts. First up is your Clip of the Week, which was basically uncontested this week.

We did have a bunch of cool videos shared by Barry Ritholtz, including this clip from Switzerland (anyone wanna go there with me? It looks pretty awesome and I hear they've got universal health care...), this compilation of a cappella theme songs, this very cool presentation of time-lapse photography, and this collection of some of the greatest soccer goals ever (my vote goes to Zidane... ridiculous).

But my favorite clip from this week was most definitely this extended advertisement for The Guardian (the U.K. media outlet), which borrows from the Three Little Pigs to illustrate a point. This is amazing, and it honestly comes across as almost a self-parody of the media industry and its role in society. For better or for worse, this is what today's media world is, and how it operates. Enjoy.

Shipping container homes

This bit of creative awesomeness comes courtesy of my man Killagroove: turning expired shipping containers into housing projects. It's resourceful, it's creative, and it's actually pretty attractive stuff, considering the source material. Pretty cool. Let's call it "recession chic".

The first U.S. multi-family condo built of used shipping containers is slated to break ground in Detroit early next year. 

Strong, durable and portable, shipping containers stack easily and link together like Legos. About 25 million of these 20-by-40 feet multicolored boxes move through U.S. container ports a year, hauling children’s toys, flat-screen TVs, computers, car parts, sneakers and sweaters. 

But so much travel takes its toll, and eventually the containers wear out and are retired. That’s when architects and designers, especially those with a “green” bent, step in to turn these cast-off boxes into student housing in Amsterdam, artists’ studios, emergency shelters, health clinics, office buildings. 

Despite an oft-reported glut of unused cargo containers lying idle around U.S. ports and ship yards – estimates have ranged from 700,000 to 2 million – the Intermodal Steel Building Units and Container Homes Association puts the number closer to 12,000, including what’s sold on Craigslist and eBay. 

Joel Egan, co-founder of HyBrid Architecture in Seattle, which has built cottages and office buildings from shipping containers for close to a decade and coined the term “cargotecture” to describe this method of construction, warns that although containers can be bought for as little as $2,500, they shouldn’t be seen as a low-cost housing solution. 

“Ninety-five percent of the cost still remains,” he says.

Cost-effective or not, it's definitely a novel way of re-using our scarce resources, and there's definitely value in that. Here's a quick look at some of the projects, all of which I've captioned.

Rosa Parks; Detroit, MI

The Box Office; Providence, RI

Aprisa Mexican Cuisine; Portland, OR

The Shipping Container House; Nederland, CO

[ABC News]

More stadium financing follies

I've written about the lunacy of publicly-funded sports arenas and stadia here before, and I think the issue deserves to be revisited given recent developments. On the one front, there is the city of Miami, which was taken to the cleaners by the disgrace that is the Miami Marlins franchise. Unfortunately for that city, their woes may just be beginning, as the Dolphins are also reportedly looking for public funding to fix their dilapidated home.

It would be easy to write this all off as Miami's loss, and theirs alone, except that it's not the case. When municipalities like these go into debt to fund stadium boondoggles, the whole country pays, as a recent Bloomberg article points out.

New York Giants fans will cheer on their team against the Dallas Cowboys at tonight’s National Football League opener in New Jersey. At tax time, they’ll help pay for the opponents’ $1.2 billion home field in Texas. 

That’s because the 80,000-seat Cowboys Stadium was built partly using tax-free borrowing by the City of Arlington. The resulting subsidy comes out of the pockets of every American taxpayer, including Giants fans. The money doesn’t go directly to the Cowboys’ billionaire owner Jerry Jones. Rather, it lowers the cost of financing, giving his team the highest revenue in the NFL and making it the league’s most-valuable franchise. 

“It’s part of the corruption of the federal tax system,” said James Runzheimer, 67, an Arlington lawyer who led opponents of public borrowing for the structure known locally as “Jerry’s World.” “It’s use of government funds to subsidize activity that the private sector can finance on its own.”...

Tax exemptions on interest paid by muni bonds that were issued for sports structures cost the U.S. Treasury $146 million a year, based on data compiled by Bloomberg on 2,700 securities. Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, the last of which matures in 2047, taxpayer subsidies to bondholders will total $4 billion, the data show. 

Those estimates are based on what the Treasury could have collected on interest from the same amount of taxable bonds sold at the same time to investors in the 25 percent income-tax bracket, the rate many government agencies assume. In fact, more than half the owners of tax-exempt bonds pay top rates of at least 30 percent, according to the Congressional Budget Office. So they save even more on their income taxes, a system that U.S. lawmakers of both parties and President Barack Obama have described as inefficient and unfair.

Yes, that's right, when tax-exempt municipal bonds are used to pay for these stadiums, that means that the FEDERAL government is effectively subsidizing these projects. So when the Cowboys build a stadium with "public" funds, that "public" isn't limited to the Dallas area—it includes the entire nation. This amounts to taxation without representation for those of us who don't get to enjoy the Cowboys' new monstrosity, and that used to be something that mattered in this country (but of course, doesn't any more).

Sure, we could try to argue that some of this comes out in the wash, because it's just a transfer from taxpayers to bondholders, and there is significant overlap between those two populations—it's just taxpayers stealing from themselves. But unless every taxpayer is also a municipal bondholder (and I'm at least one taxpayer who owns no munis), then this becomes a very serious constitutional issue, and yet one that is perpetually ignored by nearly everyone in the nation. I, for one, have no interest in paying more in taxes so that Jerry Jones can build a playground for the super-rich in Texas, but I was never afforded a say in the matter.

Ultimately, this trend of public financing of private enterprise must end in all its forms. There's no reason for taxpayers to be funding private business, in Miami, Dallas, or anywhere else. This is a long-running scam that has been run on Americans who love their sports (and teams) too much to say no to this extortion. We all must stand up and say that we are unwilling to pay for stadiums that we then must pay to enter—if it's a public facility, then we should have the right to do with it what we please. Otherwise, the Jerry Joneses of the world can figure out their own ways to build the things. I'm getting out of the stadium-building business... who's coming with me?

[Bloomberg]

Clip of the Week (Double Feature)

Since I never got around to posting the Clip of the Week last week, this week's super special Thanksgiving Clip of the Week will be a double feature.

If you've ever wondered about why (or whined about the fact that) MTV doesn't play music videos anymore, this video has your answer (hint: it's your fault). If you've enjoyed my previous Jimmy Kimmel clips, then you're sure to enjoy this bit on unnecessary censorship. And if you love super-slo-mo videos as much as I do, these guys do a great job of taking you behind the scenes of how they get made (it's long, but it's worth it).

There's also a few sports videos, which I don't feel like running through entirely, so... college football, college football (UVA), soccer, soccer (USA). You're welcome.

There were also a couple of posts that were directly or peripherally attached to my hometown of Wellesley, MA, where I happen to be right now. This car accident was amazing (wait for it...), and I scouted out the location this week and still can't figure out how it happened. Also, this clip of historian David McCullough on 60 Minutes is very eye-opening with respect to the historical ignorance of the coming generation of Americans. McCullough happens to live in the Boston area, and his son is a teacher at my old high school here in town—his "you're not special" commencement speech earlier this year went viral and garnered national attention.

But let's get to the point. Here's your first Clip of the Week, of an elephant painting an elephant. Just watch it... in fast forward, if you insist.



And the second one comes to you via Barry Ritholtz, and it's a product of the Red Bull Kluge project. It's a human Rube Goldberg machine, and it's pretty awesome to watch.



Happy Thanksgiving, people. Enjoy your weekend.

3-D printing meets Skyfall

Yeah, I know, shut up about the 3-D printing already... but this is seriously cool, and it's becoming clear that 3-D printing is being used in more and more applications all the time these days.

If you thought producers spent millions on James Bond’s Aston Martin DB5, which was put through a series of huge explosions and stunts during the filming of Skyfall, including one scene where the priceless vehicle exploded in flames – think again. 

Three replicas of the classic car were created using a large scale 3D printer for the filming of the latest installment from the spy series. 

The models double for the now priceless original vehicle from the 1960s in the film’s action scenes. 

The models were made by British firm Propshop Modelmakers Ltd, which specialise in the production of film props, and used Voxeljet to print the cars, the Daily mail reported. 

“Propshop commissioned us to build three plastic models of the Aston Martin DB5,” voxeljet CEO Dr. Ingo Ederer, said. 

“We could have easily printed the legendary sports car in one piece at a scale of 1:3 using our high-end VX4000 printer, which can build moulds and models in dimensions of up to eight cubic metres,” Ederer said. 

But the British model builders were pursuing a different approach. 

“To ensure that the Aston Martin was as true to detail as possible, and for the purpose of integrating numerous functions into the film models, they decided on an assembly consisting of a total of 18 individual components,” Ederer said. 

“The entire body is based on a steel frame, almost identical to how vehicles were assembled in the past. In addition to the automotive industry, foundries, designers and artists, the film industry represents an entirely new customer base for voxeljet. 

“3D printing is on the cusp of a great future in the film industry. The technology offers fantastic opportunities, since it is usually much faster, more precise and more economical than classic model construction,” Ederer added.

Awesome. That's a perfect example of what this stuff is so great for, and I'm glad to see the creativity and innovation being put to good use. I can't wait to see what comes up next.

[Zee News]

Maryland, Under Armour, and the Big 10

This is turning into a sports-heavy week, which is ironic given that in my first post yesterday I said that we probably ascribe way too much importance to sports, since they're just a form of entertainment. But given some of the things I've written about in the past, I felt that it was necessary to chime in on yesterday's decision by Maryland to leave the ACC for the Big Ten Conference (which will soon have 14 teams, because of course it will—the Big 12 has 10 teams... awesome).

The University of Maryland's Board of Regents voted Monday to accept an invitation to join the Big Ten and begin competition in the conference in the 2014-15 academic year. 

"Today is a watershed moment for the University of Maryland," said university president Wallace D. Loh in a release. "Membership in the Big Ten Conference is in the strategic interest of the University of Maryland." 

Loh added it would "ensure the financial vitality of Maryland Athletics for decades to come," and offer opportunities to boost the "education, research, and innovation" of the university... 

Sources at Maryland believe the Terps will be able to negotiate the current $50 million exit fee from the ACC to a lower amount. The additions of Maryland and Rutgers would spur the Big Ten, then, toward negotiations on a new media-rights deal when its first-tier rights expire in 2017.

There are any number of angles I could attack on this topic, and most of those angles have already been explored in my previous missives about collegiate athletics. But what I find most troubling (and unique) about this particular move is the rumored role that Under Armour CEO Kevin Plank has had in these negotiations.

Welcome to the new landscape of college sports, where billionaire boosters and eight-figure payouts cause universities to abandon rivalries decades in the making. 

On Monday, the University of Maryland Board of Regents unanimously approved leaving the ACC and joining the Big Ten conference, a decision that may trigger the next wave of college sports realignment. The move is potentially quite profitable for Maryland, which could double the TV revenue it gets by hitching its wagon to the Big Ten Network. 

However, despite the foreseeable long-term gains, breaking with the ACC comes with a high upfront cost: $50 million, an exit fee that was recently raised from only $10 million. That kind of fine could cripple the University, especially at a time of cutbacks and budget shortfalls. 

Luckily for Maryland, it has a billionaire backer who may be willing to foot the bill: Under Armour founder and Maryland alumnus Kevin Plank. At the release of the Forbes 400 in September, Plank was the 345th richest person in America, with an estimated $1.35 billion net worth. A $50 million donation would barely dent his bank account... 

According to an ESPN report, an anonymous university regent said Plank is “100 percent” behind the move to the Big Ten and added that the billionaire is “heavily involved behind the scenes with board members.” 

The final piece of the puzzle may have fallen into place last week, when Under Armour announced in a SEC filing that Plank would be selling 1.3 million shares of the company “for asset diversification, tax and estate planning and charitable giving purposes.” What would 1.3 million shares of Under Armour net Plank on the open market? Try a cool $56 million after taxes—just the amount Maryland needs to pay if it leaves the ACC for greener pastures. 

Is it a smoking gun? No. And Plank did not immediately return requests for comment. But such generosity wouldn’t be unique.

Right. "Generosity". That's what we're calling it now. The simple fact is, if Plank does indeed foot the bill for Maryland's move to the Big Ten, then the expenditure amounts to little more than a marketing expense on the part of Under Armour. The company spends a few million bucks, they put their ugly-ass Maryland uniforms on a few more cable TV screens, and they immediately get increased exposure to a whole new midwest market.

We may think we're watching student-athletes play ball out there, but what we're really watching is cleverly designed product placement, brought to you in (large) part by unpaid student labor. The setup is eerily familiar to those of us who have studied 19th century plantation economics, especially when you consider that a not-insignificant portion of the players on these teams are blacks from low-income backgrounds. I'm not sayin', I'm just sayin'...

Increasingly these days, when we talk about collegiate athletics, what we're really talking about are Nike, Under Armour, and ESPN, because those are the companies that really call the shots around here. The conferences and the schools have become little more than pawns, transformed into the marketing departments for these huge multinational corporations. Maybe that's a cynical way of looking at things, but I'm finding it increasingly difficult to view NCAA sports through anything but a cynical light, especially given how cynical the decision-makers at these schools have seemingly become.

The NCAA needs to step in immediately and put a stop to this ridiculous conference-raiding free-for-all, before the whole thing loses all credibility. If we want to master plan this thing and create four or five huge jumbo-conferences, then fine. Let's get everyone together under one big NCAA umbrella and do this thing. But doing it piecemeal, with every conference raiding every other and then forcing the schools to pay exorbitant exit fees on the way out of town is just insanity, and worse yet, it's monstrously inefficient.

The conferences (and the apparel and TV companies) have become significantly more powerful and profitable than the NCAA itself, and that's clearly becoming a problem. As for me, the more days that go by, the more I think I should just quit on football altogether and start watching the sports that don't make any money, because at least there's something real left there.

As a remaining fan of the ACC (until further notice), all I can say to Maryland is "good riddance". A school that would sell out so brutally to one corporation and its CEO is not a school that I want anything to do with. God speed, Terps. Enjoy being the new Indiana.

[ESPN]
[Forbes]