Caribou Coffee: Ending My Boycott

In the past, I have been boycotting Caribou Coffee because they were bought out and majority owned by Arcapita (formerly First Islamic Bank of Bahrain). As part of their ownership, Arcapita required Caribou Coffee to have an official policy of adhering to Sharia (Islamic law) with regards to their business, whicn included bans on interest and pork.

Even though Caribou was certified to not be supporting overseas groups involved in terrorism, I did not want to support Arcapita's middle-eastern Muslim investors, so I refused to patronize them.

However, I am changing my position. According to this article, Arcapita has sold a large portion of its shares in Caribou, and now only owns about 25% of the company. Arcapita may be the largest single shareholder, however, the public now owns most of the company.

By the way, you still can't get pork at Caribou, in case you were wondering.

Digging Into "Dealergate", Part II

Doug Ross continues to assert that the Obama administration chose to close Chrysler dealers based on their political donations, but he relies on some one-sided data, hanging a lot on the closing list.

For my second look at the issue, I thought I'd look locally. What I did was tabulate the Chrysler dealers in the greater Metro Detroit area which are on the closing list, and also the ones on the stay-open list and take note of their political donations. Here are the results:

Closing:
Dealer, Donations

FORTINBERRY R

MCDONALD R

MONICATTI R

PENSKE R

RUSSO R

TAMAROFF R

VIVIANO R

Remaining:

Dealer, Donations

DEEBY R

FISCHER R

MCINERNEY R+D

MEADE AFIT PAC

MILOSCH R

MOORE NADA PAC

PENSKE R

RIEHL NADA PAC

ROBBINS R

SCOTT R

SNETHKAMP R

VIVIANO R

Metro Detroit Chrysler dealers who donated did so overwhelmingly to the Republicans.

The only example of a Metro Detroit Chrysler dealer who gave money to Democrats was "Hoot" McInerny, who gave large amounts to both sides. It would also be very bad press for Chrysler to try to axe McInerny's dealership, because he is a well known local personality and a big philanthropist.

I don't think you can argue any political bias in Metro Detroit, based on the data.

No Obvious Political Bias In Chrysler Dealership Closings

Update: Blogger Marla Singer at Zero Hedge did some actual statistcs on the entire dealer open and closing list, and found a small correlation between open dealers and donations to Hillary Clinton's campaign, but not a very significant difference between Democrat and Republican giving overall (0.93 vs 1.05 odds ratio of being closed, D vs R).

The blogger Doug Ross did some digging, and discovered that very few of the Chrysler dealers on the closing list gave political contributions to the Democrats in the last election cycle, and most of the ones that did give gave to Republicans.

In his original post (here), Ross found that out of a collection of 39 dealers he checked, 4 gave half or more of their contributions to Democrats (10%)

As much as I would like to believe it to be true, I don't think it is. There is a major flaw with his analysis: he didn't bother to check the dealers that are staying open to see how their political contributions broke down.

My hypothesis is that Chrysler dealers, being small businessmen, are more likely to donate to Republicans than Democrats, for predictable reasons. Like any small businessmen, car dealers want lower taxes, a lower minimum wage, fewer regulations, etc.

The list of Chrysler dealers that are staying open is here. This is a list of the dealers whose contracts will be assumed by the new Chrysler-Fiat.

What I did was go down the list and copy names into the search box at OpenSecrets.org until I got a clean hit. I did this until I got 25 dealers with donation records for the 2008 election cycle. The results can be considered randomized, since we don't expect a correlation in the alphabetical name of the dealership with their political affiliation (or geographic location).

Result: 23 dealer principals donated to Republicans, 2 donated to Democrats, or about 10%.

If you run these numbers through a binomial distribution, you get a 2-tailed P-value of 1! That means that the hypothesis that the two distributions are identical is correct. Chrysler dealers (and probably all auto dealers) who donated for the 2008 election cycle overwhelmingly supported the Republicans.

Here is my "raw data", if you want to spot check me.

DEEBY	R
AKINS	R
SMITH	R
MELLOY	R
SANZI	R
MCKAY	R
SIX	R
UDD	R
ANCIRA	R
ANDERSON	R
NOKES	R
HOSSLER	R
MAROONE	R
MORELAND	R
HADDAD	R
ALBRO	R
THOMASON	D
WYANT	R
BAUMANN	R
LANPHERE	R
SPITZER	D
BENSON	R
BERGERON	R
BERGSTROM	R
GERBAZ	R

Comparing The Cash For Clunkers Bills

There are two competing "cash for clunkers" bills in the House.  One is more left-leaning, HR520, and the other is more populist, HR1550.  Both bills aim to do the same thing: encourage people to scrap older cars to buy new ones.  But they are very different in how they do so. 

In fine high school government class style, I will now contrast the two bills.

Key Differences:

Definition of a "high polluting" or "high consumption" automobile.

HR520: Average (city+highway weighted average) fuel economy of <18mpg.

HR1550: A car built before 2001.

Definition of a "fuel efficient automobile"

HR520: 2003MY or later, <$45,000 price, Tier II Bin 1-5 EPA emissions, 

25% better fuel economy than current or future CAFE standards.

HR1550: 2009-2011MY, <$35,000 price, Tier II Bin 5 emissions.

Voucher Amount:

HR520: New car voucher: $4,500 for 7 year old or newer car, 

$3,000 for 8-10 year old car, $2,500 for 11+ year old car. 

Used car voucher: $3,000, $2,000, $1500.

HR1550: $4,000 for US assembled 27 hwy MPG+, North America 30 hwy MPG+, 

or US light truck 24 hwy MPG+; $5,000 for US assembled 30 hwy MPG+, 

or US assembled work truck (registered commercial); 

$3000 for a NA assembled light truck with 24 hwy MPG+

Both bills require the old vehicle to be destroyed.  Parts other than "engine block and drivetrain" can be recycled, but the titled body, engine block and transmission must be destroyed.

HR520 is obviously geared towards fuel economy.  It doesn't care what kind of car you buy, as long as it is 25% better than the current requirements--which will greatly limit what kind of vehicles would qualify.  It also won't help you unless you are driving something which is relatively thirsty.  A typical case might be a trade-in of an old SUV or pickup truck.  

For example, the current standard is 27.5MPG (combined) for cars and 23.1MPG for trucks, so to qualify for the HR520 voucher now you would have to buy a passenger car that gets at least 34.4MPG or a light truck that gets at least 28.9MPG (combined).  The list of vehicles that would currently qualify is short: small and mid-sized hybrids such as Prius and Fusion, Smart, VW TDI, Toyota Yaris, Mini, Ford Escape Hybrid.  HR520 may give more benefit as time goes on, because more fuel efficient cars will appear, ahead of the tougher CAFE standards.

I think HR520 would have an unintended side effect of boosting the residual values of used large engined vehicles.  Cars that would have been worth $700 (like this one) would be worth much more, because they could be bought and titled just to qualify for the voucher.

 

HR1550 is designed to be more of a short term shot in the arm to the auto industry.  It very broadly defines what a "polluting" and "clean" vehicle is, because it isn't really about being green. It is only in force for several years, and heavily favors U.S. assembled or NAFTA vehicles.  This favoritism could cause trouble at the WTO, although it does include transplants such as Honda who have plants in the U.S.  

I prefer HR1550, because it would be better for the Detroit 3 in the short term.

SF Mayor: Closet Engineer

San Francisco's mayor Gavin Newsom is, apparently, a secret engineer. He thinks designing cars that get big fuel efficiency numbers at an affordable price is easy. From the Detroit News:

"With respect to Detroit, it is not good enough to advance by 2012 an ambitious strategy of having 14 different models at GM of hybrids -- when hybrids are yesterday's technology," Newsom said at a conference here sponsored by Newsweek on the future of the auto industry.

He said automakers must move more quickly to plug-in hybrids, noting hybrids like the Toyota Prius have been on the market since 1997.

"We need a very dramatic shift in mentality of Detroit," Newsom said.

Hybrids are "yesterday's technology"?!?

They still aren't entirely affordable, and not every model can make a profit at market prices. The batteries are still very expensive, as well as the power electronics and drivetrain. Hybrids still haven't caught on in volume, with one model (Prius) breaking the 100,000 unit/year sales rate.

If the California legislature had any cojones, they would tax vehicles with poor fuel economy, or institute a high fuel tax. But they won't because then the voters would throw them out of work.

So instead, they shout at Detroit, "Build us a unicorn!", as if Detroit has unicorns stashed away in the basement of ever R&D lab, under digital lock and armed guard.

Things just aren't that simple.

The Warranty Insurance Signal

The Obama administration's decision to offer government backing for GM and Chrysler warranties is a clear signal of the direction they expect the companies to go in. If Obama thought that GM and Chrysler had viable business plan, with a good chance to restructure their obligations further, there would be no need for the warranty backstop.

What this signals is that Obama thinks there is a good chance that at least one of the companies will in fact wind up in bankrupcy. In which case, government backing of warranties is key to keeping public confidence high enough to keep the businesses running.

The Beginning Of The End Of Personal Mobility?

Mark Tapscot is feeling down on the auto business, judging by his latest blog post, here.

In it he points out that the leftist technocrats sweeping in with Obama ultimately want to reduce our use of personal vehicles, and force us to live packed more densely together in cities, and to rely on mass transportation. Their strategy to do this is to make gasoline expensive, keep the road system under-developed, and perhaps down the road tax our mileage.

No, the people now deciding what kind of products will be made by Detroit are working in Congress, the U.S. Department of Transportation and, most crucially, the U.S. Environmental Protection Agency. Virtually to a man, these people hate privately owned cars and the individual autonomy they symbolize.

That means it's not just the kind of cars and trucks produced by the manufacturers' skunk works that are in Washington's cross-hairs, it's the very notion that all individual Americans ought by right be able to buy and drive the vehicle of their choice anywhere and anytime they choose.

I have blogged on this topic before, and i generally agree with what Mark says. However, there are some big roadblocks in the way of the anti-car left.

First, Americans love cars, and even if they can't have fire breathing 300HP V8's, they will find a way to get fun fast cars. If people get the idea that the bureaucrats are trying to take away the great American right-to-drive-what-I-want, there will be some nasty electoral surprises.

Second, Obama is now caught between two opposing forces, which are going to grind up his campaign agenda: the economy and labor unions on one hand, and the green lobby on the other. To keep his promise of saving jobs, and particularly of helping "working families", Obama must prop up the domestic auto industry. If it fails, it takes his economic promises with it. Propping up the auto industry means getting people to buy lots of shiny new cars. The days of cheap V8's are over, but the days of shiny new cars in every other driveway won't be.

Also, as part of the economic stimulus plan, a ton of money is going to be spent on "infrastructure", and some of that is actually going to go to road repair and construction.

Obama's not dumb, he knows that economic fear is what got him elected, and at the end of the day, I expect that he will throw the greens under the bus.