Saturday, April 11, 2009

Statistics from Iowa!


Over at Musings on Iraq, Joel examines Iraq's economic performance over the last few decades and the recent increase in its GDP, noting at the same time the systemic issues that have kept it from rising faster. As usual with Joel, he offers both sourced statistics and a balanced interpretation of those numbers:
Iraq has had steady economic growth and a huge increase in its GDP since the 2003 invasion. Those aggregate numbers however don’t reveal the myriad problems that the country is facing. Almost all of that expansion was due to oil. In February 2009 a barrel of Iraqi crude sold at $38, down from its peak of $113.81 in July 2008. (NOTE: Iraqi oil sells below the world average, which went from $147 per barrel in July 2008 to around $50 currently.) The government dominates the economy, which is corrupt and inefficient. Investment is up, but it is caught in a bureaucratic maze that slows its impact. U.S. reconstruction funding is also coming to an end, and Baghdad has been unable to spend most of its capital budget that goes towards infrastructure. More importantly, the benefits of the development of Iraq have not trickled down much as there is still high unemployment, especially amongst the young, and high rates of poverty.
Iraq has a population of around 27 million, I believe, and a GDP of $85 billion. Iowa, my home-state, has a population of around 3 million and a GDP of about $130 billion.
Iraq: population, 27 million; GDP $85 billion
Iowa: population, 3 million; GDP $130 billion
Hey, I know what you're thinking. How the heck can a bunch of hog farmers in Iowa have a state GDP of around $130 billion?! Almost as much as the Kuwaiti oil sheikhs?! There are, indeed, a LOT of hog farmers in the state, and if you like to drive in the country on a fine summer evening, your nose will be assaulted by all kinds of nasty downwind smells that your urbane city nose will find objectionable. But, as it turns out, hog farming is just one line of business in Iowa. Just TAKE A LOOK. It seems that the open prairie and those sleepy small towns are, in fact, deceptively industrious.

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By the way, the ethanol plant that was built at the edge of my hometown, Dyersville, was recently closed down:
The plant opened in September and was projected to produce up to 110 million gallons of ethanol each year.

VeraSun filed for Chapter 11 bankruptcy on Oct. 31. On Wednesday, it released its earnings statement, which showed the company had a net loss of more than $476 million in the last quarter.
Let me see. Opened in September and filed for bankruptcy on October 31?! I don't know if that's the fastest filing for Chapter 11 in corporate history, but -- my God! -- it has to be a contender.

And NO, I did NOT want the federal government to come in and bail out VeraSun. They rolled the dice and lost. That's life. The people in my hometown are kind of pissed, of course. I saw that plant under construction the last two or three years when I was visiting the folks. People in town thought it was another way to make money using their corn -- some for the hogs, some for the city-slickers in their PC hybrid cars. But those hopes were based, it seems, on very high oil prices. And, unfortunately, by the time they finished building the ethanol plant, the bottom fell out of the oil market and the prices began plummeting, making ethanol, for now, just a hog farmer's daydream as he sits whittling next to his potbellied stove on a cold winter day after morning chores are finished.

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