Mitt Romney: Corporation a Person?
Issue
Is a corporation a person?
Analysis
Mitt actually got this one right. According to Ross, Westerfield and Jaffe, a corporation is defined as a:
“Form of business organization that is created as a distinct “legal person”composed of one or more actual individuals or legal entities. Primary advantages of a corporation include limited liability, ease of ownership transfer, and perpetual succession.”
This is a classic example of where our legal and financial systems define the rights of an organization similar to a “person”, but where in no way does the entity look, feel, or act like anyone we know, hence the confusion.
Trade Environmental Assessment Model (TEAM)
Environmental Economic Impacts
TEAM is a suite of software tools developed by Abt Associates for the Environmental Protection Agency (EPA) National Center for Environmental Economics to assess the environmental impacts of international trade agreements.
The ECONOMIC resolution is 4 digit NAICS sector level.
The ENVIRONMENTAL resolution TEAM currently analyzes are four separate environmental release and resource use categories: air, water, and carbon dioxide pollutants along with energy consumption by fuel type.
The GEOGRAPHIC resolution is the state level.
This tool is an exciting, and likely the first, applied environmental economic impact calculation tool. Imagine for a moment a community considering the development of an industrial park with a certain mix of industries. Wouldn’t it be useful to estimate the environmental economic impact this development could have on a regional community. TEAM can assist in this evaluation.
The EPA has done an excellent job in development, analysis, and peer review. The model is based on standard economic methodology, grounded with sources such as Duchin and Steenge, Miller and Blair, Leontief, and the National Research Council among others.
Further, as a result of the model design, outputs dovetail with; transportation, economic, land use, and environmental impact models as part of the final economic/environmental impact deliverables.
Utility Industry Economic Environmental Impact Example
This is an example of output created by the TEAM model. The example uses the sector 2211- Electric Power Generation, Transmission and Distribution to demonstrate a portion of the model functionality. This example is only scratching the surface and for introductory purposes only. In my view the possibilities for TEAM are limitless. (pdf)
I have added an example from Miller and Blair (2009), which demonstrates the matrix algebra used to create these coefficients. The process is intuitive and flexible, demonstrating the value of applied industry – environmental analysis. (pdf)
Rural Technology and Transportation
Issue
Recently, I traveled to a remote region of western North Carolina. The only communication technology provided by the local motel was rabbit-ear TV! Cell, telephone (old school), Wi-Fi, cable and Internet (smart phone, computer, iPad) service were not available. But communication was not a problem since there were plenty of guns and ammunition around.
But seriously, I wonder if there is still a technology – communication or otherwise – gap as first reported by the United States Department of Agriculture (USDA) in 1997. That report, titled “Is There A Rural-Urban Technology Gap“, analyzes the technology gap between rural and urban areas.
Analysis
Without the benefit of a follow-up report, I speculate there remains a technology variance between rural and urban areas. However, the main culprit may not be the lack of desire to invest in technology itself but, instead, transportation costs associated with both the cost of manufacturing (cost of goods sold – import parts) and the cost to ship the finished product from the manufacturing facility. It is these transportation costs that determine the type of product that can be competitively produced in rural areas? Important to this conversation is that capital investment in the production process does not reduce these costs. Ultimately only plant location and/or plant capability (rail, water, truck) can lower them.
Early in my manufacturing career, we built a plant that was designed to ship 80 percent by truck and 20 percent by rail. After being in operation for a few years, the plant was shipping 80 percent by rail and 20 percent by truck. A significant plant upgrade along with a rail extension was necessary to make this possible, but it made an immediate profitability impact through the reduction of transportation costs of both raw material and finished goods. Ultimately this cost reduction lowered the cost per unit and made us more competitive in the market place. The cost advantage remains in place to this day.
Conclusion
Today advanced technologies can be found in most communities. What is not always available is a cost-competitive transportation model used to import manufacturing components and ship finished goods. Small rural communities may give a boost to their economic development efforts by eliminating this barrier for current and future businesses.
Note: As we left western North Carolina, on the side of a remote road was parked a classic Airstreamer with a sign that stated it had full Wi-Fi access – but there was no tow vehicle hooked up to pull it down the road!
