Pumpjacks hammer in a changing world: A petro-village becomes a medical hub

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The MALP Moinesti Clinic is the only private clinic in the entire municipality and surrounding villages. (Photo: Courtesy of Dr. Mihaela Cotirlet)

Pumpjacks hammer for petroleum in Moinesti. They hammer and hammer and hammer like it’s still the 1970s, when the government-run petroleum industry kept the small municipality economically afloat. Then, Communist dictator Nicolae Ceausescu was overthrown in 1989 with a bloody revolution that ended with him and his wife getting executed on national television, on Christmas Day. 

As Romania shifted from communism to capitalism in the 90s, the petroleum industry was privatized, and life in Moinesti changed as petroleum jobs fled the community. At its worst, the municipality’s unemployment rate was more than 20%. In 1993, Romania’s unemployment rate was 8.40%.

Romania’s unemployment rate, 1991 – 2019 (Photo: Courtesy of Macrotrends.net)

At first glance, Moinesti looks unremarkable. Almost 200 miles away from Bucharest, Romania’s capital, Moinesti is surrounded by farmland and clusters of small villages. With a population of roughly 20,000, it is not uncommon to see horse-driven carts on the street. It is also located in Moldova, Romania’s poorest province and the fifth poorest region in the European Union.

Still economically recovering from the loss of petroleum industry, Moinesti is known for four things: 1) Being a “global village” destination for Habitat for Humanity, 2) having a Jewish cemetery, 3) the fact that a giant DADA mural marks the entrance to town, and 4) having surprisingly good health care.

There are two major medical facilities in Moinesti: a private clinic and a public hospital. The private clinic, MALP Moinesti, is run by Dr. Mihaela Cotirlet and provides various types of care, including family medicine, infectious diseases, rheumatology, nephrology and clinical psychology. 

The lobby of Dr. Cotirlet’s private clinic. (Photo: Courtesy of Dr. Mihaela Cotirlet)

Her husband, Adrian, runs the public Moinesti Municipal Emergency Hospital; he was voted the best healthcare and pharmacy manager in 2019 by Capital, a business and economics magazine. His hospital is working on new infrastructure projects to improve the hospital’s accessibility to neighboring counties and extend hospital spaces, bringing some jobs to Moinesti.

Good healthcare is something of an oxymoron for Romanians due to the system’s infamous corruption. After the fall of the dictatorship in 1989, the healthcare industry, much like the petroleum industry, switched from government-owned to privately owned. 

“We found ourselves in a system in which the disrespect placed its influence on the young doctors, a system that had not developed any strategy for the doctors who wanted more than the state of employment,” Cotirlet said. 

According to a study by Mihaela Cristina Dragoi, a professor at the Bucharest Academy of Economic Study, the political changes in 1989 created a partial replica of the totalitarian regime’s sanitary system: the Semashko system. Borrowed from the Soviet Union, the Semashko system’s goal was to provide free, universal healthcare through a multi-tiered system of differentiated networks of service providers.

Romanian physicians lobbied for reform, to change from the Soviet Semashko model to the German Bismark model, which provides free, universal healthcare through an insurance system jointly financed by employers and employees. According to Dragoi, reform was stunted because of Romania’s political instability. 

“Frequent changes of government and ministers, the lack of clear strategy and defined objectives to be pursued rigorously and independently of political changes slowed down the health reform process after 1990,” she wrote. 

Bribery is common in the sector, and since 2007, the EU has invested over €12 million to fight against corruption in Romania. Even though Romania provides universal healthcare, the system does not provide equal coverage; rural areas are frequently left behind.

In short, a combination of Soviet bureaucracy and crony capitalism has led to Romania’s health care sector turning a transaction of care into an economic exchange. 

Perhaps no event in recent Romanian history encapsulates the crony capitalism that has infiltrated the system as much as the 2015 Colectiv nightclub fire, which claimed the lives of 64 people. While 27 of those people died on the scene, the other 33 passed away in the hospital, some from preventable bacterial infections. Gazeta Sporturilor (“The Sports Gazette”), a daily Romanian sports newspaper, investigated, and found that government health authorities never inspected the disinfectant used by hospital staff. 

A map tracing the movement of Condrea’s disinfectant scam entitled “The ‘Disinfectant’ Business.” Pret means price and Cipru means Cyprus. (Photo: Courtesy of the RISE Project)

The quality control came from Hexi Pharma, a pharmaceutical company who distributed antiseptics to 350 out of 367 public hospitals in Romania. Further investigation revealed that Hexi Pharma diluted the disinfectants to increase profits. In addition, hospital directors allegedly took a 30% cut on Hexi Pharma contract. According to the RISE Project, a non-profit journalism organization based in Romania, Aurelian Condrea, the owner of Hexi Pharma, would buy a liter of disinfectant from Germany for about €7.9 euros, sent to offshore mediary Condrea owned in Cyprus, and then finally sold in Romania for €75 – €100. 

Public outrage over the Hexi Pharma scandal and Colectiv nightclub fire deaths led to the resignations of multiple cabinet members, including Prime Minister Victor Ponta and Patriciu Achimas-Cadariu, the Minister of Health. Achimas-Cadariu’s replacement was Vlad Voiculescu, an economist  with no prior political experience, known for creating the Cytostatic Network, a group of volunteers who bring cancer drugs free of charge to Romania from other countries.

This is the kind of system Dr. Mihaela Cotirlet is operating in. “For some, [a doctor] is just a person. For others, it’s a white coat,” she said. “And for the system, it’s an investment.” 

Although Romania’s healthcare system struggles with corruption and inefficiencies, Cotirlet tries to operate her practice with a simple maxim: Be the change you wish to see in the world. 

One thing she is trying to change is the level of access to healthcare in rural areas, a historic problem in Romania’s universal healthcare system. Her clinic is the only clinic in the Moinesti municipality; without it, villagers from neighboring communes like Poduri and Solont would need to drive approximately 30 miles to Bacau, the county’s capital, in order to receive care. 

Although her practice is well-established, renowned in Romania and financially stable, the Moinesti native said she remembers her experience with medical school in Ceausescu’s Romania vividly. “You deliver babies, clean them in pots, and as transportation, you have to use a carriage pulled by horses,” she said. 

Romania’s healthcare system is still underfunded today. In fact, Romania spends the least of its GDP on healthcare out of all EU countries. In 2016, that meant that only 5% of the total GDP went to the public health system. According to Cotirlet, it’s this sort of environment that has made Romanian doctors tough.

2016 European Union healthcare expenditures (Photo: Courtesy of Eurostat)

“They [Romanian doctors] are used to hardship, with hospitals with no medical equipment,” she said. “For that reason, they are very good clinicians. Management counts: even with less money, people can achieve progress.”

However, until 2018, many Romanian medical practitioners weren’t paid as though they were valuable members of society. In 2015, a first-year resident physician in Romania made €260 (~$288.30) a month. Meanwhile, in the United States, the 2015 Residents Salary & Debt Report found that the average yearly salary for a first-year resident was $52,000, or roughly $4,333.33 a month. That is around 15 times more than what a first-year Romanian resident would make. 

The economics of this made living self-sufficiently as a doctor difficult, if not impossible, leading to a brain drain. From 2009 to 2015, half of Romania’s doctors left the country, leaving almost one-third of hospital positions vacant. Despite Romania being a leading EU state in medical school graduates, the Ministry of Health estimates that one in four Romanians have insufficient access to essential healthcare, which makes practices like Dr. Mihaela Cotirlet’s all the more necessary.

Sometimes, it can feel like there is no incentive for people to stay. That goes beyond just doctors. According to the Carnegie Council for Ethics in International Affairs, conservative estimates put one in five working-age Romanians living abroad. Romania has the second-fastest growing diaspora, only after Syria. 

But Dr. Alexandra Scovronschi, also a Moinesti native, decided to move back home after completing dentistry school not only to start a family with her husband, a surgeon at a public hospital, but to start her own private dental practice. 

According to residents of Moinesti, Scovronschi’s dental practice is one of the first in Moinesti that has been accessible to locals. Because Moinesti was a small town where Scovronschi grew up, some parts of starting a business were simpler because she knew the people and the people knew her. It made it easier for her to build a client base. 

An aerial view of apartment blocks in Moinesti, Romania. (Photo: Courtesy of Daniel Anturaju via Flickr)

Scovronschi remembers the pumpjacks digging for petroleum as that segment in Moinesti’s economy began faltering. It was the same year she had a health scare and underwent surgery at the public hospital in Moinesti, which has received national prestige for its hygienic conditions.

Scovronschi said she knew she wanted to be a doctor since she was a little girl, but didn’t realize how badly she wanted it until she decided to go to college for economics instead of pursuing medicine. 

Unlike in many other Western countries, a career in medicine did not equate to wealth. During her summer holidays from business school, Scovronschi said she worked at a small tile business in Southern California where she made around $1,600 a month – more than five times what she would have made as a first-year medical school resident. 

In 2018, the government raised the base gross salaries for public health employees by more than double in order to stem the hemorrhage of medical professionals. First-year residents will now earn €715 ($792.85) a month. Whether this succeeds in stopping the brain drain is yet to be seen. This move is also intended to help stop the common practice of bribing medical professionals for better care. 

“Receiving flowers, boxes of chocolate, and coffee is not bribing. It’s a form of showing respect and appreciation after the work with the patient,” Cotirlet said. “This is rooted in customs, but what is condemnable are the ones who ‘ask something’ because now the salaries are sufficient.”

Many of the municipality’s Gen Z population decided to pursue medicine in college. Raluca is a Moinesti native who is on her first of six years of medical school at the Iuliu Hatieganu University of Medicine and Pharmacy Cluj-Napoca, generally abbreviated as UMF Cluj. She has requested that her surname be withheld. 

According to Raluca, out of the 30 students she graduated high school with, 15 wanted to go to medical school. Eight got into a medical college in Romania, four reapplied and got in the following year, and five decide to change their path. 

Cluj, the fourth most populous city in Romania, can sometimes feel like a whole world away from Moinesti. “In Moinesti, it’s impossible to go outside and not bump into someone you know. In Cluj, you can walk for three hours and not find someone you know,” she said. “I don’t plan on going back to Moinesti.”

Although she was born around the time the petrol industry left Romania, she said she remembers the pumpjacks hammering for oil even though all the jobs left the community, sending them into a downhill economic spiral. “Bad men got rich backs on the backs of the people,” she said. 

Petroleum pumpjacks in Romania. (Photo: Courtesy of Desteptarea)

Growing up in a Romania defined by corruption and scandal can make it hard to not become at least a little cynical, especially for an aspiring doctor. 

“At a certain moment, you need to have hope. And then you meet people who have no hope for the future, and that affects you,” she said. Becoming a doctor is a life-long ambition, and she said that she can’t picture herself being happy doing anything else, but to find happiness in her career, she might have to leave her country. 

“It’s easier to leave than to stay and fight. So many people want to leave. So many people in my year want to leave,” she said. 

According to her, this leaves Romania’s medical system in a tenuous state – without capital and with young people leaving, there are few people bringing in new ideas. “At the same time, there is nothing to offer them,” she said. “Either way, the school makes money.” 

This system made her want to leave Romania for a long time. “Now, I don’t. The salaries are rising. And I still have five years to decide.” 

Raluca said that although the system creates good doctors, it’s deeply flawed. For her, two of the largest problems are the underfunding and bribery. Growing up, she said there was pressure to bring mita, or bribes. “It’s ugly. I hope my generation stops accepting money,” she said. What makes mita particularly heinous to her now is that with the salary increases, it is unnecessary. 

“I just want to live in a state where there is no political turmoil,” she said. 

As a new generation is left to find hope and battling a fight or flight instinct, the pumpjacks of Moinesti still hammer.

SOURCES

PROHIBITION – A 20TH CENTURY ECONOMIC EVIL

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Prohibition officers raiding the lunch room of 922 Pa. Ave., Wash., D.C. ( Dewar’s Repeal / Flickr )

From 1920 to 1933, the Eighteenth Amendment of the United States constitution banned alcohol. The Eighteen Amendment, also known as Prohibition, has the honor of being the only constitutional amendment to be repealed with another constitutional amendment.

Although prohibiting alcohol is now seen as absolutely ridiculous, hindsight is 20/20 and Prohibition began with noble intentions. According to the Cato Institute, it was “undertaken to reduce crime and corruption, solve social problems, reduce the tax burden created by prisons and poorhouses, and improve health and hygiene in America.” 

Total Expenditure on Distilled Spirts as a Percentage of Total Alcohol Sales (1890-1960)
Source: Clark Warburton, The Economic Result of Prohibition (New York: Columbia University Press, 1932), pp. 114-15; and Licensed Beverage Industry, Facts about the Licensed Beverage Industry (New York: LBI, 1961), pp. 54-55.

Needless to say, that did not come to pass. Alcohol consumption dipped initially, it increased soon after, and led to the organization of crime. Demand continued, the legality of supply be damned. Prior to Prohibition, crime bosses such as Al Capone were relatively small-time menaces. The “noble experiment” made illegal alcohol a lush business opportunity. It also led to networking opportunities for these mafiosos, as the sourcing and distribution of alcohol often requiring crossing state lines. 

“Mobsters couldn’t work in isolation if they wanted to keep the liquor flowing and maximize profits,” said Dave Roos, a freelance journalist in History. 

 Per Capita Consumption of Alcoholic Beverages (Gallons of Pure Alcohol) 1910-1929
Source: Clark Warburton, The Economic Results of Prohibition (New York: Columbia University Press, 1932), pp. 23-26, 72.

A 2010 Congressional Research Service study found that organized crime in capable of weakening the economy with illegal activities because they can cause state and federal governments to lose tax revenue. Prohibition cost the United States government $11 billion in tax revenue. According to PBS, a long-term consequence of this was that multiple state governments, in addition to the federal government, would on income tax revenue to fund their budgets. 

Enforcing Prohibition also turned out to be a costly endeavor. In 1921, Prohibition enforcement began at $6.3 million. By 1930, it cost $13.4 million to enforce. 

During Prohibition, kingpins could make as much as $1.4 billion in 2018 currency. 

Meanwhile, other industries that were expected to rise as a result of Prohibition actually ended up struggling. Top industries with expected growth were clothing, chewing gum, grape juice, soft drink and theatre producers. Essentially, every non-booze industry that could provide a new way to entertain Americans expected an increase. According to PBS, theatre revenues declined and restaurants failed to turn a profit without legal liquor sales. 

Mug shot of Al Capone in Philadelphia, Pennsylvania, where he had been arrested and charged with carrying a concealed weapon. ( Pennsylvania Department of Corrections / FBI )

PBS found that “the closing of breweries, distillaries, and saloons led to the elimination of thousands of jobs, and in turn thousands more jobs were eliminated for barrel makers, truckers, waiters, and other related trades.

The repeal of Prohibition in 1933 ended gangster’s profitable bootlegging enterprises, and many returned to classic criminal operations like gambling and prostitution. The Great Depression, like Prohibition before it, provided mobsters with a golden opportunity: loan sharking. 

Unlike many Americans during the Great Depression, the gangs had cash in an economy that wanted in. Like with alcohol, the people had the demand and the gangsters had the supply. 

According to Howard Abadinsky, a criminal justice professor at St. John’s University, it became clear to many that if people wanted to do something that required cash, they needed to get in cahoots with the likes of Al Capone, Bugsy Segal and “Lucky” Luciano. The law of the land was irrelevant in many ways, and money-laundering techniques were extremely powerful. 

“If you wanted to set up a legitimate business, [you] have to go to organized crime. Loan Sharking becomes a major industry,” Abadinsky said. 

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And the Wall came tumbling down…

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West German citizens gather at a newly created opening in the Berlin Wall at Potsdamer Platz in November 1989. DoD photo.  

November 2019 marks the 30th anniversary of the fall of the Berlin Wall. From 1961 to 1989, the Berlin Wall separated West Berlin from East Berlin. Standing approximately 12 feet high and 27 miles long, one of the reasons the Wall was created was to keep East Germans from fleeing to the west.

The fall of the Berlin Wall on Nov. 9, 1989 meant that East Germans were free to travel and to work outside of their country for the first time in decades. A New York Times article written three days before the Wall fell about the economic impact the fall could have on Europe mentions that “since East Germans can automatically obtain citizenship in West Germany, they also become citizens of the European Community, free to travel and seek jobs, housing, and eventually welfare benefits in any of the other 11 member countries.” 

Within a year of the fall of the wall, East Germany and West Germany reunited into one whole Germany. That new Germany was generally economically stable with a stable currency. The European Community morphed into the European Union, which Germany is heavily associated with. The country’s general economic strength typically means that the European Central Bank’s “one size fits all” interest rates only fit Germany.

A Pew Research Center study found that while Germany is generally viewed positively in Europe, views of Germany are tied to the EU as a whole. Essentially, if you like the EU, you generally like Germany. Since the global financial crisis, that’s less likely to be the case. In Italy, unfavorable views of Germany increased by 27 percentage points between 2007 and 2017. 

But Greece is where the real hate is at, with a little over three-quarters of Greeks having an unfavorable view of their fellow EU member. “The country is several years into an austerity program imposed by the EU and backed by Merkel’s government,” the study reminds. 

There’s another group of people that aren’t too fond of Germany right now: the Germans. More specifically, people from the eastern German states. It’s been 30 years since the Berlin Wall and 29 years since the German Reunification, and they are still living with the consequences. According to Marketplace, many state-owned companies were sold off to the private sector post-unification and many others collapsed because they could not compete in a market economy. 

When the Berlin Wall fell, many things changed for the better – residents of East Germany could see loved ones on the other side of the border again, could participate in democratic elections, and could travel freely. The economics of the matter is different. It has fostered a feeling of discontent amongst the former East Germans, who say they feel like they have been treated like second class citizens.

According to a recent opinion poll, only 38 percent of Easterners regard the unification as a success – perhaps due to the feeling that it was not a reunification of two Germany’s but the absorption of the East into the West. Jörg Roesler, an economist, said that although western taxpayers spent $2 trillion to improve infrastructure and a social safety net in the former East Germany, it was wasted. Roesler believes what Eastern companies needed was protection. He told Marketplace that if they had been protected for up to five years, a generation would not have been unemployed and “made to feel worthless.”

The dissatisfaction of the former East Germans isn’t just resentment over something that happened 30 years ago. Eastern Germans are still being effected. A Pew Research Center study on how the economic conditions of East and West Germany changed over time found that unemployment in the former East Germany is higher than in the former West Germany by around 2 percent. Although the economic gap between the two regions has become narrower recently, former East Germans make less money than former West Germans. 

“People in the former East Germany earned 86% the after-tax income of their West German counterparts in 2017,” said the study. “That percentage has changed little in recent years, but is far higher than in 1991, when per-capita disposable income in the former East was only 61% of that in the former West.”

The physical Berlin Wall may have fallen 30 years ago, but its economic and psychological shadows live on.

SOURCES

It’s not easy going green: the plight of SoCal drivers, gas, and electric cars

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The 1995 Mitsubishi Eclipse used in The Fast and the Furious by Brian (Paul Walker)

In 2001, it cost Brian, Paul Walker’s character in The Fast and the Furious, $24.674 to fill up his lime green 1995 Mitsubishi Eclipse. Gas cost $1.46 per gallon. The Mitsubishi has a fuel capacity of 16.9 gallons. As the Fast and Furious franchise grew, so did gas prices. According to AAA, California’s current gas prices are $4.075. In 2019, it would cost Brian $68.87 to fill up his Mitsubishi Eclipse. 

Let’s pretend that even in a cinematic universe now defined by lucrative physics-defying crime, Walker’s character still owns that 1995 Mitsubishi Eclipse. If his character was still involved in the franchise (RIP Paul Walker), he would rather steal a Tesla than pay almost $70 for a full tank of gas. 

In the real world, Californians may not be stealing Teslas, but interest in electric and hybrid cars has grown. This year, the California New Car Dealers Association found that electric car sales have increased since 2018 by 63.7%. Hybrid car sales are up 22.1%. 

Gas prices are one of the reasons why. When filling up your tank makes a visible dent in your disposable income, being able to drive without worrying about gas becomes really appealing. The opposite is also true – when gas prices are low, alternatively powered car sales decrease. The Bureau of Transportation Statistics found that while electric and hybrid car sales increased rapidly from 2011 to 2014, sales decreased in 2015 “due to low gasoline prices.”

Gasoline Hybrid and Electric Vehicle Sales: 1999 – 2015 (Photo: Courtesy of Bureau of Transportation Statistics)

Despite California’s rising gas prices, the top two cars sold in the Golden State for the first six months of 2019 were the gas-using Honda Civic and Toyota Camry. Tesla Model 3 came in at third place. 

Even though California’s gas prices are at $4.075, getting an electric is not an investment some Southern California drivers are willing to make for a variety of reasons. 

NOT AS GREEN AS YOU THINK 

Hanna Richter, a stable attendant at Disneyland, lives approximately 45 minutes from the Happiest Place on Earth in Riverside, Calif. Richter commutes on what she describes as a “heavily trafficked route.” 

“It’s awful,” she said. 

Richter drives a gas-using vehicle, a 2018 Toyota RAV4, and pays just under $200 per month for gas. She said she is on the fence regarding electric and hybrid cars. “I like the one hand of less gas and saving money by using said less gas,” Richter said. 

What is stopping her is concerns about whether one of the main selling points of electric cars – that it is better for the environment – is actually true. “The batteries used to make electric cars cause a greater carbon footprint than just using a gas-powered car,” Richter said. “So I’d like to save money on gas, and use less gas. But I also want to lessen my carbon footprint.”

Many electric cars are powered by lithium-ion batteries. According to Amnesty International, making them is an energy intensive practice, and is primarily located in China, South Korea and Japan – countries where electricity generation is dependent on fossil fuels. Lithium-ion batteries are also linked to human rights abuses in the Democratic Republic of Congo. 

Richter’s concerns were confirmed in a 2018 study by the International Council of Clean Transportation that found that making an electric vehicle produces more emissions than the manufacturing of a conventional car because of lithium-ion batteries. 

“On the other hand, electric vehicles travel farther with a given amount of energy and account for fewer emissions through the fuel production and vehicle use phases,” the study said. 

According to the ICCT, although the long-term environmental benefits of electric cars is not outweighed by emissions created by lithium-ion batteries, the emissions are still substantial. Without technological improvements, these emissions could become more substantial as electric cars increase in popularity.

For consumers like Richter who want to lessen their carbon footprint and spend less money on gas, striking the balance between an ethical decision and a logical financial decision is complex.

In addition, electric vehicles are generally more expensive to purchase than their gas-fueled counterparts. The manufacturer suggested retail price for a 2019 Toyota RAV4 is $25,650. The hybrid version of the car is retailed at $27,850 – an 8.2% increase from the gas version. 

According to the Office of Energy Efficiency and Renewable Energy, the federal government and several states offer incentives to buy electric cars. California offers a rebate of $1,500 to $7,000 depending on the purchaser’s household income and the kind of electric car bought. 

California’s Vehicle Rebate Program (CRVP) Amounts (Photo: Courtesy of Moving California)

CONVENIENCE


Richter’s boyfriend, Dan Grecu, works for a tile contracting company in Riverside, Calif. He lives in the same city he works in. Unlike his girlfriend’s 45-minute commute, his drive to work is only 10 minutes. His car – a RAM truck – consumes gas. 

Going green did not factor heavily into his car purchase.  “I wanted that car because it has plenty of room for passengers and storage,” he said.

Southern California’s traffic and high gas prices are a recurrent source of frustration for him. That, and the lack of rain, has made him consider moving to Canada or the Pacific Northwest. “Gas prices in California are and always have been too high. I spend about $250 a month on gas,” he said. Spending that much a month on gas for one year would be like buying a new pair of Apple AirPods Pro, which cost $249, per month.

Apple AirPods (Courtesy: Photo by Howard Lawrence B)

One of the reasons why California’s gas prices are so high is because of SB 1, colloquially known as the Gas Tax. Grecu is not a fan of the policy. “I think it’s ridiculous,” he said. “I would like to know where the money actually goes.” 

Passed in 2017, SB 1 taxes gasoline to collect revenue for transportation infrastructure. California’s roads are one of the worst in the country, and were given a D grade by the American Society of Civil Engineers. With over 175,000 miles of public roads, ASCE estimated 44% are in poor condition. “A good transportation system enables efficient movement of goods and people and is critical to California’s economic well-being,” ASCE’s California infrastructure report card said. 

Two years into SB 1, and officials estimate that $130 billion more in revenue is necessary to improve the state’s roads. The policy has found itself caught in a sort of catch-22. 

A 2017 report by Next 10, a California-centric nonprofit organization focusing on the economy and the environment, found one of the reasons California’s roads are in poor condition is because “funding for repairs and improvements – which traditionally comes largely from motor vehicle fuel taxes – is declining as cars become more fuel-efficient and the state’s electric vehicle fleet grows.” 

According to the report, the displacement of gasoline as a revenue source could lead to $572 million in losses in state gasoline taxes by 2025 without new, sustainable transportation funding solutions. SB 1 may not be doing enough – and in fact, with increasing gas prices driving up electric vehicle sales, may be ineffectual at fixing California’s roads and very effective at irritating people who drive gas-powered cars.

California leads the United States in electric vehicle sales / (Photo: Courtesy of CleanTechnica)

SB 1 does not expire for 10 years and is designed to grow over time to fall in line with the cost of living. The most recent increase occurred in July 2019.

Despite rebates, rising gas prices, and lower operating costs of an electric car, Grecu said he is not considering one because the technology is not where it needs to be to make sense for him. 

“I would consider electric if I lived in a house with solar panels as electricity is still expensive,” he said. “I don’t think there are enough charging stations, yet. Once the batteries are built for longer trips, it would be more convenient.”

NOT THE RIGHT TIME

Vicki Ghines, a resident of LA’s Koreatown neighborhood, drives approximately 120 miles five days out of the week to her job as an account manager in the Inland Empire. She drives a 2017 Honda Accord. She said that getting an environmental or hybrid car is not something she is considering right now. “My car is fairly new and I know it would be years before I get another one,” she said. 

Ghines said she got her new Honda under protest. “I had to replace my 2001 Honda Accord. It had 345,000 plus miles on it, and since I had been going home late at night from work, my sister was so afraid that the car may break down, especially at night,” she said. “So she kept ‘nagging’ me, asking when I will get another car.” 

Her average consumption of gasoline per month is around $300. 

A car is a significant purchase – a purchase consumers want to last them years. For consumers like Ghines who bought new cars recently, buying an electric car is not feasible. It’s a decision they can afford to procrastinate on. 

Ultimately, a car is a personal choice – an economic expression of identity. In California, having a car is an almost inescapable purchase. According to Hedges & Company, over 84 percent of California’s driving age population is a licensed driver. Perhaps because it is so ubiquitous, a car choice matters all the more. 

SOURCES

Nailed it: Can nail polish be the new lipstick index?

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What has a) a million colors, b) a oft-ridiculous punny name, c) the capacity to survive a nuclear apocalypse on your toes but chips off in two days on your hands, and d) the ability to serve as an economic indicator? 

Nail polish.

OPI Planks A Lot Nail Polish
OPI “Planks A Lot” nail polish / Courtesy of The Fingernail Files

In the first ten months of 2011, less than five years after the Great Recession started, nail polish and product sales were 59% higher than in the same period a year ago, according to NPD Group, a market research firm. 

Adam Davidson, an economic journalist and co-founder of NPR’s Planet Money, wrote in a 2011 New York Times column that a “rise in nail polish sales indicates that we’re searching for bargain luxuries as the economy craters – and sales of nail polish are way up right now.” High nail polish sales = good times are a’coming. A 2017 study of the global nail polish market showed that the industry is projected to reach $15.5 billion in 2024. One factor in the projected growth is the popularity of nail designs in youth populations, as well as the popularity of nail polish products in international fashion capitals, such as Paris, London and Milan. 

A key finding in the 2017 report is the increase of projected increase of gel polish. More expensive than the traditional “liquid” nail polish, gel is advertised to offer up to three weeks without cracking or chipping and faster drying time with the use of L.E.D. light. The high popularity of gel polish could be due to a variety of reasons, including a demand for longer lasting nail products. Consumers might be willing to pay more for what can read like a bionic manicure, but because of the durability of gel nails, may be spending less time at salons. 

Economics is part psychology, as the recession-proofness of nail polish shows. A small pleasure, nail polish can be affordable (sometimes less than a dollar). Coming in a variety of colors from deep burgundies and plums to neon yellow, as well as a variety of textures (hello 2012’s “crackle” nail polish trend), nail polish is visually appealing, and for people that choose to forgo the luxury of a nail salon, painting your nails can be a relaxing, almost therapeutic activity. 

The Great Recession seems to have catapulted nail polish to the recession-proof big leagues – in 2011, TIME named it one of the “12 things we buy in a bad economy,” a list that also featured romance novels, donuts, chocolate and condoms. Good company? 

Nail polish appears to have pushed out lipstick as the recession-proof cosmetic. Termed the “lipstick index” by Leonard Lauder, chairman emeritus of Esteé Lauder, lipstick sales used to soar during not-so-great economic terms. Like nail polish, lipstick is a quick, colorful pick-me-up – (sometimes) affordable glamor in a tube. However, lipstick sales fell in 2010. 

After the lipstick index’s accuracy was called into question during the Great Recession, Lauder expanded on his original definition, claiming it was never about just lipstick.

“We have long observed the concept of small luxuries, things that can get you through the hard times and the good ones. And they become more important during harder times. The biggest surge in movie attendance came during the 1930s during the Depression.”

Leonard Lauder, chairman emeritus of Esteé Lauder.

Although nail polish may not be as important an economic indicator, per se, as the GDP or unemployment, OPI’s puke-green “Uh-Oh Roll the Windows Down” demonstrates that even in times of frugality, people are still willing to spend on little luxuries.

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Brexit: Why we’re still stressing out about it

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(Courtesy: Pixabay)

Some background

Brexit is coming – and if Game of Thrones was still “in” right now, I would make a cheesy, poorly thought out “Winter is coming” joke. However, perhaps there is more in common with Brexit and the hit fantasy series, whose anticipated final season drummed up more controversy than acclaim, than meets the eye. 

Like Game of Thrones’s final season, Brexit – referring to the United Kingdom’s decision to leave the European Union, a political and economic coalition – has been a long-time coming, stressful, messy, controversial and disillusioning. Ever since the 2016 referendum where Brexiters narrowly between the “Bremain” crowd 52% to 46%, the United Kingdom has not actually managed to leave the United Kingdom, delaying their departure date twice due to an inability to strike and approve a satisfactory deal with the European Union. 

The United Kingdom is currently salted to leave the EU on Oct. 31, 2019. There is still no departure deal. Britain’s current prime minister, Boris Johnson – a controversial figure who has drawn comparisons to Trump for his hair and speech patterns – has stated that, if it comes down to it, the UK will leave the EU on Halloween without a deal. 

With the battle for Brexit getting more heated and members of Johnson’s own party rebelling against him and working with the opposition to draft a bill that would prevent a no-deal departure, Johnson has threatened to call for an election, potentially reshuffling the lines of power. 

What a no-deal Brexit could mean for the UK’s economy

A no-deal Brexit could impact not only the United Kingdom’s economy, but the economy of significant trading partners, such as the United States. In 2018, the Federal Reserve worried that a no-deal Brexit would make London subsidiaries of US banks make the costly relocation to another EU country in order to keep EU clientele and that it could become less profitable for US banks to loan to UK citizens.

Leaving without a deal would mean that the UK would leave a customs union and single market overnight. As a member of the EU, the UK’s goods were not taxed by other member countries. After going cold turkey on the organization, Britain will lose that privilege and the EU would start taxing their goods. 

According to the BBC, “This could lead to delays at ports, such as Dover, Some fear that this could lead to traffic bottlenecks, disrupting supply routes and damaging the economy.” With almost one-third of food in the UK coming from the EU, food shortages are another concern.

Source: https://www.bbc.com/news/uk-politics-32810887

In the weeks following the initial referendum, the value of the pound fell a little over 10% against the euro from €1.3017 to €1.1663, according to the Brexit currency fallout engagement rate tracker. The original vote also caused the Dow to drop 610.32 points. While Capital Economics’ Senior U.S. Economist Andrew Hunter points out for CNBC that the market volatility “unwound” itself in the weeks following the vote, and suspects the same could happen following Brexit.

What does the economic future of a country leaving the EU look like?

No one knows for certain. The United Kingdom would be the first nation to leave the European Union. There is no precedent. In many ways, it is a shot in the dark. A shot in the dark that has been making headlines for a little over three years and no satisfactory resolution in sight, creating a sense of anxiety for consumers. In August 2019, British consumer confidence fell to a seven-month low, with many attributing that to Brexit worries.

Source: tradingeconomics.com

According to The Guardian’s Sean Farrell, Britain’s economy has been treading water because of consumer spending amidst manufacturing and constructing shrinking and the unwillingness of companies to invest. However, the UK’s decreasing consumer confidence could encourage people to save rather than spend, putting a dent in that part of the economy.

What exactly is Brexit an economic indicator for? It’s unclear. It could be nothing. Or, it could help push the nation into a recession. Only time will tell, but as the prospect of a no-deal Brexit becomes closer to a reality, the UK and the EU’s economic futures may be the scariest thing on Halloween.

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