Friday, September 14, 2007

9/11 Attitudes Revealing

The present day attitudes toward the tragedy of September 11, 2001 reveal magnitudes about the full world view of groups and individuals as to so many issues.

Recall statements from John Edwards that the global war on terror was just a bumper sticker, John Kerry recently reverting to the law enforcement theory of dealing with terrorist incidents and the Democrat's now politically correct dictum to separate, wherever possible, Iraq from any association with a fight against terrorism?

How about The New York Times effort to distinguish Al-Qaeda Mesopotamia? Here's the WSJ's James Taranto pointing out the humor in this September 12 post in Best of the Web Today:

In an item yesterday, we noted the following hilariously awkward sentence from a New York Times report on the Petraeus testimony: "When Representative Gary L. Ackerman, Democrat of New York, suggested the war was not integral to the anti-terror effort since members of Al Qaeda in Mesopotamia, sometimes called Al Qaeda in Iraq, the homegrown Sunni Arab extremist group that American intelligence agencies have concluded is foreign-led, is not part of the Qaeda network behind the Sept. 11 attacks, the general offered a quick retort. "

What we didn't catch is that the sentence isn't even grammatical: The subject of the dependent clause that begins the sentence, members, does not match the verb, is, which is understandable since the two words are separated by a participial phrase and another dependent clause.

We also missed this equally riotous passage, from a "news analysis" in yesterday's Times by Michael Gordon: "The National Intelligence Estimate issued last month made a similar point--and General Petraeus quoted from it in his testimony. 'We assess that changing the mission of coalition forces from a primarily counterinsurgency and stabilization role to a primary combat support role for Iraqi forces and counterterrorist operations to prevent A.Q.I. from establishing a safe haven would erode security gains achieved thus far,' the estimate noted. A.Q.I. is the abbreviation the intelligence agencies use to refer to Al Qaeda of Mesopotamia, a predominantly Iraqi organization with foreign leadership."

Hmm, if AQI an an abbreviation for "Al Qaeda in Mesopotamia," what does the I stand for? We suspect this is another case of an NYT* reporter protesting the Times's policy of forced editorializing in stories about al Qaeda in Iraq.
* An abbreviation for Nieuw Amsterdam Times.

The notion that there is no "Global War on Terror" is actually very common.

Tony Blankley offers this analysis in "The War On Terror Six Years On":

Overwhelmingly in Europe, and to a lesser but still large extent in the United States, the vastly unpopular Iraq war has been conflated with the broader war against radical Islam. This regrettable fact has been compounded by the intense hatred of President Bush, who has prosecuted the war with such personal determination and whose own rhetoric has contributed to the confusion.

As a result, six years after 9/11, there is little consensus in the United States or Europe as to the nature and magnitude of the threat, and many -- including government officials, experts and the general public -- still believe there is little to fear from radical Islam and its terrorists. These people -- perhaps two-thirds of Europeans and 30-40 percent of Americans -- believe the terrorists can be dealt with merely with law enforcement, as previous 20th-century European terrorists had been. Those who hold this view are likely to wrongly see President Bush, former British Prime Minister Tony Blair and others, such as me, who agree with them as exploiting the fear of Muslim terrorists for crass political advantage.

Thus, much of the ferocious controversy over electronic intercepts, Guantanamo, CIA renditions, semi-secret foreign-based CIA prisons, coerced interrogation methods, and the Patriot Act provisions is a product of not seeing a sufficient threat to national security to justify tough wartime intrusions into civil liberties.

If we in the United States can't agree on the nature and magnitude of the threat, we aren't likely to agree on the means of protecting ourselves from it. Until a majority can be convinced that we face real danger from radical Islam, virulent political strife in Washington will continue to delay the design and implementation of an effective, united national defense.

He concludes:

In the days following Sept. 11, I realized we were in for a test of our strength, will and capacity to persist for decades in a harrowing task. But I never imagined that six years into the ordeal, we would remain so utterly divided in the face of a unique and little understood enemy. That constitutes a collective act of abdication of duty without parallel in our long history. We live in greater jeopardy because of it.

To prove Blankley's thesis, here is a portion of my local paper's lead editorial on 9/11 - the Asheville Citizen-Times and "6 Years Later, Time to Take Stock, Correct Mistakes". Here are some paragraph headings and their conclusion:

Initially, our invasion of Afghanistan weakened and displaced the Taliban, but our distraction in Iraq has enabled the Taliban to regroup.

Our invasion of Iraq was not related to the “War on Terror,” despite what the Bush government would have us believe.

With the Patriot Act, we have undermined our Constitution and civil rights.

By pursuing torture in Guantanamo Bay and Iraq, we have violated the Geneva Convention and many of the human rights principles we hold so dearly.

By over-committing our military, we have placed personal hardships on many military families, run up tremendous amounts of debt and reduced our ability to fund many of the infrastructure and social needs at home.

It’s time to turn back from our mistakes and head in a different direction.
This involves:
• Significantly reducing our forces in Iraq, redeploying some of them to Afghanistan and the Pakistani border to go after real terrorists and bringing large numbers of them home....
• Actively pursuing diplomacy and dialogue with all parties who can contribute to a solution in Iraq including Iran and Syria....
• Reaching out without arrogance to moderate Muslims around the world diplomatically and with economic aid where appropriate....
• Closing the prison at Guantanamo Bay, charging in court or releasing to their home countries all prisoners housed there and recommitting the United States to the Geneva Convention.
• Scaling back our military-industrial complex to the size needed to defend our country and pursue real terrorists. This involves a retreat from the role of the world’s policeman and a reinvestment of some of our military spending into debt reduction, infrastructure, health insurance and social programs for the American people.

During the past six years we have expended vast amounts of money, driving the nation deeply into debt, undermined our Constitution and exhausted our military, and yet Osama bin Laden is still running a terrorist network. Invading Afghanistan, where the terrorists found safe haven, avenged the attack on our nation. We had the moral high ground and an opportunity to destroy the heart of the terrorist threat. But that objective was neglected when we took our eye off the ball and went into Iraq, and the broader problem has been dramatically exacerbated by that move. The fact Osama is still releasing tapes is inexcusable.

As the arch terrorist tries to ratchet up our fear, we need to remember this: Terrorists can hit us, they can hurt us, but they can’t take the country from us. Only we can do that.

I always think when my paper is late that the Democratic National Committee must have been late with the day's talking points email and so the lead editorial in the Citizen-Times wasn't ready on time.

Seriously, these two points of view on the war on terror certainly serve as frames of reference and a clear predictor of the world view and specifically the political views of the opinion holders for almost any issue. Think about that.

America Is No Roman Empire

These days I cannot think of politics or economics without an over-hanging and omnipresent context of the war in Iraq. In the next several posts, I will highlight several recent opinions that helped me clarify my thinking on the broader issues of where we actually are in the Global War on Terror and in Iraq, and how those two issues shape not only my thinking but most thinking of the engaged citizenry of the United States.

In some sense, these posts are all the same in that they are more contextual rather than strategic or tactical in nature. I am an optimist about where we are and what we have done --which certainly seems to be a contrarian opinion held by a very few people. Perhaps some of the following may make you slightly more optimistic too or you may conclude I am delusional. Either way it will impact your thinking at least a nudge in spite of any opinions you bring with you to the arena.

Gerard Baker, whom I enjoy reading, has a piece in The Times (London) today, A Quick History: America Is No Rome - The Tired Analogy of Imperial Decline and Fall. Here are some cuts:

...Gibbon himself noted in The Decline and Fall of the Roman Empire: “There exists in human nature a strong propensity to depreciate the advantages, and to magnify the evils, of the present times.” Which brings us back neatly to General Petraeus and the Iraq war.

...You can argue about the surge. The evidence is encouraging that the increased US military effort, together with a change in tactics, has reduced the violence in Iraq. On the other hand there are legitimate questions about the long-term viability of the strategy. But if America is to emerge from Iraq with a renewed sense of its global role, you shouldn’t really debase the motives of those who lead US forces there. Because in the end what they are doing is deeply honourable – fighting to destroy an enemy that delights in killing women and children; rebuilding a nation ruined by rapine and savagery; trying to bridge sectarian divides that have caused more misery in the world than the US could manage if it lasted a thousand years.

It is helpful to think about Iraq this way. Imagine if the US had never been there; and that this sectarian strife had broken out in any case – as, one day it surely would, given the hatreds engendered by a thousand years of Muslim history and the efforts of Saddam Hussein.

What would we in the West think about it? What would we think of as our responsibilities? There would be some who would want to wash their hands of it. There would be others who would think that UN resolutions and diplomatic initiatives would be enough to salve our consciences if not to stop the slaughter.

But many of us surely would think we should do something about it – as we did in the Balkans more than a decade ago – and as, infamously, we failed to do in Africa at the same time. And we would know that, for all our high ideals and our soaring rhetoric, there would be only one country with the historical commitment to make massive sacrifices in the defence of the lives and liberty of others, the leadership to mobilise efforts to relieve the suffering and, above all, the economic and military wherewithal to make it happen.

That’s the only really workable analogy between the US and Rome. When Rome fell, the world went dark for the best part of a millennium. America may not be an empire. But whatever it is, for the sake of humanity, pray it lasts at least as long as Rome.

Posts follow giving more context and will, as always, reveal my present thinking from the choices of articles I post.

Wednesday, September 12, 2007

Thoughts on My Return

I have been away from posting for about four weeks but now I am re-energized and ready to go again. I had to travel and I dealt with some family health issues - I still managed to read even more than usual and I had a great deal of time to think which surprisingly none of us seem to take the time to do anymore as we should.

I think getting away gave me me time to calm down from the rhetoric we hear and read so much of everyday and to get a better grip on the drivers behind the opinions, false statements and deluded lies so frequent in our discourse. I am also incredibly amused at how we "modern" Americans like to believe that past Americans, particularly our Founding Fathers (and Mothers, no pun intended) as well as our past Presidents and legendary political leaders, were more civil and less prone to mistakes and blunders than we are today. That certainly is not the case. I am also amused at all the issues over which we are said today to be in a "constitutional crisis" when the constitutional crisises of the past were much more serious and absolute threats to the Constitution and the Bill of Rights than anything we see today.

One real Constitutional crisis of our early days was the passage of the Alien Friends Act and the Sedition Act which resulted in the deportation or arrest of journalists, leaders of political parties and even members of Congress. From the excellent book "Union 1812: The Americans Who Fought the Second War of Independence" by A. J. Langguth (not on the web):

To Madison and Jefferson, the [Sedition] act was clearly designed to silence the press and intimidate Republican leaders through the elections of 1798 and 1800.

Prominent examples of arrests under the act included John Daly Burk, a Republican editor of the New York Time Price and Congressman Matthew Lyon (R - Vermont). Here is A.J. Langguth again:

Lyon had accused [President] Adams of avarice and a lust for power and adulation. During the [U.S. House] debate, he further outraged Federalists by spitting in the face of an opponent. Lyon was convicted of sedition, fined one thousand dollars, and sentenced to serve four months in an unheated jail cell usually occupied by runaway slaves.

[See note below.]

Other egregious examples of a real Constitutional crisis in our history would have to include Lincoln's treatment of the Constitution during the Civil War (which I think was justified) especially the suspension of habeas corpus as President Lincoln pleased and Roosevelt's internment policies of Japanese Americans during World War II.

Wonder what our current press geniuses would think about those days? Wire tapping a foreign originated telephone call under FISA might not seem such a big deal compared the past reality of going to jail for writing bad things about the President.

Special thanks to those who missed me.

Note: A $1000 fine in 1800 using a basis of the unskilled wage rate calculates to be in today's dollars approximately $266,300.

Thursday, August 09, 2007

Candidates Mislead on Economics

In an earlier post today, I noted how important it is to check facts and assumptions anytime economic issues are involved, not only by the media but also from politicians. Now I read this from James Pethokoukis and his blog Capital Commerce, "Democratic Debate Spawns Weird Economics":

The Democratic presidential contenders went at it again last night in a debate (or "forum" if you prefer) sponsored by the AFL-CIO. For once, economic issues—especially trade—shared equal importance with the war in Iraq. Here are a few statements from the various candidates —including front-runners Hillary Clinton and Barack Obama—that struck me as kind of strange:

1) "You know, six and a half years ago, we had a balanced budget and a surplus; now we are in deep debt with a rising deficit, and it is absolutely true that George Bush has put it on the credit card, expecting our children and grandchildren to pay for it." -- Sen. Hillary Clinton. Hey, the last time I checked, the budget deficit for this year was forecast to be $207 billion, half of what it was in 2004. (The budget might actually be back in the black when the next president takes office.) And while Bush did inherit a balanced budget and surplus from Team Clinton, neither administration successfully fixed the $100 trillion unfunded liability problem with Social Security and Medicare.

2 ) "For every $1 billion we spend [on infrastructure], 40,000 jobs can be created in the United States of America." -- Sen. Christopher Dodd. I have no doubt that jobs can be created through government spending. But those billions must be taken from the private sector. Will those billions be used more wisely and efficiently and productively by federal bureaucrats than by private managers? If so, maybe the feds should guarantee a job for everyone who wants one. Using the Dodd formula, it would cost a mere $175 billion a year to employ all 7 million unemployed Americans.

3) "Well, look, people don't want a cheaper T-shirt if they're losing a job [from free trade] in the process." -- Sen. Barack Obama. Inexpensive T-shirts vs. outsourced jobs isn' t really the debate. According to research from the International Institute for Economics, Americans are $7,000 to $13,000 richer because of trade, and removing all trade barriers would permanently increase our wealth by $4,000 to $13,000 per household. And since the North American Free Trade Agreement took effect in 1994, America has added nearly 30 million net new jobs.

4) "What we need to do is say that from now on, America will adhere to all international labor standards in any trade agreement—no child labor, no slave labor, freedom of association, collective bargaining—that is critically important—making sure that no wage disparity exists." -- Gov. Bill Richardson. If what Richardson was saying is that American trade negotiators should demand foreign workers make the same as American workers or no trade deals, then what he is saying is no trade with India or China. Incomes in those countries are rising thanks to globalization, but there is a long way to go.

5)"It means that we are also not running up deficits and asking China to bail us out and finance them, because it's pretty hard to have a tough negotiation when the Chinese are our banker." -- Sen. Barack Obama. This is the myth that "China holds all the cards." Look, the Chinese government needs fast growth to hold down social unrest and justify the continued dominance of the Communist Party there. And the most likely cause of a slowdown there would be a slowdown here first. The last thing China wants to do is start dumping U.S. bonds and cause a recession here.

Perhaps I have been assigning too much blame to the media and not enough to pandering politicians. I am sure many of the Republician candidates will be as bad and when I get those misleading remarks I will pass those on as well. It is not by any means a one party problem.

Maybe Sen. Clinton doesn't know the deficit is very low at present, or Sen. Obama doesn't know know that counties buy our treasury bonds because of the strength of our economy not our weakness, or that Sen. Dodd's doesn't remember that government spending originates from the taxes paid by citizens not thin air? Or that Gov. Richardson thinks all wage disparities can be eliminated if the US says so, or Sen. Obama (again) sees no benefit in trade to the US consumer?

Is it possible that people can reach a point of being a US Senator or a state governor, let alone running for president, and either know almost nothing about basic economics or not telling the truth due to an obsessive desire to win elections?

Fixing Broken Government

Cal Thomas is out today with "Competence Above Ideology". Here are some highlights:

We pour increasing amounts of time, attention and money into giving children, especially underprivileged children, a chance to succeed. Do the candidates really believe the problem is not enough money, or is it too much money and not enough choice as to which school -- public or private -- best serves the needs of children? Ending the education monopoly would help those languishing in substandard schools. Are the candidates -- especially Democrats -- so beholden to the teachers unions that they care more about winning their approval than they do about educating children? The answer for Democrats is "yes." Why don't the overpaid interrogators/moderators ask the question this way?

H. George Frederickson, a professor in the Department of Public Administration at the University of Kansas, has written a compelling essay on "Repairing Broken Government." It addresses the need to focus on competence more than ideology. Noting the familiar list most people make on the reasons for broken government -- the pervasive influence of money in politics, the power of interest groups and lobbyists, legislative gridlock and more -- Frederickson touches on something of perhaps even greater importance: "bureaucracy, ineffective management, or poor policy implementation are central elements of a broken national government."

Instead of "sound-byting," character assassination and sloganeering, Frederickson calls for "substantive competence (think Katrina)" in government. He wants more competent people running things and he suggests the way to make that happen is to amend the Civil Service Reform Act of 1978.

That law, he writes, "added a thick layer of political appointees to the upper ranks of federal agencies" while the ranks of merit-based civil servants were reduced from almost 3 million to about 1.8 million. "From the standpoint of government effectiveness, this has been a deadly combination," he says.

Where are the voices of the presidential candidates promising to clean house of political appointees and replace them, not with political appointees from their party and persuasion, but with people who know what they are doing?

I care about social issues and the eroding morality of the country, but I care more about competent government. We are spending more on government than ever and getting less for our money...

Let's have a little less ideology from the presidential candidates of both parties and a lot more talk of how to repair broken government.

These remarks fits perfectly with my recent post on school failure, see here.

I also think in a way that a focus on competence in managing government fits into points being made repeatedly by Giuliani and Romney as to the importance of managerial experience in the presidential election campaign. I hope that the public and candidates from all sides see this not however as a party issue but that a real need exists for America to fix our schools and to fix the inability of government to carry out basic duties.

By the way, The New Republic has a funny parody out today, listed on the web site as "The Absurd Comedy of the Dems' Labor Suck Up". I hope this writer does one on the next Republican debate as well.

Public Opinion & US Economy

One blog that I really like and admire is Back Talk written by an anonymous person who describes himself (or herself) as "a professor at a research university, a registered Democrat, a liberal by some measures, but a radical conservative relative to the large majority of my colleagues." The author is an economist of talent given the analysis and manner of thinking exhibited in Back Talk.

The following is an introduction to a couple of excellent posts about the actual state of the US economy as opposed to public perceptions that I recalled from early June of this year that serves as an excellent introduction to an article from today's Wall Street Journal that I will get to shortly. Here from Back Talk, "What Americans Think About Their Economy":

Americans are not happy with the state of their economy, which either means that they are insane or that the media is so negative that Americans do not realize how good they have it. It's definitely the latter.

The health of an economy is measured by such things as GDP growth, GDP per capita, unemployment, inflation, budget deficit and cumulative debt. Additional issues include income inequality (we aren't doing that well if only the rich are getting better off), the trade deficit, and the exchange rate for the dollar.

People need some perspective before forming an opinion about the economy, but they never get that from the news media.
There are two kinds of perspective that are needed: perspective over time and perspective over place. That is, on all of these measures, how do the current numbers compare to prior years in which we were much happier with the state of economy? In addition, on each of these measures, how does the American economy stack up against the other major industrialized nations of the world (i.e., the G7)?

After the professor goes through all the data he concludes:

...Americans fail to appreciate the strength of their fabulous economy. Our economy is not only as good as it has ever been (unless you count the bubble economy years), it is better than any large economy on the planet (as I'll show again tomorrow). Perhaps that's not good enough for you, but, if not, you should consider having your head examined, because that's where the problem lies.

Now let's turn to the WSJ piece today, "Fair But Unbalanced: How the Media Promote False Pessimism about the Economy":

...[T]he most recent Wall Street Journal economic forecasting survey, from July, shows that 49 out of 60 forecasters expect real GDP to grow at an average annual rate of 2%, or faster, in 2007. Of the remaining 11 forecasters, only two expect growth of less than 1%, and only one expects a recession. For 2008, the forecasters are even more optimistic, with none expecting recession.

There are at least a half-dozen other institutions publishing surveys, and all of them report very similar results among the 100 or so active professional forecasters. Except for two well-known economists (Nouriel Roubini at New York University, and Gary Shilling of A. Gary Shilling & Co.), who are not in many surveys, a super-duper majority of professional forecasting economists believe the economy will continue to expand during the next year and have believed so for the past four or five years.

Despite this, an NBC News/Wall Street Journal poll taken in late July found that 68% of Americans thought that the economy either was in recession already, or would experience a recession sometime during the next 12 months. Interestingly, this is not much of a change from the past. This same survey question has been polled at least five times since September 2002. Each time a robust majority of between 65% and 85% of respondents thought a recession either was under way or would occur within the year. Americans have been bearish on the economy for quite some time.

In short, over the past five years, forecasting economists from academia, consulting shops, financial services and industry have a perfect 5-0 record against a random sample of American citizens. It's important to understand that economists are not always right. Some even say that economists were put on earth to make weathermen look good.

In fact, some suggest that the experts don't know what they are talking about. They say that economists make the mistake of looking at aggregate data, for GDP or overall income, which hides serious dislocations for the middle class and those with lower incomes. Those who argue this point believe that unfair foreign competition and unfair distribution of income are leaving many Americans behind.

But this is hard to believe. The economy moderated last year, but the unemployment rate is still just 4.6%, almost a full percentage point below its 20-year average of 5.5%. Since the jobless rate first fell below 5% in December 2005, average hourly earnings have expanded at a 4.1% annualized rate--as good as any year during the late 1990s. And recent research shows that incomes for the bottom fifth of wage earners have risen faster in the past few decades than incomes at the top, hard work is being rewarded more by performance pay, and income volatility is no worse today than it was in the 1980s and 1990s.

Stranger still is a July poll by the American Research Group (ARG) in which 68% of respondents rated their own personal financial situation as "good, very good or excellent." This is a huge improvement from March 2003, when another ARG poll found only 46% of Americans were either "hopeful or happy" about their personal financial situation, while 46% were "worried or angry."

This begs the question: If the actual economic data, the views of professional economists and the self-proclaimed personal financial situation of a majority of Americans have improved this much, why are people so worried about the economy? Why do people assume they are the exception rather than the rule?

One answer is that people gather knowledge about the rest of the economy, the part they cannot see, from watching news. As a result, it could be that the format behind most business journalism skews perceptions and creates pessimism. To be very clear, I am not arguing that business news is purposefully biased. But what seems clear is that in the name of producing an entertaining product, and in an attempt to provide contrasting views, the true consensus of experts is rarely reported.

...The global economy may never have been as strong as it is today. The pace of technological achievement has boosted living standards for billions of people, and promises to do even more in the years to come. It's sad, really, that so many people can't enjoy it because they fret so much about the future.

Let me suggest fully reading the two posts in Back Talk that provide an exceptional review of where the US economy does stand now compared to the past and compared to other world economies. These posts are from June 5 and 6: What Americans Think About Their Economy, which provides a perspective of the US economy over time, and then read Perspective Over Place.

I also highly recommend the blog for insightful analysis on current topics with a bent toward what I call the economic way of thinking.

I further suggest that anytime you read or hear references to the economy in newspaper articles, news magazines, blogs, blog comments and, most especially editorials, letters to the editor, and campaign speeches and promises you turn a keen ear and eye to the assumptions made and the facts involved as most often than not both will be wrong.

I get particularly incensed when I read letters and comments about the terrible spending deficits in the US right now - typically quoting the amount and never in the context of a percentage of GDP or in any historical context of past numbers, or the growth of the economy overall compared to actual deficit trends. The same is true in almost all negative descriptions of the economy because right now the negatives are very hard to find and be honest at the same time.

I have no doubt when the occupant of the White House changes then suddenly the economy will turn excellent in every way in the eyes of the mainstream media. No doubt at all.

Wednesday, August 08, 2007

Gingrich on School Failure

Newt Gingrich may be grating to a lot of people as reflected in his high negative polling numbers (like Sen. Clinton.) I suspect that in the case of the former Speaker those numbers are primarily because he is right so often and tells everybody that he is right so often too.

In any event, he is absolutely correct in the opinions he is expressing about Detroit city schools utter failure and what that fact reveals about all of our government's inability to accomplish goals and its structural incompetence. In today's issue of The Detroit News we find "Gingrich: Will Detroit Save Its Kids or Bureaucracy?". Gingrich explains that according to the Gates Foundation that Detroit schools are dead last in its independent study and noted that "the Detroit school system graduates only one-fourth of its entering freshmen on time, placing Detroit dead last on its list." Now here's more from Newt:

But this failure is not just Detroit's failure. It is an American failure. When American children are being cheated out of the education needed to succeed and an American city is allowed to decline while its leaders refuse to confront the failure, it should concern every American.

This human tragedy extends well beyond the schools. The New York Times reported that an African-American male who drops out of high school faces a 72 percent unemployment rate in his 20s and a 60 percent possibility of going to jail by his mid-30s. The Detroit bureaucracy now presides over a school system whose black male students are more likely to go to jail than go to college.

...This bureaucracy is so focused on protecting its monopoly, it turned down a $200 million offer from a Metro Detroit philanthropist to help high school students learn. Faced with such appalling failure, why would the Detroit bureaucracy be so aggressive in defending itself? And why would it be so unwilling to adopt bold changes to improve its performance?

It could be that the Detroit school system is the single largest employer in the city, followed by the city government. Of Detroit's 25 largest employers, state, county and city governments provide 40 percent of the jobs.

These numbers raise a critical question: What is the purpose of our government bureaucracies? Clearly, we have a fundamental disagreement about how to measure success, and it goes right to the heart of the issue.

If the purpose of the Detroit school system is to provide jobs for members of a unionized bureaucracy, pay them well and pay them on time, then Detroit's school system is a stunning success. If this is the primary purpose of the bureaucracy, Detroit may very well be the most successful school district in the nation.

If, however, the purpose of the school system is to provide Detroit's children with an education, the knowledge, the tools and the motivation to succeed in the real world, a prerequisite to prosperous, productive communities, then Detroit's bureaucratic schools are an abysmal failure.

There is ample evidence of what works in education, but the bureaucracy has systematically ignored all of it. The innovations include merit-based pay; increasing teacher-to-student ratios; revamping union rules to reward the best teachers; bonuses and incentives for new teachers; charter schools; and offering parents a coupon that allows them to send their children to the school that works best for their children and not the bureaucracies.

...[R]eal change requires real change, not new rhetoric while doing more of the same old thing. Propping up the failed past at the expense of future generations leads to prison and poverty vouchers for too many of our children.

The time for excuses is over. The crisis is not about money. The crisis is a failure of responsibility, accountability, honesty, transparency and determination to protect the children from the bureaucracies that are crippling their lives. Who will the people of Detroit save -- their failing bureaucracies or our American children?

Here is what I asked in a post at the end of July, from "Big Labor & Presidential Politics":

"Can you draw any obvious correlation between the fact that education and our government is widely perceived to be dysfunctional despite the amount of money devoted to those undertakings and the fact that those employees are almost completely unionized and have almost zero turnover? Dysfunctional and employed for life does not a good combination for performance make."

Tuesday, August 07, 2007

Beer Prices and Ethanol

Recalling all the problems with ethanol that was discussed earlier in my post "The Ethanol Scam", including the increase of world-wide cost of food which is a life and death matter in the Third World countries, is --- an increase in beer prices. From "Biofuel Brews Up Higher German Beer Prices":

Like most Germans, brewer Helmut Erdmann is all for the fight against global warming. Unless, that is, it drives up the price of his beer.

And that is exactly what is happening to Erdmann and other German brewers as farmers abandon barley — the raw material for the national beverage — to plant other, subsidized crops for sale as environmentally friendly biofuels.

"Beer prices are a very emotional issue in Germany — people expect it to be as inexpensive as other basic staples like eggs, bread and milk," said Erdmann, director of the family-owned Ayinger brewery in Aying, an idyllic village nestled between Bavaria's rolling hills and dark forests with the towering Alps on the far horizon....

Already, at the annual brewery festival in Aying this week, prices for Erdmann's Ayinger beer were up at $8.60, or 6.40 euros, from last year's 6.10 euros for a 34-ounce mug. That's no small matter for Bavarians, who are among the world's heaviest beer drinkers. They put away about 42 gallons of beer a year _ well above the already high German average of 30.38 gallons per person.

And organizers of the world-famous Oktoberfest in Munich have announced a 5.5 percent price increase: A one-liter mug will cost up to $10.70 at this year's autumn beer festival _ the highest price ever.

...[I]in its first major report on bioenergy, the United Nations tried to temper enthusiasm over biofuels last week, warning that the diversion of land to grow crops for fuel will increase prices for basic food commodities.

That is what happened in Mexico, when increased demand for corn to make ethanol in the United States pushed up the price of tortillas.

...Germany leads in the consumption of bioenergy in Europe with an annual usage of 4.3 percent of overall fuel consumption, according to figures by the Agency of Renewable Energies. Germany also is among the leaders in producing wind energy and recycling garbage.

Beer prices are serious business in Bavaria, which has some 615 breweries and gave Germany its famed beer purity law, which dates back to 1516 and in its current form permits only four ingredients: malted grain, hops, yeast and water.

This does, in a somewhat lighthearted way (even though beer is a serious matter,) point out that all government actions do have unintended consequences. I am of the opinion that the best approach to restraining the use of oil in the West for environmental reasons and national security reasons (which for me the latter reason is an even stronger argument) is imposing a gasoline tax (maybe a carbon tax) with some method (perhaps like the fair tax ideas) to make the tax less regressive (both to the poor and to rural consumers) and to devote a good portion of those taxes to dedicated spending on mass transportation and energy efficient infrastructure modernization. The tax is probably the best method to reduce all the unintended consequences and, directly and clearly, accomplish the desired goal of decreased fossil fuel dependence. Also note most serious economists endorse the tax opposed to other methods, particularly the slippery carbon offset fads, as well as the boondoggle subsidies addressed before.

Monday, August 06, 2007

Two Views of Populism

I could summarize the following by writing the American Enterprise Institute versus the Center for American Progress and you might have a good clue where this is going.

First, in one corner, from yesterday in The Financial Times we have Matt Miller and "Phoney Fears Grip America":

A spectre is apparently haunting America – the spectre of “populism”. “New populism spurs Democrats on the economy,” cried the front page headline in The New York Times the other day. Republicans rail against unseemly “class warfare”, while centrist Democrats fret that hard-edged populist appeals will spook suburban voters.

“It is not unusual,” The New York Times explained, “for candidates seeking the Democratic presidential nomination to move left in the primary season.” However, rhetoric aside, there is little reason to view today’s supposedly wild-eyed Democrats as “populist” or “leftwing” at all.

Consider John Edwards, who the press and Republicans have cast as the heartthrob of the resurgent “left”....

The fact that a Thatcher-Cameron-Buffet agenda can be hyped as “populist” says more about propaganda success and media norms than anything else. Over three decades, America’s conservative movement has so deftly shifted the boundaries of debate to the right that even modest adjustments to the market system can be cast as the second coming of Marx without anyone blushing. Today’s phony populist fears also remind us that the real problem with the media is not ideology but stenography. If official sources call something “populist” often enough, it is.

More depressing is that many Democrats fall into the same trap, worrying that a Thatcher-Cameron agenda in America will frighten suburban swing voters, rather than asking themselves how they might win the argument over the direction America needs to take. At this rate, Americans will be lucky to catch up a decade from now to today’s social policy consensus in the UK. Meanwhile, Brits and others will have moved forward on a new generation of ideas to help citizens find security and opportunity in a global economy.

So as Miller praises the European system and demands America follow suit, we turn to the opposite corner where we find that Europe is recognizing the problems inherent in their social policies, moving toward American policies and that following Europe's mistake would be a travesty. In a recent Wall Street Journal article (which was a re-print of an article originally on TCSDaily) by Jurgen Reinhoudt, we see "Wrong Turn: Even as European leftists move right, American ones move further left":

In Europe, reforms are in vogue. Though many special interests are fiercely resisting change, it is striking to see just how many European Social Democrats have come to recognize the need for structural reforms to welfare states....

In many countries the left has been willing to discard or, at the very least, publicly reconsider old big-government approaches in order to reinvigorate economic growth and general prosperity.

In the United States, by contrast, those most committed to the welfare state tend to talk about trimming entitlements the least. This is particularly true of politicians aspiring to the highest office of the land....

Far from tackling the looming fiscal crisis, presidential candidates are busy marketing expensive new plans to voters. The health-care plan of John Edwards would "cost the federal government some $120 billion a year," $1.2 trillion over a 10-year period, for the foreseeable future. And that's not including $15 billion a year in proposed antipoverty measures. No word on how the existing entitlement shortfall will be dealt with....

While proposals for new entitlements may be politically easy, they are fiscally reckless. Candidates who promise expansive new entitlement spending are effectively writing checks the American economy cannot cash. They will take us to the place where Europe is today: a place where existing entitlements are unaffordable. Yet what matters is not so much the specific measures being considered, but the broader mindset from which they originate. It is in this context that comparing the European political mindset to the American political mindset is useful.

In 2005, the liberal Washington Post columnist Sebastian Mallaby criticized the opposition of many Democrats to the possibility of investing in private Social Security accounts by saying that "a party that refuses to acknowledge the urgency of entitlement reform is a party of ostriches." He's right--and the label applies to many leaders in both parties.

Presidential candidates ought to learn from Europe's lessons. Even if it is politically painful, we should not race to the place that Europe is trying to get away from.

So which opinion is correct? I will let you look at the articles, research the facts and you can decide.

In case you have any doubt, my money is on Mr. Reinhoudt with Mr. Miller suffering a KO both in terms of economics and in what is the best policy for the citizens of Europe and America.

A Corporate Speak Glossary

To provide some relief from all the recent long serious posts, here is something fun; from Conde Nast's Portfolio magazine comes this "Corporate Speak Glossary". Here are a few of my favorites for you to enjoy:

action item - An urgent task requiring immediate action—from someone else.

assign ownership - To dump responsibility on someone else as quickly as possible.

branded - Pre-DCE (dotcom era), this described the status of a steer after a rancher burned his symbol of ownership into the animal’s backside; now connotes how the public perceives a company’s image. In the company’s mind, though, that poor steer will always be you.

core competency - Depending on your company’s stock price at the time, your shareholders describe this as either your ability to run a company or to play a low-scoring round of golf.

deliverables - Stuff you owe your customers before they owe you a lawsuit.

dress-down Friday - The day your boss pulls out a sweater that cost more than your suit.

driver - The key factor in getting something done; what you can afford when you get enough things done.

empower - The process by which the powerful dribble out bits of power to the powerless.

fast track - A type of professional advancement that leads most quickly to divorce and personal despair.

first mover - A nice epitaph for a company that goes bankrupt for being two years ahead of its time.

low-hanging fruit - The part of a project your boss completes before handing it over to you.

outside the box - Ironically, an expression used most often by people who will never understand it.

overhead - The fixed costs of running a business (such as rent, heat, and electricity) that must be paid, making them very different from your salary.

paradigm shift - What you want your foot to give the V.P. of marketing when he overuses this term.

take it offline - The “let’s take this outside” of the business world; often thrown around when people begin to disagree too openly in a large meeting.

team player - An enthusiastic co-worker who some say can’t get hired anywhere else.

upsell - To peddle expensive add-ons to an otherwise useful but inexpensive product.

OK, you get the idea, read them all and start thinking of the ones you could add.

Sunday, August 05, 2007

Iraq: A Need for Wisdom

This past fortnight has been very interesting regarding some perspective over the entire issue of the Iraq war and on-going foreign policy.

It seems to me that recently, given the context of a way too early presidential campaign and the pressure from the main stream media and the far left on the panic to "end the war" that we have lost all perspective and wisdom on where we stand and what we should do. Good decisions are never made in great haste, panic or hysteria. Our founding fathers wisely structured the government to avoid the wide swings in popular opinion and manage policy from a perspective of contemplation and wisdom; hence, the nature of the Senate, the Judiciary and the Executive branch to have longer tenure and less responsiveness to the "will of the people" than the House or local politics. Unfortunately, given all the Senators who wish to be President and the nature of political parties to place elections over all other considerations we have been poorly served lately in the nature of comments from our Senate leaders and all the pandering politicians who seem to be so much more reactive than reflective on important situations and problems.

So many issues both in the press and in the campaigns seem directed toward saying what is good based on polls and not saying what is right or good for the country without regard to polls. I know this is an over-simplification as politicians always want to please the voters and get re-elected but there often comes along times that call for more statesmanship and leadership and this seems to be one of those critical times. I am reminded of Dick Morris and his columns which always look at every issue in terms of its polling strength and popularity and never any remarks about what is right or wrong -- and we see the same thing out of so many of our politicians and Senators on a day to day basis.

From The Federalist Papers here is James Madison in The Federalist No. 63:

As the cool and deliberate sense of the community ought in all governments, and actually will in all free governments ultimately prevail over the views of its rulers; so there are particular moments in public affairs, when the people stimulated by some irregular passion, or some illicit advantage, to mislead by the artful misrepresentations of interested men, may call for measures which they themselves will afterwards be most ready to lament and condemn. In these critical moments, how salutary will be the interference of some temperate and respectable body of citizens, in order to check the misguided career, and to suspend the blow meditated by the people against themselves, until reason, justice and truth, can regain their authority over the public mind? What bitter anguish would not the people of Athens have often escaped, if their government had contained so provident a safeguard against the tyranny of their own passions? Popular liberty might then have escaped the indelible reproach of decreeing to the same citizens, the hemlock on one day, and statues on the next.

In The Federalist No. 10, Madison uses similar reasoning in explaining the many reasons to favor a Republic over a pure Democracy:

The two great points of difference between a Democracy and a Republic are, first, the delegation of the Government, in the latter, to a small number of citizens elected by the rest: secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.

The effect of this first difference is, on the one hand to refine and enlarge the public views, by passing them through the medium of a chosen body of citizens, whose wisdom may best discern the true interest of their country, and whose patriotism and love of justice, will be least likely to sacrifice to temporary or partial considerations. Under such a regulation, it may well happen that the public voice pronounced by the representatives of the people, will be more consonant to the public good, than if pronounced by the people themselves convened for the purpose.

Now to the present. We have great disparity of opinion at present over: 1) what is happening and will happen on the ground in Iraq; 2) the consequences of withdrawal from Iraq; and, most importantly, 3) the long term strategic nature of Iraq and the Middle East as it concerns the well-being of the United States.

Several important pieces and occurrences that touch on these three vital questions have been appearing along with the detritus noise we get frequently. The perfect answers may indeed be unknowable but the decisions to be made require the best analysis and information obtainable. I have pointed out the importance of recognizing sunk costs in our decision making (here) so let's begin by not rehashing the past and make our decisions based only on the situation at present.

The pieces that stick most in my mind include the O'Hanlon and Pollack's Op-Ed in the NYT "A War We Might Just Win" which I discussed earlier (here) and two more pieces that really have my attention.

The first is a short commentary from Victor Davis Hanson in which he reviews all the frankly horrible mismanagement of the Middle East situation by all the recent Presidential administrations and surveys the Middle East situation in "Back to the Future?"; a large portion:

...[B]efore the United States abandons its present policies in Iraq and Afghanistan, we should at least recall the past record — which may be best summed up as the ying of Democratic appeasement and the yang of Republican cynicism.

Jimmy Carter now writes books damning our present policies. He should keep quiet. When the Iranians stormed the American embassy in Tehran and inaugurated this era of Islamic terrorism, his U.N. ambassador, Andrew Young, announced that the murderous Ayatollah Khomeini was “a 20th-century saint.” Moralist Carter himself also tried to send hardcore leftist Ramsey Clark over to Tehran to beg the mullahs to release the hostages — in exchange for arms sales.

Next came Ronald Reagan, who, to put it kindly, was bewildered by Islamic extremism. He pulled out American troops from Lebanon after Hezbollah murdered 241 Marines and thereby helped to energize a new terrorist movement that has spread havoc ever since. The Lebanon retreat was followed by the disgrace of the Iran-contra affair, when American agents sold the hostage-taking theocracy missiles and then used the receipts illegally to fund the Contras. Few now remember that Oliver North purportedly flew to Iran to seal the deal, bearing gifts for the ayatollah. No need to mention the intelligence the Reagan administration gave to Saddam Hussein during the savage Iran-Iraq war, or the way it continued Carter’s policy of arming jihadists in Afghanistan.

There were just as many cynical realists in George Bush Sr.’s foreign policy team. In the debate leading up to the first Gulf War, Secretary of State James Baker justified attacking oil-rich Saddam Hussein for the sake of “jobs, jobs, jobs.” And when our coalition partner, the even oil-richer House of Saud, objected to removing the murderous Hussein regime after its retreat from Kuwait, we complied — to the point of watching Saddam butcher thousands of Kurds and Shiites.

Bill Clinton also often weighs in with ideas on the Middle East. But during his two terms he passed up an offer from Sudan to hand over bin Laden. Shortly afterwards, the terrorist openly threatened us: “To kill the Americans and their allies — civilians and military — is an individual duty for every Muslim.” The Clinton administration also didn’t do much about eight years of serial terrorist attacks on the World Trade Center, American servicemen in Saudi Arabia, the East African embassies or the USS Cole. The $50 billion U.N. Oil-for-Food scandal did not reflect well on Clinton’s multilateral model of dealing with Saddam Hussein.

The point of reviewing prior American naivete and cynicism is not to excuse the real mistakes in stabilizing Iraq. Instead, these past blunders remind us that we have had few good choices in dealing with the terrorism, theocracy, and authoritarian madness of an oil-rich Middle East. And we have had none after the murder of 3,000 Americans on September 11.

After four years of effort in Iraq, Americans may well tire of that cost and bring Gen. Petraeus and the troops home. We can then go back to the shorter-term remedies of the past. Well and good.

But at least remember what that past policy was: Democratic appeasement of terrorists, interrupted by cynical Republican business with terrorist-sponsoring regimes.

Then came September 11, and we determined to get tougher than the Democrats by taking out the savage Taliban and Saddam Hussein — and more principled than the Republicans by staying on after our victories to foster something better.

The jihadists are now fighting a desperate war against the new stick of American military power and carrot of American-inspired political reform.

They want us, in defeat, to go back to turning a blind eye to both terrorism and corrupt dictatorships.

That’s the only way they got power in the first place and now desperately count on keeping it.

The second major piece that is a must read is an interview of John Burns who I regard as the best foreign correspondent writing today. He has been with the New York Times for many years yet still maintains his personal integrity and strives to report the facts. My problem with the NYT is twofold, of course, the editorial side (making the above Op-Ed even more startling) and secondly, the growing tendency to have analysis and opinion creeping into the news at the NYT.

The interview is with Hugh Hewitt who is certainly conservative but here shows he can just ask questions and we hear/see the answer. Please read it all. Here are some cuts from that interview, "New York Times Pulitzer Prize winner John Burns on Iraq, Iran and How the Surge is Working.":

[These are selections from the transcript of comments by John Burns.]

David Petraeus is a man who’s had a remarkably distinguished military career, and he is very clear that he thinks his responsibilities lie not to the White House alone, but to the White House and the Congress conjointly, and through them to the American people. I don’t think that this is just a profession, a claim. I think he really intends that, and he’s been very careful not to make commitments at the moment as to what he’s going to say, though we may guess it. And I think he’s going to say that the surge is having its effects, it hasn’t turned the tide of the war, there’s been too little time for it, and I think he and Ambassador Crocker, who will be his partner in that September report, are going to say one thing very clearly, and that is a quick, early withdrawal of American troops of the kind that is being argued by Nancy Pelosi, for example, would very likely lead to catastrophic levels of violence here. And in that, General Petraeus and Ambassador Crocker will be saying something which is pretty broadly shared by people who live and work here, I have to say. The removal of American troops would very likely, we believe from all indications, lead to much higher, and indeed potentially cataclysmic levels of violence, beyond anything we’ve seen to date....

The plan is that with the surge, aimed primarily at al Qaeda, who are responsible for most of the spectacular attacks, the major suicide bombings, for example, that have driven the sectarian warfare here, the belief is, or the hope is, that with the surge, they can knock al Qaeda back, they can clear areas which have been virtually sanctuaries for al Qaeda, northeast, south, west and northwest of Baghdad, and in Baghdad itself, and then have Iraqi troops move in behind them. The problem here is time. How much time does the U.S. military have now, according to the American political timetable, to accomplish this? I think most generals would say, indeed have said, most serving current generals here have said that a drawdown, which took American troops from the 160,00 level they’re at now quickly down to 100,000 or 80,000 over the next, shall we say, year to eighteen months, that’s too fast. If you do that, I think they would say, though they don’t put it quite this frankly, that this war will be lost for sure. Given a little bit more time, they think that it is realistic to think that the Iraqi forces can move in behind them, and can take over the principal responsibilities for the war. The problem is, of course, that American generals have been saying this now for four years, and as we know, the Congress is beginning to run out of patience with that. But I think that they have a good plan now, at least if there is any plan that could save the situation here, any plan that could bring a reasonably successful end to the American enterprise here, it’s probably the plan they have right now....

I think it’s probably fair to say that the Iraqi political leaders, Sunni, Shiia, Kurd in the main, are somewhat further apart now than they were six months ago. In other words, the Bush administration’s hope that the military surge would be accompanied by what they called a political surge, a movement towards some sort of national reconciliation, uniting around a kind of national compact, that has simply not occurred. Indeed, the gulf between the Shiite and Sunni leaders in the government is probably wider than it has ever been. There’s a great deal of recrimination. There’s hardly a day when the Sunnis do not, as they did again today, threaten to withdraw from the government altogether. There’s virtually no progress on the key benchmarks, as the Bush administration calls them, matters like a comprehensive oil law that will settle the issue of how oil revenues, which account for 90% of government revenues here, will in future be divided and spent between the various communities, and many other issues, eighteen of them, benchmarks identified by the Congress, there’s very little progress on those benchmarks. Where there is some progress is at the grass roots level, some progress, though we’re beginning to see tribal leaders, in particular, in some of the most heavily congested war areas, beginning to stand up and say they’ve had enough of it, and to volunteer to put forth their young men, either to join the Iraqi police or army, or to join in tribal auxiliaries, or levees if you will. That’s probably the most encouraging political sign. But at the Baghdad level, unfortunately, the United States still does not have an effective political partner....

...[Y]ou would think it would be so, wouldn’t you, that the threat of withdrawal of American troops, and the risk of a slide into catastrophic levels of violence, much higher than we’ve already seen, would impel the Iraqi leadership to move forward. But there’s a conundrum here. There’s a paradox. That’s to say the more that the Democrats in the Congress lead the push for an early withdrawal, the more Iraqi political leaders, particularly the Shiite political leaders, but the Sunnis as well, and the Kurds, are inclined to think that this is going to be settled, eventually, in an outright civil war, in consequence of which they are very, very unlikely or reluctant, at present, to make major concessions. They’re much more inclined to kind of hunker down. So in effect, the threats from Washington about a withdrawal, which we might have hoped would have brought about greater political cooperation in face of the threat that would ensue from that to the entire political establishment here, has had, as best we can gauge it, much more the opposite effect, of an effect that persuading people well, if the Americans are going, there’s absolutely no…and we’re going to have to settle this by a civil war, why should we make concessions on that matter right now? For example, to give you only one isolated exception, why should the Shiite leadership, in their view, make major concessions about widening the entry point for former Baathists into the government, into the senior levels of the military leadership, that’s to say bringing in high ranking Sunnis into the government and the army and the police, who themselves, the Sunnis, are in the main former stalwarts of Saddam’s regime. Why would the Shiites do that if they believe that in the end, they’re going to have to fight a civil war? This is not to reprove people in the Congress who think that the United States has spent enough blood and treasure here. It’s just a reality that that’s the way this debate seems to be being read by many Iraqi politicians....

I think the war is close to lost, but I don’t think that all hope is extinguished, and I do think, as do many of my colleagues in the media here, that an accelerated early withdrawal, something which reduced American troops, even if they were placed in large bases out in the desert to, say, something like 60-80,000 over a period of six to nine months, and in effect, leaving the fighting in the cities and the approaches to the cities to the Iraqis, I think the result of that would, in effect, be a rapid, a rapid progress towards an all-out civil war. And the people who are urging that kind of a drawdown, I think, have to take that into account. That’s not to say, I have to say, that that should be enough to inhibit those politicians who make that argument, because they could very well ask if that’s true, can those who argue for a continued high level of American military involvement here assure us that we wouldn’t come to the same point three or four years, and perhaps four or five thousand American soldiers killed later? In other words, we might only be putting off the evil day. It seems to me that’s where this discussion really has to focus. Can those who argue for staying here, can they offer any reasonable hope that three, two, three, four years out, the risk of a decline into cataclysmic civil war would be any less? If the answer is no they can’t, then it seems to me that strengthens the argument of those who say well, we might as well withdraw fairly quickly now....

Whatever we may make of the original intent of coming here, if the United States did not have a problem with Islamic extremism in Iraq before 2003, it certainly does now. You only have to look at the pronouncements of Mr. bin Laden and Mr. Zawahiri, his deputy, to see that they regard Iraq now as being, if you will, the front line of the Islamic militant battle against the West. And so if American troops were withdrawn, I think that there would be a very serious risk that large parts of this country will fall under the sway of al Qaeda linked groups. Now we could debate what that exactly means. Al Qaeda’s a holding company. Does that mean that Mr. bin Laden would be able to direct affairs in Afghanistan? No, I don’t think he would. I don’t think he does now. But it would mean that Islamic extremists who bear the worst intent towards the United States would have a base similar to the base they had in Afghanistan before 9/11 from which to operate, and I think it’s very likely that they would then begin to want to expatriate their hatred of the United States in some way or another. In fact, it’s already the case, that there are parts of Iraq which are under the sway of groups that swear allegiance to al Qaeda. And just to speak of one of them, the city of Sumarra, where I was yesterday, it’s about sixty miles north
of Baghdad, is definitely under the sway of al Qaeda right now. And that would likely get very much worse in the event of an accelerated withdrawal. So I don’t think it’s purely propaganda, political propaganda on the part of the Bush administration to say that there would be a major al Qaeda problem here. It seems to me it’s absolutely self-evident that there would be....

This a long and very important interview, well worth your valuable time to read it all.

I will have many other comments later but my focus is to stick to real analysis that is food for thought and not all the sound bites from all the players in the politics of it all including the inane comments from Senators and the Presidential candidates; while those comments make the news and are interesting from an entertainment and political perspective those biased and self-serving comments often offer little insight into the depths and complexities of the situations involved.

I think the Iraq war will be the defining issue of the 2008 presidential election with the Democratic nominee determined to withdraw and the Republican candidate determined to stay. In reality an exit cannot practically be quick and easy regardless of the intent to "end the war." The issue is how soon we draw down, by how much and what carnage do we cause and foment in the drawdown/withdrawal/retreat/cut and run.

The second most important issue will be health care with both sides agreeing to a goal of universal coverage relatively quickly but with Democrats in a favor of a single-payer government solution and the Republicans for a multi-payer, portable and tax driven solution for coverage.

I also predict, contrary to what the polls suggest, it will again be a very close election but the issues will be more clearly defined than in a long time: Hawk v. dove, big government v. less-big government. An exciting, sometimes bitter, and close election is again on the horizon.

Wednesday, August 01, 2007

Income Equality v. Opportunity

In a fascinating piece by Arthur C. Brooks in the Summer 2007 issue of City Journal the issue of income inequality is explored in terms of what people really want and a review of some numbers and polls on the issue. The article is "What Really Buys Happiness? - Not Income Equality but Mobility and Opportunity":

The United States is a rich nation getting richer....

Reason to celebrate? Not according to those who worry about rising income inequality—the fact that the rich are getting richer faster than the poor are getting richer....

Rising inequality makes for good political fodder...liberal politicians, policymakers, and social activists who want to reduce economic inequality through greater taxation and redistribution of wealth. And their plan draws inspiration from a particular academic theory: that inequality is socially destructive because it makes people miserable. As a scholar working in the field of public policy, I have long witnessed hand-wringing about the alleged connection between inequality and unhappiness. What first made me doubt this prevailing view was not some new scholarly study but rather that when I questioned actual human beings about it, few expressed any shock and outrage at the enormous wealth of software moguls and CEOs. On the contrary, they tended to hope that their kids might become the next Bill Gates.

Were these people somehow unrepresentative of America? Or was the academic consensus wrong? I set out to discover which it was. What I found was that economic inequality doesn’t frustrate Americans at all. It is, rather, the perceived lack of economic opportunity that makes us unhappy. To focus our policies on inequality, instead of opportunity, is to make a grave error—one that will worsen the very problem we seek to solve and make us generally unhappier to boot....

...the arguments linking economic inequality to unhappiness are mistaken. If the egalitarians are right, then average happiness levels should be falling. But they aren’t. The GSS shows that in 1972, 30 percent of the population said that they were “very happy” with their lives; in 1982, 31 percent; in 1993, 32 percent; in 2004, 31 percent. In other words, no significant change in reported happiness occurred—even as income inequality increased...

Believing in mobility helps make people happy, then. But does mobility actually exist in the United States? The Left doesn’t think so. Liberals, including rich liberals, are far less likely than conservatives to see a better future for people who work hard. Just 26 percent of liberals with incomes above the national average believe that there’s a lot of upward income mobility in America, versus 48 percent of conservatives with below-average incomes. And 90 percent of the poorer conservatives said that hard work and perseverance could overcome disadvantage, versus 65 percent of the richer liberals. If a liberal and a conservative are exactly identical in income, education, sex, family situation, and race, the liberal will still be 20 percentage points less likely than the conservative to say that hard work leads to success for the disadvantaged.

It is small wonder, then, that conservatives tend to be happier than liberals today. The 2004 GSS showed that 44 percent of people who identified themselves as “conservative” or “extremely conservative” were “very happy” about their lives; only 25 percent of self-identified liberals or extreme liberals gave that response. Conservatives believe that they live in a more promising country than liberals do, and that makes them happier.

And those left behind, it’s important to note, will almost certainly not become happier if we redistribute more income. Indeed, they will probably become less happy. Policies designed to lower economic inequality tend to change the incentives of both the haves and the have-nots in a way that particularly harms the have-nots. Reductions in the incentives to prosper mean fewer jobs created, less economic growth, less in tax revenues, and less charitable giving—all to the detriment of those left behind. And redistribution can, as the American welfare system has shown, turn beneficiaries into demoralized long-term dependents. As Irving Kristol put it three years before the federal welfare reform of 1996, “The problem with our current welfare programs is not that they are costly—which they are—but that they have such perverse consequences for people they are supposed to benefit.”

Further, policies to redress economic inequality hardly affect true inequality at all. Policymakers and economists rarely denounce the scandal of inequality in work effort, creativity, talent, or enthusiasm. We almost never hear about the outrage that is America’s inequality in leisure time, love, faith, or fun—even though these are things that most of us value more than money. To believe that we can redress inequality in our society by moving cash around is to have a materialistic, mechanistic, and totally unrealistic understanding of the resources that we truly care about.

Finally, arguments against inequality legitimize envy. Americans may indeed have strong concerns about their relative incomes and may seek status as reflected in their economic circumstances. But to base our policies on the anxieties of those at the back of the status race is to bow before Invidia. A deadly sin is not, in my view, a smart blueprint for policymaking.

A more accurate vision of America sees a land of both inequality and opportunity, in which hard work and perseverance are the keys to jumping from the ranks of the have-nots to those of the haves. If we can solve problems of absolute deprivation, such as hunger and homelessness, then rewarding hard work will continue to serve as a positive stimulant to achievement.

Redistribution and taxation, beyond what’s necessary to pay for key services, weaken America’s willingness and ability to thrive.

This vision promotes policies focused not on wiping out economic inequality, but rather on enhancing economic mobility. They include improving educational opportunities, aggressively addressing cultural impediments to success, enhancing the fluidity of labor markets, searching for ways to include all citizens in America’s investing revolution, and protecting the climate of American entrepreneurship.

Placidity about income inequality, and opposition to income redistribution, are evidence of a light heart, not a hard one. If happiness is our goal, those who promote opportunity over economic equality have no apologies to make.

The Ethanol Scam

From a post by Larry Kudlow over at The Corner comes this article from Rolling Stone, clearly not one of my regular sources, but a fascinating article that proves what some of us have all been thinking for some time. Some snippets from "Ethanol Scam: Ethanol Hurts the Environment And Is One of America's Biggest Political Boondoggles":

...Ethanol doesn't burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption -- yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World. And the increasing acreage devoted to corn for ethanol means less land for other staple crops, giving farmers in South America an incentive to carve fields out of tropical forests that help to cool the planet and stave off global warming.

So why bother? Because the whole point of corn ethanol is not to solve America's energy crisis, but to generate one of the great political boondoggles of our time. Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 -- twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon -- about half of ethanol's wholesale market price.

Three factors are driving the ethanol hype. The first is panic: Many energy experts believe that the world's oil supplies have already peaked or will peak within the next decade. The second is election-year politics. With the first vote to be held in Iowa, the largest corn-producing state in the nation, former skeptics like Sens. Hillary Clinton and John McCain now pay tribute to the wonders of ethanol. Earlier this year, Sen. Barack Obama pleased his agricultural backers in Illinois by co-authoring legislation to raise production of biofuels to 60 billion gallons by 2030. A few weeks later, rival Democrat John Edwards, who is staking his campaign on a victory in the Iowa caucus, upped the ante to 65 billion gallons by 2025.

The third factor stoking the ethanol frenzy is the war in Iraq, which has made energy independence a universal political slogan. Unlike coal, another heavily subsidized energy source, ethanol has the added political benefit of elevating the American farmer to national hero. As former CIA director James Woolsey, an outspoken ethanol evangelist, puts it, "American farmers, by making the commitment to grow more corn for ethanol, are at the top of the spear on the war against terrorism." If you love America, how can you not love ethanol?

Ethanol is nothing more than 180-proof grain alcohol....

But as a gasoline substitute, ethanol has big problems: Its energy density is one-third less than gasoline, which means you have to burn more of it to get the same amount of power. It also has a nasty tendency to absorb water, so it can't be transported in existing pipelines and must be distributed by truck or rail, which is tremendously inefficient.

Nor is all ethanol created equal. In Brazil, ethanol made from sugar cane has an energy balance of 8-to-1 -- that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That's a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 - making it practically worthless as an energy source. "Corn ethanol is essentially a way of recycling natural gas," says Robert Rapier, an oil-industry engineer who runs the R-Squared Energy Blog.

The ethanol boondoggle is largely a tribute to the political muscle of a single company: agribusiness giant Archer Daniels Midland....

Today, ADM is the leading producer of ethanol, supplying more than 1 billion gallons of the fuel additive last year. Ethanol is propped up by more than 200 tax breaks and subsidies worth at least $5.5 billion a year. And ADM continues to give back: Since 2000, the company has contributed $3.7 million to state and federal politicians.

The Iraq War has also been a boon for ADM and other ethanol producers. The Energy Policy Act of 2005, which was pushed by Corn Belt politicians, mandated the consumption of 7.5 billion gallons of biofuels by 2012. After Democrats took over Congress last year, they too vowed to "do something" about America's addiction to foreign oil. By the time Sen. Jeff Bingaman, chair of the Committee on Energy and Natural Resources, proposed new energy legislation this spring, the only real question was how big the ethanol mandate would be. According to one lobbyist, 36 billion gallons became "the Goldilocks number -- not too big to be impractical, not too small to satisfy corn growers."

Under the Senate bill, only 15 billion gallons of ethanol will come from corn, in part because even corn growers admit that turning more grain into fuel would disrupt global food supplies. The remaining 21 billion gallons will have to come from advanced biofuels, most of which are currently brewed only in small-scale lab experiments. "It's like trying to solve a traffic problem by mandating hovercraft," says Dave Juday, an independent commodities consultant. "Except we don't have hovercraft."

The most seductive myth about ethanol is that it will free us from our dependence on foreign oil. But even if ethanol producers manage to hit the mandate of 36 billion gallons of ethanol by 2022, that will replace a paltry 1.5 million barrels of oil per day -- only seven percent of current oil needs. Even if the entire U.S. corn crop were used to make ethanol, the fuel would replace only twelve percent of current gasoline use.

Another misconception is that ethanol is green. In fact, corn production depends on huge amounts of fossil fuel -- not just the diesel needed to plow fields and transport crops, but also the vast quantities of natural gas used to produce fertilizers. Runoff from industrial-scale cornfields also silts up the Mississippi River and creates a vast dead zone in the Gulf of Mexico every summer. What's more, when corn ethanol is burned in vehicles, it is as dirty as conventional gasoline and does little to solve global warming: E85 reduces carbon dioxide emissions by a modest fifteen percent at best, while fueling the destruction of tropical forests.

But the biggest problem with ethanol is that it steals vast swaths of land that might be better used for growing food. In a recent article in Foreign Affairs titled "How Biofuels Could Starve the Poor," University of Minnesota economists C. Ford Runge and Benjamin Senauer point out that filling the gas tank of an SUV with pure ethanol requires more than 450 pounds of corn -- roughly enough calories to feed one person for a year.

Thanks in large part to the ethanol craze, the price of beef, poultry and pork in the United States rose more than three percent during the first five months of this year. In some parts of the country, hog farmers now find it cheaper to fatten their animals on trail mix, french fries and chocolate bars. And since America provides two-thirds of all global corn exports, the impact is being felt around the world. In Mexico, tortilla prices have jumped sixty percent, leading to food riots. In Europe, butter prices have spiked forty percent, and pork prices in China are up twenty percent. By 2025, according to Runge and Senauer, rising food prices caused by the demand for ethanol and other biofuels could cause as many as 600 million more people to go hungry worldwide.

If you can, the entire thing is worth reading to get the passion the author puts into his opinion. Again, this isn't surprising to me but is good to see my suspicions in print. Corporate subsidies remain a huge problem in this country and so often violate my rules about how free trade is a good thing. And besides "Big Corn" my other favorite egregious example is "Big Sugar" and the subsidies for that industry that have caused many of our candy manufacturers to move offshore, particularly Canada, to escape the ridiculous sugar prices in America due to propping up "Big Sugar" to the detriment of industry and the consumer.

Sunk Costs, Decision Making & Iraq

Walter Williams in a nice article today describes one of the most misunderstood and most important concepts in economics and in decision making in "Economic Thinking":

Historical costs, sometimes called sunk costs, are irrelevant to decision-making because they are costs that have already been incurred. That's something that's not intuitively obvious, even for some trained economists....

Today's debate over the Iraq War is so often discussed in terms of whether it should have been initiated in the first place, our faulty intelligence about Hussein's possession of weapons of mass destruction, and whether the Bush administration lied to the American people. Whether these observations and charges are true or false should in no way be a part of today's decision-making, for history is one of those immutable facts of life. We can change the future, but we cannot change the past, though we can learn from it.

The only costs relevant to decision-making are what economists call marginal or incremental cost; that's the change in costs as a result of doing something. That cost should be compared to the expected benefit. Think about pollution. Getting rid of pollution is a no-brainer. All that the authorities of, say, Los Angeles would have to do is to mandate that all pollution-emitting sources shut down. That would mean no driving, no manufacturing, no airplanes, no power generation and no lawn mowing. Angelenos would have perfectly clean air, but I doubt whether they'd agree that it's worth the costs. That means perfectly clean air is non-optimal, and so is perfectly dirty air. The question is, how much clean air do we want and at what cost? In other words, we should compare the additional benefit of cleaner air to the additional costs of getting it.

The idea of weighing the costs of doing something against its benefits are part and parcel of intelligent decision-making. If we only look to benefits, we'll do darn near anything because everything has some kind of benefit.

NYT: "A War We Just Might Win"

In a surprising Op-Ed printed in the New York Times, of all places given the paper's constant criticism of the war in Iraq and of President Bush, positive news from the battle front is actually printed. This report may indeed be a very significant part of our future debates about the right course of action in Iraq. Two analysts from the liberal Brookings Institution, Michael O'Hannon and Kenneth Pollack, present their findings from a recent visit to Iraq in "A War We Just Might Win":

We are finally getting somewhere in Iraq, at least in military terms. As two analysts who have harshly criticized the Bush administration’s miserable handling of Iraq, we were surprised by the gains we saw and the potential to produce not necessarily “victory” but a sustainable stability that both we and the Iraqis could live with.

After the furnace-like heat, the first thing you notice when you land in Baghdad is the morale of our troops. In previous trips to Iraq we often found American troops angry and frustrated — many sensed they had the wrong strategy, were using the wrong tactics and were risking their lives in pursuit of an approach that could not work.

Today, morale is high. The soldiers and marines told us they feel that they now have a superb commander in Gen. David Petraeus; they are confident in his strategy, they see real results, and they feel now they have the numbers needed to make a real difference.

Everywhere, Army and Marine units were focused on securing the Iraqi population, working with Iraqi security units, creating new political and economic arrangements at the local level and providing basic services — electricity, fuel, clean water and sanitation — to the people. Yet in each place, operations had been appropriately tailored to the specific needs of the community. As a result, civilian fatality rates are down roughly a third since the surge began — though they remain very high, underscoring how much more still needs to be done....

But for now, things look much better than before. American advisers told us that many of the corrupt and sectarian Iraqi commanders who once infested the force have been removed. The American high command assesses that more than three-quarters of the Iraqi Army battalion commanders in Baghdad are now reliable partners (at least for as long as American forces remain in Iraq).

In addition, far more Iraqi units are well integrated in terms of ethnicity and religion. The Iraqi Army’s highly effective Third Infantry Division started out as overwhelmingly Kurdish in 2005. Today, it is 45 percent Shiite, 28 percent Kurdish, and 27 percent Sunni Arab.

In the past, few Iraqi units could do more than provide a few “jundis” (soldiers) to put a thin Iraqi face on largely American operations. Today, in only a few sectors did we find American commanders complaining that their Iraqi formations were useless — something that was the rule, not the exception, on a previous trip to Iraq in late 2005.

The additional American military formations brought in as part of the surge, General Petraeus’s determination to hold areas until they are truly secure before redeploying units, and the increasing competence of the Iraqis has had another critical effect: no more whack-a-mole, with insurgents popping back up after the Americans leave.

In war, sometimes it’s important to pick the right adversary, and in Iraq we seem to have done so. A major factor in the sudden change in American fortunes has been the outpouring of popular animus against Al Qaeda and other Salafist groups, as well as (to a lesser extent) against Moktada al-Sadr’s Mahdi Army.

These groups have tried to impose Shariah law, brutalized average Iraqis to keep them in line, killed important local leaders and seized young women to marry off to their loyalists. The result has been that in the last six months Iraqis have begun to turn on the extremists and turn to the Americans for security and help. The most important and best-known example of this is in Anbar Province, which in less than six months has gone from the worst part of Iraq to the best (outside the Kurdish areas). Today the Sunni sheiks there are close to crippling Al Qaeda and its Salafist allies. Just a few months ago, American marines were fighting for every yard of Ramadi; last week we strolled down its streets without body armor.

Another surprise was how well the coalition’s new Embedded Provincial Reconstruction Teams are working. Wherever we found a fully staffed team, we also found local Iraqi leaders and businessmen cooperating with it to revive the local economy and build new political structures. Although much more needs to be done to create jobs, a new emphasis on microloans and small-scale projects was having some success where the previous aid programs often built white elephants.

In some places where we have failed to provide the civilian manpower to fill out the reconstruction teams, the surge has still allowed the military to fashion its own advisory groups from battalion, brigade and division staffs. We talked to dozens of military officers who before the war had known little about governance or business but were now ably immersing themselves in projects to provide the average Iraqi with a decent life.

Outside Baghdad, one of the biggest factors in the progress so far has been the efforts to decentralize power to the provinces and local governments. But more must be done. For example, the Iraqi National Police, which are controlled by the Interior Ministry, remain mostly a disaster. In response, many towns and neighborhoods are standing up local police forces, which generally prove more effective, less corrupt and less sectarian. The coalition has to force the warlords in Baghdad to allow the creation of neutral security forces beyond their control.

In the end, the situation in Iraq remains grave. In particular, we still face huge hurdles on the political front. Iraqi politicians of all stripes continue to dawdle and maneuver for position against one another when major steps towards reconciliation — or at least accommodation — are needed. This cannot continue indefinitely. Otherwise, once we begin to downsize, important communities may not feel committed to the status quo, and Iraqi security forces may splinter along ethnic and religious lines.

How much longer should American troops keep fighting and dying to build a new Iraq while Iraqi leaders fail to do their part? And how much longer can we wear down our forces in this mission? These haunting questions underscore the reality that the surge cannot go on forever. But there is enough good happening on the battlefields of Iraq today that Congress should plan on sustaining the effort at least into 2008.

[Michael E. O’Hanlon is a senior fellow at the Brookings Institution. Kenneth M. Pollack is the director of research at the Saban Center for Middle East Policy at Brookings.]

Tuesday, July 31, 2007

Lieberman on Terrorism

I find Senator Lieberman's position on Iraq, terrorism, the anti-war influence and his relationship with the Democratic leadership most interesting these days especially given his position as being the Democrats' nominee for Vice President only two presidential elections ago.

Here is a portion of a summary of an interview the Senator did with The Hill, "Lieberman escalates attack on Iraq critics":

Ever since Connecticut Democrats refused to back him for a fourth term in Congress, Joe Lieberman has been burnishing his independent credentials in the narrowly divided Senate while becoming increasingly critical of the Democratic Party on the war in Iraq.

Lieberman, the Democrats’ 2000 vice presidential nominee, insists he is not actively considering joining the Republican Party. But he is keeping that possibility wide open as his disenchantment grows with Democratic leaders. The main sticking points are their attempts to end the war in Iraq and their hesitation to take a harder line against Iran.

“I think either [Democrats] are, in my opinion, respectfully, na├»ve in thinking we can somehow defeat this enemy with talk, or they’re simply hesitant to use American power, including military power,” Lieberman said in a wide-ranging interview with The Hill.

“There is a very strong group within the party that I think doesn’t take the threat of Islamist terrorism seriously enough.”

...As Lieberman sees it, however, the Democratic Party has slipped away from its “most important and successful times” of the middle of last century, where it was tough on Communism and progressive on domestic policy.

...He has no plans to endorse a Democrat for president, including the senior senator from his home state, Christopher Dodd, and is open to backing a Republican candidate for president. Lieberman also startled Democrats when he lent his support to the re-election bid of Republican Sen. Susan Collins of Maine, a top target of the Democratic Senatorial Campaign Committee.

During this month’s Iraq debate, Lieberman was working behind the scenes strategizing with Republicans and was front-and-center in several GOP press conferences denouncing Democratic tactics to push for an end to the war.

Lieberman was the lone non-Republican to vote against Majority Leader Harry Reid’s (D-Nev.) efforts to shut down debate on an amendment to bring troops home by next April. (Reid voted against the cloture motion to file a similar motion at a later time.) Lieberman was also alone when he joined 40 Republicans in voting to kill an amendment by Sen. Jim Webb (D-Va.) to extend the time between troop deployments in Iraq.

“I’m disappointed that I am in so small a minority among Senate Democrats in taking the position that I have,” Lieberman said.

But even as he has played a key role on some of their top domestic initiatives, Democrats have at times kept their distance from Lieberman. Last week, for instance, Reid held a press conference with several Democrats to tout their efforts to pass the 9/11 Commission bill and a homeland-security spending plan. Lieberman, the lead Senate negotiator on the measure and chairman of the Homeland Security and Governmental Affairs Committee, was conspicuously absent.

Reid said it was not intentional to leave Lieberman out of the press conference, but Lieberman said not being invited was “surprising.”

The distance that Democratic leaders appear to be keeping from Lieberman could result from the animosity that the Democrats’ anti-war base has directed toward him. That criticism intensified even more last month, when he suggested military intervention against the Iranian government.

...Lieberman is unfazed and says he has no intention of formally rejoining the Democratic Party.

“For now, I find being an independent more fun,” Lieberman said. “The partisanship in this place is out of control. As an independent I’ve got the opportunity to speak out against that.”

Might Lieberman consider a run for Vice President as an Independent with a Republican nominee?