FAQ on climate models: Part II. By Gavin Schmidt
Real Climate, Jan 06, 2009 @ 8:09 AM
[This is a continuation of a previous post including interesting questions from the comments.]
What are parameterisations?
Some physics in the real world, that is necessary for a climate model to work, is only known empirically. Or perhaps the theory only really applies at scales much smaller than the model grid size. This physics needs to be 'parameterised' i.e. a formulation is used that captures the phenomenology of the process and its sensitivity to change but without going into all of the very small scale details. These parameterisations are approximations to the phenomena that we wish to model, but which work at the scales the models actually resolve. A simple example is the radiation code - instead of using a line-by-line code which would resolve the absorption at over 10,000 individual wavelengths, a GCM generally uses a broad-band approximation (with 30 to 50 bands) which gives very close to the same results as a full calculation. Another example is the formula for the evaporation from the ocean as a function of the large-scale humidity, temperature and wind-speed. This is really a highly turbulent phenomena, but there are good approximations that give the net evaporation as a function of the large scale ('bulk') conditions. In some parameterisations, the functional form is reasonably well known, but the values of specific coefficients might not be. In these cases, the parameterisations are 'tuned' to reproduce the observed processes as much as possible.
How are the parameterisations evaluated?
In at least two ways. At the process scale, and at the emergent phenomena scale. For instance, taking one of the two examples mentioned above, the radiation code can be tested against field measurements at specific times and places where the composition of the atmosphere is known alongside a line-by-line code. It would need to capture the variations seen over time (the daily cycle, weather, cloudiness etc.). This is a test at the level of the actual process being parameterised and is a necessary component in all parameterisations. The more important tests occur when we examine how the parameterisation impacts larger-scale or emergent phenomena. Does changing the evaporation improve the patterns of precipitation? the match of the specific humidity field to observations? etc. This can be an exhaustive set of tests but again are mostly necessary. Note that most 'tunings' are done at the process level. Only those that can't be constrained using direct observations of the phenomena are available for tuning to get better large scale climate features. As mentioned in the previous post, there are only a handful of such parameters that get used in practice.
Are clouds included in models? How are they parameterised?
Models do indeed include clouds, and do allow changes in clouds as a response to forcings. There are certainly questions about how realistic those clouds are and whether they have the right sensitivity - but all models do have them! In general, models suggest that they are a positive feedback - i.e. there is a relative increase in high clouds (which warm more than they cool) compared to low clouds (which cool more than they warm) - but this is quite variable among models and not very well constrained from data.
Cloud parameterisations are amongst the most complex in the models. The large differences in mechanisms for cloud formation (tropical convection, mid-latitude storms, marine stratus decks) require multiple cases to be looked at and many sensitivities to be explored (to vertical motion, humidity, stratification etc.). Clouds also have important micro-physics that determine their properties (such as cloud particle size and phase) and interact strongly with aerosols. Standard GCMs have most of this physics included, and some are even going so far as to embed cloud resolving models in each grid box. These models are supposed to do away with much of the parameterisation (though they too need some, smaller-scale, ones), but at the cost of greatly increased complexity and computation time. Something like this is probably the way of the future.
What is being done to address the considerable uncertainty associated with cloud and aerosol forcings?
As alluded to above, cloud parameterisations are becoming much more detailed and are being matched to an ever larger amount of observations. However, there are still problems in getting sufficient data to constrain the models. For instance, it's only recently that separate diagnostics for cloud liquid water and cloud ice have become available. We still aren't able to distinguish different kinds of aerosols from satellites (though maybe by this time next year).
However, none of this is to say that clouds are a done deal, they certainly aren't. In both cloud and aerosol modelling the current approach is get as wide a spectrum of approaches as possible and to discern what is and what is not robust among those results. Hopefully soon we will start converging on the approaches that are the most realistic, but we are not there yet.
Forcings over time are a slightly different issue, and there it is likely that substantial uncertainties will remain because of the difficulty in reconstructing the true emission data for periods more than a few decades back. That involves making pretty unconstrained estimates of the efficiency of 1930s technology (for instance) and 19th Century deforestation rates. Educated guesses are possible, but independent constraints (such as particulates in ice cores) are partial at best.
Do models assume a constant relative humidity?
No. Relative humidity is a diagnostic of the models' temperature and water distribution and will vary according to the dynamics, convection etc. However, many processes that remove water from the atmosphere (i.e. cloud formation and rainfall) have a clear functional dependence on the relative humidity rather than the total amount of water (i.e. clouds form when air parcels are saturated at their local temperature, not when humidity reaches X g/m3). These leads to the phenomenon observed in the models and the real world that long-term mean relative humidity is pretty stable. In models it varies by a couple of percent over temperature changes that lead to specific humidity (the total amount of water) changing by much larger amounts. Thus a good estimate of the model relative humidity response is that it is roughly constant, similar to the situation seen in observations. But this is a derived result, not an assumption. You can see for yourself here (select Relative Humidty (%) from the diagnostics).
What are boundary conditions?
These are the basic data input into the models that define the land/ocean mask, the height of the mountains, river routing and the orbit of the Earth. For standard models additional inputs are the distribution of vegetation types and their properties, soil properties, and mountain glacier, lake, and wetland distributions. In more sophisticated models some of what were boundary conditions in simpler models have now become prognostic variables. For instance, dynamic vegetation models predict the vegetation types as a function of climate. Other examples in a simple atmospheric model might be the distribution of ozone or the level of carbon dioxide. In more complex models that calculate atmospheric chemistry or the carbon cycle, the boundary conditions would instead be the emissions of ozone precursors or anthropogenic CO2. Variations in these boundary conditions (for whatever reason) will change the climate simulation and can be considered forcings in the most general sense (see the next few questions).
Does the climate change if the boundary conditions are stable?
The answer to this question depends very much on perspective. On the longest timescales a climate model with constant boundary conditions is stable - that is, the mean properties and their statistical distribution don't vary. However, the spectrum of variability can be wide, and so there is variation from one decade to the next, from one century to the next, that are the result of internal variations in (for instance) the ocean circulation. While the long term stability is easy to demonstrate in climate models, it can't be unambiguously determined whether this is true in the real world since boundary conditions are always changing (albeit slowly most of the time).
Does the climate change if boundary conditions change?
Yes. If any of the factors that influence the simulation change, there will be a response in the climate. It might be large or small, but it will always be detectable if you run the model for long enough. For example, making the Rockies smaller (as they were a few million years ago) changes the planetary wave patterns and the temperature patterns downstream. Changing the ozone distribution changes temperatures, the height of the tropopause and stratospheric winds. Changing the land-ocean mask (because of sea level rise or tectonic changes for instance) changes ocean circulation, patterns of atmospheric convection and heat transports.
What is a forcing then?
The most straightforward definition is simply that a forcing is a change in any of the boundary conditions. Note however that this definition is not absolute with respect to any particular bit of physics. Take ozone for instance. In a standard atmospheric model, the ozone distribution is fixed and any change in that fixed distribution (because of stratospheric ozone depletion, tropospheric pollution, or changes over a solar cycle) would be a forcing causing the climate to change. In a model that calculates atmospheric chemistry, the ozone distribution is a function of the emissions of chemical precursors, the solar UV input and the climate itself. In such a model, ozone changes are a response (possibly leading to a feedback) to other imposed changes. Thus it doesn't make sense to ask whether ozone changes are or aren't a forcing without discussing what kind of model you are talking about.
There is however a default model setup in which many forcings are considered. This is not always stated explicitly and leads to (somewhat semantic) confusion even among specialists. This setup consists of an atmospheric model with a simple mixed-layer ocean model, but that doesn't include chemistry, aerosol vegetation or dynamic ice sheet modules. Not coincidentally this corresponds to the state-of-the-art of climate models around 1980 when the first comparisons of different forcings started to be done. It persists in the literature all the way through to the latest IPCC report (figure xx). However, there is a good reason for this, and that is observation that different forcings that have equal 'radiative' impacts have very similar responses. This allows many different forcings to be compared in magnitude and added up.
The 'radiative forcing' is calculated (roughly) as the net change in radiative fluxes (both short wave and long wave) at the top of the atmosphere when a component of the default model set up is changed. Increased solar irradiance is an easy radiative forcing to calculate, as is the value for well-mixed greenhouse gases. The direct effect of aerosols (the change in reflectance and absorption) is also easy (though uncertain due to the distributional uncertainty), while the indirect effect of aerosols on clouds is a little trickier. However, some forcings in the general sense defined above don't have an easy-to-caclulate 'radiative forcing' at all. What is the radiative impact of opening the isthmus of Panama? or the collapse of Lake Agassiz? Yet both of these examples have large impacts on the models' climate. Some other forcings have a very small global radiative forcing and yet lead to large impacts (orbital changes for instance) through components of the climate that aren't included in the default set-up. This isn't a problem for actually modelling the effects, but it does make comparing them to other forcings without doing the calculations a little more tricky.
What are the differences between climate models and weather models?
Conceptually they are very similar, but in practice they are used very differently. Weather models use as much data as there is available to start off close to the current weather situation and then use their knowledge of physics to step forward in time. This has good skill for a few days and some skill for a little longer. Because they are run for short periods of time only, they tend to have much higher resolution and more detailed physics than climate models (but note that the Hadley Centre for instance, uses the same model for climate and weather purposes). Weather models develop in ways that improve the short term predictions, though the impact for long term statistics or the climatology needs to be assessed independently. Curiously, the best weather models often have a much worse climatology than the best climate models. There are many current attempts to improve the short-term predictability in climate models in line with the best weather models, though it is unclear what impact that will have on projections.
How are solar variations represented in the models?
This varies a lot because of uncertainties in the past record and complexities in the responses. But given a particular estimate of solar activity there are a number of modelled responses. First, the total amount of solar radiation (TSI) can be varied - this changes the total amount of energy coming into the system and is very easy to implement. Second, the variation over the the solar cycle at different frequencies (from the UV to the near infra-red) don't all vary with the same amplitude - UV changes are about 10 times as large as those in the total irradiance. Since UV is mostly absorbed by ozone in the stratosphere, including these changes increases the magnitude of the solar cycle variability in the stratosphere. Furthermore, the change in UV has an impact on the production of ozone itself (even down into the troposphere). This can be calculated with chemistry-climate models, and is increasingly being used in climate model scenarios (see here for instance).
There are also other hypothesised impacts of solar activity on climate, most notably the impact of galactic cosmic rays (which are modulated by the solar magnetic activity on solar cycle timescales) on atmospheric ionisation, which in turn has been linked to aerosol formation, and in turn linked to cloud amounts. Most of these links are based on untested theories and somewhat dubious correlations, however, as was recognised many years ago (Dickinson, 1975), this is a plausible idea. Implementing it in climate models is however a challenge. It requires models to have a full model of aerosol creation, growth, accretion and cloud nucleation. There are many other processes that affect aerosols and GCR-related ionisation is only a small part of that. Additionally there is a huge amount of uncertainty in aerosol-cloud effects (the 'aerosol indirect effect'). Preliminary work seems to indicate that the GCR-aerosol-cloud link is very small (i.e. the other effects dominate), but this is still in the early stages of research. Should this prove to be significant, climate models will likely incorporate this directly (using embedded aerosol codes), or will parameterise the effects based on calculated cloud variations from more detailed models. What models can't do (except perhaps as a sensitivity study) is take purported global scale correlations and just 'stick them in' - cloud processes and effects are so tightly wound up in the model dynamics and radiation and have so much spatial and temporal structure that this couldn't be done in a way that made physical sense. For instance, part of the observed correlation could be due to the other solar effects, and so how could they be separated out? (and that's even assuming that the correlations actually hold up over time, which doesn't seem to be the case).
What do you mean when you say model has “skill”?
'Skill' is a relative concept. A model is said to have skill if it gives more information than a naive heuristic. Thus for weather forecasts, a prediction is described as skilful if it works better than just assuming that each day is the same as the last ('persistence'). It should be noted that 'persistence' itself is much more skillful than climatology (the historical average for that day) for about a week. For climate models, there is a much larger range of tests available and there isn't necessarily an analogue for 'persistence' in all cases. For a simulation of a previous time period (say the mid-Holocene), skill is determined relative to a 'no change from the present'. Thus if a model predicts a shift northwards of the tropical rain bands (as was observed), that would be skillful. This can be quantified and different models can exhibit more or less skill with respect to that metric. For the 20th Century, models show skill for the long-term changes in global and continental-scale temperatures - but only if natural and anthropogenic forcings are used - compared to an expectation of no change. Standard climate models don't show skill at the interannual timescales which depend heavily on El Niño's and other relatively unpredictable internal variations (note that initiallised climate model projections that use historical ocean conditions may show some skill, but this is still a very experimental endeavour).
How much can we learn from paleoclimate?
Lots! The main issue is that for the modern instrumental period the changes in many aspects of climate have not been very large - either compared with what is projected for the 21st Century, or from what we see in the past climate record. Thus we can't rely on the modern observations to properly assess the sensitivity of the climate to future changes. For instance, we don't have any good observations of changes in the ocean's thermohaline circulation over recent decades because a) the measurements are difficult, and b) there is a lot of noise. However, in periods in the past, say around 8,200 years ago, or during the last ice age, there is lots of evidence that this circulation was greatly reduced, possibly as a function of surface freshwater forcing from large lake collapses or from the ice sheets. If those forcings and the response can be quantified they provide good targets against which the models' sensitivity can be tested. Periods that are of possibly the most interest for testing sensitivities associated with uncertainties in future projections are the mid-Holocene (for tropical rainfall, sea ice), the 8.2kyr event (for the ocean thermohaline circulation), the last two millennia (for decadal/multi-decadal variability), the last interglacial (for ice sheets/sea level) etc. There are plenty of other examples, and of course, there is a lot of intrinsic interest in paleoclimate that is not related to climate models at all!
As before, if there are additional questions you'd like answered, put them in the comments and we'll collate the interesting ones for the next FAQ.
Tuesday, January 6, 2009
Open Thread: Appreciation of Past and Current Federal Commander-in-Chiefs
Please add your appreciation posts for past and current Federal Commander-in-Chiefs here.
Let's start with the current one:
1 President Bush Attends Military Appreciation Parade with Chairman of the Joint of Staff Admiral Mike Mullen and Secretary of Defense Robert Gates
Fort Myer, Arlington, Virginia, January 6, 2009
10:21 A.M. EST
ADMIRAL MULLEN: President and Mrs. Bush; Mr. Vice President; Secretary and Mrs. Gates; members of the Cabinet; distinguished members of Congress; fellow members of the Joint Chiefs; members of the Armed Forces of the United States, past and present; ladies and gentlemen: Thank you for honoring us with your presence, and welcome to the grounds of the Old Guard, which both sanctify our past and herald our future.
On behalf of the 2.2 million uniform men and women of our Armed Forces, I am humbled to be able to formally thank President and Mrs. Bush for all they have done for our military and for our nation. More than 280,000 are walking point right now on the front lines. They stand tallest with us on this day, and it is right to thank them for making this celebration possible. (Applause.)
Truly it is not my privilege alone to tell the story of the Bush name -- a story that waits not only to be said in volumes, but one carried in the hearts of those patriots out there; a story which rushes with the oral history of life, warm with gratitude, flush with inspiration; a story best told by the voices of our service members themselves, who recently had an opportunity to place in a journal their thoughts to President and Mrs. Bush. Deborah and I passed that journal to the troops as we recently traveled around the world.
And so if you don't mind, Mr. President and Madam First Lady, I wanted to share a few handwritten lines from them.
"Mr. President, thank you and your family for your service. I am proud to serve under you, sir. You are awesome, and made a difference in the world." Staff Sergeant Ward, Queens, New York.
"Sir, nice to see that our President is still quick on his feet after eight years in office." (Laughter.) "Next time, pick up the shoe and throw it back." (Laughter and applause.) "We got your back." Master Sergeant Michael Frazier, United States Air Force.
"Sir, you truly set the standard to uphold the peace and our very way of life so our kids can grow up in a peaceful world. We will always stand tall, one great nation and one great state -- Texas." (Hoo-ah.) Sergeant First Class Claude Corey, Waco, Texas.
"Mrs. Bush, your class and dignity were an inspiration to us all." Lieutenant Colonel Scott Rainey, United States Army, Baghdad.
"Sir, thank you for your service, example and leadership. We have not faltered, we will not fail. With greatest respect and honor, we serve." Signed simply, Your Soldiers.
Those voices are an answering volley to you for your high regard and great respect for every single man and woman who serves this nation.
After this nation was attacked by a rising evil, the same evil which later murdered many others in places like London, Madrid, Islamabad and Mumbai, you quickly led us from the grip of fear to a serenity of purpose and unity of action -- serenity well beyond our dreams on September 12th, when all thought further attack was not only likely, but gravely imminent. And through your vision, a new national security was rendered to reach our enemies where they hid and trained and celebrated deadly crimes.
We sent our forces to hills and caves, alongside tribesman on horseback to root them out and hunt them down. We liberated Iraq from tyranny, now on the road to renewal. And we are shifting our focus to Afghanistan. We applauded as you, Mrs. Bush, worked for the freedom and education of young women, and gave hope to children scarred by hate. And always, sir, we felt your unmatched confidence in us, which only made us better.
Yes, we know these images well and we treasure them. But what wasn't always often an image was how you, as our First Family, fully embraced our military family with words of love and prayers of hope. For you have proven that how well we care for our wounded and the families of the fallen defines who and what we really are as a nation. You made it personal, and that has made all the difference.
With quiet dignity, you stretched out hands to those touched by loss, unimaginable loss that can never be made whole so they might be touched yet again.
There are many moments I will never forget, such as when you, Mr. President, presented Michael Monsoor's family with the Medal of Honor, and how in that very presidential setting you were so visibly moved. We will never know of all the private embraces and words of healing that you provided, but we do know the wholeness they created. For with every minute which melted into many gracious hours spent with our veterans and families, you gave something precious to us all -- gifts which will forever adorn our chords of memory.
Indeed, not far from these grounds where both Union and Confederate soldiers lay in white, tented hospitals, President Lincoln also walked through the lines and personally brought the meaning of hope and sacrifice to those straining to touch it from every side. So true today. A reporter who followed Lincoln wrote, "From the outset, he was the personal friend of every soldier he sent to the front, and somehow, every man seemed to know it." So true today.
In my 44 years of wearing this uniform, I have never seen the American public and our military as bonded in understanding, purpose, and spirit as I do right now. For this, Mr. President, we owe you our greatest gratitude.
Finally, sir, I want to personally thank you for your trust in me as Chairman of the Joint Chiefs, and, honestly, a trust I do not hold alone, a confidence every other uniformed member also holds so dear: the honor to serve and represent the American people.
Mr. President, you have selected a tremendous civilian leadership team in Secretary Gates and the Deputy Secretary, our former Secretary of the Navy, Gordon England. It is a great personal honor to serve alongside them.
Ladies and gentlemen, it is my pleasure to introduce to you the Secretary of Defense, the honorable Robert Gates. (Applause.)
SECRETARY GATES: Thank you, Admiral Mullen.
Some of you of a certain generation might remember a line from the John Wayne movie, "Red River" -- an epic story of a thousand-mile cattle drive across Texas. At one point, one of the characters says, "There's three times in a life -- in a man's life when he has the right to yell at the moon -- when he marries, when his children come, and when he finishes a job he had to be crazy to start." (Laughter.) Well, before President Bush finishes his job, I'm pleased to have this chance, on behalf of the United States military, to pay tribute to our Commander-in-Chief, and to give him proper thanks.
The legacy of George W. Bush in matters of war and peace began taking form more than a year before he first took the oath of office. In the fall of 1999, then Governor Bush gave a speech at the Citadel, titled, "A Period of Consequences." He observed that nearly a decade after the collapse of the Soviet Union, the United States military was still organized more for Cold War threats than for the challenges of a new century -- what he called an era of car-bombers and plutonium merchants and cyber-terrorists and drug cartels and unbalanced dictators, all the unconventional and invisible threats of new technologies and old hatreds.
On a bright Tuesday morning in September, eight months into President Bush's first term, we learned how dangerous and unpredictable this new era could be, and saw in the starkest terms how necessary was the task of transforming the American defense establishment to meet these challenges. It was a task inspired by the vision of President Bush, propelled by the energetic advocacy of Secretary Rumsfeld, informed by the experience of our senior military leaders, and accelerated by the urgent demands of two unconventional ground wars.
The result is an American military that has become more agile, lethal, and prepared to deal with the full spectrum of 21st century conflict -- and on a personal note, a force that is dramatically more deployable and expeditionary than when I last served in government 15 years ago.
Consider just a few of the historical changes: The Army has undergone its most significant restructuring in more than two generations, moving from a division-based to a modular brigades-based force. The Navy's fleet response plan has nearly doubled the number of strike carrier groups that can be surged in the first weeks of a crisis.
America's Special Forces have seen vast increases in budget, personnel, authorities, and most importantly, in capabilities in the campaign against terrorism worldwide. The number of unmanned aerial vehicles has grown some 40-fold, to more than 6,000, and we have seen a genuine revolution in the military's ability to fuse intelligence and operations.
Cold War basing arrangements in Germany, Korea and Japan have been modernized and sized to better reflect the security requirements of this century. New authorities and programs enable the military to build the capacity of allies and partners in cooperation with civilian agencies and organizations. And much, much more.
As this historical institutional shift was underway, President Bush led our military through two major conflicts in Iraq and Afghanistan, and a broader struggle against terrorist networks worldwide. He has not flinched when faced with difficult wartime decisions, including the momentous decision two years ago to send more troops into Iraq and revamp our strategy there.
Nor has the President ever hidden from the human consequences of his decisions. We have seen this in countless visits with the wounded at Walter Reed, Bethesda, and other military hospitals. And there are the meetings that he and the First Lady have held with thousands of family members of wounded and fallen troops. The President's deep regard and affection for our service members and their families has played out in ways big and small: Surprise visits to Iraq and Afghanistan to shake hands and high-five, and personal phone calls to those deployed over Thanksgiving, even the occasional chest bump to unwary cadets.
Some might remember the story of Staff Sergeant Michael McNaughton of Louisiana National Guard. In January 2003, he stepped on a landmine 30 miles north of Kabul, and lost his right leg. President Bush visited Michael at Walter Reed, and suggested they go for a run when he received his prosthetic. Months later, Michael and the President jogged around the South Lawn of the White House together. A single promise to a single soldier: A small act that reflects President Bush's commitment to care for and honor every member of the Armed Forces.
Mr. President, every day these volunteers execute your orders with courage and determination, facing down danger for the greater good of America. On behalf of more than two million men and women in uniform, we are deeply grateful for your leadership and service to America in a time of war.
Finally, and personally, I would like to thank you for granting me the opportunity to serve as Secretary of Defense. It is true that I have been known to grouse from time to time about coming back to Washington, D.C. Yet working every day with our soldiers, sailors, airmen and Marines has been the greatest honor of my life. And I will always owe you a debt of gratitude for that. I have appreciated your steadfast confidence and support over these past two years, and I wish you and Laura the very best as you begin the next phase of your lives.
Ladies and gentlemen, the President of the United States. (Applause.)
THE PRESIDENT: Thank you very much. At ease.
Mr. Secretary, thank you for the kind introduction -- and thank you for being an outstanding Secretary of Defense. (Applause.) For a while, we expected this event to be a joint retirement party. It didn't turn out that way, did it? (Laughter.) I am pleased that President-Elect Obama has asked you to stay on, and I am confident that you'll continue to be a strong leader as the Secretary of Defense. (Applause.)
And, Admiral Mullen, thank you for your strong advice, your clear thinking, and your years of service to our country. (Applause.)
I want to thank you for honoring Laura, who's been a fabulous First Lady. (Applause.) The military gave her the Distinguished Service Award -- a lot of friends from Texas think she deserved the Purple Heart. (Laughter.) I wish I'd have thought of the roses.
Mr. Vice President, I am proud to have served with you for eight years. The military has had no stauncher defender in my administration than Vice President Dick Cheney. (Applause.)
I thank members of the Cabinet, members of the administration, and former members of the Cabinet, especially the former Secretary of Defense, who did an outstanding job -- Secretary Don Rumsfeld. (Applause.)
I thank the current members of the Joint Chiefs and their families, as well as the former members of the Joint Chiefs and their families for joining us today. I want to thank those who wear the uniform; distinguished guests.
As my time in office winds down, the days bring a series of "lasts." I made my last overseas trip on Air Force One. I have delivered my final college commencement as President. And after much consideration, I pardoned my last Thanksgiving turkey. (Laughter.) These have all been wonderful experiences. But nothing compares to the honor of standing before you today, and addressing America's Armed Forces as your Commander-in-Chief.
Over the past eight years, I have seen the valor of the American military time and time again. I saw your valor on September the 11th, 2001, in service members rushing into smoke-filled corridors to save their colleagues at the Pentagon -- and in planes patrolling the skies above New York City and Washington. I saw your valor in the days after the attack, when Americans crowded into recruiting centers across our country, raised their hands to serve, and pledged to defend our people and our freedom.
I saw your valor in the forces who deployed to Afghanistan. Within weeks of September the 11th, you closed down the terrorist training camps, and you drove the Taliban from power. I saw your valor in the fearless troops who stormed across the Iraqi desert -- and destroyed a regime that threatened America. I saw your valor in battle-tested warriors who signed up for a second, or third, or fourth tour -- and made the surge in Iraq one of the great successes in America's military history.
The valor of America's Armed Forces have made our nation safer. Because you've taken the fight to the terrorists abroad, we have not had to face them here at home. And the world has seen something that almost no one thought possible: More than seven years after September the 11th, there has not been another attack on American soil.
The decisions I made as your Commander-in-Chief have not always been popular. But the cause you have served has always been just and right. The missions you have carried out have always been necessary. And the work you have done has every bit -- has been every bit as courageous and idealistic as that of any generation that came before you.
In the years since the war on terror began, America's Armed Forces have led the largest military liberation since World War II. Because of your actions, more than 50 million Afghans and Iraqis have seen the chains of despotism broken -- and are living in the liberty that the Creator intended. The new wave of freedom in the Middle East has made America more secure at home -- because it is undermining the culture of tyranny that fosters radicalism.
There will become a day when your grandchildren will ask, what did you do during your time in uniform? And you'll be able to say: We made the military stronger. We made the world freer. And we made America more secure.
You'll be able to tell them the story of the first decade in the 21st century -- their early days of a generational struggle against terror and extremism. It is a story of a global coalition led by the United States that is dedicated to eliminating the forces of oppression and fear. It is the story of the Iraqi people proudly holding up ink-stained fingers to show that the threat of violence could not break their commitment to liberty. It is the story of young girls going to school in Afghanistan after years when educating a woman could be punished with beatings or imprisonment. It is the story about the character in men and women who volunteered to leave the comforts of home to defend freedom and keep our nation safe.
On behalf of the American people, I thank you for making that sacrifice. I know you have not shouldered the burdens of military life alone. You've had the support of strong and loving families to sustain you. And this morning, I want all of you and your families to hear your Commander-in-Chief loud and clear: We appreciate you, we love you, and we honor your service. (Applause.)
We also honor our wounded warriors -- and those who never returned home from the field of battle. In their sacrifices, we see one of the extraordinary legacies of our Armed Forces -- the willingness to give everything to secure safety at home and liberty abroad.
As the Admiral pointed out, we saw that selfless spirit in people like Petty Officer Michael Monsoor, a Navy SEAL who served in Iraq. In the fall of 2006, on a rooftop in Iraq, Mike threw himself onto a grenade in order to save the lives of his teammates. As Admiral Mullen mentioned, I had the honor of presenting Michael Monsoor's parents his posthumous Medal of Honor in the White House. On that day, I saw the deep sadness that is familiar to anyone who has lost a loved one in the line of duty. But I also saw the pride that comes with such noble sacrifice -- and the recognition that our freedom and our security only endure because of the acts of bravery like Michael Monsoor's.
That kind of courage, character, and devotion defines our Armed Forces. So this morning, I cannot accept your kind tribute unless I'm allowed to return the favor. To the men and women of the Army, the Navy, the Air Force, Marine Corps, Coast Guard, and all those who serve in the Department of Defense: You have the respect of a grateful nation that you have kept safe. You have the admiration of millions around the world who would have never tasted freedom without you. You have the undying love and respect of a man who has been proud to call himself your Commander-in-Chief.
Two weeks from today, Laura and I will take our final trip back to Texas -- or, as you Texans understand, back to the promised land. We have the honor of doing it onboard a 747 piloted by the United States Air Force -- Colonel Mark Tillman will be the lead pilot. This brings a fitting symmetry: The military brought me to Washington eight years ago -- and on January the 20th, the military is taking me home.
We will take with us many fond memories that we will cherish for the rest of our lives. We will always remember that you answered the call to serve when your nation needed you most. We will always remember that you did your duty with honor and dignity. And we will always remember the debt of gratitude that each of us who lives in freedom owes to each of you who has protected it.
May God bless you. And may God always bless the United States. (Applause.)
END 10:49 A.M. EST
2 Tribute to President Obama
Celebrities pay powerful, heartfelt tribute to President Obama
3 Remarks by the Federal President to the Troops in Baghdad
Al Faw Palace
Baghdad, Iraq
6:08 P.M. (Local)
4 Remarks by the Federal President on Memorial Day
REMARKS BY THE PRESIDENT ON MEMORIAL DAY
Memorial Amphitheater
Arlington National Cemetery
5 'He Just Does What He Thinks Is Right'
By Peggy Noonan
Let's start with the current one:
1 President Bush Attends Military Appreciation Parade with Chairman of the Joint of Staff Admiral Mike Mullen and Secretary of Defense Robert Gates
Fort Myer, Arlington, Virginia, January 6, 2009
10:21 A.M. EST
ADMIRAL MULLEN: President and Mrs. Bush; Mr. Vice President; Secretary and Mrs. Gates; members of the Cabinet; distinguished members of Congress; fellow members of the Joint Chiefs; members of the Armed Forces of the United States, past and present; ladies and gentlemen: Thank you for honoring us with your presence, and welcome to the grounds of the Old Guard, which both sanctify our past and herald our future.
On behalf of the 2.2 million uniform men and women of our Armed Forces, I am humbled to be able to formally thank President and Mrs. Bush for all they have done for our military and for our nation. More than 280,000 are walking point right now on the front lines. They stand tallest with us on this day, and it is right to thank them for making this celebration possible. (Applause.)
Truly it is not my privilege alone to tell the story of the Bush name -- a story that waits not only to be said in volumes, but one carried in the hearts of those patriots out there; a story which rushes with the oral history of life, warm with gratitude, flush with inspiration; a story best told by the voices of our service members themselves, who recently had an opportunity to place in a journal their thoughts to President and Mrs. Bush. Deborah and I passed that journal to the troops as we recently traveled around the world.
And so if you don't mind, Mr. President and Madam First Lady, I wanted to share a few handwritten lines from them.
"Mr. President, thank you and your family for your service. I am proud to serve under you, sir. You are awesome, and made a difference in the world." Staff Sergeant Ward, Queens, New York.
"Sir, nice to see that our President is still quick on his feet after eight years in office." (Laughter.) "Next time, pick up the shoe and throw it back." (Laughter and applause.) "We got your back." Master Sergeant Michael Frazier, United States Air Force.
"Sir, you truly set the standard to uphold the peace and our very way of life so our kids can grow up in a peaceful world. We will always stand tall, one great nation and one great state -- Texas." (Hoo-ah.) Sergeant First Class Claude Corey, Waco, Texas.
"Mrs. Bush, your class and dignity were an inspiration to us all." Lieutenant Colonel Scott Rainey, United States Army, Baghdad.
"Sir, thank you for your service, example and leadership. We have not faltered, we will not fail. With greatest respect and honor, we serve." Signed simply, Your Soldiers.
Those voices are an answering volley to you for your high regard and great respect for every single man and woman who serves this nation.
After this nation was attacked by a rising evil, the same evil which later murdered many others in places like London, Madrid, Islamabad and Mumbai, you quickly led us from the grip of fear to a serenity of purpose and unity of action -- serenity well beyond our dreams on September 12th, when all thought further attack was not only likely, but gravely imminent. And through your vision, a new national security was rendered to reach our enemies where they hid and trained and celebrated deadly crimes.
We sent our forces to hills and caves, alongside tribesman on horseback to root them out and hunt them down. We liberated Iraq from tyranny, now on the road to renewal. And we are shifting our focus to Afghanistan. We applauded as you, Mrs. Bush, worked for the freedom and education of young women, and gave hope to children scarred by hate. And always, sir, we felt your unmatched confidence in us, which only made us better.
Yes, we know these images well and we treasure them. But what wasn't always often an image was how you, as our First Family, fully embraced our military family with words of love and prayers of hope. For you have proven that how well we care for our wounded and the families of the fallen defines who and what we really are as a nation. You made it personal, and that has made all the difference.
With quiet dignity, you stretched out hands to those touched by loss, unimaginable loss that can never be made whole so they might be touched yet again.
There are many moments I will never forget, such as when you, Mr. President, presented Michael Monsoor's family with the Medal of Honor, and how in that very presidential setting you were so visibly moved. We will never know of all the private embraces and words of healing that you provided, but we do know the wholeness they created. For with every minute which melted into many gracious hours spent with our veterans and families, you gave something precious to us all -- gifts which will forever adorn our chords of memory.
Indeed, not far from these grounds where both Union and Confederate soldiers lay in white, tented hospitals, President Lincoln also walked through the lines and personally brought the meaning of hope and sacrifice to those straining to touch it from every side. So true today. A reporter who followed Lincoln wrote, "From the outset, he was the personal friend of every soldier he sent to the front, and somehow, every man seemed to know it." So true today.
In my 44 years of wearing this uniform, I have never seen the American public and our military as bonded in understanding, purpose, and spirit as I do right now. For this, Mr. President, we owe you our greatest gratitude.
Finally, sir, I want to personally thank you for your trust in me as Chairman of the Joint Chiefs, and, honestly, a trust I do not hold alone, a confidence every other uniformed member also holds so dear: the honor to serve and represent the American people.
Mr. President, you have selected a tremendous civilian leadership team in Secretary Gates and the Deputy Secretary, our former Secretary of the Navy, Gordon England. It is a great personal honor to serve alongside them.
Ladies and gentlemen, it is my pleasure to introduce to you the Secretary of Defense, the honorable Robert Gates. (Applause.)
SECRETARY GATES: Thank you, Admiral Mullen.
Some of you of a certain generation might remember a line from the John Wayne movie, "Red River" -- an epic story of a thousand-mile cattle drive across Texas. At one point, one of the characters says, "There's three times in a life -- in a man's life when he has the right to yell at the moon -- when he marries, when his children come, and when he finishes a job he had to be crazy to start." (Laughter.) Well, before President Bush finishes his job, I'm pleased to have this chance, on behalf of the United States military, to pay tribute to our Commander-in-Chief, and to give him proper thanks.
The legacy of George W. Bush in matters of war and peace began taking form more than a year before he first took the oath of office. In the fall of 1999, then Governor Bush gave a speech at the Citadel, titled, "A Period of Consequences." He observed that nearly a decade after the collapse of the Soviet Union, the United States military was still organized more for Cold War threats than for the challenges of a new century -- what he called an era of car-bombers and plutonium merchants and cyber-terrorists and drug cartels and unbalanced dictators, all the unconventional and invisible threats of new technologies and old hatreds.
On a bright Tuesday morning in September, eight months into President Bush's first term, we learned how dangerous and unpredictable this new era could be, and saw in the starkest terms how necessary was the task of transforming the American defense establishment to meet these challenges. It was a task inspired by the vision of President Bush, propelled by the energetic advocacy of Secretary Rumsfeld, informed by the experience of our senior military leaders, and accelerated by the urgent demands of two unconventional ground wars.
The result is an American military that has become more agile, lethal, and prepared to deal with the full spectrum of 21st century conflict -- and on a personal note, a force that is dramatically more deployable and expeditionary than when I last served in government 15 years ago.
Consider just a few of the historical changes: The Army has undergone its most significant restructuring in more than two generations, moving from a division-based to a modular brigades-based force. The Navy's fleet response plan has nearly doubled the number of strike carrier groups that can be surged in the first weeks of a crisis.
America's Special Forces have seen vast increases in budget, personnel, authorities, and most importantly, in capabilities in the campaign against terrorism worldwide. The number of unmanned aerial vehicles has grown some 40-fold, to more than 6,000, and we have seen a genuine revolution in the military's ability to fuse intelligence and operations.
Cold War basing arrangements in Germany, Korea and Japan have been modernized and sized to better reflect the security requirements of this century. New authorities and programs enable the military to build the capacity of allies and partners in cooperation with civilian agencies and organizations. And much, much more.
As this historical institutional shift was underway, President Bush led our military through two major conflicts in Iraq and Afghanistan, and a broader struggle against terrorist networks worldwide. He has not flinched when faced with difficult wartime decisions, including the momentous decision two years ago to send more troops into Iraq and revamp our strategy there.
Nor has the President ever hidden from the human consequences of his decisions. We have seen this in countless visits with the wounded at Walter Reed, Bethesda, and other military hospitals. And there are the meetings that he and the First Lady have held with thousands of family members of wounded and fallen troops. The President's deep regard and affection for our service members and their families has played out in ways big and small: Surprise visits to Iraq and Afghanistan to shake hands and high-five, and personal phone calls to those deployed over Thanksgiving, even the occasional chest bump to unwary cadets.
Some might remember the story of Staff Sergeant Michael McNaughton of Louisiana National Guard. In January 2003, he stepped on a landmine 30 miles north of Kabul, and lost his right leg. President Bush visited Michael at Walter Reed, and suggested they go for a run when he received his prosthetic. Months later, Michael and the President jogged around the South Lawn of the White House together. A single promise to a single soldier: A small act that reflects President Bush's commitment to care for and honor every member of the Armed Forces.
Mr. President, every day these volunteers execute your orders with courage and determination, facing down danger for the greater good of America. On behalf of more than two million men and women in uniform, we are deeply grateful for your leadership and service to America in a time of war.
Finally, and personally, I would like to thank you for granting me the opportunity to serve as Secretary of Defense. It is true that I have been known to grouse from time to time about coming back to Washington, D.C. Yet working every day with our soldiers, sailors, airmen and Marines has been the greatest honor of my life. And I will always owe you a debt of gratitude for that. I have appreciated your steadfast confidence and support over these past two years, and I wish you and Laura the very best as you begin the next phase of your lives.
Ladies and gentlemen, the President of the United States. (Applause.)
THE PRESIDENT: Thank you very much. At ease.
Mr. Secretary, thank you for the kind introduction -- and thank you for being an outstanding Secretary of Defense. (Applause.) For a while, we expected this event to be a joint retirement party. It didn't turn out that way, did it? (Laughter.) I am pleased that President-Elect Obama has asked you to stay on, and I am confident that you'll continue to be a strong leader as the Secretary of Defense. (Applause.)
And, Admiral Mullen, thank you for your strong advice, your clear thinking, and your years of service to our country. (Applause.)
I want to thank you for honoring Laura, who's been a fabulous First Lady. (Applause.) The military gave her the Distinguished Service Award -- a lot of friends from Texas think she deserved the Purple Heart. (Laughter.) I wish I'd have thought of the roses.
Mr. Vice President, I am proud to have served with you for eight years. The military has had no stauncher defender in my administration than Vice President Dick Cheney. (Applause.)
I thank members of the Cabinet, members of the administration, and former members of the Cabinet, especially the former Secretary of Defense, who did an outstanding job -- Secretary Don Rumsfeld. (Applause.)
I thank the current members of the Joint Chiefs and their families, as well as the former members of the Joint Chiefs and their families for joining us today. I want to thank those who wear the uniform; distinguished guests.
As my time in office winds down, the days bring a series of "lasts." I made my last overseas trip on Air Force One. I have delivered my final college commencement as President. And after much consideration, I pardoned my last Thanksgiving turkey. (Laughter.) These have all been wonderful experiences. But nothing compares to the honor of standing before you today, and addressing America's Armed Forces as your Commander-in-Chief.
Over the past eight years, I have seen the valor of the American military time and time again. I saw your valor on September the 11th, 2001, in service members rushing into smoke-filled corridors to save their colleagues at the Pentagon -- and in planes patrolling the skies above New York City and Washington. I saw your valor in the days after the attack, when Americans crowded into recruiting centers across our country, raised their hands to serve, and pledged to defend our people and our freedom.
I saw your valor in the forces who deployed to Afghanistan. Within weeks of September the 11th, you closed down the terrorist training camps, and you drove the Taliban from power. I saw your valor in the fearless troops who stormed across the Iraqi desert -- and destroyed a regime that threatened America. I saw your valor in battle-tested warriors who signed up for a second, or third, or fourth tour -- and made the surge in Iraq one of the great successes in America's military history.
The valor of America's Armed Forces have made our nation safer. Because you've taken the fight to the terrorists abroad, we have not had to face them here at home. And the world has seen something that almost no one thought possible: More than seven years after September the 11th, there has not been another attack on American soil.
The decisions I made as your Commander-in-Chief have not always been popular. But the cause you have served has always been just and right. The missions you have carried out have always been necessary. And the work you have done has every bit -- has been every bit as courageous and idealistic as that of any generation that came before you.
In the years since the war on terror began, America's Armed Forces have led the largest military liberation since World War II. Because of your actions, more than 50 million Afghans and Iraqis have seen the chains of despotism broken -- and are living in the liberty that the Creator intended. The new wave of freedom in the Middle East has made America more secure at home -- because it is undermining the culture of tyranny that fosters radicalism.
There will become a day when your grandchildren will ask, what did you do during your time in uniform? And you'll be able to say: We made the military stronger. We made the world freer. And we made America more secure.
You'll be able to tell them the story of the first decade in the 21st century -- their early days of a generational struggle against terror and extremism. It is a story of a global coalition led by the United States that is dedicated to eliminating the forces of oppression and fear. It is the story of the Iraqi people proudly holding up ink-stained fingers to show that the threat of violence could not break their commitment to liberty. It is the story of young girls going to school in Afghanistan after years when educating a woman could be punished with beatings or imprisonment. It is the story about the character in men and women who volunteered to leave the comforts of home to defend freedom and keep our nation safe.
On behalf of the American people, I thank you for making that sacrifice. I know you have not shouldered the burdens of military life alone. You've had the support of strong and loving families to sustain you. And this morning, I want all of you and your families to hear your Commander-in-Chief loud and clear: We appreciate you, we love you, and we honor your service. (Applause.)
We also honor our wounded warriors -- and those who never returned home from the field of battle. In their sacrifices, we see one of the extraordinary legacies of our Armed Forces -- the willingness to give everything to secure safety at home and liberty abroad.
As the Admiral pointed out, we saw that selfless spirit in people like Petty Officer Michael Monsoor, a Navy SEAL who served in Iraq. In the fall of 2006, on a rooftop in Iraq, Mike threw himself onto a grenade in order to save the lives of his teammates. As Admiral Mullen mentioned, I had the honor of presenting Michael Monsoor's parents his posthumous Medal of Honor in the White House. On that day, I saw the deep sadness that is familiar to anyone who has lost a loved one in the line of duty. But I also saw the pride that comes with such noble sacrifice -- and the recognition that our freedom and our security only endure because of the acts of bravery like Michael Monsoor's.
That kind of courage, character, and devotion defines our Armed Forces. So this morning, I cannot accept your kind tribute unless I'm allowed to return the favor. To the men and women of the Army, the Navy, the Air Force, Marine Corps, Coast Guard, and all those who serve in the Department of Defense: You have the respect of a grateful nation that you have kept safe. You have the admiration of millions around the world who would have never tasted freedom without you. You have the undying love and respect of a man who has been proud to call himself your Commander-in-Chief.
Two weeks from today, Laura and I will take our final trip back to Texas -- or, as you Texans understand, back to the promised land. We have the honor of doing it onboard a 747 piloted by the United States Air Force -- Colonel Mark Tillman will be the lead pilot. This brings a fitting symmetry: The military brought me to Washington eight years ago -- and on January the 20th, the military is taking me home.
We will take with us many fond memories that we will cherish for the rest of our lives. We will always remember that you answered the call to serve when your nation needed you most. We will always remember that you did your duty with honor and dignity. And we will always remember the debt of gratitude that each of us who lives in freedom owes to each of you who has protected it.
May God bless you. And may God always bless the United States. (Applause.)
END 10:49 A.M. EST
2 Tribute to President Obama
Tuesday, January 20, 2009
Celebrities pay powerful, heartfelt tribute to President Obama
3 Remarks by the Federal President to the Troops in Baghdad
Tuesday, April 7, 2009
Al Faw Palace
Baghdad, Iraq
6:08 P.M. (Local)
4 Remarks by the Federal President on Memorial Day
Monday, May 25, 2009
REMARKS BY THE PRESIDENT ON MEMORIAL DAY
Memorial Amphitheater
Arlington National Cemetery
5 'He Just Does What He Thinks Is Right'
Wall Street Journal, Saturday, December 26, 2009
By Peggy Noonan
Securing U.S. Objectives in North Korea: A Memo to President-elect Obama
Securing U.S. Objectives in North Korea: A Memo to President-elect Obama. By Bruce Klingner and Walter Lohman
Heritage, January 6, 2009Special Report #37
I have no illusions about North Korea, and we must be firm and unyielding in our commitment to a non-nuclear Korean peninsula.
--Barack Obama, Chosun Ilbo, February 15, 2008[1]
President-elect Obama, during the campaign you stressed the need for "sustained, direct, and aggressive diplomacy" with North Korea in order to achieve "the complete and verifiable elimination of all of North Korea's nuclear weapons programs, as well as its past proliferation activities, including with Syria."[2] When North Korea provided data on its nuclear weapons programs, you stated that:
[S]anctions are a critical part of our leverage to pressure North Korea to act. They should only be lifted based on performance. If the North Koreans do not meet their obligations, we should move quickly to re-impose sanctions that have been waived, and consider new restrictions going forward.[3]
Yet, after National Security Advisor Stephen Hadley admitted that North Korea's data declaration "was not the complete and correct declaration that we had hoped,"[4] you did not advocate re-imposing any sanctions on North Korea.
You also stated that a strict verification protocol was an absolute prerequisite for removing North Korea from the list of state sponsors of terrorism, as well as for making further progress in the nuclear negotiations. You called for "a clear understanding that if North Korea fails to follow through there will be immediate consequences." Specifically, "If North Korea refuses to permit robust verification, we should lead all members of the Six Party talks in suspending energy assistance, re-imposing sanctions that have recently been waived, and considering new restrictions."[5]
It has become evident that the verification protocol has significant shortcomings and does not apply to Pyongyang's uranium-based weapons program or proliferation activities. North Korea declared on November 12 that no scientific sampling of Pyongyang's nuclear programs will be allowed, that inspections will be confined to the Yongbyon facility, and that divergence "even by one word, [would] lead inevitably to war."[6] Yet you have not altered your description of North Korea's removal from the terrorism list as a "modest step forward" and have not called for any slowdown in negotiations.
You have blamed the Bush Administration's initial hard-line policy for allowing "North Korea to expand its nuclear arsenal as it resumed reprocessing of plutonium and tested a nuclear device."[7] But this ignores North Korea's role in instigating the crisis. Pyongyang began violating its international denuclearization commitments in the benign threat environment of the 1990s during the administrations of U.S. President William J. Clinton and South Korean President Kim Dae-jung. At the time, both presidents were intent on engaging North Korea and providing diplomatic and economic benefits in return for non-threatening behavior by Pyongyang.
During the past two years, the Bush Administration has engaged in the direct bilateral diplomacy with Pyongyang that you advocate, but North Korea's intransigence, noncompliance, and brinksmanship have continued. Nor--three years after Pyongyang agreed to do so--have diplomats yet begun the real negotiations to discuss the elimination of nuclear weapons. This strategy has resulted in the abandonment of important principles, including enforcement of international law and attaining sufficient verification measures.
North Korean denuclearization is a critically important goal, but how it is attained is equally important. Being excessively eager to compromise not only rewards abhorrent behavior, but also undermines the negotiating leverage that is necessary to get Pyongyang to abandon its nuclear weapons. An engagement policy toward North Korea should be based on several key negotiating precepts:
Insist that North Korea fulfill its existing requirements. Pyongyang should provide full disclosure of its plutonium-based and uranium-based nuclear weapons programs before receiving the entirety of Phase Two benefits. Required information includes all nuclear production, weaponization, and test facilities; the number of nuclear weapons produced; and the export (proliferation) of nuclear technology, materials, and equipment to Syria, Iran, and any other countries. Until North Korea fully complies, the Six-Party-Talks nations should not provide all of the Phase Two benefits.
Implement a rigorous and intrusive verification mechanism. The U.S. should insist on verification requirements as called for under U.N. Resolution 1718; North Korea's accession to the Non-Proliferation Treaty (NPT) and International Atomic Energy Agency (IAEA) Safeguards, as Pyongyang promised to do at an early date in September 2005; and observance of the precedence of previous U.S. arms control treaties. The verification protocol should include short-notice challenge inspections of non-declared facilities for the duration of the agreement to redress any questions about North Korea's nuclear weapons programs.
Require more detailed follow-on joint statements. North Korea has used the vagaries of existing Six-Party-Talks agreements to exploit loopholes and defer full compliance. The U.S. should insist that follow-on agreements explicitly define the linkages between North Korean steps toward denuclearization and the economic and diplomatic benefits to be provided.
Use all of the instruments of national power (diplomatic, informational, military, and economic) in a coordinated, integrated strategy. While it is important to continue negotiations to seek a diplomatic resolution to the North Korean nuclear problem, the U.S. and its allies should simultaneously use outside pressure to influence North Korea's negotiating behavior.
Realize that talking is not progress. The U.S. should favor resolving issues rather than repeatedly lowering the bar simply to maintain the negotiating process. North Korea should not be treated differently from every other country in the world. You should insist that North Korea abide by international standards of behavior and not be allowed to carve out another "special status" within the NPT and IAEA Safeguards.
Define redlines and their consequences. The Bush Administration's abandonment of its stated resolve to impose costs on North Korea for proliferating nuclear technology to Syria undermined U.S. credibility and sent a dangerous signal to other potential proliferators.
Establish deadlines with consequences for failure to meet them. North Korea must not be allowed to drag out the Six-Party Talks indefinitely in order to achieve de facto international acceptance as a nuclear weapons state. Repeatedly deferring difficult issues in response to Pyongyang's intransigence is not an effective way to achieve U.S. strategic objectives.
In addition to these heightened standards for negotiating with North Korea, the U.S. should deepen its relations with South Korea to retain its influence in the region and ensure that U.S. security interests are safeguarded. The first step should be to extend the current relationship from a primarily military one to one that includes bilateral economic ties. Government and independent studies overwhelmingly conclude that the Korea-U.S. free trade agreement (KORUS FTA) will provide clear economic benefits to the United States, but it will also strengthen ties on the Korean peninsula and ensure that the U.S. maintains a strategic ally in dealing with North Korea.
Conclusion
You have stated the need for an aggressive policy toward North Korea and recognize the threat that it poses. But while denuclearization is critical, the measures used to achieve it are just as critical. You must pursue a policy that does not reward blatant disobedience and disregard for agreed-to measures and that does not compromise on something that is so fundamental to U.S. security.
Specifically, you should abide by strict negotiation standards and not reward North Korea when it breaks them. Additionally, you should deepen ties with South Korea, our key ally on the peninsula. The KORUS agreement will bolster this critically important alliance and continue to build the strategic relationship that is crucial to protecting U.S. security interests and ensuring continued U.S. influence in the region.
Bruce Klingner is Senior Research Fellow for Northeast Asia in, and Walter Lohman is Director of, the Asian Studies Center at The Heritage Foundation.
References
[1] "Obama Has Misgivings About Korea-US FTA," Chosun Ilbo, February 15, 2008.
[2] "Barack Obama and Joe Biden's Plan to Renew U.S. Leadership in Asia," at http://obama.3cdn.net/ef3d1c1c34cf996edf_s3w2mv24t.pdf (December 8, 2008).
[3] Jonathan Ellis, "McCain and Obama on North Korea," The New York Times, political blog, June 26, 2008, at http://thecaucus.blogs.nytimes.com/2008/06/26/mccain-and-obama-on-north-korea (December 8, 2008).
[4] Press release, "Press Briefing by National Security Advisor Stephen Hadley on the Upcoming United Nations General Assembly," The White House, September 20, 2008, at http://www.whitehouse.gov/news/releases/2008/09/20080920-2.html (December 8, 2008).
[5] "Candidate Statements on North Korea," RealClearPolitics, at http://realclearpolitics.blogs.time.com/2008/10/11/candidate_statements_on_north (December 8, 2008).
[6] Choe Sang-hun, "North Korea to Bar Taking of Nuclear Samples," International Herald Tribune, November 12, 2008.
[7] "Obama Has Misgivings About Korea-US FTA."
Heritage, January 6, 2009Special Report #37
I have no illusions about North Korea, and we must be firm and unyielding in our commitment to a non-nuclear Korean peninsula.
--Barack Obama, Chosun Ilbo, February 15, 2008[1]
President-elect Obama, during the campaign you stressed the need for "sustained, direct, and aggressive diplomacy" with North Korea in order to achieve "the complete and verifiable elimination of all of North Korea's nuclear weapons programs, as well as its past proliferation activities, including with Syria."[2] When North Korea provided data on its nuclear weapons programs, you stated that:
[S]anctions are a critical part of our leverage to pressure North Korea to act. They should only be lifted based on performance. If the North Koreans do not meet their obligations, we should move quickly to re-impose sanctions that have been waived, and consider new restrictions going forward.[3]
Yet, after National Security Advisor Stephen Hadley admitted that North Korea's data declaration "was not the complete and correct declaration that we had hoped,"[4] you did not advocate re-imposing any sanctions on North Korea.
You also stated that a strict verification protocol was an absolute prerequisite for removing North Korea from the list of state sponsors of terrorism, as well as for making further progress in the nuclear negotiations. You called for "a clear understanding that if North Korea fails to follow through there will be immediate consequences." Specifically, "If North Korea refuses to permit robust verification, we should lead all members of the Six Party talks in suspending energy assistance, re-imposing sanctions that have recently been waived, and considering new restrictions."[5]
It has become evident that the verification protocol has significant shortcomings and does not apply to Pyongyang's uranium-based weapons program or proliferation activities. North Korea declared on November 12 that no scientific sampling of Pyongyang's nuclear programs will be allowed, that inspections will be confined to the Yongbyon facility, and that divergence "even by one word, [would] lead inevitably to war."[6] Yet you have not altered your description of North Korea's removal from the terrorism list as a "modest step forward" and have not called for any slowdown in negotiations.
You have blamed the Bush Administration's initial hard-line policy for allowing "North Korea to expand its nuclear arsenal as it resumed reprocessing of plutonium and tested a nuclear device."[7] But this ignores North Korea's role in instigating the crisis. Pyongyang began violating its international denuclearization commitments in the benign threat environment of the 1990s during the administrations of U.S. President William J. Clinton and South Korean President Kim Dae-jung. At the time, both presidents were intent on engaging North Korea and providing diplomatic and economic benefits in return for non-threatening behavior by Pyongyang.
During the past two years, the Bush Administration has engaged in the direct bilateral diplomacy with Pyongyang that you advocate, but North Korea's intransigence, noncompliance, and brinksmanship have continued. Nor--three years after Pyongyang agreed to do so--have diplomats yet begun the real negotiations to discuss the elimination of nuclear weapons. This strategy has resulted in the abandonment of important principles, including enforcement of international law and attaining sufficient verification measures.
North Korean denuclearization is a critically important goal, but how it is attained is equally important. Being excessively eager to compromise not only rewards abhorrent behavior, but also undermines the negotiating leverage that is necessary to get Pyongyang to abandon its nuclear weapons. An engagement policy toward North Korea should be based on several key negotiating precepts:
Insist that North Korea fulfill its existing requirements. Pyongyang should provide full disclosure of its plutonium-based and uranium-based nuclear weapons programs before receiving the entirety of Phase Two benefits. Required information includes all nuclear production, weaponization, and test facilities; the number of nuclear weapons produced; and the export (proliferation) of nuclear technology, materials, and equipment to Syria, Iran, and any other countries. Until North Korea fully complies, the Six-Party-Talks nations should not provide all of the Phase Two benefits.
Implement a rigorous and intrusive verification mechanism. The U.S. should insist on verification requirements as called for under U.N. Resolution 1718; North Korea's accession to the Non-Proliferation Treaty (NPT) and International Atomic Energy Agency (IAEA) Safeguards, as Pyongyang promised to do at an early date in September 2005; and observance of the precedence of previous U.S. arms control treaties. The verification protocol should include short-notice challenge inspections of non-declared facilities for the duration of the agreement to redress any questions about North Korea's nuclear weapons programs.
Require more detailed follow-on joint statements. North Korea has used the vagaries of existing Six-Party-Talks agreements to exploit loopholes and defer full compliance. The U.S. should insist that follow-on agreements explicitly define the linkages between North Korean steps toward denuclearization and the economic and diplomatic benefits to be provided.
Use all of the instruments of national power (diplomatic, informational, military, and economic) in a coordinated, integrated strategy. While it is important to continue negotiations to seek a diplomatic resolution to the North Korean nuclear problem, the U.S. and its allies should simultaneously use outside pressure to influence North Korea's negotiating behavior.
Realize that talking is not progress. The U.S. should favor resolving issues rather than repeatedly lowering the bar simply to maintain the negotiating process. North Korea should not be treated differently from every other country in the world. You should insist that North Korea abide by international standards of behavior and not be allowed to carve out another "special status" within the NPT and IAEA Safeguards.
Define redlines and their consequences. The Bush Administration's abandonment of its stated resolve to impose costs on North Korea for proliferating nuclear technology to Syria undermined U.S. credibility and sent a dangerous signal to other potential proliferators.
Establish deadlines with consequences for failure to meet them. North Korea must not be allowed to drag out the Six-Party Talks indefinitely in order to achieve de facto international acceptance as a nuclear weapons state. Repeatedly deferring difficult issues in response to Pyongyang's intransigence is not an effective way to achieve U.S. strategic objectives.
In addition to these heightened standards for negotiating with North Korea, the U.S. should deepen its relations with South Korea to retain its influence in the region and ensure that U.S. security interests are safeguarded. The first step should be to extend the current relationship from a primarily military one to one that includes bilateral economic ties. Government and independent studies overwhelmingly conclude that the Korea-U.S. free trade agreement (KORUS FTA) will provide clear economic benefits to the United States, but it will also strengthen ties on the Korean peninsula and ensure that the U.S. maintains a strategic ally in dealing with North Korea.
Conclusion
You have stated the need for an aggressive policy toward North Korea and recognize the threat that it poses. But while denuclearization is critical, the measures used to achieve it are just as critical. You must pursue a policy that does not reward blatant disobedience and disregard for agreed-to measures and that does not compromise on something that is so fundamental to U.S. security.
Specifically, you should abide by strict negotiation standards and not reward North Korea when it breaks them. Additionally, you should deepen ties with South Korea, our key ally on the peninsula. The KORUS agreement will bolster this critically important alliance and continue to build the strategic relationship that is crucial to protecting U.S. security interests and ensuring continued U.S. influence in the region.
Bruce Klingner is Senior Research Fellow for Northeast Asia in, and Walter Lohman is Director of, the Asian Studies Center at The Heritage Foundation.
References
[1] "Obama Has Misgivings About Korea-US FTA," Chosun Ilbo, February 15, 2008.
[2] "Barack Obama and Joe Biden's Plan to Renew U.S. Leadership in Asia," at http://obama.3cdn.net/ef3d1c1c34cf996edf_s3w2mv24t.pdf (December 8, 2008).
[3] Jonathan Ellis, "McCain and Obama on North Korea," The New York Times, political blog, June 26, 2008, at http://thecaucus.blogs.nytimes.com/2008/06/26/mccain-and-obama-on-north-korea (December 8, 2008).
[4] Press release, "Press Briefing by National Security Advisor Stephen Hadley on the Upcoming United Nations General Assembly," The White House, September 20, 2008, at http://www.whitehouse.gov/news/releases/2008/09/20080920-2.html (December 8, 2008).
[5] "Candidate Statements on North Korea," RealClearPolitics, at http://realclearpolitics.blogs.time.com/2008/10/11/candidate_statements_on_north (December 8, 2008).
[6] Choe Sang-hun, "North Korea to Bar Taking of Nuclear Samples," International Herald Tribune, November 12, 2008.
[7] "Obama Has Misgivings About Korea-US FTA."
David Boaz on Blagojevich and corruption in politics
Politics and Corruption, Together Again. By David Boaz
This article appeared in the Fort Worth Star-Telegram on January 6, 2009.
Illinois Gov. Rod Blagojevich is the new poster boy for political corruption, but he is really just the most recent reminder of the fundamentally grubby and corrupt nature of politics. In Illinois alone, three recent governors — liberal "reformers" Otto Kerner and Dan Walker and career politician George Ryan — have preceded Blagojevich in making the journey from the statehouse to the big house.
Cases like these remind us of the fundamental nature of politics. Blagojevich showed less intelligence and more vulgarity than most politicians, but trading taxpayer money for personal or political gain is the common coin of politicians. In his first post-indictment news conference, Blagojevich himself strongly hinted that he will defend himself with the notion that swapping appointments and favors is merely stock in trade for politicians of the upper echelon.
That leads to a virtually inescapable conclusion: The best way to limit such tawdry quid pro quo is to limit the power of politicians and of government.
Stories of ambitious men being corrupted by the political game have been plentiful since my youth. It amazes me, here amid many calls for the government to take an ever more active role in our country’s doings, that so many of these cautionary tales seem to be forgotten.
Spiro T. Agnew got his start on the Baltimore County zoning board, which is probably evidence enough that he was a crook from the start. He went on to serve as Baltimore County executive, governor of Maryland and vice president under President Richard M. Nixon, taking bribes in return for government contracts the whole way through.
Agnew pleaded no contest to one count of tax evasion and resigned the vice presidency. But one of the federal attorneys on the case said: "I’ve never seen a stronger extortion case. The man is a crook."
When I was a college student in Nashville, Rep. Ray Blanton was elected governor of Tennessee. Four years later, he lost his bid for re-election to Lamar Alexander, who now serves in the U.S. Senate. On Jan. 16, 1979, Alexander was suddenly sworn in as governor, three days before his scheduled inauguration, to prevent Blanton from commuting the sentences of any more prisoners.
Blanton accelerated his sales of pardons after he was defeated for re-election and realized his time to profit was drawing short. Blagojevich is accused of speeding up his efforts to trade favors for campaign funds before a Dec. 31 change in the campaign finance laws.
Blanton had ordered commutations or pardons for 24 convicted murderers and 28 other prisoners before his signing frenzy ended with Alexander’s surprise swearing-in. Those 52 last-minute pardons came a month after three state employees, including two members of his office legal staff, were arrested by the FBI and charged with extortion and conspiracy to sell pardons, paroles and commutations. As with Blagojevich, the knowledge that an FBI investigation was under way just made Blanton double down.
The Blanton pardons were recalled to public memory when another Southern politician created a pardon scandal as he left office in 2001. President Bill Clinton’s pardons differed from Blanton’s in many ways. Blanton’s aides apparently sold pardons and commutations for straight cash on the barrelhead, though the governor himself did not pocket any of the loot. Blanton commuted the sentences of convicted murderers, some of whom had served only a few years.
Clinton’s last-minute pardons involved a broader range of offenses against decency and good sense. His notorious pardons for Marc Rich and Pincus Green, who had fled the country and never faced trial, overshadowed many of the other outrages on the morning of Jan. 20.
In his rush to the door, Clinton pardoned his brother; people associated with Whitewater and related Clinton scandals; his former Cabinet secretary Henry Cisneros and Cisneros’ former mistress; several people convicted of bribery involving another Clinton Cabinet member; former Rep. Mel Reynolds, convicted of wire fraud, bank fraud and sex with an underage girl; a Clinton fundraiser who had embezzled clients’ money; supporters of Hillary Clinton’s Senate bid; a Democratic party activist who had embezzled money intended for the homeless; several people smart enough to hire former Clinton staffers as their lawyers; a group of female leftist bombers, one of whom told the media that she was excited about resuming her activism; and a convicted defrauder then under investigation in yet another money-laundering scheme.
FBI investigations and anti-bribery laws will never take the corruption out of politics. The best way to limit it is to keep government small, with few jobs to fill and limited money to spend.
This article appeared in the Fort Worth Star-Telegram on January 6, 2009.
Illinois Gov. Rod Blagojevich is the new poster boy for political corruption, but he is really just the most recent reminder of the fundamentally grubby and corrupt nature of politics. In Illinois alone, three recent governors — liberal "reformers" Otto Kerner and Dan Walker and career politician George Ryan — have preceded Blagojevich in making the journey from the statehouse to the big house.
Cases like these remind us of the fundamental nature of politics. Blagojevich showed less intelligence and more vulgarity than most politicians, but trading taxpayer money for personal or political gain is the common coin of politicians. In his first post-indictment news conference, Blagojevich himself strongly hinted that he will defend himself with the notion that swapping appointments and favors is merely stock in trade for politicians of the upper echelon.
That leads to a virtually inescapable conclusion: The best way to limit such tawdry quid pro quo is to limit the power of politicians and of government.
Stories of ambitious men being corrupted by the political game have been plentiful since my youth. It amazes me, here amid many calls for the government to take an ever more active role in our country’s doings, that so many of these cautionary tales seem to be forgotten.
Spiro T. Agnew got his start on the Baltimore County zoning board, which is probably evidence enough that he was a crook from the start. He went on to serve as Baltimore County executive, governor of Maryland and vice president under President Richard M. Nixon, taking bribes in return for government contracts the whole way through.
Agnew pleaded no contest to one count of tax evasion and resigned the vice presidency. But one of the federal attorneys on the case said: "I’ve never seen a stronger extortion case. The man is a crook."
When I was a college student in Nashville, Rep. Ray Blanton was elected governor of Tennessee. Four years later, he lost his bid for re-election to Lamar Alexander, who now serves in the U.S. Senate. On Jan. 16, 1979, Alexander was suddenly sworn in as governor, three days before his scheduled inauguration, to prevent Blanton from commuting the sentences of any more prisoners.
Blanton accelerated his sales of pardons after he was defeated for re-election and realized his time to profit was drawing short. Blagojevich is accused of speeding up his efforts to trade favors for campaign funds before a Dec. 31 change in the campaign finance laws.
Blanton had ordered commutations or pardons for 24 convicted murderers and 28 other prisoners before his signing frenzy ended with Alexander’s surprise swearing-in. Those 52 last-minute pardons came a month after three state employees, including two members of his office legal staff, were arrested by the FBI and charged with extortion and conspiracy to sell pardons, paroles and commutations. As with Blagojevich, the knowledge that an FBI investigation was under way just made Blanton double down.
The Blanton pardons were recalled to public memory when another Southern politician created a pardon scandal as he left office in 2001. President Bill Clinton’s pardons differed from Blanton’s in many ways. Blanton’s aides apparently sold pardons and commutations for straight cash on the barrelhead, though the governor himself did not pocket any of the loot. Blanton commuted the sentences of convicted murderers, some of whom had served only a few years.
Clinton’s last-minute pardons involved a broader range of offenses against decency and good sense. His notorious pardons for Marc Rich and Pincus Green, who had fled the country and never faced trial, overshadowed many of the other outrages on the morning of Jan. 20.
In his rush to the door, Clinton pardoned his brother; people associated with Whitewater and related Clinton scandals; his former Cabinet secretary Henry Cisneros and Cisneros’ former mistress; several people convicted of bribery involving another Clinton Cabinet member; former Rep. Mel Reynolds, convicted of wire fraud, bank fraud and sex with an underage girl; a Clinton fundraiser who had embezzled clients’ money; supporters of Hillary Clinton’s Senate bid; a Democratic party activist who had embezzled money intended for the homeless; several people smart enough to hire former Clinton staffers as their lawyers; a group of female leftist bombers, one of whom told the media that she was excited about resuming her activism; and a convicted defrauder then under investigation in yet another money-laundering scheme.
FBI investigations and anti-bribery laws will never take the corruption out of politics. The best way to limit it is to keep government small, with few jobs to fill and limited money to spend.
Monday, January 5, 2009
Michael Ledeen On Leon Panetta as CIA Chief
Panetta to CIA, by Michael Ledeen
The Corner/NRO, Jan 05, 2009, 05:23 PM
In the very early days of the Bush administration, Karl Rove asked a Washington policy wonk what personnel changes he'd recommend to newly arrived George W. The wonk said "there is one matter of life and death: he must replace Tenet at CIA and put in one of his own people, someone he absolutely trusts." Rove said "well, good luck with that one." Obama knows better, and he's putting Leon Panetta in Langley.
I always liked Panetta. He served in the Army and is openly proud of it. He seems to be a good lawyer (oxymoronic though it may seem). He's a good manager. And he's going to watch Obama's back at a place that's full of stilettos and a track record for attempted presidential assassination second to none. But Italians know all about political assassination; you may remember Julius Caesar. Or Aldo Moro. The self-proclaimed cognoscenti will deride his lack of "spycraft," and he's never worked in the intel bureaucracy or, for that matter, in foreign policy or national security. But he's been chief of staff, which involved all that stuff.
I think it's a smart move.
The Corner/NRO, Jan 05, 2009, 05:23 PM
In the very early days of the Bush administration, Karl Rove asked a Washington policy wonk what personnel changes he'd recommend to newly arrived George W. The wonk said "there is one matter of life and death: he must replace Tenet at CIA and put in one of his own people, someone he absolutely trusts." Rove said "well, good luck with that one." Obama knows better, and he's putting Leon Panetta in Langley.
I always liked Panetta. He served in the Army and is openly proud of it. He seems to be a good lawyer (oxymoronic though it may seem). He's a good manager. And he's going to watch Obama's back at a place that's full of stilettos and a track record for attempted presidential assassination second to none. But Italians know all about political assassination; you may remember Julius Caesar. Or Aldo Moro. The self-proclaimed cognoscenti will deride his lack of "spycraft," and he's never worked in the intel bureaucracy or, for that matter, in foreign policy or national security. But he's been chief of staff, which involved all that stuff.
I think it's a smart move.
Common perception that trade is, at best, a mixed blessing
Imports as Inputs. By Doug Karmin
Progressive Policy Institute, January 5, 2009
Introduction
With the U.S. economy in crisis, and the dollar weakening against most major currencies, trade has become the only bright spot in an otherwise bleak economic landscape. Indeed, exports have grown over 10 percent in 2008, while a decline in Americans' disposable incomes has caused imports to shrink for the first time in years -- bringing our trade deficit down with it.1
Yet while the net impact of trade on the U.S. economy is now at its most positive, helping prevent the current crisis from becoming even worse, there is still a common perception that trade is, at best, a mixed blessing.
After all, we like having expanded markets to sell our products and services, but we don't always like to accept that other countries will want to sell theirs to us. When it comes to trade, we just hope that the good somehow outweighs the bad.
This assumption that all imports are bad because they compete against U.S.-based companies is flawed, and needs to be examined. Normally, the best anyone can say for imports is that they allow consumers to buy things for less and therefore improve our standard of living. What is largely overlooked is that imported inputs -- the components used by U.S.-based companies to produce their finished goods -- are essential for our economy to remain competitive.
Imports in the Aggregate
It's surprising how little is mentioned about the linkage between foreign inputs and our competitiveness given how dependent U.S. producers have become on global supply chains.2 Census Bureau data for 2007 show that 47 percent of imports came from related-party companies, or cases when the U.S. importer was a subsidiary or parent company of the foreign exporter.3
In other words, almost half of all imported goods are not the traditional case of a foreign company selling directly to U.S. consumers, but rather are part of an intra-company global supply chain. Furthermore, almost 30 percent of all goods imported by U.S. affiliates of foreign companies were destined for further manufacturing within the United States.4 In cases such as these, where the importing company is using foreign inputs to build finished goods, restricting imports would directly affect U.S. production and employment.
Indeed, it's difficult to find any large U.S. manufacturer that doesn't depend on some foreign inputs. To name just a few examples:
Unintended Consequences of So-Called Safeguards
Perhaps the clearest way to illustrate how much our economy has become dependent on high-quality, low-cost inputs from abroad is to look at what happens when that supply is temporarily disrupted.
A very high-profile example of this occurred in 2002, when President Bush invoked a "safeguard" to protect U.S. steel producers. Tariffs ranging from 8 percent to 30 percent were increased on foreign steel in March 2002, with an original plan of holding them in place until 2005 so that U.S. steel companies could adjust to a surge in competition from low-cost imports.8
While U.S. steel companies undoubtedly benefited from this reduction in competition, what hadn't been fully anticipated was the negative impact on U.S.-based steel users. Manufacturers of steel-dependent goods like machine tools or auto parts suddenly saw their costs spike overnight.
Several studies have shown that more U.S. jobs were lost as a result of the tariffs than were saved, and even Bush allies like Sen. Lamar Alexander (R-Tenn.) concluded the tariffs had "shifted more steel-consuming jobs overseas than exist in the steel-producing industry in the United States."9
Eventually, the Bush administration caved in to pressure from steel users, as well as the threat of retaliation from the impacted foreign nations, and lifted the safeguard in December 2003, more than a year earlier than originally planned. The lesson was clear: the interdependence of U.S. producers with foreign suppliers has made it too complicated to easily protect one domestic industry without harming many others.
Conclusion
None of this is to say that imports don't affect U.S. jobs. We must recognize that some imports do replace domestic production -- and that, by doing so, they cost some Americans their livelihoods. For these reasons, it's critical that public policy be designed to both prepare workers for the demands of 21st century competition through efforts to improve worker productivity (including through training and education, as well as better infrastructure). We also need policies that will help cushion the blow for those who do lose their jobs. This should include effective unemployment and wage insurance, as well as universal and portable health coverage.
But the idea that jobs can be saved simply by raising barriers to imports is misguided, especially when those imports are inputs used for domestic production. As the steel example shows, even the best intentions to protect one set of U.S. companies will have costs and competitive effects on others, even ignoring the foreign retaliation that often hits unrelated U.S. industries.
Especially in this era of heightened globalization, in which technology can enable companies to move production and employment virtually anywhere in the world, it's imperative that U.S. companies and workers be as competitive as possible. One way of achieving this is to ensure that U.S.-based employers have access to the inputs they need, including those that arrive from overseas. Otherwise, we risk watching jobs cross the water -- in the opposite direction.
Endnotes
1. See Bureau of Economic Analysis, U.S. Department of Commerce, news release from September 26, 2008 for most current data on export and import growth.http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htmFor a discussion on the inverse relationship between import growth and unemployment, see "The Facts on Trade Deficits and Jobs," by Doug Karmin. Progressive Policy Institute, October 3, 2007.
2. For a less serious look at the impact of restricting inputs on competitiveness, see "GATT confusing? Canadian football provides some answers" by Doug Karmin in The Hill (November 30, 1994). It describes how the Canadian football league tilted the competitive balance against its own teams by restricting the number of foreign players allowed on Canadian teams while allowing U.S. teams to hire the best available talent.
3. Census Bureau, U.S. Department of Commerce, "U.S. Goods Trade: Imports & Exports by Related Parties 2007." May 9, 2008.
4. Bureau of Economic Analysis, U.S. Department of Commerce, Operations of Multinational Companies, Product Guide for Foreign Direct Investment in the U.S., 2002 Benchmark Survey, "U.S. Imports of Goods Shipped to Affiliates and Intended Use." Most recent data is for 2002, and it shows that U.S. affiliates imported $95 billion in goods destined for further manufacturing out of a total of $335 billion in imports (28.3%). Intended use of imports only exists for U.S. affiliates.
5. "Lack of Hybrids-Parts Suppliers Could Hurt U.S. Auto Makers," by Norihiko Shirouzu. The Wall Street Journal, August 16, 2004. The need for importing batteries for hybrid cars has continued since Ford's initial launch of their hybrid SUV. See "Hybrid Cars' Foreign Dependence," by Jim Ostroff. The Kiplinger Letter, September 9, 2008.
6. "Boeing, too, uses foreign parts," by Joelle Tessler. The Associated Press, March 7, 2008. It was also reported in September 2007 in China's "People's Daily Online" that Boeing's Vice President of China Operations stated that China had become one of Boeing's largest foreign suppliers with $2.5 billion in active contracts.
7. "Living in Dell Time," by Bill Breen. Fast Company.com, November 2004.
8. Remarks by Robert B. Zoellick, United States Trade Representative, on the decision by the president to terminate steel safeguards, December 4, 2003.
9. "Steel Tariffs Appear to Have Backfired on Bush," by Mike Allen and Jonathan Weisman. The Washington Post, September 19, 2003.
Progressive Policy Institute, January 5, 2009
Introduction
With the U.S. economy in crisis, and the dollar weakening against most major currencies, trade has become the only bright spot in an otherwise bleak economic landscape. Indeed, exports have grown over 10 percent in 2008, while a decline in Americans' disposable incomes has caused imports to shrink for the first time in years -- bringing our trade deficit down with it.1
Yet while the net impact of trade on the U.S. economy is now at its most positive, helping prevent the current crisis from becoming even worse, there is still a common perception that trade is, at best, a mixed blessing.
After all, we like having expanded markets to sell our products and services, but we don't always like to accept that other countries will want to sell theirs to us. When it comes to trade, we just hope that the good somehow outweighs the bad.
This assumption that all imports are bad because they compete against U.S.-based companies is flawed, and needs to be examined. Normally, the best anyone can say for imports is that they allow consumers to buy things for less and therefore improve our standard of living. What is largely overlooked is that imported inputs -- the components used by U.S.-based companies to produce their finished goods -- are essential for our economy to remain competitive.
Imports in the Aggregate
It's surprising how little is mentioned about the linkage between foreign inputs and our competitiveness given how dependent U.S. producers have become on global supply chains.2 Census Bureau data for 2007 show that 47 percent of imports came from related-party companies, or cases when the U.S. importer was a subsidiary or parent company of the foreign exporter.3
In other words, almost half of all imported goods are not the traditional case of a foreign company selling directly to U.S. consumers, but rather are part of an intra-company global supply chain. Furthermore, almost 30 percent of all goods imported by U.S. affiliates of foreign companies were destined for further manufacturing within the United States.4 In cases such as these, where the importing company is using foreign inputs to build finished goods, restricting imports would directly affect U.S. production and employment.
Indeed, it's difficult to find any large U.S. manufacturer that doesn't depend on some foreign inputs. To name just a few examples:
- When Ford originally set out to build a hybrid SUV in the United States, it found that key components like the battery pack had to be sourced from Japan and Europe because U.S. suppliers lacked the leading-edge capabilities. Ford's ability to compete effectively against Toyota and others in the nascent hybrid market was therefore dependent on its access to high-quality imports.5
- Boeing is in the middle of a fierce battle with an Airbus joint venture to compete for a $35 billion Pentagon contract to build aerial refueling tankers. National allegiances have played a role in the competition, and while Boeing's bid would reportedly use more U.S. content than the Airbus bid, Boeing's own estimates say that about 15 percent of the tankers (including such high-value components as the fuselage and tail) would have to be imported to meet the Air Force's needs.6
- Dell is one of the last companies that still assembles computers in the United States, and is famous for its custom-configuration sales model. What is less known is how dependent Dell's U.S.-based manufacturing sites are on foreign suppliers, to the point where Dell had to charter a dozen and a half 747s to move necessary components from Asia to keep its U.S. plants from shutting down when a dock strike closed 29 ports along the West Coast in 2002.7
Unintended Consequences of So-Called Safeguards
Perhaps the clearest way to illustrate how much our economy has become dependent on high-quality, low-cost inputs from abroad is to look at what happens when that supply is temporarily disrupted.
A very high-profile example of this occurred in 2002, when President Bush invoked a "safeguard" to protect U.S. steel producers. Tariffs ranging from 8 percent to 30 percent were increased on foreign steel in March 2002, with an original plan of holding them in place until 2005 so that U.S. steel companies could adjust to a surge in competition from low-cost imports.8
While U.S. steel companies undoubtedly benefited from this reduction in competition, what hadn't been fully anticipated was the negative impact on U.S.-based steel users. Manufacturers of steel-dependent goods like machine tools or auto parts suddenly saw their costs spike overnight.
Several studies have shown that more U.S. jobs were lost as a result of the tariffs than were saved, and even Bush allies like Sen. Lamar Alexander (R-Tenn.) concluded the tariffs had "shifted more steel-consuming jobs overseas than exist in the steel-producing industry in the United States."9
Eventually, the Bush administration caved in to pressure from steel users, as well as the threat of retaliation from the impacted foreign nations, and lifted the safeguard in December 2003, more than a year earlier than originally planned. The lesson was clear: the interdependence of U.S. producers with foreign suppliers has made it too complicated to easily protect one domestic industry without harming many others.
Conclusion
None of this is to say that imports don't affect U.S. jobs. We must recognize that some imports do replace domestic production -- and that, by doing so, they cost some Americans their livelihoods. For these reasons, it's critical that public policy be designed to both prepare workers for the demands of 21st century competition through efforts to improve worker productivity (including through training and education, as well as better infrastructure). We also need policies that will help cushion the blow for those who do lose their jobs. This should include effective unemployment and wage insurance, as well as universal and portable health coverage.
But the idea that jobs can be saved simply by raising barriers to imports is misguided, especially when those imports are inputs used for domestic production. As the steel example shows, even the best intentions to protect one set of U.S. companies will have costs and competitive effects on others, even ignoring the foreign retaliation that often hits unrelated U.S. industries.
Especially in this era of heightened globalization, in which technology can enable companies to move production and employment virtually anywhere in the world, it's imperative that U.S. companies and workers be as competitive as possible. One way of achieving this is to ensure that U.S.-based employers have access to the inputs they need, including those that arrive from overseas. Otherwise, we risk watching jobs cross the water -- in the opposite direction.
Endnotes
1. See Bureau of Economic Analysis, U.S. Department of Commerce, news release from September 26, 2008 for most current data on export and import growth.http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htmFor a discussion on the inverse relationship between import growth and unemployment, see "The Facts on Trade Deficits and Jobs," by Doug Karmin. Progressive Policy Institute, October 3, 2007.
2. For a less serious look at the impact of restricting inputs on competitiveness, see "GATT confusing? Canadian football provides some answers" by Doug Karmin in The Hill (November 30, 1994). It describes how the Canadian football league tilted the competitive balance against its own teams by restricting the number of foreign players allowed on Canadian teams while allowing U.S. teams to hire the best available talent.
3. Census Bureau, U.S. Department of Commerce, "U.S. Goods Trade: Imports & Exports by Related Parties 2007." May 9, 2008.
4. Bureau of Economic Analysis, U.S. Department of Commerce, Operations of Multinational Companies, Product Guide for Foreign Direct Investment in the U.S., 2002 Benchmark Survey, "U.S. Imports of Goods Shipped to Affiliates and Intended Use." Most recent data is for 2002, and it shows that U.S. affiliates imported $95 billion in goods destined for further manufacturing out of a total of $335 billion in imports (28.3%). Intended use of imports only exists for U.S. affiliates.
5. "Lack of Hybrids-Parts Suppliers Could Hurt U.S. Auto Makers," by Norihiko Shirouzu. The Wall Street Journal, August 16, 2004. The need for importing batteries for hybrid cars has continued since Ford's initial launch of their hybrid SUV. See "Hybrid Cars' Foreign Dependence," by Jim Ostroff. The Kiplinger Letter, September 9, 2008.
6. "Boeing, too, uses foreign parts," by Joelle Tessler. The Associated Press, March 7, 2008. It was also reported in September 2007 in China's "People's Daily Online" that Boeing's Vice President of China Operations stated that China had become one of Boeing's largest foreign suppliers with $2.5 billion in active contracts.
7. "Living in Dell Time," by Bill Breen. Fast Company.com, November 2004.
8. Remarks by Robert B. Zoellick, United States Trade Representative, on the decision by the president to terminate steel safeguards, December 4, 2003.
9. "Steel Tariffs Appear to Have Backfired on Bush," by Mike Allen and Jonathan Weisman. The Washington Post, September 19, 2003.
Card Check
More on Hoyer & Card Check, posted Jonah Goldberg
The Corner/NRO, Monday, January 05, 2009 @02:57 PM
From Patrick Semmens at National Right to Work Legal Defense Foundation:
Jonah-
Just to add to what others have written regarding Hoyer's comments on FNS. While it's often a fine line between gross misrepresentation and out and out lie, I'd say at least one aspect of Hoyer's comments fall into the second category:
Hoyer says "The employees currently have and will have the opportunity to opt for a secret ballot. They don't have to sign the card. They can say, 'Look, we'll have an election, and we may vote.' But they have that choice right now, and they will continue to have that choice."
But the fact is the so-called "authorization cards" that unions use to run a card check doesn't give employees the choice to opt for a secret ballot election. In fact, the cards often seem to intentionally bait-and-switch employees into thinking that they are supporting an election, when really they have done just the opposite by signing a card that will be later be counted as a "vote" for unionization under card check.
We have an example of a typical union card here. You'll see that on the top of the card in big bold print it says it is a request for a representation election. However, in fine print at the bottom it says that signing the card authorizes the union "also to represent me..." (meaning that it would count in a card check).
In short workers have no opportunity to request only a secret ballot vote... it's card check or nothing because the union controls the cards and what they are used for. Meanwhile as others have pointed out, union organizers technically could request a vote, but they never would because it is always easier to pressure or mislead 50% +1 workers into signing cards, than it is to get them to vote in a union within the privacy of the secret ballot.
Hope that helps.
Also, people need to be reminded that in most states (the 28 without Right to Work laws) once a union gets in (through card check or secret ballot) every worker must (1) accept the union's representation even if they don't want it and (2) pay dues to the union or be fired. So while obviously the secret ballot election is far less coercive than the card check scheme, let's not forget that both are still part of a fundamentally unjust system.
Regards.
—Patrick T. Semmens
Legal Information Director
National Right to Work Legal Defense Foundation
The Corner/NRO, Monday, January 05, 2009 @02:57 PM
From Patrick Semmens at National Right to Work Legal Defense Foundation:
Jonah-
Just to add to what others have written regarding Hoyer's comments on FNS. While it's often a fine line between gross misrepresentation and out and out lie, I'd say at least one aspect of Hoyer's comments fall into the second category:
Hoyer says "The employees currently have and will have the opportunity to opt for a secret ballot. They don't have to sign the card. They can say, 'Look, we'll have an election, and we may vote.' But they have that choice right now, and they will continue to have that choice."
But the fact is the so-called "authorization cards" that unions use to run a card check doesn't give employees the choice to opt for a secret ballot election. In fact, the cards often seem to intentionally bait-and-switch employees into thinking that they are supporting an election, when really they have done just the opposite by signing a card that will be later be counted as a "vote" for unionization under card check.
We have an example of a typical union card here. You'll see that on the top of the card in big bold print it says it is a request for a representation election. However, in fine print at the bottom it says that signing the card authorizes the union "also to represent me..." (meaning that it would count in a card check).
In short workers have no opportunity to request only a secret ballot vote... it's card check or nothing because the union controls the cards and what they are used for. Meanwhile as others have pointed out, union organizers technically could request a vote, but they never would because it is always easier to pressure or mislead 50% +1 workers into signing cards, than it is to get them to vote in a union within the privacy of the secret ballot.
Hope that helps.
Also, people need to be reminded that in most states (the 28 without Right to Work laws) once a union gets in (through card check or secret ballot) every worker must (1) accept the union's representation even if they don't want it and (2) pay dues to the union or be fired. So while obviously the secret ballot election is far less coercive than the card check scheme, let's not forget that both are still part of a fundamentally unjust system.
Regards.
—Patrick T. Semmens
Legal Information Director
National Right to Work Legal Defense Foundation
State Dept: U.S. Government Support for Humanitarian Assistance Activities in Gaza
U.S. Government Support for Humanitarian Assistance Activities in Gaza
Fact Sheet
US State Dept, Office of the Spokesman
Washington, DC, January 5, 2009
The United States Government continues to support the delivery of urgently needed food, health, shelter and other emergency assistance to the people of Gaza through our ongoing support for international organizations such as the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the World Food Program (WFP), and the International Committee of the Red Cross (ICRC) and non-governmental organizations (NGOs).
On December 30, the United States announced a contribution to UNRWA for its 2009 appeals. Of the $85 million contribution, $5 million will directly support UNRWA’s Gaza Flash Appeal that will provide food, temporary shelter, and medical assistance for over 500,000 conflict-affected refugees in Gaza. The Flash Appeal funding will also supply up to 500,000 liters of fuel to municipalities and utilities for basic public services, including electricity and water treatment. $20 million will support UNRWA’s 2009 Emergency Appeal for the West Bank and Gaza, of which a large portion bolsters UNRWA’s ongoing emergency assistance activities for more than 1 million Palestinian refugees in Gaza. $60 million will support UNRWA’s General Fund for the provision of education, primary health care, and relief services to Palestinian refugees in the region, including Gaza.
The United States Government continues to provide food assistance through the World Food Program (WFP) to 20,000 non-refugee Palestinian households in Gaza with a bi-monthly package of five basic foods. Since December 28, WFP and its implementing partner, Community Housing Foundation (CHF), have distributed some 720 metric tons (MT) of food commodities to beneficiaries in Gaza. An additional 1,350 MT is available in Gaza for distribution when the security situation allows.
The United States Government also continues to support the International Committee of the Red Cross’s (ICRC 's) efforts to supply Gaza’s hospitals and clinics with urgently needed medicines, surgery kits, hygiene kits, intravenous fluids, bandages, plastic sheeting and other medical equipment. The ICRC is bringing two generators into Gaza to ensure continued operation of Gaza’s hospitals despite electricity cuts and maintenance problems resulting from a lack of spare parts.
The United States Government has provided other medical and food supplies to health care facilities in Gaza, including syringes, tubes, gloves, x-ray film, tape, silk for sutures and bedding (mattresses, blankets and linens), and 18,000 kilograms of plastic sheeting to cover broken windows and help mitigate the cold.
The United States is the largest bilateral donor to UNRWA, which provides essential services to hundreds of thousands of Palestinian refugees in Gaza, the West Bank, Lebanon and elsewhere.
The United States is deeply concerned about the safety of civilians caught up in this conflict, and urges all sides to facilitate the provision of humanitarian relief.
2009/009
Released on January 5, 2009
Obama-Biden: Keeping college affordable
Keeping college affordable, by Dan McSwain
Change.gov, Monday, January 5, 2009 11:49am EST
Claiborne Pell, a Rhode Island senator whose achievements brought about lasting change both at home and abroad, died on January 1st, 2009, at the age of 90.
In a statement, Vice President-elect Joe Biden honored Sen. Pell’s many accomplishments, noting that, “few Senators have done more to expand opportunity in America.”
Pell’s domestic efforts led to the establishment of the Pell Grant, a federal higher education subsidy that has defrayed the cost of college tuition for thousands of American students since their establishment in 1973.
In 2000, nearly 30% of public university students were Pell Grant recipients.
Still, many students and their families worry that the worsening economy will increase the burden of tuition and other college costs.
Carolyn from California shared some of her concerns:
http://change.gov/newsroom/entry/keeping_college_affordable/
Change.gov, Monday, January 5, 2009 11:49am EST
Claiborne Pell, a Rhode Island senator whose achievements brought about lasting change both at home and abroad, died on January 1st, 2009, at the age of 90.
In a statement, Vice President-elect Joe Biden honored Sen. Pell’s many accomplishments, noting that, “few Senators have done more to expand opportunity in America.”
Pell’s domestic efforts led to the establishment of the Pell Grant, a federal higher education subsidy that has defrayed the cost of college tuition for thousands of American students since their establishment in 1973.
In 2000, nearly 30% of public university students were Pell Grant recipients.
Still, many students and their families worry that the worsening economy will increase the burden of tuition and other college costs.
Carolyn from California shared some of her concerns:
“With the state of our current economy my parents are worried with how they are going to be able to support me and my younger brother as he goes off to college. We are considered upper-middle class (I think) and if we are having a hard time, I can only imagine what other families are facing. Please continue to support federal funding for higher education including the Pell Grant Program. Your proposed changes to the Financial Aid application would be very helpful, but at the same time increased funding of federal programs is necessary.”Making higher education more affordable is a priority for the Obama-Biden administration. Use the discussion forum below to tell us some of your concerns about education costs:
http://change.gov/newsroom/entry/keeping_college_affordable/
Rahn on the Fed, the SEC, and the Community Reinvestment Act
Avoidable disasters, by Richard Rahn
Washington Times, Wednesday, December 31, 2008
Excerpts:
Many had warned, but few who were in a position to act even tried to avoid the very predictable economic calamities of 2008. This was the year that proved Ronald Reagan's old adage, "The government is not the solution; it is the problem." As we enter the New Year, the question is again, "Will those in charge do what is necessary to avoid the very obvious new economic wrecks coming?"
The U.S. government has now explicitly said there are financial institutions (and other companies - autos, etc.) that are "too big to fail." If that is (arguably) true, then they must be more highly regulated than the smaller institutions, particularly in terms of capital adequacy.
The reason is quite simple. If the government guarantees the debt of big companies, those institutions will have a much lower cost of capital than their smaller competitors, which is not only unfair but will destroy new and smaller companies, thus killing much of the job and productivity creating innovation in the U.S. economy. So far, the Washington governing class has failed to even discuss this disastrous consequence of the bailouts, let alone figure out a solution.
It is now widely understood that the current economic mess was a result of the Federal Reserve (Fed) keeping interest rates too low during the middle of this decade, as even Alan Greenspan now admits. Also, Congress pushed banks into providing mortgages to people who were insufficiently creditworthy, while at the same time resisting calls to provide more oversight and regulation of the two government-sponsored mortgage giants (Fannie Mae and Freddie Mac).
In addition, the Securities and Exchange Commission chose to take its eye off the ball of rooting out financial fraud and instead imposed very costly, counterproductive and destructive rules on the financial industry, including forcing companies to "expense" stock options and incomprehensible "mark to market" accounting rules.
The economic situation will not appreciably improve without corrective action on the above-mentioned items. In the late 1990s, the Fed implicitly followed the Taylor Rule, a formula developed in 1992 by John Taylor, a former member of the President's Council of Economic Advisers and undersecretary of the U.S. Treasury, that indicated when to increase or decrease interest rates in conducting monetary policy. This resulted in relatively low inflation and strong growth.
The Fed made an exception to the rule in 2000 because of the anticipated Y2K problem, which turned out not to be a problem - but this Fed policy deviation largely caused the 2000-01 recession.
[...]
In addition to the Fed's actions, the mortgage meltdown was caused by banks being forced, by regulatory actions and the Community Reinvestment Act (CRA), to make loans to unqualified people; plus irresponsible behavior and undercapitalization at Fannie Mae, Freddie Mac and a number of private financial institutions. For at least a decade, many economists and noted financial experts had warned about the debacle that would occur at Fannie and Freddie. They were ignored by the members of Congress (because all too many of them were on the take - that is, recipients of large political donations from Freddie and Fannie).
The same congressional committee chairmen, Barney Frank in the House and Chris Dodd in the Senate, who failed in their oversight responsibilities, now say they want to "reform" rather than abolish Fannie and Freddie - which will almost certainly result in a repeat of the current disaster. (Nonconflicted experts, such as former Treasury General Council, Peter Wallison, have advocated a phaseout of the two organizations - which is the correct course of action.)
The SEC also needs to be abolished, and the Sarbanes-Oxley bill should be repealed. The SEC has repeatedly failed in its primary mission - investor protection - as has been all too evident in the world record Madoff Ponzi scheme - while at the same time destroying the U.S. Initial Public Offering market, which is the engine of future economic growth. (Where would the United States be without Intel, Microsoft, Apple, Google, Amazon, etc? Under the new SEC rules, it would have been almost impossible to create these innovative powerhouses.) There are plenty of federal and state laws against financial fraud, which makes the SEC redundant at best.
As for Ponzi schemes - when will Congress address the world's largest Ponzi scheme - Social Security, which it created? Social Security depends on an ever-increasing number of new taxpayers to fund the retirement payments of the ever-growing numbers of the longer-living elderly. The only question is, "In what year will it fail?"
Finally, the new administration and Congress are promising a big increase in federal spending, ignoring the fact that historically when government spending rises as a percentage of gross domestic product, growth falters and vice versa. A major reason growth has been relatively weak during George W. Bush's term is that, unlike Ronald Reagan and Bill Clinton, he allowed (by not using his veto pen) government spending to grow more rapidly than the economy.
Those who want to replicate Herbert Hoover's and Franklin Roosevelt's spending increases will find that if they succeed, they too will replicate a decade without growth.
Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.
Washington Times, Wednesday, December 31, 2008
Excerpts:
Many had warned, but few who were in a position to act even tried to avoid the very predictable economic calamities of 2008. This was the year that proved Ronald Reagan's old adage, "The government is not the solution; it is the problem." As we enter the New Year, the question is again, "Will those in charge do what is necessary to avoid the very obvious new economic wrecks coming?"
The U.S. government has now explicitly said there are financial institutions (and other companies - autos, etc.) that are "too big to fail." If that is (arguably) true, then they must be more highly regulated than the smaller institutions, particularly in terms of capital adequacy.
The reason is quite simple. If the government guarantees the debt of big companies, those institutions will have a much lower cost of capital than their smaller competitors, which is not only unfair but will destroy new and smaller companies, thus killing much of the job and productivity creating innovation in the U.S. economy. So far, the Washington governing class has failed to even discuss this disastrous consequence of the bailouts, let alone figure out a solution.
It is now widely understood that the current economic mess was a result of the Federal Reserve (Fed) keeping interest rates too low during the middle of this decade, as even Alan Greenspan now admits. Also, Congress pushed banks into providing mortgages to people who were insufficiently creditworthy, while at the same time resisting calls to provide more oversight and regulation of the two government-sponsored mortgage giants (Fannie Mae and Freddie Mac).
In addition, the Securities and Exchange Commission chose to take its eye off the ball of rooting out financial fraud and instead imposed very costly, counterproductive and destructive rules on the financial industry, including forcing companies to "expense" stock options and incomprehensible "mark to market" accounting rules.
The economic situation will not appreciably improve without corrective action on the above-mentioned items. In the late 1990s, the Fed implicitly followed the Taylor Rule, a formula developed in 1992 by John Taylor, a former member of the President's Council of Economic Advisers and undersecretary of the U.S. Treasury, that indicated when to increase or decrease interest rates in conducting monetary policy. This resulted in relatively low inflation and strong growth.
The Fed made an exception to the rule in 2000 because of the anticipated Y2K problem, which turned out not to be a problem - but this Fed policy deviation largely caused the 2000-01 recession.
[...]
In addition to the Fed's actions, the mortgage meltdown was caused by banks being forced, by regulatory actions and the Community Reinvestment Act (CRA), to make loans to unqualified people; plus irresponsible behavior and undercapitalization at Fannie Mae, Freddie Mac and a number of private financial institutions. For at least a decade, many economists and noted financial experts had warned about the debacle that would occur at Fannie and Freddie. They were ignored by the members of Congress (because all too many of them were on the take - that is, recipients of large political donations from Freddie and Fannie).
The same congressional committee chairmen, Barney Frank in the House and Chris Dodd in the Senate, who failed in their oversight responsibilities, now say they want to "reform" rather than abolish Fannie and Freddie - which will almost certainly result in a repeat of the current disaster. (Nonconflicted experts, such as former Treasury General Council, Peter Wallison, have advocated a phaseout of the two organizations - which is the correct course of action.)
The SEC also needs to be abolished, and the Sarbanes-Oxley bill should be repealed. The SEC has repeatedly failed in its primary mission - investor protection - as has been all too evident in the world record Madoff Ponzi scheme - while at the same time destroying the U.S. Initial Public Offering market, which is the engine of future economic growth. (Where would the United States be without Intel, Microsoft, Apple, Google, Amazon, etc? Under the new SEC rules, it would have been almost impossible to create these innovative powerhouses.) There are plenty of federal and state laws against financial fraud, which makes the SEC redundant at best.
As for Ponzi schemes - when will Congress address the world's largest Ponzi scheme - Social Security, which it created? Social Security depends on an ever-increasing number of new taxpayers to fund the retirement payments of the ever-growing numbers of the longer-living elderly. The only question is, "In what year will it fail?"
Finally, the new administration and Congress are promising a big increase in federal spending, ignoring the fact that historically when government spending rises as a percentage of gross domestic product, growth falters and vice versa. A major reason growth has been relatively weak during George W. Bush's term is that, unlike Ronald Reagan and Bill Clinton, he allowed (by not using his veto pen) government spending to grow more rapidly than the economy.
Those who want to replicate Herbert Hoover's and Franklin Roosevelt's spending increases will find that if they succeed, they too will replicate a decade without growth.
Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.
TNYT Editorial: A Pitch for Mass Transit
TNYT Editorial: A Pitch for Mass Transit
January 5, 2009, page A20
Unlike President Bush, Barack Obama is going to enter office with a clear appreciation of the urgent problems of climate change and America’s growing dependency on foreign oil — and a strong commitment to address both.
One way he can do this is to give mass transit — trains, buses, commuter rails — the priority it deserves and the full financial and technological help it needs and has long been denied.
Mass transit has always played second fiddle to the automobile, so Mr. Obama will need strong allies. Ray LaHood, Mr. Obama’s choice for transportation secretary, must be not only an ally but a champion for mass transit. Mr. LaHood is a Republican and former member of Congress from rural Illinois, where farmers produce a lot of ethanol and where people mostly drive. His résumé on transportation issues is thin, and we fear he may need some coaxing in this new direction.
Another important ally should be — and almost certainly will be — James Oberstar, a Minnesota Democrat who is chairman of the House Transportation and Infrastructure Committee.
For years, the division of transportation money in Washington has heavily favored cars and trucks — more than 80 percent of the big transit money from gas taxes goes to highways and bridges, and less than 20 percent to railroads or mass transit. Mr. Oberstar is leading the charge to change that formula and divide this money a little more evenly. This will not be easy. Automobiles will be with us a long time, and old spending habits die hard. But as part of the stimulus package now under discussion for transportation, Mr. Oberstar is proposing $30 billion for highways and bridges and $12 billion for public transit. That is certainly a far healthier mix.
The new administration could further help mass transit by shelving the unfair “cost effectiveness index” that President Bush put in place several years ago for new transit programs. The net effect of this index was to make it easier to build highways and almost impossible to use federal money for buses, streetcars, light rail, trolleys — indeed, any commuter-rail projects.
For Mr. Obama’s transit agenda and for Mr. LaHood, the next big challenge will be a transit bill that Congress must pass by September. Mr. LaHood is widely praised for his management skills and his ability to work well with others. Those abilities will certainly be needed if he and the Congress are to find and then finance the best, the most-efficient and the most-advanced ways for Americans to move around.
January 5, 2009, page A20
Unlike President Bush, Barack Obama is going to enter office with a clear appreciation of the urgent problems of climate change and America’s growing dependency on foreign oil — and a strong commitment to address both.
One way he can do this is to give mass transit — trains, buses, commuter rails — the priority it deserves and the full financial and technological help it needs and has long been denied.
Mass transit has always played second fiddle to the automobile, so Mr. Obama will need strong allies. Ray LaHood, Mr. Obama’s choice for transportation secretary, must be not only an ally but a champion for mass transit. Mr. LaHood is a Republican and former member of Congress from rural Illinois, where farmers produce a lot of ethanol and where people mostly drive. His résumé on transportation issues is thin, and we fear he may need some coaxing in this new direction.
Another important ally should be — and almost certainly will be — James Oberstar, a Minnesota Democrat who is chairman of the House Transportation and Infrastructure Committee.
For years, the division of transportation money in Washington has heavily favored cars and trucks — more than 80 percent of the big transit money from gas taxes goes to highways and bridges, and less than 20 percent to railroads or mass transit. Mr. Oberstar is leading the charge to change that formula and divide this money a little more evenly. This will not be easy. Automobiles will be with us a long time, and old spending habits die hard. But as part of the stimulus package now under discussion for transportation, Mr. Oberstar is proposing $30 billion for highways and bridges and $12 billion for public transit. That is certainly a far healthier mix.
The new administration could further help mass transit by shelving the unfair “cost effectiveness index” that President Bush put in place several years ago for new transit programs. The net effect of this index was to make it easier to build highways and almost impossible to use federal money for buses, streetcars, light rail, trolleys — indeed, any commuter-rail projects.
For Mr. Obama’s transit agenda and for Mr. LaHood, the next big challenge will be a transit bill that Congress must pass by September. Mr. LaHood is widely praised for his management skills and his ability to work well with others. Those abilities will certainly be needed if he and the Congress are to find and then finance the best, the most-efficient and the most-advanced ways for Americans to move around.
Environmental reporters ought to be more responsible too
Environmental reporters ought to be more responsible too. By "eric"
Real Climate, Jan 03, 2009
At RealClimate, we have more than once been accused of being imbalanced — criticizing those who would deny the basic science of climate change, while leaving inflammatory statements by what might be called the "environmentalist side" without comment. It's not an entirely a fair criticism, because there is a world of difference between the willful obfuscation of science and the naive exaggeration of it. There are however plenty of silly, and sometimes outrageous, claims made - see e.g. the Telegraph on Jan. 3rd — and we probably ought to do a better job of calling these out, particularly when they show up in prominent places. So to inaugurate the New Year, I humbly offer a rant about a minor but illustrative example that I happened to notice because there was a link to it on Nature Reports Climate Change.
The subject of the linked article, in the British online newspaper The Independent, is the decline of various bird and butterfly species in England. The article, entitled Changing climate devastates UK species, reports that "insects in particular, and creatures that feed on insects…were sharply reduced in numbers" due to a "cold late spring, a wet summer, with few sunny days, and the long dry autumn…." Now I have no reason to doubt the accuracy of the claim that 2008 was a hard year for UK insects and insectivores. But this is weather we're talking about, not climate. And while it is true that at least one prominent study shows that there has been an overall increase in rainfall in the latitude band that includes the UK, and that climate models reproduce this trend (see e.g. the Zhang et al. article in Nature, in 2007), one cannot, as we are fond of pointing out, attribute a single, or even several individual extreme weather events to "climate change".
Indeed, Peter Stott, a co-author on the Zhang et al. study noted, in reference to 2007 (the wettest summer on record in the UK) that "This latest study cannot make the link between climate change and what we have experienced so far this summer." Moreover, most projections actually suggest drier summers in the UK in the future, though with increased convection (so less total precipitation, but bigger rainstorms).
Another thing that bugs me about the Independent article is the suggestion that climate is becoming "more unpredictable". I suspect what is meant here is that we used to know what a mean season and normal variations were, and now we don't. That's valid, since the baseline climate is changing. But saying it this way — that "climate is becoming more unpredictable" is misleading. In fact, climate may, if anything, become more predictable as anthropogenic forcing becomes even more dominant (as greenhouse gas concentrations increase), relative to natural forcing and variability. And what is definitely not the case — but might be inferred from the article — is that weather is becoming more unpredictable. Weather prediction is based on observations just a few days in advance — climate and climate trends have nothing to do with it.
The point here is not that we shouldn't be concerned about the fate of insects and birds in the UK (that would be the kind of conclusion that only the most willfully ignorant would draw.) They have been in decline for a long time (mostly due to land use change and pesticides) and there is little doubt that climate change will continue to add insult to injury. But it is simply wrong to confuse a year or even two years of unfavorable weather with a change in climate, and it is irresponsible to headline an article that is really about weather with the provocative juxtaposition of "climate" and "devastates". Doing so gives the average reader the sense that their personal observations about "weird weather patterns" or fewer sightings of Parus caeruleus represent definitive manifestations of climate change. The fact is, climate changes are — so far — small enough in most places, relative to the natural variability, that one's personal experience is a very poor guide to what is happening over the long term (observations of sea ice changes by those that live in the high Arctic notwithstanding).
Real Climate, Jan 03, 2009
At RealClimate, we have more than once been accused of being imbalanced — criticizing those who would deny the basic science of climate change, while leaving inflammatory statements by what might be called the "environmentalist side" without comment. It's not an entirely a fair criticism, because there is a world of difference between the willful obfuscation of science and the naive exaggeration of it. There are however plenty of silly, and sometimes outrageous, claims made - see e.g. the Telegraph on Jan. 3rd — and we probably ought to do a better job of calling these out, particularly when they show up in prominent places. So to inaugurate the New Year, I humbly offer a rant about a minor but illustrative example that I happened to notice because there was a link to it on Nature Reports Climate Change.
The subject of the linked article, in the British online newspaper The Independent, is the decline of various bird and butterfly species in England. The article, entitled Changing climate devastates UK species, reports that "insects in particular, and creatures that feed on insects…were sharply reduced in numbers" due to a "cold late spring, a wet summer, with few sunny days, and the long dry autumn…." Now I have no reason to doubt the accuracy of the claim that 2008 was a hard year for UK insects and insectivores. But this is weather we're talking about, not climate. And while it is true that at least one prominent study shows that there has been an overall increase in rainfall in the latitude band that includes the UK, and that climate models reproduce this trend (see e.g. the Zhang et al. article in Nature, in 2007), one cannot, as we are fond of pointing out, attribute a single, or even several individual extreme weather events to "climate change".
Indeed, Peter Stott, a co-author on the Zhang et al. study noted, in reference to 2007 (the wettest summer on record in the UK) that "This latest study cannot make the link between climate change and what we have experienced so far this summer." Moreover, most projections actually suggest drier summers in the UK in the future, though with increased convection (so less total precipitation, but bigger rainstorms).
Another thing that bugs me about the Independent article is the suggestion that climate is becoming "more unpredictable". I suspect what is meant here is that we used to know what a mean season and normal variations were, and now we don't. That's valid, since the baseline climate is changing. But saying it this way — that "climate is becoming more unpredictable" is misleading. In fact, climate may, if anything, become more predictable as anthropogenic forcing becomes even more dominant (as greenhouse gas concentrations increase), relative to natural forcing and variability. And what is definitely not the case — but might be inferred from the article — is that weather is becoming more unpredictable. Weather prediction is based on observations just a few days in advance — climate and climate trends have nothing to do with it.
The point here is not that we shouldn't be concerned about the fate of insects and birds in the UK (that would be the kind of conclusion that only the most willfully ignorant would draw.) They have been in decline for a long time (mostly due to land use change and pesticides) and there is little doubt that climate change will continue to add insult to injury. But it is simply wrong to confuse a year or even two years of unfavorable weather with a change in climate, and it is irresponsible to headline an article that is really about weather with the provocative juxtaposition of "climate" and "devastates". Doing so gives the average reader the sense that their personal observations about "weird weather patterns" or fewer sightings of Parus caeruleus represent definitive manifestations of climate change. The fact is, climate changes are — so far — small enough in most places, relative to the natural variability, that one's personal experience is a very poor guide to what is happening over the long term (observations of sea ice changes by those that live in the high Arctic notwithstanding).
Sunday, January 4, 2009
Mary Schapiro Will Protect Investors the Same Way Willie Sutton Protected Banks
Mary Schapiro Will Protect Investors the Same Way Willie Sutton Protected Banks. By Dan Solin
Huffington Post, January 4, 2009 03:24 PM (EST)
We don't have to guess how Mary Schapiro, named by President-elect Obama to head the SEC, will protect investors. As the CEO of the Financial Industry Regulatory Authority (FINRA), she had been a strong advocate of the mandatory arbitration system which requires investors to arbitrate all disputes with their brokers before a panel selected by FINRA and governed by its rules.
How has this worked for investors?
Here is a recent example. It is a true story. You can't make this up.
A 60 year old doctor invested $100,000 he had in an IRA with a FINRA broker.
The broker put the funds into an after-tax account, triggering a $35,000 tax liability.
Over the next 14 months, during which time the S&P 500 increased in value, the portfolio lost a whopping $86,000, reducing its value to $14,000.
This is not surprising given the amount of trading by the broker. His commissions were so huge that the account would have had to earn 31% just to break even! The broker used margin to generate even more trades.
The stocks in the portfolio were 600% more volatile (risky) than the S&P 500.
Before any Judge or jury, the investor would have recovered his losses and most likely would have received a meaningful award of punitive damages.
Not before the FINRA arbitration panel.
They found that the broker had to pay back only the tax liability caused by the transfer of the IRA to a taxable account.
Now for the unbelievable part.
This "impartial" FINRA arbitration panel concluded that the broker did nothing else wrong. No unsuitability. No excessive trading. They gave him a clean bill of health.
Just another day at the office, ripping off investors with impunity. Instead of being drummed out of the industry, he is happily back in his office high fiving his fellow brokers.
So much for FINRA "self-regulation."
This shameful process is "supervised" by the SEC, the very agency Ms. Schapiro will head if she is confirmed.
"Real change" would be to put an investor advocate, and not an industry shill, in charge of the SEC.
"Real change" would be to abolish the FINRA mandatory arbitration system and expose it for the farce it is.
"Real change" would be give investors their constitutional right to a trial by jury.
Do you think Mary Schapiro will represent "real change" at the SEC?
Do you think Willie Sutton protected banks?
Huffington Post, January 4, 2009 03:24 PM (EST)
We don't have to guess how Mary Schapiro, named by President-elect Obama to head the SEC, will protect investors. As the CEO of the Financial Industry Regulatory Authority (FINRA), she had been a strong advocate of the mandatory arbitration system which requires investors to arbitrate all disputes with their brokers before a panel selected by FINRA and governed by its rules.
How has this worked for investors?
Here is a recent example. It is a true story. You can't make this up.
A 60 year old doctor invested $100,000 he had in an IRA with a FINRA broker.
The broker put the funds into an after-tax account, triggering a $35,000 tax liability.
Over the next 14 months, during which time the S&P 500 increased in value, the portfolio lost a whopping $86,000, reducing its value to $14,000.
This is not surprising given the amount of trading by the broker. His commissions were so huge that the account would have had to earn 31% just to break even! The broker used margin to generate even more trades.
The stocks in the portfolio were 600% more volatile (risky) than the S&P 500.
Before any Judge or jury, the investor would have recovered his losses and most likely would have received a meaningful award of punitive damages.
Not before the FINRA arbitration panel.
They found that the broker had to pay back only the tax liability caused by the transfer of the IRA to a taxable account.
Now for the unbelievable part.
This "impartial" FINRA arbitration panel concluded that the broker did nothing else wrong. No unsuitability. No excessive trading. They gave him a clean bill of health.
Just another day at the office, ripping off investors with impunity. Instead of being drummed out of the industry, he is happily back in his office high fiving his fellow brokers.
So much for FINRA "self-regulation."
This shameful process is "supervised" by the SEC, the very agency Ms. Schapiro will head if she is confirmed.
"Real change" would be to put an investor advocate, and not an industry shill, in charge of the SEC.
"Real change" would be to abolish the FINRA mandatory arbitration system and expose it for the farce it is.
"Real change" would be give investors their constitutional right to a trial by jury.
Do you think Mary Schapiro will represent "real change" at the SEC?
Do you think Willie Sutton protected banks?
James Hansen's open letter to Michelle and Barack Obama
Thanks to the people on my e-mail list for all the suggestions (more than 100!) about my draft
“Tell Barack Obama the Truth – the Whole Truth”. Most frequent criticism: the need for an
executive summary. Two people suggested: put a summary in the form of a letter to Michelle
and Barack Obama. I like that idea. They are equally smart lawyers, and if we can get either
of them to really focus on the actions that are needed, the planet has a chance.
The letter turned out to be four pages. Sorry. But I wrote a note to John Holdren, which can
serve as an executive summary. John has promised to deliver the letter, but cannot do so
prior to the inauguration. That delay is a problem for one of the three recommendations: tax
and dividend. Thus I am making the letter available at
http://www.columbia.edu/~jeh1/mailings/20081229_DearMichelleAndBarack.pdf
and the revised “Tell Barack Obama the Truth” at
http://www.columbia.edu/~jeh1/mailings/20081229_Obama_revised.pdf
in hopes of getting the information to people who continue to push for “goals” and “caps”.
“Goals” for percentage CO2 emission reductions and “cap & trade & dividend” are a threat to
the planet, weak tea, not commensurate with the task of getting CO2 back to 350 ppm and
less. Note:
(1) There must be a tax at the mine or port of entry, the first sale of oil, gas and coal, so every direct and indirect use of the fuel is affected. Anything less means that the reduction of demand for the fuel will make it cheaper for some uses; e.g., people will start burning coal in their stoves. Peter Barnes’ idea to push the cap upstream to the extent possible is not adequate nor is a ‘gas tax’ suggested by NY Times and others. A comprehensive approach is needed.
(2) “Cap & trade & dividend” creates Wall Street millionaires and complex bureaucracy. The public is fed up with that – rightly so. A single carbon tax rate can be adjusted upward affecting all activities appropriately. With 100% dividend the public will allow a carbon price adequate to the job, i.e., helping us move to the postfossil-fuel world.
(3) Supply ‘caps’ cannot yield a really big reduction because of the weapon: ‘shortages’. All a utility has to say is ‘blackout coming’ and politicians and public have to cave in – we are not going to have the lights turned out. Will the public allow a high enough tax rate? Yes, dividends will exceed tax for most people concerned about their bills.
(4) A tax is not sufficient. All other measures, such as building codes, are needed. But with millions of buildings, all construction codes and operations cannot be enforced. A rising carbon price provides effective enforcement.
(5) Wouldn’t it be cheaper to let people burn the dirtiest fuel? No. The clean future that we aim for, including more efficient energy use, is not more expensive. For example, you may have read about passively heated homes that require little energy and increase construction costs only several percent. Such possibilities remain the oddball (with high price tag), not the standard construction, unless the government adopts policies that make things happen.
Some of you suggested that I should only explain the urgency of the climate crisis, the need
to get back to 350 ppm CO2 and less. Politicians are happy if scientists provide information
and then go away and shut up. But science and policy cannot be divorced. What I learned in
the past few years is that politicians often adopt convenient policies that can be shown to be
inconsistent with long-term success, given readily available scientific data and empirical
information on policy impacts.
Jim Hansen
“Tell Barack Obama the Truth – the Whole Truth”. Most frequent criticism: the need for an
executive summary. Two people suggested: put a summary in the form of a letter to Michelle
and Barack Obama. I like that idea. They are equally smart lawyers, and if we can get either
of them to really focus on the actions that are needed, the planet has a chance.
The letter turned out to be four pages. Sorry. But I wrote a note to John Holdren, which can
serve as an executive summary. John has promised to deliver the letter, but cannot do so
prior to the inauguration. That delay is a problem for one of the three recommendations: tax
and dividend. Thus I am making the letter available at
http://www.columbia.edu/~jeh1/mailings/20081229_DearMichelleAndBarack.pdf
and the revised “Tell Barack Obama the Truth” at
http://www.columbia.edu/~jeh1/mailings/20081229_Obama_revised.pdf
in hopes of getting the information to people who continue to push for “goals” and “caps”.
“Goals” for percentage CO2 emission reductions and “cap & trade & dividend” are a threat to
the planet, weak tea, not commensurate with the task of getting CO2 back to 350 ppm and
less. Note:
(1) There must be a tax at the mine or port of entry, the first sale of oil, gas and coal, so every direct and indirect use of the fuel is affected. Anything less means that the reduction of demand for the fuel will make it cheaper for some uses; e.g., people will start burning coal in their stoves. Peter Barnes’ idea to push the cap upstream to the extent possible is not adequate nor is a ‘gas tax’ suggested by NY Times and others. A comprehensive approach is needed.
(2) “Cap & trade & dividend” creates Wall Street millionaires and complex bureaucracy. The public is fed up with that – rightly so. A single carbon tax rate can be adjusted upward affecting all activities appropriately. With 100% dividend the public will allow a carbon price adequate to the job, i.e., helping us move to the postfossil-fuel world.
(3) Supply ‘caps’ cannot yield a really big reduction because of the weapon: ‘shortages’. All a utility has to say is ‘blackout coming’ and politicians and public have to cave in – we are not going to have the lights turned out. Will the public allow a high enough tax rate? Yes, dividends will exceed tax for most people concerned about their bills.
(4) A tax is not sufficient. All other measures, such as building codes, are needed. But with millions of buildings, all construction codes and operations cannot be enforced. A rising carbon price provides effective enforcement.
(5) Wouldn’t it be cheaper to let people burn the dirtiest fuel? No. The clean future that we aim for, including more efficient energy use, is not more expensive. For example, you may have read about passively heated homes that require little energy and increase construction costs only several percent. Such possibilities remain the oddball (with high price tag), not the standard construction, unless the government adopts policies that make things happen.
Some of you suggested that I should only explain the urgency of the climate crisis, the need
to get back to 350 ppm CO2 and less. Politicians are happy if scientists provide information
and then go away and shut up. But science and policy cannot be divorced. What I learned in
the past few years is that politicians often adopt convenient policies that can be shown to be
inconsistent with long-term success, given readily available scientific data and empirical
information on policy impacts.
Jim Hansen
In TNYT: Should Congress Put a Cap on Executive Pay?
Should Congress Put a Cap on Executive Pay? By Robert H. Frank
TNYT, January 4, 2009, BU5
It's no wonder that voters’ outrage over exorbitant executive pay is mounting. After all, the government just had to bail out financial firms that paid big bonuses last year to many of the same executives who helped precipitate the current financial crisis.
Nor is it any wonder that Congress is considering measures to limit executive pay — not just in the financial industry, but economywide. So far, the only formal legislative proposal is “say on pay,” which would require a nonbinding shareholder vote on executive pay proposals. But critics complain that this would have little impact and are hungry for stronger measures.
One popular proposal would cap the chief executive’s pay at each company at 20 times its average worker’s salary. But while Congress may well have compelling reasons to limit executive pay in companies seeking bailout money, voter anger is not a good reason to extend pay caps more generally.
To be sure, executive pay in the United States is vastly higher than necessary. Executives in other countries, whose pay is often less than one-fifth that of their American counterparts, seem to work just as hard and perform just as well. The same was true of American executives in the 1980s.
So why not limit executive pay? The problem is that although every company wants a talented chief executive, there are only so many to go around. Relative salaries guide job choices. If salaries were capped at, say, $2 million annually, the most talented candidates would have less reason to seek the positions that make best use of their talents.
More troubling, if C.E.O. pay were capped and pay for other jobs was not, the most talented potential managers would be more likely to become lawyers or hedge fund operators. Can anyone think that would be a good thing?
In large companies, even small differences in managerial talent can make an enormous difference. Consider a company with $10 billion in annual earnings that has narrowed its C.E.O. search to two finalists. If one would make just a handful of better decisions each year than the other, the company’s annual earnings might easily be 3 percent — or $30 million — higher under the better candidate’s leadership. That same candidate couldn’t possibly make as much difference at a company with only $10 million in earnings.
That’s why companies where executive decisions have the greatest impact tend to outbid others in hiring the ablest managers.
Critics complain that executive labor markets are not really competitive — that chief executives appoint friends to their boards who approve unjustifiably large pay packages. But C.E.O.’s have always appointed friends, so that can’t explain recent trends.
One reason for these trends is that companies themselves have become bigger. As the New York University economists Xavier Gabaix and Augustin Landier argue in a 2006 paper, C.E.O. pay in a competitive market should vary in direct proportion to the market capitalization of the company. They found that C.E.O. compensation at large companies grew sixfold between 1980 and 2003, the same as the market-cap growth of these businesses.
Beyond growth in company size, executive mobility has also increased. In past decades, about the only way to become a C.E.O. was to have spent one’s entire career with the company. With only a handful of plausible internal candidates, pay was essentially a matter of bilateral negotiation between the board and the chosen. Increasingly, however, hiring committees believe that a talented executive from one industry can also deliver top performance in another.
A celebrated case in point was Louis V. Gerstner Jr. Having produced record earnings at RJR Nabisco, he was hired by I.B.M., where he led the computer giant, then struggling, to a dramatic turnaround in the 1990s.
This new spot market for talent has affected executive salaries in much the same way that free agency affected the salaries of professional athletes.
If the market for executive talent is competitive, critics ask, why are C.E.O.’s in an industry paid about the same, regardless of performance? That’s because no one knows with certainty how a particular executive will perform. But most hiring decisions are based on well-researched predictions, and always with hope for success. Executives whose record predicts good performance command a high rate. Their leash, however, has grown shorter.
In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two.
In short, evidence suggests that the link between pay and performance is tighter than proponents of pay caps seem to think. Since the fall of the former Soviet Union, no one has seriously challenged the wisdom of relegating a high proportion of society’s most important tasks to private markets. And the market-determined salary of a job generally offers the best — if imperfect — measure of its importance.
The financial industry, however, may be an exception. A money manager’s pay depends primarily on the amount of money managed, which in turn depends on the fund’s rate of return relative to other funds. This provides strong incentives to invest in highly leveraged risky assets, which yield higher average returns. But as recent events have shown, these complex assets also expose the rest of us to considerable systemic risk.
On balance, then, the high pay that lures talent to the financial industry may actually cause harm. So if Congress wants to cap executive pay in financial institutions receiving bailout money, well and good.
Elsewhere, however, the more prudent response to runaway salaries at the top is to raise marginal tax rates on the highest earners, irrespective of occupation. Again, relative salaries drive job choices. The jobs with the highest pretax salaries will still offer the highest post-tax salaries, just as before, so this step will not compromise the price signals that steer talented performers to the most important jobs.
In answering voter outrage about executive pay, Congress should recall the words of Marcus Aurelius: “How much more grievous are the consequences of anger than the causes of it.”
Robert H. Frank, an economist at Cornell, is a visiting faculty member at the Stern School of Business at New York University.
TNYT, January 4, 2009, BU5
It's no wonder that voters’ outrage over exorbitant executive pay is mounting. After all, the government just had to bail out financial firms that paid big bonuses last year to many of the same executives who helped precipitate the current financial crisis.
Nor is it any wonder that Congress is considering measures to limit executive pay — not just in the financial industry, but economywide. So far, the only formal legislative proposal is “say on pay,” which would require a nonbinding shareholder vote on executive pay proposals. But critics complain that this would have little impact and are hungry for stronger measures.
One popular proposal would cap the chief executive’s pay at each company at 20 times its average worker’s salary. But while Congress may well have compelling reasons to limit executive pay in companies seeking bailout money, voter anger is not a good reason to extend pay caps more generally.
To be sure, executive pay in the United States is vastly higher than necessary. Executives in other countries, whose pay is often less than one-fifth that of their American counterparts, seem to work just as hard and perform just as well. The same was true of American executives in the 1980s.
So why not limit executive pay? The problem is that although every company wants a talented chief executive, there are only so many to go around. Relative salaries guide job choices. If salaries were capped at, say, $2 million annually, the most talented candidates would have less reason to seek the positions that make best use of their talents.
More troubling, if C.E.O. pay were capped and pay for other jobs was not, the most talented potential managers would be more likely to become lawyers or hedge fund operators. Can anyone think that would be a good thing?
In large companies, even small differences in managerial talent can make an enormous difference. Consider a company with $10 billion in annual earnings that has narrowed its C.E.O. search to two finalists. If one would make just a handful of better decisions each year than the other, the company’s annual earnings might easily be 3 percent — or $30 million — higher under the better candidate’s leadership. That same candidate couldn’t possibly make as much difference at a company with only $10 million in earnings.
That’s why companies where executive decisions have the greatest impact tend to outbid others in hiring the ablest managers.
Critics complain that executive labor markets are not really competitive — that chief executives appoint friends to their boards who approve unjustifiably large pay packages. But C.E.O.’s have always appointed friends, so that can’t explain recent trends.
One reason for these trends is that companies themselves have become bigger. As the New York University economists Xavier Gabaix and Augustin Landier argue in a 2006 paper, C.E.O. pay in a competitive market should vary in direct proportion to the market capitalization of the company. They found that C.E.O. compensation at large companies grew sixfold between 1980 and 2003, the same as the market-cap growth of these businesses.
Beyond growth in company size, executive mobility has also increased. In past decades, about the only way to become a C.E.O. was to have spent one’s entire career with the company. With only a handful of plausible internal candidates, pay was essentially a matter of bilateral negotiation between the board and the chosen. Increasingly, however, hiring committees believe that a talented executive from one industry can also deliver top performance in another.
A celebrated case in point was Louis V. Gerstner Jr. Having produced record earnings at RJR Nabisco, he was hired by I.B.M., where he led the computer giant, then struggling, to a dramatic turnaround in the 1990s.
This new spot market for talent has affected executive salaries in much the same way that free agency affected the salaries of professional athletes.
If the market for executive talent is competitive, critics ask, why are C.E.O.’s in an industry paid about the same, regardless of performance? That’s because no one knows with certainty how a particular executive will perform. But most hiring decisions are based on well-researched predictions, and always with hope for success. Executives whose record predicts good performance command a high rate. Their leash, however, has grown shorter.
In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two.
In short, evidence suggests that the link between pay and performance is tighter than proponents of pay caps seem to think. Since the fall of the former Soviet Union, no one has seriously challenged the wisdom of relegating a high proportion of society’s most important tasks to private markets. And the market-determined salary of a job generally offers the best — if imperfect — measure of its importance.
The financial industry, however, may be an exception. A money manager’s pay depends primarily on the amount of money managed, which in turn depends on the fund’s rate of return relative to other funds. This provides strong incentives to invest in highly leveraged risky assets, which yield higher average returns. But as recent events have shown, these complex assets also expose the rest of us to considerable systemic risk.
On balance, then, the high pay that lures talent to the financial industry may actually cause harm. So if Congress wants to cap executive pay in financial institutions receiving bailout money, well and good.
Elsewhere, however, the more prudent response to runaway salaries at the top is to raise marginal tax rates on the highest earners, irrespective of occupation. Again, relative salaries drive job choices. The jobs with the highest pretax salaries will still offer the highest post-tax salaries, just as before, so this step will not compromise the price signals that steer talented performers to the most important jobs.
In answering voter outrage about executive pay, Congress should recall the words of Marcus Aurelius: “How much more grievous are the consequences of anger than the causes of it.”
Robert H. Frank, an economist at Cornell, is a visiting faculty member at the Stern School of Business at New York University.
A Century of Chlorination
Perspective on a Century of Chlorination
Jan 04, 2009
Article originally from American Chemistry magazine.
For an industry expert’s perspective on the 100th anniversary of the chlorinationof U.S. drinking water, the American Chemistry Council (ACC) interviewed Dr. James P. Brennan, Technology Manager with Arch Chemicals in Smyrna, Ga., who has worked extensively with water chlorination chemistry for more than 30 years.
“The chlorination process has long been the conventional method of disinfection for municipal water and wastewater, due to its low chemical cost and consistent performance,” he says.
Beyond drinking water, chlorine disinfection is an important component to healthyswimming pools, schools, daycare centers, and restaurants. As Brennan puts it, chlorine and the chlorination process are used for everything from preventing the transmission of disease to reducing spoilage in freshly harvested fruits and vegetables.
“Chlorine had a marvelous effect on public health during the first 50 years of use,” hesays. “Through the chlorination process, the average lifespan went from 49 to 70 years.”
During that time, he adds, the basic principle of cleaning and sanitizing had already begun; and because of the concepts of good hygiene, the population as a whole benefited.
Chlorine can be applied to water as a gas (elemental chlorine), a liquid solution (sodiumhypochlorite), or in several dry forms. A granular form of dry chlorine (calcium hypochlorite), introduced 80 years ago, was stronger and had a longer shelf life. This product also evolved and is now easier to handle and store than ever.
“One success begets another, and chlorine evolved in its uses and its forms,” says Brennan.
More recently, he says, this product has become available in consistent tablet forms with delivery systems designed to provide dosage control and convenience, resulting in higher-quality treated water.
Calcium hypochlorite is also used in municipal water treatment plants and for sanitizing pools and spas. Private owners of pools and spas can conveniently transport and store it, and plant operators can easily apply it directly to the source, which is imperative for stopping the transmission of diseases.
Over the past 30 years, Brennan’s career has taken him from the laboratory bench to field locations throughout the U.S. and, more recently, around the globe. Most interesting and rewarding to him has been the opportunity to educate others about the chlorination process, particularly in underdeveloped areas in Asia and South America, where he has traveled in efforts to improve public health by emphasizing the importance of safe drinking water and how to treat it efficiently and reliably.
"We are teaching sustainable methods to treat water,” he says. “We want to keep the process simple and teach people how to use the products and protect their water sources.”
Looking ahead, Brennan says he believes improvements to the chlorination process are always evolving, especially in ways to make it more available and reliable.
And for the enormous effect chlorine has had on everything from public health to ensuring safe drinking water, he says, “Job well done.”
Jan 04, 2009
Article originally from American Chemistry magazine.
For an industry expert’s perspective on the 100th anniversary of the chlorinationof U.S. drinking water, the American Chemistry Council (ACC) interviewed Dr. James P. Brennan, Technology Manager with Arch Chemicals in Smyrna, Ga., who has worked extensively with water chlorination chemistry for more than 30 years.
“The chlorination process has long been the conventional method of disinfection for municipal water and wastewater, due to its low chemical cost and consistent performance,” he says.
Beyond drinking water, chlorine disinfection is an important component to healthyswimming pools, schools, daycare centers, and restaurants. As Brennan puts it, chlorine and the chlorination process are used for everything from preventing the transmission of disease to reducing spoilage in freshly harvested fruits and vegetables.
“Chlorine had a marvelous effect on public health during the first 50 years of use,” hesays. “Through the chlorination process, the average lifespan went from 49 to 70 years.”
During that time, he adds, the basic principle of cleaning and sanitizing had already begun; and because of the concepts of good hygiene, the population as a whole benefited.
Chlorine can be applied to water as a gas (elemental chlorine), a liquid solution (sodiumhypochlorite), or in several dry forms. A granular form of dry chlorine (calcium hypochlorite), introduced 80 years ago, was stronger and had a longer shelf life. This product also evolved and is now easier to handle and store than ever.
“One success begets another, and chlorine evolved in its uses and its forms,” says Brennan.
More recently, he says, this product has become available in consistent tablet forms with delivery systems designed to provide dosage control and convenience, resulting in higher-quality treated water.
Calcium hypochlorite is also used in municipal water treatment plants and for sanitizing pools and spas. Private owners of pools and spas can conveniently transport and store it, and plant operators can easily apply it directly to the source, which is imperative for stopping the transmission of diseases.
Over the past 30 years, Brennan’s career has taken him from the laboratory bench to field locations throughout the U.S. and, more recently, around the globe. Most interesting and rewarding to him has been the opportunity to educate others about the chlorination process, particularly in underdeveloped areas in Asia and South America, where he has traveled in efforts to improve public health by emphasizing the importance of safe drinking water and how to treat it efficiently and reliably.
"We are teaching sustainable methods to treat water,” he says. “We want to keep the process simple and teach people how to use the products and protect their water sources.”
Looking ahead, Brennan says he believes improvements to the chlorination process are always evolving, especially in ways to make it more available and reliable.
And for the enormous effect chlorine has had on everything from public health to ensuring safe drinking water, he says, “Job well done.”
On Griggs v. Duke Power: Implications for College Credentialing
The Toll of a Rights 'Victory', by George F. Will
Washington Post, Sunday, January 4, 2009; B07
Like pebbles tossed into ponds, important Supreme Court rulings radiate ripples of consequences. Consider a 1971 Supreme Court decision that supposedly applied but actually altered the 1964 Civil Rights Act.
During debate on the legislation, prescient critics worried that it might be construed to forbid giving prospective employees tests that might produce what was later called, in the 1971 case, a "disparate impact" on certain preferred minorities. To assuage these critics, the final act stipulated that employers could use "professionally developed ability tests" that were not "designed, intended or used to discriminate."
Furthermore, two Senate sponsors of the act insisted that it did not require "that employers abandon bona fide qualification tests where, because of differences in background and educations, members of some groups are able to perform better on these tests than members of other groups." What subsequently happened is recounted in "Griggs v. Duke Power: Implications for College Credentialing," a paper written by Bryan O'Keefe, a law student, and Richard Vedder, a professor of economics at Ohio University.
In 1964, there were more than 2,000 personnel tests available to employers. But already an Illinois state official had ruled that a standard ability test used by Motorola was illegal because it was unfair to "disadvantaged groups."
Before 1964, Duke Power had discriminated against blacks in hiring and promotion. After the 1964 act, the company changed its policies, establishing a high school equivalence requirement for all workers and allowing them to meet that requirement by achieving minimum scores on two widely used aptitude tests, including one used today by almost every NFL team to measure players' learning potential.
Plaintiffs in the Griggs case argued that the high school and testing requirements discriminated against blacks. A unanimous Supreme Court, disregarding the relevant legislative history, held that Congress intended the 1964 act to proscribe not only overt discrimination but also "practices that are fair in form, but discriminatory in operation." The court added:
Thus a heavy burden of proof was placed on employers, including that of proving that any test that produced a "disparate impact" detrimental to certain minorities was a "business necessity" for various particular jobs. In 1972, Congress codified the Griggs misinterpretation of what Congress had done in 1964. And after a 1989 Supreme Court ruling partially undid Griggs, Congress in 1991 repudiated that 1989 ruling and essentially reimposed the burden of proof on employers.
Small wonder, then, that many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants' satisfactory intelligence and diligence.
This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O'Keefe and Vedder write:
"Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach."
Indeed, by turning college degrees into indispensable credentials for many of society's better jobs, this series of events increased demand for degrees and, O'Keefe and Vedder say, contributed to "an environment of aggressive tuition increases." Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.
Griggs and its consequences are timely reminders of the Law of Unintended Consequences, which is increasingly pertinent as America's regulatory state becomes increasingly determined to fine-tune our complex society. That law holds that the consequences of government actions often are different than, and even contrary to, the intended consequences.
Soon the Obama administration will arrive, bristling like a very progressive porcupine with sharp plans -- plans for restoring economic health by "demand management," for altering the distribution of income by using tax changes and supporting more muscular labor unions, for cooling the planet by such measures as burning more food as fuel, and for many additional improvements. At least, those will be the administration's intended consequences.
Washington Post, Sunday, January 4, 2009; B07
Like pebbles tossed into ponds, important Supreme Court rulings radiate ripples of consequences. Consider a 1971 Supreme Court decision that supposedly applied but actually altered the 1964 Civil Rights Act.
During debate on the legislation, prescient critics worried that it might be construed to forbid giving prospective employees tests that might produce what was later called, in the 1971 case, a "disparate impact" on certain preferred minorities. To assuage these critics, the final act stipulated that employers could use "professionally developed ability tests" that were not "designed, intended or used to discriminate."
Furthermore, two Senate sponsors of the act insisted that it did not require "that employers abandon bona fide qualification tests where, because of differences in background and educations, members of some groups are able to perform better on these tests than members of other groups." What subsequently happened is recounted in "Griggs v. Duke Power: Implications for College Credentialing," a paper written by Bryan O'Keefe, a law student, and Richard Vedder, a professor of economics at Ohio University.
In 1964, there were more than 2,000 personnel tests available to employers. But already an Illinois state official had ruled that a standard ability test used by Motorola was illegal because it was unfair to "disadvantaged groups."
Before 1964, Duke Power had discriminated against blacks in hiring and promotion. After the 1964 act, the company changed its policies, establishing a high school equivalence requirement for all workers and allowing them to meet that requirement by achieving minimum scores on two widely used aptitude tests, including one used today by almost every NFL team to measure players' learning potential.
Plaintiffs in the Griggs case argued that the high school and testing requirements discriminated against blacks. A unanimous Supreme Court, disregarding the relevant legislative history, held that Congress intended the 1964 act to proscribe not only overt discrimination but also "practices that are fair in form, but discriminatory in operation." The court added:
"The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited."
Thus a heavy burden of proof was placed on employers, including that of proving that any test that produced a "disparate impact" detrimental to certain minorities was a "business necessity" for various particular jobs. In 1972, Congress codified the Griggs misinterpretation of what Congress had done in 1964. And after a 1989 Supreme Court ruling partially undid Griggs, Congress in 1991 repudiated that 1989 ruling and essentially reimposed the burden of proof on employers.
Small wonder, then, that many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants' satisfactory intelligence and diligence.
This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O'Keefe and Vedder write:
"Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach."
Indeed, by turning college degrees into indispensable credentials for many of society's better jobs, this series of events increased demand for degrees and, O'Keefe and Vedder say, contributed to "an environment of aggressive tuition increases." Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.
Griggs and its consequences are timely reminders of the Law of Unintended Consequences, which is increasingly pertinent as America's regulatory state becomes increasingly determined to fine-tune our complex society. That law holds that the consequences of government actions often are different than, and even contrary to, the intended consequences.
Soon the Obama administration will arrive, bristling like a very progressive porcupine with sharp plans -- plans for restoring economic health by "demand management," for altering the distribution of income by using tax changes and supporting more muscular labor unions, for cooling the planet by such measures as burning more food as fuel, and for many additional improvements. At least, those will be the administration's intended consequences.
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