Japan warns against U.N. inaction on N Korea rocket launch
Japan Today, Wednesday 08th April, 06:30 AM JST
TOKYO — Japan’s foreign minister warned Tuesday that the U.N. Security Council must give a strong response to North Korea’s recent rocket launch or risk losing its authority.
Foreign Minister Hirofumi Nakasone said a failure to respond to the North’s Sunday launch could hurt multilateral talks aimed at getting the communist nation to halt its nuclear programs.
“If violations are allowed, the U.N. Security Council’s authority would be threatened and trust placed upon it would be impaired,” Nakasone told a news conference. “The U.N. Security Council should respond properly and teach North Korea a lesson that it has to pay for the act of provocation.”
He said the lack of a strong response to the rocket launch—seen by many as a cover for testing long-range missile technology—would send the wrong message to the North.
Security Council diplomats were mired in squabbles over how, or even whether, to punish North Korea for Sunday’s launch. World leaders, including President Barack Obama, called it a provocative act and a violation of previous sanctions, imposed after the North’s underground nuclear test in 2006.
Japan said Monday that while it was trying to lobby China and Russia, which are reluctant to punish the North, it would extend sanctions against North Korea for another year in response to the launch.
Japan imposed tight trade sanctions against the North in 2006 following Pyongyang’s missile and atomic tests that year. The ongoing sanctions, which ban North Korean ships from entering Japan and prohibit imports of North Korean goods, have been renewed every six months since and were to expire on April 13.
Pyongyang continued to claim it put a communications satellite into orbit and is now transmitting data and patriotic songs. But Japan joined the rest of the world in saying that it appeared to be a failure.
Nakasone said Japan has yet to determine whether North Korea launched a satellite or a missile, but either way the launch violated the Security Council ban because it used missile technology.
The international community will allow North Korea to engage in space development “only if the North fulfilled its obligation to abandon all nuclear programs and no longer poses a threat to Japan and the rest of the world,” he said.
Wednesday, April 8, 2009
Salazar Announces that East Coast Windmills Could Provide 100 Percent of Nation’s Electricity
Fantasy Land: Salazar Announces that East Coast Windmills Could Provide 100 Percent of Nation’s Electricity
The Institute for Energy Research, Apr 07, 2009
WASHINGTON, D.C. - IER President Thomas J. Pyle today issued the following statement in response to Secretary Salazar’s assertion that windmills off the East Coast, “could generate 1 million megawatts of power, roughly the equivalent of 3,000 medium coal-fired power plants, or nearly five times the number of coal plants now in the United States.”
“We were pleasantly surprised to hear Secretary Salazar announce today that East Coast windmills could not only replace the electricity we get from coal, but double it. According to his estimate, these windmills could completely replace the 1 million megawatt hours of power that coal, natural gas, nuclear, biomass, onshore wind, and other renewable sources provide.
“Unfortunately, upon closer inspection, key elements of the secretary’s claim fail to hold up to scrutiny. For starters, America doesn’t even have 3,000 coal plants in service right now—we don’t have even half of that. But even if we did, the secretary appears to be suggesting that East Coast windmills could meet well over 100 percent of our electricity needs all by themselves. Never mind that wind accounts for only 1.3 percent of our nation’s electricity today. To make the secretary’s claim accurate, we would need to install 309,587 giant 3.25 mw turbines spread over 1,800 miles of coastline (which is the entire East Coast)—or about 172 turbines per mile of coastline—and hope the wind blows 24 hours a day, seven days a week.
“Assuming the wind never stops, and assuming Americans could do without a recreational coastline, we might have a shot at meeting the secretary’s goal. But it won’t be cheap. According to the Energy Information Administration, offshore wind power—21 cents per kilowatt hour—is more than twice as costly as just about every other conventional alternative available.”
NOTE: The Cape Wind Project calls for the installation of 130 wind turbines, which have a rated capacity of 420 megawatts of energy.
More from IER:
Blog Posting: Will Renewables Become Competitive Anytime Soon?
Press Release: Hundreds Turn Out in Support of Offshore Energy Development
Fact Sheet: Offshore Energy Exploration: Myths vs. Facts
The Institute for Energy Research, Apr 07, 2009
WASHINGTON, D.C. - IER President Thomas J. Pyle today issued the following statement in response to Secretary Salazar’s assertion that windmills off the East Coast, “could generate 1 million megawatts of power, roughly the equivalent of 3,000 medium coal-fired power plants, or nearly five times the number of coal plants now in the United States.”
“We were pleasantly surprised to hear Secretary Salazar announce today that East Coast windmills could not only replace the electricity we get from coal, but double it. According to his estimate, these windmills could completely replace the 1 million megawatt hours of power that coal, natural gas, nuclear, biomass, onshore wind, and other renewable sources provide.
“Unfortunately, upon closer inspection, key elements of the secretary’s claim fail to hold up to scrutiny. For starters, America doesn’t even have 3,000 coal plants in service right now—we don’t have even half of that. But even if we did, the secretary appears to be suggesting that East Coast windmills could meet well over 100 percent of our electricity needs all by themselves. Never mind that wind accounts for only 1.3 percent of our nation’s electricity today. To make the secretary’s claim accurate, we would need to install 309,587 giant 3.25 mw turbines spread over 1,800 miles of coastline (which is the entire East Coast)—or about 172 turbines per mile of coastline—and hope the wind blows 24 hours a day, seven days a week.
“Assuming the wind never stops, and assuming Americans could do without a recreational coastline, we might have a shot at meeting the secretary’s goal. But it won’t be cheap. According to the Energy Information Administration, offshore wind power—21 cents per kilowatt hour—is more than twice as costly as just about every other conventional alternative available.”
NOTE: The Cape Wind Project calls for the installation of 130 wind turbines, which have a rated capacity of 420 megawatts of energy.
More from IER:
Blog Posting: Will Renewables Become Competitive Anytime Soon?
Press Release: Hundreds Turn Out in Support of Offshore Energy Development
Fact Sheet: Offshore Energy Exploration: Myths vs. Facts
Tuesday, April 7, 2009
Libertarian views: Resenting the Rich
Resenting the Rich, by Chris Edwards
This article appeared in the Economist on April 7, 2009
This is half of a larger debate between Chris Edwards and Professor Thomas Piketty.
Should the rich pay higher taxes? Definitely not. Governments do not need any more money, and they misallocate much of what they already take from us. Furthermore, taxation imposes large deadweight losses on the economy, which makes us all poorer.
More on those points later, but first let us examine how much tax the rich are currently paying. In the United States, Congressional Budget Office (CBO) data show average effective tax rates for five income groups or quintiles. The CBO data include federal income, payroll, and excise taxes (www.cbo.gov/publications/collections/taxdistribution.cfm).
The most recent data for 2005 show that effective rates (taxes divided by income) for the quintiles starting at the bottom were 4.3%, 9.9%, 14.2%, 17.4% and 25.5%. That is a steeply graduated tax system. I would prefer a flat or proportional system because I believe in the American ideal of equal justice under law. But it is amazing that some people want to increase taxes on the rich when the top quintile is already paying a rate five times higher than the rate at the bottom.
The Economist's proposition states: "Inequality has risen across the rich world since the 1970s" partly as a result of lower taxes on the rich. If income inequality has risen, the CBO data suggests that taxes are not the cause. The CBO data show that the effective tax rate on the top quintile has been fairly constant since 1979, hovering between 25% and 28%.
If there are disproportionately large tax cuts at the top end, it might lead to larger asset accumulations by the wealthy and greater pre-tax income inequality over time. But the CBO data show that is not what happened. The rich have been pummelled with an effective rate of 25% or more for decades, while effective rates on the other four quintiles have fallen modestly.
Statutory rates have been cut at the top end, but that has led to substantially higher reported income due to an increase in productive efforts and a reduction in tax avoidance. In a 2006 paper, Martin Feldstein at Harvard calculated that the elasticity of taxable income with respect to income tax rates is about 1, so that cutting the top rate from 40% to 30% would boost taxable income by about 16%. The result would be more work effort and less avoidance by entrepreneurs, doctors, scientists and others in the top quintile, which would greatly benefit the rest of us.
Unfortunately, President Obama wants to go in the other direction, raising the top two income tax rates, which would reduce production and increase avoidance by highly skilled people. Such economic damage from higher taxes is called deadweight loss. In the 2006 paper, Mr Feldstein argued that deadweight losses from a federal income tax rate increase would be $1.76 for every dollar of tax increase. That means that every new $1 billion spending programme in President Obama's budget will destroy about $1.76 billion of activities in the private sector.
That is the economics of tax hikes, but what about the politics? The Economist proposition suggests that "resentment over inequality is growing ever more vocal … is taxing the rich more heavily necessary to buy social peace?" Consider that 43% of American households do not pay any federal income tax, according to data from the Joint Committee on Taxation. That large group is doing little to support the huge burden of the welfare state, so it is laughable that they might be angry at the wealthy who do bear the burden. The CBO data show that the top one-fifth of households pay 69% of the entire costs of the federal government. Frankly, the rest of Americans are free-riders on the top quintile's enormous financial support of government.
In America, it is not rich and productive people that create resentment. Instead, it is corrupt politicians handing out special favours, it is the bungling bureaucrats we saw after Hurricane Katrina, and it is cabinet nominees who cheat on their taxes. Americans are not upset at wealthy Steve Jobs and his amazing innovations, but they are upset when they hear that global warming advocate Al Gore lives in a mansion that consumes 15 times more electricity than the average US home. It is hypocrisy, fraud and corruption that people do not like, not hard work and high incomes.
The main reason that we should not increase taxes on the rich is that most governments are far above their optimal size. Vito Tanzi, a former top economist at the International Monetary Fund, noted in a 2004 study: "All the theoretical reasons advanced by economists to justify the role of the state in the economy, including the need to assist the poor, could be satisfied with a much smaller share of spending of GDP than is now found in most industrial countries." Mr Tanzi found that bigger governments were not correlated with better human development indicators such as education achievement, infant mortality or life expectancy.
There are fundamental reasons why big governments do not work very well. As taxes rise, resources are shifted from more efficient private activities to less efficient government activities. The private sector is not more efficient than government because it does not make mistakes, but because it has mechanisms to purge mistakes and move resources to higher-valued uses. Government policymakers do the opposite: they retain failed programmes year after year, and resources get stuck in low-value uses.
Even if politicians did focus on moving resources to higher-value uses, they would be unable to because government activities do not generate the price and profit signals needed to allocate capital and labour efficiently. A final problem is that government programmes are often horribly managed. To take one example, President Obama wants to expand subsidies for energy research, but past US energy subsidies have led to boondoggle after boondoggle, as I have documented at www.downsizinggovernment.org. Perhaps governments in other countries work better than in the United States, but I doubt it.
Some economists in America think that it is inevitable that taxes will rise in coming years. But Canada's recent experience shows a different path. Since the early 1990s, Canada has cut individual and corporate tax rates, shrunk the overall size of government from 53% of GDP to 40%, and has consistently balanced its federal budget. In Canada, tax cuts, spending cuts and debt reduction have not led to less social peace, nor should it anywhere else.
Chris Edwards is tax policy director at the Cato Institute and co-author of Global Tax Revolution.
This article appeared in the Economist on April 7, 2009
This is half of a larger debate between Chris Edwards and Professor Thomas Piketty.
Should the rich pay higher taxes? Definitely not. Governments do not need any more money, and they misallocate much of what they already take from us. Furthermore, taxation imposes large deadweight losses on the economy, which makes us all poorer.
More on those points later, but first let us examine how much tax the rich are currently paying. In the United States, Congressional Budget Office (CBO) data show average effective tax rates for five income groups or quintiles. The CBO data include federal income, payroll, and excise taxes (www.cbo.gov/publications/collections/taxdistribution.cfm).
The most recent data for 2005 show that effective rates (taxes divided by income) for the quintiles starting at the bottom were 4.3%, 9.9%, 14.2%, 17.4% and 25.5%. That is a steeply graduated tax system. I would prefer a flat or proportional system because I believe in the American ideal of equal justice under law. But it is amazing that some people want to increase taxes on the rich when the top quintile is already paying a rate five times higher than the rate at the bottom.
The Economist's proposition states: "Inequality has risen across the rich world since the 1970s" partly as a result of lower taxes on the rich. If income inequality has risen, the CBO data suggests that taxes are not the cause. The CBO data show that the effective tax rate on the top quintile has been fairly constant since 1979, hovering between 25% and 28%.
If there are disproportionately large tax cuts at the top end, it might lead to larger asset accumulations by the wealthy and greater pre-tax income inequality over time. But the CBO data show that is not what happened. The rich have been pummelled with an effective rate of 25% or more for decades, while effective rates on the other four quintiles have fallen modestly.
Statutory rates have been cut at the top end, but that has led to substantially higher reported income due to an increase in productive efforts and a reduction in tax avoidance. In a 2006 paper, Martin Feldstein at Harvard calculated that the elasticity of taxable income with respect to income tax rates is about 1, so that cutting the top rate from 40% to 30% would boost taxable income by about 16%. The result would be more work effort and less avoidance by entrepreneurs, doctors, scientists and others in the top quintile, which would greatly benefit the rest of us.
Unfortunately, President Obama wants to go in the other direction, raising the top two income tax rates, which would reduce production and increase avoidance by highly skilled people. Such economic damage from higher taxes is called deadweight loss. In the 2006 paper, Mr Feldstein argued that deadweight losses from a federal income tax rate increase would be $1.76 for every dollar of tax increase. That means that every new $1 billion spending programme in President Obama's budget will destroy about $1.76 billion of activities in the private sector.
That is the economics of tax hikes, but what about the politics? The Economist proposition suggests that "resentment over inequality is growing ever more vocal … is taxing the rich more heavily necessary to buy social peace?" Consider that 43% of American households do not pay any federal income tax, according to data from the Joint Committee on Taxation. That large group is doing little to support the huge burden of the welfare state, so it is laughable that they might be angry at the wealthy who do bear the burden. The CBO data show that the top one-fifth of households pay 69% of the entire costs of the federal government. Frankly, the rest of Americans are free-riders on the top quintile's enormous financial support of government.
In America, it is not rich and productive people that create resentment. Instead, it is corrupt politicians handing out special favours, it is the bungling bureaucrats we saw after Hurricane Katrina, and it is cabinet nominees who cheat on their taxes. Americans are not upset at wealthy Steve Jobs and his amazing innovations, but they are upset when they hear that global warming advocate Al Gore lives in a mansion that consumes 15 times more electricity than the average US home. It is hypocrisy, fraud and corruption that people do not like, not hard work and high incomes.
The main reason that we should not increase taxes on the rich is that most governments are far above their optimal size. Vito Tanzi, a former top economist at the International Monetary Fund, noted in a 2004 study: "All the theoretical reasons advanced by economists to justify the role of the state in the economy, including the need to assist the poor, could be satisfied with a much smaller share of spending of GDP than is now found in most industrial countries." Mr Tanzi found that bigger governments were not correlated with better human development indicators such as education achievement, infant mortality or life expectancy.
There are fundamental reasons why big governments do not work very well. As taxes rise, resources are shifted from more efficient private activities to less efficient government activities. The private sector is not more efficient than government because it does not make mistakes, but because it has mechanisms to purge mistakes and move resources to higher-valued uses. Government policymakers do the opposite: they retain failed programmes year after year, and resources get stuck in low-value uses.
Even if politicians did focus on moving resources to higher-value uses, they would be unable to because government activities do not generate the price and profit signals needed to allocate capital and labour efficiently. A final problem is that government programmes are often horribly managed. To take one example, President Obama wants to expand subsidies for energy research, but past US energy subsidies have led to boondoggle after boondoggle, as I have documented at www.downsizinggovernment.org. Perhaps governments in other countries work better than in the United States, but I doubt it.
Some economists in America think that it is inevitable that taxes will rise in coming years. But Canada's recent experience shows a different path. Since the early 1990s, Canada has cut individual and corporate tax rates, shrunk the overall size of government from 53% of GDP to 40%, and has consistently balanced its federal budget. In Canada, tax cuts, spending cuts and debt reduction have not led to less social peace, nor should it anywhere else.
Chris Edwards is tax policy director at the Cato Institute and co-author of Global Tax Revolution.
Remarks by the Federal President to the Troops in Baghdad
THE WHITE HOUSE
Office of the Press Secretary
_________________________________________________________________
For Immediate Release April 7, 2009
REMARKS BY THE PRESIDENT TO THE TROOPS
Al Faw Palace
Baghdad, Iraq
6:08 P.M. (Local)
THE PRESIDENT: Thank you. Thank you, guys. Let me say Multinational Force Iraq, Multinational Corps Iraq, Multinational Security Transition Command Iraq First Corps, America's Corp Band: Thanks to all of you.
Listen, I am so honored.
AUDIENCE MEMBER: We love you.
THE PRESIDENT: I love you back. (Applause.) I am honored -- I'm honored and grateful to be with all of you. And I'm not going to talk long because I want to shake as many hands as I can. (Applause.) And I've been talking all week. (Laughter.)
But there's a couple of things I want to say. Number one, thank you.
AUDIENCE MEMBER: You're welcome.
THE PRESIDENT: You know, when I was at Camp Lejeune I spoke about what it means for America to see our best and brightest, our finest young men and women serve us. And what I said then is something that I want to repeat to you, which is: You have performed brilliantly in every mission that has been given to you.
AUDIENCE: Ooh-ah.
THE PRESIDENT: Under enormous strain and under enormous sacrifice, through controversy and difficulty and politics, you've kept your eyes focused on just doing your job. And because of that, every mission that's been assigned -- from getting rid of Saddam, to reducing violence, to stabilizing the country, to facilitating elections -- you have given Iraq the opportunity to stand on its own as a democratic country. That is an extraordinary achievement, and for that you have the thanks of the American people. (Applause.) That's point number one.
Point number two is, this is going to be a critical period, these next 18 months. I was just discussing this with your commander, but I think it's something that all of you know. It is time for us to transition to the Iraqis. (Applause.) They need to take responsibility for their country and for their sovereignty. (Applause.)
And in order for them to do that, they have got to make political accommodations. They're going to have to decide that they want to resolve their differences through constitutional means and legal means. They are going to have to focus on providing government services that encourage confidence among their citizens.
All those things they have to do. We can't do it for them. But what we can do is make sure that we are a stalwart partner, that we are working alongside them, that we are committed to their success, that in terms of training their security forces, training their civilian forces in order to achieve a more effective government, they know that they have a steady partner with us.
And so just as we thank you for what you've already accomplished, I want to say thank you because you will be critical in terms of us being able to make sure that Iraq is stable, that it is not a safe haven for terrorists, that it is a good neighbor and a good ally, and we can start bringing our folks home. (Applause.)
So now is not the time to lose focus. We have to be even more focused than we've been in order to achieve success.
The last point I want to make is I know how hard it's been on a lot of you. You've been away from your families, many of you for multiple rotations. You've seen buddies of yours injured and you remember those who have made the ultimate sacrifice.
AUDIENCE: Ooh-ah.
THE PRESIDENT: There are probably some people here who have seen children born and have been missing watching them grow up. There are many of you who have listened to your spouse and the extraordinary sacrifices that they have to make when you're gone.
And so I want you to know that Michelle and myself are doing everything -- (applause) -- are doing everything we can to provide additional support for military families. The federal budget that I have introduced increases support for military families. We are going to do everything required to make sure that the commitment we make to our veterans is met, and that people don't have to fight for what they have earned as a consequence of their service.
The main point I want to make is we have not forgotten what you have already done, we are grateful for what you will do, and as long as I am in the White House, you are going to get the support that you need and the thanks that you deserve from a grateful nation. (Applause.)
So thank you very much everybody. (Applause.) God bless you. (Applause.) God bless the United States of America. (Applause.)
END
6:15 P.M. (L)
Office of the Press Secretary
_________________________________________________________________
For Immediate Release April 7, 2009
REMARKS BY THE PRESIDENT TO THE TROOPS
Al Faw Palace
Baghdad, Iraq
6:08 P.M. (Local)
THE PRESIDENT: Thank you. Thank you, guys. Let me say Multinational Force Iraq, Multinational Corps Iraq, Multinational Security Transition Command Iraq First Corps, America's Corp Band: Thanks to all of you.
Listen, I am so honored.
AUDIENCE MEMBER: We love you.
THE PRESIDENT: I love you back. (Applause.) I am honored -- I'm honored and grateful to be with all of you. And I'm not going to talk long because I want to shake as many hands as I can. (Applause.) And I've been talking all week. (Laughter.)
But there's a couple of things I want to say. Number one, thank you.
AUDIENCE MEMBER: You're welcome.
THE PRESIDENT: You know, when I was at Camp Lejeune I spoke about what it means for America to see our best and brightest, our finest young men and women serve us. And what I said then is something that I want to repeat to you, which is: You have performed brilliantly in every mission that has been given to you.
AUDIENCE: Ooh-ah.
THE PRESIDENT: Under enormous strain and under enormous sacrifice, through controversy and difficulty and politics, you've kept your eyes focused on just doing your job. And because of that, every mission that's been assigned -- from getting rid of Saddam, to reducing violence, to stabilizing the country, to facilitating elections -- you have given Iraq the opportunity to stand on its own as a democratic country. That is an extraordinary achievement, and for that you have the thanks of the American people. (Applause.) That's point number one.
Point number two is, this is going to be a critical period, these next 18 months. I was just discussing this with your commander, but I think it's something that all of you know. It is time for us to transition to the Iraqis. (Applause.) They need to take responsibility for their country and for their sovereignty. (Applause.)
And in order for them to do that, they have got to make political accommodations. They're going to have to decide that they want to resolve their differences through constitutional means and legal means. They are going to have to focus on providing government services that encourage confidence among their citizens.
All those things they have to do. We can't do it for them. But what we can do is make sure that we are a stalwart partner, that we are working alongside them, that we are committed to their success, that in terms of training their security forces, training their civilian forces in order to achieve a more effective government, they know that they have a steady partner with us.
And so just as we thank you for what you've already accomplished, I want to say thank you because you will be critical in terms of us being able to make sure that Iraq is stable, that it is not a safe haven for terrorists, that it is a good neighbor and a good ally, and we can start bringing our folks home. (Applause.)
So now is not the time to lose focus. We have to be even more focused than we've been in order to achieve success.
The last point I want to make is I know how hard it's been on a lot of you. You've been away from your families, many of you for multiple rotations. You've seen buddies of yours injured and you remember those who have made the ultimate sacrifice.
AUDIENCE: Ooh-ah.
THE PRESIDENT: There are probably some people here who have seen children born and have been missing watching them grow up. There are many of you who have listened to your spouse and the extraordinary sacrifices that they have to make when you're gone.
And so I want you to know that Michelle and myself are doing everything -- (applause) -- are doing everything we can to provide additional support for military families. The federal budget that I have introduced increases support for military families. We are going to do everything required to make sure that the commitment we make to our veterans is met, and that people don't have to fight for what they have earned as a consequence of their service.
The main point I want to make is we have not forgotten what you have already done, we are grateful for what you will do, and as long as I am in the White House, you are going to get the support that you need and the thanks that you deserve from a grateful nation. (Applause.)
So thank you very much everybody. (Applause.) God bless you. (Applause.) God bless the United States of America. (Applause.)
END
6:15 P.M. (L)
U.S.-New Zealand Arrangement For Cooperation On Nonproliferation Assistance to Kazakhstan
U.S.-New Zealand Arrangement For Cooperation On Nonproliferation Assistance
Bureau of Public Affairs, Office of the Spokesman, US State Dept
Washington, DC, April 7, 2009
Secretary of State Hillary Rodham Clinton and New Zealand Foreign Minister Murray McCully signed on April 7, 2009, an arrangement for cooperation on nonproliferation assistance. This arrangement supports collaborative work between the United States and New Zealand to secure nuclear and radioactive materials that could be used in a nuclear or radiological weapon and to detect and deter illicit trafficking in these materials by improving monitoring capabilities at priority border crossings, airports, and seaports.
Through this arrangement, New Zealand has pledged to provide NZ$685,000 (approximately US$350,000) to support the U.S. Department of Energy’s National Nuclear Security Administration’s Second Line of Defense program in equipping Kazakhstan’s borders with radiation monitors and providing related infrastructure and training. This contribution builds on the success of a similar arrangement signed in May 2007, through which New Zealand contributed similar assistance to help secure Ukraine’s border.
This arrangement reflects the common conviction on the part of the Governments of the United States and New Zealand that nuclear smuggling is a global threat that requires a coordinated, global response. Secretary Clinton and Foreign Minister McCully have agreed to sign this document today because of the high priority that the United States and New Zealand both place on nonproliferation cooperation.
This contribution results from the efforts of the U.S. Government’s Nuclear Smuggling Outreach Initiative (NSOI), a Department of State-led program that also involves the Department of Energy’s National Nuclear Security Administration and several other U.S. agencies. NSOI engages nations most at risk of nuclear smuggling to jointly identify steps to improve their capabilities to combat that threat. NSOI then works with international donors to identify and coordinate funding to help the vulnerable countries address their needs. New Zealand is one of eleven partners that has joined the United States in supporting anti-nuclear smuggling projects through NSOI. For more information on the Nuclear Smuggling Outreach Initiative, go to www.nsoi-state.net.
Bureau of Public Affairs, Office of the Spokesman, US State Dept
Washington, DC, April 7, 2009
Secretary of State Hillary Rodham Clinton and New Zealand Foreign Minister Murray McCully signed on April 7, 2009, an arrangement for cooperation on nonproliferation assistance. This arrangement supports collaborative work between the United States and New Zealand to secure nuclear and radioactive materials that could be used in a nuclear or radiological weapon and to detect and deter illicit trafficking in these materials by improving monitoring capabilities at priority border crossings, airports, and seaports.
Through this arrangement, New Zealand has pledged to provide NZ$685,000 (approximately US$350,000) to support the U.S. Department of Energy’s National Nuclear Security Administration’s Second Line of Defense program in equipping Kazakhstan’s borders with radiation monitors and providing related infrastructure and training. This contribution builds on the success of a similar arrangement signed in May 2007, through which New Zealand contributed similar assistance to help secure Ukraine’s border.
This arrangement reflects the common conviction on the part of the Governments of the United States and New Zealand that nuclear smuggling is a global threat that requires a coordinated, global response. Secretary Clinton and Foreign Minister McCully have agreed to sign this document today because of the high priority that the United States and New Zealand both place on nonproliferation cooperation.
This contribution results from the efforts of the U.S. Government’s Nuclear Smuggling Outreach Initiative (NSOI), a Department of State-led program that also involves the Department of Energy’s National Nuclear Security Administration and several other U.S. agencies. NSOI engages nations most at risk of nuclear smuggling to jointly identify steps to improve their capabilities to combat that threat. NSOI then works with international donors to identify and coordinate funding to help the vulnerable countries address their needs. New Zealand is one of eleven partners that has joined the United States in supporting anti-nuclear smuggling projects through NSOI. For more information on the Nuclear Smuggling Outreach Initiative, go to www.nsoi-state.net.
Conservative: How not to promote democracy in Cuba and at home
How not to promote democracy in Cuba and at home. By Paul Mirengoff
Washington Examiner, Apr 04, 2009
Momentum is growing in Washington for removing the ban on most travel to Cuba and for lifting or lightening other economic sanctions. This is a subject about which reasonable people can disagree. Unfortunately, there appears to be little room for disagreement within the Senate Democratic caucus.
Let’s start with the merits. U.S. sanctions were originally intended to bring down Castro’s revolutionary regime or, alternatively, to marginalize it.
Sanctions failed on the first score, but succeeded on the second. In less than 20 years, Cuba was transformed, even in the left-liberal imagination, from a romantic cutting-edge society to an impoverished backwater. And Castro was never able to “export” his revolution.
This was due primarily to the underlying weakness of Castro’s model, but sanctions probably made a contribution too. Once Cuba was marginalized, however, the case for maintaining the sanctions came to rest on their ability to help actually change Cuba.
In this, sanctions have not succeeded, and there begins the case for lifting or lightening them. Taking the analysis one step further, liberal Democrats contend that Cuban “engagement” with American tourists and American businesses will make the country a more open one and increase internal pressure for reform.
The problem with this approach is that, like sanctions, it has been tried and found wanting. As Sen. Robert Menendez, D-NJ, points out, millions of Europeans, Canadians, Mexicans, and South Americans have visited Cuba, while their nation’s businesses and governments have invested in the Cuban economy and entered into trade agreements. Yet the regime has not opened up.
Unfortunately, the tyrants who control Cuba have the desire and the means to maintain their control. Neither the infliction of more economic pain on the population through sanctions nor the further lining of the tyrants’ pockets through “engagement” will change this.
Maintaining the sanctions nonetheless increases the likelihood of a democratic Cuba. The next generation of Cuban leaders may be less dead set against loosening the government’s hold on society than the old-time totalitarians. If sanctions remain in place, the prospect that they might be lifted provides the new leaders with an incentive to reform. If sanctions have already been removed or substantially reduced, that particular incentive no longer exists.
The Senate Democrats, though, have decided to accommodate the Cuban regime without seeking any political concessions. And they are brooking no dissent from within their caucus.
Menendez is a dissenter. The son of Cuban immigrants, Menendez has forcefully advocated the continuation of sanctions and travel restrictions.
In response, according to The Washington Post, some of Menendez’s Democratic Senate colleagues are questioning whether he should continue to serve as chairman of the Democratic Senatorial Campaign Committee. The Post also reports that some liberal donors have “protested doing business with a man they [believe] is taking outdated positions.”
This reaction is odd. First, President Obama told the Cuban American National Foundation last year that he would “maintain the embargo [of Cuba] as an inducement for democratic change on the island.” Menendez, then, is in hot water for holding an “outdated” position not that different from the Democratic president’s.
Second, the Democrats don’t need Menendez’s vote. They have the support of influential Republican Richard Lugar and other farm-state Republicans looking for new markets.
Finally, Menendez’s main objection does not even go to the merits of the sanctions; he says he just wants an open debate. He fears, however, that his Democratic colleagues will thwart such a debate by radically altering U.S. policy towards Cuba through language smuggled into unrelated legislation.
“A full and open discussion of the real situation in Cuba is timely,” Menendez concedes. All he demands is that “we gather the evidence, bring a wide range of voices to the table, and make careful and thoughtful considerations of their implications.”
This doesn’t seem like too much to ask – unless you’re questioning liberal Democratic orthodoxy.
Ironically, it is the Republican Party that is portrayed in the mainstream media as doctrinaire and monolithic. Yet throughout the Bush administration, the party tolerated defections from Republican Senators.
The dissenting Senators included not just blue state centrists like Susan Collins, Olympia Snowe, and Arlen Specter, but also, for example, John Sununu (on the Patriotic Act), George Voinovich (on John Bolton’s nomination), Lindsey Graham (on treatment of detainee policy), and John McCain (on detainee policy, tax cuts, etc.) Far from being punished, Specter became chairman of the Senate Judiciary Committee. McCain became the Republican nominee for president.
As a minority party, the Democrats too were reasonably tolerant of dissent, at least on the part of members of Congress from red states or congressional districts. But now that they are in power, and racing to implement a leftist agenda, their acceptance of dissent seems diminished.
The main culprit appears to be the left-wing interest groups that help float the party. As noted above, “liberal donors” say they are reluctant to do business with Menendez due to his “outdated” views about Cuba. And Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee, says he is working to dissuade liberal interest groups from raising money to finance challenges to centrist Democrats.
How the Democrats resolve this matter is their business. But the Party’s aversion to full and open legislative debate should concern all Americans.
Menendez’s fear that the Senate leadership will limit or prevent debate on altering U.S. policy towards Cuba is well-founded. Earlier this year, the Democrats pushed through a trillion dollar stimulus package without hearings, and on a timetable so short that members could not read the legislation before voting on it. Marching in lockstep, every Democratic Senator voted for the legislation without really knowing its contents.
Reasoned debate is not possible when members do not know what they are debating. Neither is responsible legislating.
By limiting public debate and discouraging even internal debate, the Democratic Party shows itself to be increasingly less democratic.
Paul Mirengoff is a lawyer in Washington, D.C., and a principal author of Powerlineblog.com.
Washington Examiner, Apr 04, 2009
Momentum is growing in Washington for removing the ban on most travel to Cuba and for lifting or lightening other economic sanctions. This is a subject about which reasonable people can disagree. Unfortunately, there appears to be little room for disagreement within the Senate Democratic caucus.
Let’s start with the merits. U.S. sanctions were originally intended to bring down Castro’s revolutionary regime or, alternatively, to marginalize it.
Sanctions failed on the first score, but succeeded on the second. In less than 20 years, Cuba was transformed, even in the left-liberal imagination, from a romantic cutting-edge society to an impoverished backwater. And Castro was never able to “export” his revolution.
This was due primarily to the underlying weakness of Castro’s model, but sanctions probably made a contribution too. Once Cuba was marginalized, however, the case for maintaining the sanctions came to rest on their ability to help actually change Cuba.
In this, sanctions have not succeeded, and there begins the case for lifting or lightening them. Taking the analysis one step further, liberal Democrats contend that Cuban “engagement” with American tourists and American businesses will make the country a more open one and increase internal pressure for reform.
The problem with this approach is that, like sanctions, it has been tried and found wanting. As Sen. Robert Menendez, D-NJ, points out, millions of Europeans, Canadians, Mexicans, and South Americans have visited Cuba, while their nation’s businesses and governments have invested in the Cuban economy and entered into trade agreements. Yet the regime has not opened up.
Unfortunately, the tyrants who control Cuba have the desire and the means to maintain their control. Neither the infliction of more economic pain on the population through sanctions nor the further lining of the tyrants’ pockets through “engagement” will change this.
Maintaining the sanctions nonetheless increases the likelihood of a democratic Cuba. The next generation of Cuban leaders may be less dead set against loosening the government’s hold on society than the old-time totalitarians. If sanctions remain in place, the prospect that they might be lifted provides the new leaders with an incentive to reform. If sanctions have already been removed or substantially reduced, that particular incentive no longer exists.
The Senate Democrats, though, have decided to accommodate the Cuban regime without seeking any political concessions. And they are brooking no dissent from within their caucus.
Menendez is a dissenter. The son of Cuban immigrants, Menendez has forcefully advocated the continuation of sanctions and travel restrictions.
In response, according to The Washington Post, some of Menendez’s Democratic Senate colleagues are questioning whether he should continue to serve as chairman of the Democratic Senatorial Campaign Committee. The Post also reports that some liberal donors have “protested doing business with a man they [believe] is taking outdated positions.”
This reaction is odd. First, President Obama told the Cuban American National Foundation last year that he would “maintain the embargo [of Cuba] as an inducement for democratic change on the island.” Menendez, then, is in hot water for holding an “outdated” position not that different from the Democratic president’s.
Second, the Democrats don’t need Menendez’s vote. They have the support of influential Republican Richard Lugar and other farm-state Republicans looking for new markets.
Finally, Menendez’s main objection does not even go to the merits of the sanctions; he says he just wants an open debate. He fears, however, that his Democratic colleagues will thwart such a debate by radically altering U.S. policy towards Cuba through language smuggled into unrelated legislation.
“A full and open discussion of the real situation in Cuba is timely,” Menendez concedes. All he demands is that “we gather the evidence, bring a wide range of voices to the table, and make careful and thoughtful considerations of their implications.”
This doesn’t seem like too much to ask – unless you’re questioning liberal Democratic orthodoxy.
Ironically, it is the Republican Party that is portrayed in the mainstream media as doctrinaire and monolithic. Yet throughout the Bush administration, the party tolerated defections from Republican Senators.
The dissenting Senators included not just blue state centrists like Susan Collins, Olympia Snowe, and Arlen Specter, but also, for example, John Sununu (on the Patriotic Act), George Voinovich (on John Bolton’s nomination), Lindsey Graham (on treatment of detainee policy), and John McCain (on detainee policy, tax cuts, etc.) Far from being punished, Specter became chairman of the Senate Judiciary Committee. McCain became the Republican nominee for president.
As a minority party, the Democrats too were reasonably tolerant of dissent, at least on the part of members of Congress from red states or congressional districts. But now that they are in power, and racing to implement a leftist agenda, their acceptance of dissent seems diminished.
The main culprit appears to be the left-wing interest groups that help float the party. As noted above, “liberal donors” say they are reluctant to do business with Menendez due to his “outdated” views about Cuba. And Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee, says he is working to dissuade liberal interest groups from raising money to finance challenges to centrist Democrats.
How the Democrats resolve this matter is their business. But the Party’s aversion to full and open legislative debate should concern all Americans.
Menendez’s fear that the Senate leadership will limit or prevent debate on altering U.S. policy towards Cuba is well-founded. Earlier this year, the Democrats pushed through a trillion dollar stimulus package without hearings, and on a timetable so short that members could not read the legislation before voting on it. Marching in lockstep, every Democratic Senator voted for the legislation without really knowing its contents.
Reasoned debate is not possible when members do not know what they are debating. Neither is responsible legislating.
By limiting public debate and discouraging even internal debate, the Democratic Party shows itself to be increasingly less democratic.
Paul Mirengoff is a lawyer in Washington, D.C., and a principal author of Powerlineblog.com.
The Supreme Court of Iowa’s decision to redefine marriage abandons reason and replaces it with feelings as the standard of public consensus
Law, Feelings, and Religion at the Bar in Iowa, by Matthew J. Franck
The Supreme Court of Iowa’s decision to redefine marriage abandons reason and replaces it with feelings as the standard of public consensus.
April 07, 2009
What happens when judicial arrogance becomes so habitual as to become second nature? This past Friday, April 3, the Supreme Court of Iowa provided an answer: judicial arrogance transforms into smug self-deception. This is not the question the court thought it was answering. It claimed to be addressing the question of whether “exclusion of a class of Iowans from civil marriage”—namely the “class” of “gay and lesbian people” who wish to marry others of the same sex—can be justified by the state. But the opinion for a unanimous court in Varnum v. Brien, written by Justice Mark Cady, actually says very little about matters of such justification. By contrast, it speaks volumes about the extent to which American judicial power, having burst free of all constraints, is now in the grip of a banal routinization of tyranny so complete that the tyrants do not recognize their own character as they blandly overturn many centuries of civilization in a day’s work.
The evidence of this “banality of tyranny” (to paraphrase Hannah Arendt) is littered throughout Justice Cady’s opinion. We might point to the court’s blithe unconcern for the actual words of the Iowa constitution, which receive no real analysis at all. We might note, as has legal scholar Robert F. Nagel, that the opinion is full of “clunking vocabulary” and “painfully labored analysis” about whether the statute under challenge is subject to the “rational basis test” or to “strict scrutiny” or to something in between called “intermediate scrutiny.” We might remark on the relentless question-begging and the abrupt ipse dixits that drive the court’s choice of the third of these “levels of analysis” and create a simulacrum of reasoning on the part of judges whose minds were clearly made up before any “analysis” was undertaken. We might say something about the bad faith the judges show their fellow Iowans, whose tolerant attitudes about homosexuality, expressed in previous public policy decisions, are exploited to push their state into a brave new world they continue to resist. Or we might join others who have gasped incredulously at the court’s rejection of any argument for the natural family as the best setting for child-rearing as a mere “stereotype” (and this in a dismissive footnote, no less).
We could broaden the discussion to consider the Iowa supreme court’s general impression of its relationship to its state constitution and to the people for whom and by whom it was made. More than once, Justice Cady’s opinion actually cites the undoubted prospect of failure for the cause of same-sex marriage in Iowa’s democratic institutions as a justification for the court’s intervention on the cause’s behalf on allegedly constitutional grounds. The judges, you see, are “free from the influences that tend to make society’s understanding of equal protection resistant to change.” And so when he follows the lead of the U.S. Supreme Court’s 2003 Lawrence v. Texas ruling (overturning a state law criminalizing sodomy), claiming that “the standards of each generation” are the touchstone for understanding what the Constitution says about equality, we know perfectly well that Cady does not mean that democratic majorities will be consulted for discerning what those standards are. No, “a new understanding of equal protection is achieved” whenever the judges say a new thing on the subject. Adorning the opinion with the standard insincere pledge of a “keen and respectful understanding” of separation of powers that is employed by all judicial activists, Cady all but admits that the Iowa supreme court has just amended the state constitution. This is easily done illegitimately by the judiciary, but is a very hard thing for Iowans themselves to do legitimately through the prescribed amendment process. Cady knows this too, remarking that the people can “shape it over time,” while silently passing over the fact that the judiciary can do it in a few minutes on a Friday morning.
We could talk about all these matters at length, but let us instead consider something else in this “legal astonisher” (to borrow Abraham Lincoln’s description of the Dred Scott case). Let us examine the state supreme court’s peculiar view of the role of moral reasoning in legal decision-making, and of the sources of moral principles.
Choosing, as it does, the standard of “intermediate scrutiny” to test the validity of Iowa’s 1998 marriage-protective statute, the court puts the burden of justification on the state. This maneuver masks the essential weakness of the argument for same-sex marriage, which comes finally to this: because some persons are “sexually and romantically attracted to members of their own sex,” and because some of those persons have entered into “committed and loving relationships” with each other, they are entitled to “the personal and public affirmation that accompanies marriage.”
From this vantage point, the feelings individuals have for one another are the authoritative wellspring of moral principle. Now, only a great fool would deny the connection of love and marriage—they go together like a horse and carriage, as Frank Sinatra famously sang. But emotion and desire, without more, are a treacherous foundation for law and public policy. As Pascal remarked, the heart has its reasons of which reason knows nothing. From society’s vantage point, that’s not good enough. Marriage and family are a moral institution—the teacher of right conduct between the sexes, the school of morality for the young, the founding scene of our moral obligations, the refuge from a wider world where respect for those obligations is a much chancier proposition. These may sound like lofty ideals often unrealized, but that both is the point and is beside the point. Society has an interest—none of its interests is higher—in encouraging the successful formation of marriages and families that point by their nature toward the achievement of these ideals. Within the metes and bounds of the law that expresses society’s conclusions about these matters, the rest is up to us.
Hence it is essential that public policy on marriage turn from love, and from lovers’ felt need for “affirmation,” to consider what reasons can be given for this or that way of arranging the family that makes a claim on our attention. Are all “relationships” created equal? Are all of them equally conducive to human flourishing? Is every way of bringing children into the world, or of rearing them, equally deserving of “affirmation”? How many men and/or women does it take to make a marriage that will perform the functions we want marriage to perform? Are children best prepared for healthy, responsible adult lives with both a mother and a father? Natural or “step-” or adopted? With a mother and a father or with “parents”? How many of each?
The laws of marriage and family, of divorce and custody, are efforts to address such questions rationally, if necessarily imperfectly, with the moral health of each party concerned being something to be optimized to the greatest extent possible. In the nature of things, someone’s preferred notion of a “relationship” that needs “affirming” is always going to be left outside the moral pale, or so one would have thought until now. But on the Iowa court, all such questions, answered slowly and haltingly by G.K. Chesterton’s democracy of the dead, the living, and the yet-unborn—otherwise known as “tradition”—are swept aside by the judges’ solicitude for the “excluded” whose self-esteem is wounded. When desire becomes the foundation for a right, beware. Nothing in what passes for reasoning in Justice Cady’s opinion can stand against the next claimant—perhaps the polygamist—who presents himself as needing affirmation for his relationships. This is not a slippery slope we have before us. It is the sight of a levee breaking in a spring flood.
The Iowa court itself presents an alternative to a feelings-based moral reasoning in the final pages of the Varnum opinion. But it presents that alternative in the most thuggish and intellectually dishonest way. Turning to an argument that was not even made by the county officials defending their duty under Iowa law (and thus should not have been discussed by the court at all), Justice Cady imputes to the state legislature a covert motive behind its marriage-protective statute of 1998: “religious opposition to same-sex marriage.” This is what’s really going on: “religious sentiment most likely motivates many, if not most, opponents of same-sex civil marriage.” But this, Cady argues, is constitutionally objectionable for the following reasons: first, there are different religious opinions, some opposing but others approving of same-sex marriage; second, the state government is forbidden to choose between rival religious beliefs; and third, “[s]tate government can have no religious views, either directly or indirectly, expressed through its legislation. . . . This proposition is the essence of the separation of church and state.”
Justice Cady seems not to notice that, by ruling in favor of same-sex marriage, he and his fellow judges, by his own reasoning, have placed the state in the position of endorsing those religious views that approve of same-sex marriage. But that observation only scratches the surface of an argument that is—well, come to think of it—all surface. For the unanimous Iowa court appears incapable of entertaining the most elementary distinction between matters of theology, faith, and worship, on the one hand, and matters of moral reasoning springing from religious conviction on the other. What the opinion calls “religious opposition to same-sex marriage” would more accurately be described as “moral opposition to same-sex marriage springing from religious sources.” It would not go too far to say that religion is the true wellspring of moral thought and action in our civilization. Our own Declaration of Independence—source of what Lincoln called “our ancient faith”—calls upon the Creator as the giver of all our fundamental rights.
Because of the diversity of religious commitments in our society—and because it violates our constitutional morality, and no little part of our dominant religious morality, for anyone to be coerced in matters of faith and practice—we must express our moral opinions to one another in a shared language of reasons and arguments. This does not and cannot mean that the connection of our moral arguments to our religious sentiments is severed when we meet in the public square. But when all the arguments have been aired out, the moral view that prevails at the ballot box and in the legislative halls is entitled to have its way in public policy, barring any explicit constitutional obstacles to its enactment. The “separation of church and state” is not one of those obstacles. If it were, no law with any moral purpose that happened to coincide with the view of any religious community could ever be upheld.
All of this escapes the Iowa justices, whose view seems to be that if a moral argument finds support in any religious commitment, then the promulgation of that argument in law is a violation of the principle of religious disestablishment. This is logically fallacious, historically illiterate, and politically brutish. Recall that juxtaposed with this unremitting hostility to religiously-supported morality is an embrace of the morality of desire. Yet in the Iowa court’s view, religion is itself reduced to mere “feeling,” and so the justices wind up incoherently privileging one kind of feeling over another. Those who desire to marry win out over those who desire to “exclude” them from marrying, and that’s that.
Lost from view is the true ground of our common public morality: reasoned judgment about the natures of things and the good of human persons, families, and communities. About such matters, religion can be instructive (to say the least), while a mere desire to “affirm” our “relationships” cannot be. And so, in both its reductive approach to religion and its empty invocations of feelings, the Iowa Supreme Court has done an injustice to religion, to the possibility of lawful public morality, and—yes—to our relationships themselves.
Matthew J. Franck is professor and chairman of political science at Radford University and a visiting fellow in the James Madison Program at Princeton University.
The Supreme Court of Iowa’s decision to redefine marriage abandons reason and replaces it with feelings as the standard of public consensus.
April 07, 2009
What happens when judicial arrogance becomes so habitual as to become second nature? This past Friday, April 3, the Supreme Court of Iowa provided an answer: judicial arrogance transforms into smug self-deception. This is not the question the court thought it was answering. It claimed to be addressing the question of whether “exclusion of a class of Iowans from civil marriage”—namely the “class” of “gay and lesbian people” who wish to marry others of the same sex—can be justified by the state. But the opinion for a unanimous court in Varnum v. Brien, written by Justice Mark Cady, actually says very little about matters of such justification. By contrast, it speaks volumes about the extent to which American judicial power, having burst free of all constraints, is now in the grip of a banal routinization of tyranny so complete that the tyrants do not recognize their own character as they blandly overturn many centuries of civilization in a day’s work.
The evidence of this “banality of tyranny” (to paraphrase Hannah Arendt) is littered throughout Justice Cady’s opinion. We might point to the court’s blithe unconcern for the actual words of the Iowa constitution, which receive no real analysis at all. We might note, as has legal scholar Robert F. Nagel, that the opinion is full of “clunking vocabulary” and “painfully labored analysis” about whether the statute under challenge is subject to the “rational basis test” or to “strict scrutiny” or to something in between called “intermediate scrutiny.” We might remark on the relentless question-begging and the abrupt ipse dixits that drive the court’s choice of the third of these “levels of analysis” and create a simulacrum of reasoning on the part of judges whose minds were clearly made up before any “analysis” was undertaken. We might say something about the bad faith the judges show their fellow Iowans, whose tolerant attitudes about homosexuality, expressed in previous public policy decisions, are exploited to push their state into a brave new world they continue to resist. Or we might join others who have gasped incredulously at the court’s rejection of any argument for the natural family as the best setting for child-rearing as a mere “stereotype” (and this in a dismissive footnote, no less).
We could broaden the discussion to consider the Iowa supreme court’s general impression of its relationship to its state constitution and to the people for whom and by whom it was made. More than once, Justice Cady’s opinion actually cites the undoubted prospect of failure for the cause of same-sex marriage in Iowa’s democratic institutions as a justification for the court’s intervention on the cause’s behalf on allegedly constitutional grounds. The judges, you see, are “free from the influences that tend to make society’s understanding of equal protection resistant to change.” And so when he follows the lead of the U.S. Supreme Court’s 2003 Lawrence v. Texas ruling (overturning a state law criminalizing sodomy), claiming that “the standards of each generation” are the touchstone for understanding what the Constitution says about equality, we know perfectly well that Cady does not mean that democratic majorities will be consulted for discerning what those standards are. No, “a new understanding of equal protection is achieved” whenever the judges say a new thing on the subject. Adorning the opinion with the standard insincere pledge of a “keen and respectful understanding” of separation of powers that is employed by all judicial activists, Cady all but admits that the Iowa supreme court has just amended the state constitution. This is easily done illegitimately by the judiciary, but is a very hard thing for Iowans themselves to do legitimately through the prescribed amendment process. Cady knows this too, remarking that the people can “shape it over time,” while silently passing over the fact that the judiciary can do it in a few minutes on a Friday morning.
We could talk about all these matters at length, but let us instead consider something else in this “legal astonisher” (to borrow Abraham Lincoln’s description of the Dred Scott case). Let us examine the state supreme court’s peculiar view of the role of moral reasoning in legal decision-making, and of the sources of moral principles.
Choosing, as it does, the standard of “intermediate scrutiny” to test the validity of Iowa’s 1998 marriage-protective statute, the court puts the burden of justification on the state. This maneuver masks the essential weakness of the argument for same-sex marriage, which comes finally to this: because some persons are “sexually and romantically attracted to members of their own sex,” and because some of those persons have entered into “committed and loving relationships” with each other, they are entitled to “the personal and public affirmation that accompanies marriage.”
From this vantage point, the feelings individuals have for one another are the authoritative wellspring of moral principle. Now, only a great fool would deny the connection of love and marriage—they go together like a horse and carriage, as Frank Sinatra famously sang. But emotion and desire, without more, are a treacherous foundation for law and public policy. As Pascal remarked, the heart has its reasons of which reason knows nothing. From society’s vantage point, that’s not good enough. Marriage and family are a moral institution—the teacher of right conduct between the sexes, the school of morality for the young, the founding scene of our moral obligations, the refuge from a wider world where respect for those obligations is a much chancier proposition. These may sound like lofty ideals often unrealized, but that both is the point and is beside the point. Society has an interest—none of its interests is higher—in encouraging the successful formation of marriages and families that point by their nature toward the achievement of these ideals. Within the metes and bounds of the law that expresses society’s conclusions about these matters, the rest is up to us.
Hence it is essential that public policy on marriage turn from love, and from lovers’ felt need for “affirmation,” to consider what reasons can be given for this or that way of arranging the family that makes a claim on our attention. Are all “relationships” created equal? Are all of them equally conducive to human flourishing? Is every way of bringing children into the world, or of rearing them, equally deserving of “affirmation”? How many men and/or women does it take to make a marriage that will perform the functions we want marriage to perform? Are children best prepared for healthy, responsible adult lives with both a mother and a father? Natural or “step-” or adopted? With a mother and a father or with “parents”? How many of each?
The laws of marriage and family, of divorce and custody, are efforts to address such questions rationally, if necessarily imperfectly, with the moral health of each party concerned being something to be optimized to the greatest extent possible. In the nature of things, someone’s preferred notion of a “relationship” that needs “affirming” is always going to be left outside the moral pale, or so one would have thought until now. But on the Iowa court, all such questions, answered slowly and haltingly by G.K. Chesterton’s democracy of the dead, the living, and the yet-unborn—otherwise known as “tradition”—are swept aside by the judges’ solicitude for the “excluded” whose self-esteem is wounded. When desire becomes the foundation for a right, beware. Nothing in what passes for reasoning in Justice Cady’s opinion can stand against the next claimant—perhaps the polygamist—who presents himself as needing affirmation for his relationships. This is not a slippery slope we have before us. It is the sight of a levee breaking in a spring flood.
The Iowa court itself presents an alternative to a feelings-based moral reasoning in the final pages of the Varnum opinion. But it presents that alternative in the most thuggish and intellectually dishonest way. Turning to an argument that was not even made by the county officials defending their duty under Iowa law (and thus should not have been discussed by the court at all), Justice Cady imputes to the state legislature a covert motive behind its marriage-protective statute of 1998: “religious opposition to same-sex marriage.” This is what’s really going on: “religious sentiment most likely motivates many, if not most, opponents of same-sex civil marriage.” But this, Cady argues, is constitutionally objectionable for the following reasons: first, there are different religious opinions, some opposing but others approving of same-sex marriage; second, the state government is forbidden to choose between rival religious beliefs; and third, “[s]tate government can have no religious views, either directly or indirectly, expressed through its legislation. . . . This proposition is the essence of the separation of church and state.”
Justice Cady seems not to notice that, by ruling in favor of same-sex marriage, he and his fellow judges, by his own reasoning, have placed the state in the position of endorsing those religious views that approve of same-sex marriage. But that observation only scratches the surface of an argument that is—well, come to think of it—all surface. For the unanimous Iowa court appears incapable of entertaining the most elementary distinction between matters of theology, faith, and worship, on the one hand, and matters of moral reasoning springing from religious conviction on the other. What the opinion calls “religious opposition to same-sex marriage” would more accurately be described as “moral opposition to same-sex marriage springing from religious sources.” It would not go too far to say that religion is the true wellspring of moral thought and action in our civilization. Our own Declaration of Independence—source of what Lincoln called “our ancient faith”—calls upon the Creator as the giver of all our fundamental rights.
Because of the diversity of religious commitments in our society—and because it violates our constitutional morality, and no little part of our dominant religious morality, for anyone to be coerced in matters of faith and practice—we must express our moral opinions to one another in a shared language of reasons and arguments. This does not and cannot mean that the connection of our moral arguments to our religious sentiments is severed when we meet in the public square. But when all the arguments have been aired out, the moral view that prevails at the ballot box and in the legislative halls is entitled to have its way in public policy, barring any explicit constitutional obstacles to its enactment. The “separation of church and state” is not one of those obstacles. If it were, no law with any moral purpose that happened to coincide with the view of any religious community could ever be upheld.
All of this escapes the Iowa justices, whose view seems to be that if a moral argument finds support in any religious commitment, then the promulgation of that argument in law is a violation of the principle of religious disestablishment. This is logically fallacious, historically illiterate, and politically brutish. Recall that juxtaposed with this unremitting hostility to religiously-supported morality is an embrace of the morality of desire. Yet in the Iowa court’s view, religion is itself reduced to mere “feeling,” and so the justices wind up incoherently privileging one kind of feeling over another. Those who desire to marry win out over those who desire to “exclude” them from marrying, and that’s that.
Lost from view is the true ground of our common public morality: reasoned judgment about the natures of things and the good of human persons, families, and communities. About such matters, religion can be instructive (to say the least), while a mere desire to “affirm” our “relationships” cannot be. And so, in both its reductive approach to religion and its empty invocations of feelings, the Iowa Supreme Court has done an injustice to religion, to the possibility of lawful public morality, and—yes—to our relationships themselves.
Matthew J. Franck is professor and chairman of political science at Radford University and a visiting fellow in the James Madison Program at Princeton University.
WSJ Editorial: The Silicosis Abdication
The Silicosis Abdication. WSJ Editorial
A scam that deserves as much scrutiny as Lerach and Scruggs.
WSJ, Apr 07, 2009
It is going on four years since a Texas judge blew the whistle on widespread silicosis fraud, exposing a ring of doctors and lawyers who ginned up phony litigation to reap jackpot payouts. So where's the enforcement follow-up?
That's an especially apt question given news that New York's State Board for Professional Medical Conduct has finally revoked the license of Dr. Ray Harron. He was among the doctors who Texas Judge Janis Graham Jack showed had fraudulently diagnosed thousands of plaintiffs with silicosis, a rare lung disease. These doctors were later called to testify in Congress, where many, including Dr. Harron, took the Fifth Amendment.
Dr. Harron has since lost his medical licenses in California, New Mexico, Texas, Florida, North Carolina and Mississippi. This is progress, though hardly sufficient. Among the questions Congress asked state departments of health during the silicosis hearings were why those bodies hadn't moved to shut down these doctors and their mobile X-ray vans at the time they were committing medical malpractice.
New York is belatedly joining the queue, and its order stripping Dr. Harron of his license is particularly noteworthy. After outlining his unethical actions, and citing other medical boards that had denied him a new license, it summarized: "[Dr. Harron] was part of an operation to find plaintiffs with silicosis whether or not they really had silicosis. This is perpetrating a fraud on the courts."
Precisely. The question is what anybody else is doing about it. Judge Jack's findings inspired U.S. attorneys in the Southern District of New York to convene a grand jury investigation into silicosis fraud. The criminal division of the Texas state attorney general also went this route. We know both juries subpoenaed doctors and documents involved in the Jack case. While these physicians bear responsibility for negligent medical practices, the Jack trial and Congressional hearings made clear that many were taking orders from the trial bar. Dr. Harron has stated in court that he "capitulated" to attorney demands that he include inaccurate language in his silicosis reports.
Yet these grand juries have yet to result in prosecutions. The feds and Texas aside, it would seem incumbent upon New York State Attorney General Andrew Cuomo to follow up on his own state medical board's determination of fraud. A follow-up is especially important given that, prior to their silicosis escapade, these doctors made millions working for trial attorneys on asbestos. According to the Johns Manville Bankruptcy Trust, six of the doctors at the center of the silicosis fraud were also responsible for at least 140,000 asbestos-lawsuit diagnoses. Dr. Harron alone diagnosed an astonishing 51,048 people with asbestos-related disease.
The silicosis litigation machine broke down after Judge Jack's ruling, yet hundreds of thousands of phony asbestos-related diagnoses continue to clog courts. An Ohio state court in 2006 dismissed all cases that relied solely on Dr. Harron, and a federal court in Philadelphia recently did the same. But with medical boards now admitting these doctors were at the center of silicosis schemes to defraud courts, prosecutors ought to pursue their role in asbestos too.
The silicosis and asbestos scams are as corrosive to justice in their way as the cases that resulted in convictions for Bill Lerach, Dickie Scruggs and Melvyn Weiss for kickbacks or bribery. The difference is that these asbestos cases are still in court.
A scam that deserves as much scrutiny as Lerach and Scruggs.
WSJ, Apr 07, 2009
It is going on four years since a Texas judge blew the whistle on widespread silicosis fraud, exposing a ring of doctors and lawyers who ginned up phony litigation to reap jackpot payouts. So where's the enforcement follow-up?
That's an especially apt question given news that New York's State Board for Professional Medical Conduct has finally revoked the license of Dr. Ray Harron. He was among the doctors who Texas Judge Janis Graham Jack showed had fraudulently diagnosed thousands of plaintiffs with silicosis, a rare lung disease. These doctors were later called to testify in Congress, where many, including Dr. Harron, took the Fifth Amendment.
Dr. Harron has since lost his medical licenses in California, New Mexico, Texas, Florida, North Carolina and Mississippi. This is progress, though hardly sufficient. Among the questions Congress asked state departments of health during the silicosis hearings were why those bodies hadn't moved to shut down these doctors and their mobile X-ray vans at the time they were committing medical malpractice.
New York is belatedly joining the queue, and its order stripping Dr. Harron of his license is particularly noteworthy. After outlining his unethical actions, and citing other medical boards that had denied him a new license, it summarized: "[Dr. Harron] was part of an operation to find plaintiffs with silicosis whether or not they really had silicosis. This is perpetrating a fraud on the courts."
Precisely. The question is what anybody else is doing about it. Judge Jack's findings inspired U.S. attorneys in the Southern District of New York to convene a grand jury investigation into silicosis fraud. The criminal division of the Texas state attorney general also went this route. We know both juries subpoenaed doctors and documents involved in the Jack case. While these physicians bear responsibility for negligent medical practices, the Jack trial and Congressional hearings made clear that many were taking orders from the trial bar. Dr. Harron has stated in court that he "capitulated" to attorney demands that he include inaccurate language in his silicosis reports.
Yet these grand juries have yet to result in prosecutions. The feds and Texas aside, it would seem incumbent upon New York State Attorney General Andrew Cuomo to follow up on his own state medical board's determination of fraud. A follow-up is especially important given that, prior to their silicosis escapade, these doctors made millions working for trial attorneys on asbestos. According to the Johns Manville Bankruptcy Trust, six of the doctors at the center of the silicosis fraud were also responsible for at least 140,000 asbestos-lawsuit diagnoses. Dr. Harron alone diagnosed an astonishing 51,048 people with asbestos-related disease.
The silicosis litigation machine broke down after Judge Jack's ruling, yet hundreds of thousands of phony asbestos-related diagnoses continue to clog courts. An Ohio state court in 2006 dismissed all cases that relied solely on Dr. Harron, and a federal court in Philadelphia recently did the same. But with medical boards now admitting these doctors were at the center of silicosis schemes to defraud courts, prosecutors ought to pursue their role in asbestos too.
The silicosis and asbestos scams are as corrosive to justice in their way as the cases that resulted in convictions for Bill Lerach, Dickie Scruggs and Melvyn Weiss for kickbacks or bribery. The difference is that these asbestos cases are still in court.
An Idea for Mr. Summers: He could pay higher taxes—if he thought that was right
An Idea for Mr. Summers. WSJ Editorial
He could pay higher taxes—if he thought that was right.
WSJ, Apr 07, 2009
Larry Summers, the White House economic guru, is taking some hits from the left after his official disclosure forms revealed late last week that he got rich thanks to the financial industry he is now charged with reviving and reregulating.
The appearance-of-a-conflict-of-interest crowd isn't happy that Mr. Summers earned $5.2 million last year working for the beneficent hedge fund, D. E. Shaw & Co. He also made a bundle in speaking fees, including $135,000 for a single appearance for Goldman Sachs. That must have been some stemwinder, though we're confident Goldman figures it didn't overpay given Mr. Summers's later White House prominence.
We've got nothing against getting rich, though it is worth noting that Mr. Summers will pay Bush-era tax rates on his Wall Street windfall profit. So if the man who would still like to be Federal Reserve Chairman is looking to make a gesture of political solidarity with the middle-class masses, here's an idea: Honor your principles, and pay taxes on that income at Bill Clinton-Barack Obama rates.
Mr. Summers could simply calculate his taxes for 2008 based on what he'd pay if President Obama's tax proposals had been law. Thus his top marginal income tax rate would rise from 35% to 39.6%, plus the phase outs in deductions and exemptions, which would make the rate roughly 41.6%. Mr. Summers could write a check to the IRS for the difference. And of course he wouldn't forget to deduct any charitable giving at only 28 cents on the dollar, rather than 35 or 41.6 cents.
Mr. Obama likes to say it's the "era of responsibility," and if that's true then we assume Mr. Summers will want to lead by example.
He could pay higher taxes—if he thought that was right.
WSJ, Apr 07, 2009
Larry Summers, the White House economic guru, is taking some hits from the left after his official disclosure forms revealed late last week that he got rich thanks to the financial industry he is now charged with reviving and reregulating.
The appearance-of-a-conflict-of-interest crowd isn't happy that Mr. Summers earned $5.2 million last year working for the beneficent hedge fund, D. E. Shaw & Co. He also made a bundle in speaking fees, including $135,000 for a single appearance for Goldman Sachs. That must have been some stemwinder, though we're confident Goldman figures it didn't overpay given Mr. Summers's later White House prominence.
We've got nothing against getting rich, though it is worth noting that Mr. Summers will pay Bush-era tax rates on his Wall Street windfall profit. So if the man who would still like to be Federal Reserve Chairman is looking to make a gesture of political solidarity with the middle-class masses, here's an idea: Honor your principles, and pay taxes on that income at Bill Clinton-Barack Obama rates.
Mr. Summers could simply calculate his taxes for 2008 based on what he'd pay if President Obama's tax proposals had been law. Thus his top marginal income tax rate would rise from 35% to 39.6%, plus the phase outs in deductions and exemptions, which would make the rate roughly 41.6%. Mr. Summers could write a check to the IRS for the difference. And of course he wouldn't forget to deduct any charitable giving at only 28 cents on the dollar, rather than 35 or 41.6 cents.
Mr. Obama likes to say it's the "era of responsibility," and if that's true then we assume Mr. Summers will want to lead by example.
Tobacco cessation therapies, cell phone towers, &c.
ACSH Dispatches Round-Up: Tobacco cessation therapies, cell phone towers, &c. By Elizabeth Wade
ACSH, Apr 04, 2009
April 3, 2009
Congress's Pro-Smoking Bill and Anti-Book Law, plus Radiation Hysteria
Quitting smoking just got harder
A story about a study concluding that smokers who use nicotine replacement therapy are twice as likely to quit for six months than those who were given placebos reminds us of the dire straits we are in with regard to tobacco cessation therapy. What isn't reported until the end of the news story is that only 6.75% of the smokers given the nicotine replacement therapy managed to quit for six months -- and only half of them are expected to remain smoke-free in the future.
"These abysmal quit rates show that our current smoking cessation therapies are almost never effective," says ACSH's Dr. Gilbert Ross. "People who close their eyes to alternative cessation therapies, such as smokeless tobacco as harm reduction, are being ostriches at the expense of the over 40 million addicted smokers in this country -- and who knows how many millions around the world."
Unfortunately, the U.S. took a step in the wrong direction yesterday when the House of Representatives passed the Kennedy-Waxman bill giving the FDA regulatory control of tobacco and defeated Rep. Steven Buyer's (R-IN) harm reduction amendment in a 284-142 vote. Lawmakers expect a tighter vote in the Senate, and ACSH looks forward to offering our science-based perspective to the continuing debate. We wholeheartedly agree with Rep. Buyer when he says, "Effectively giving an FDA stamp of approval on cigarettes will improperly lead people to believe that these products are safe, and they really aren't. We want to move people from smoking down the continuum of risk to eventually quitting."
The current battle over the e-cigarette illustrates the problems with our country's approach to tobacco policy. The e-cigarette delivers a hit of nicotine vapor when a person "smokes" it, so smokers who are trying to quit can satisfy their craving without inhaling the harmful products of combustion produced by cigarettes. But because the FDA has yet to approve the e-cigarette as a nicotine-delivery device, this new technology could be banned until it undergoes the approval process. "You can't blame the FDA for enforcing the law, but we have bad laws about tobacco that lead to bad public policy outcomes," says ACSH's Jeff Stier.
Attack of the cell phone towers!
A group of Staten Island parents and lawmakers are up in arms about the possibility of cell phone towers sending low-level radiation into a nearby school. "When they traced the source of radiation, which was above average but not dangerous, they found that it wasn't connected to the cell phone towers at all," Dr. Ross remarks. "But they are still trying to get them removed!"
Dr. Whelan adds, "When people believe scares like this they become totally irrational. When they really believe that these towers are emitting dangerous levels of radiation, how do you convince them otherwise?"
Dr. Ross jokes, "The only way to appease them seems to be getting all the students at this school metal helmets." ACSH debunked the wrongheaded notion that cell phones cause brain cancer in our Top 10 Unfounded Health Scares of 2008. For more information, see our publication The Health Effects of Low-Level Radiation.
CPSIA remains intact, Prop 65 grows even more ridiculous
Unfortunately, the Senate rejected Senator Jim DeMint's (R-SC) amendment to the stimulus bill that would have reformed the Consumer Product Safety Improvement Act (CPSIA). "The Senate failed to take a breath of fresh air," Stier says. As we have written before, the CPSIA places an impossible burden on many small businesses by banning certain types of phthalates and requiring that every children's product be tested for minuscule levels of lead. If a business can't afford the expensive testing, it must throw out the products -- even all-terrain vehicles (ATVs) and children's books!
As summarized so succinctly in today's Wall Street Journal editorial, "With one stroke of the regulatory pen, an estimated $100 million of inventory can't be sold, and the industry loss may reach $1 billion."
In California, we see the results of another absurdly stringent "public health" measure, Proposition 65, which requires warnings to accompany any product that contains "toxic chemicals." To avoid lawsuits, businesses in the state have taken to posting frivolous "warning signs" about products that do not pose any danger to consumers' health.
"Prop 65 is not based on health or science, but rather perceptions and politics," Dr. Ross says. For more on the consequences of the misguided law, check out Stier's op-ed "Perils of Global Warnings" from the Washington Times.
ACSH, Apr 04, 2009
April 3, 2009
Congress's Pro-Smoking Bill and Anti-Book Law, plus Radiation Hysteria
Quitting smoking just got harder
A story about a study concluding that smokers who use nicotine replacement therapy are twice as likely to quit for six months than those who were given placebos reminds us of the dire straits we are in with regard to tobacco cessation therapy. What isn't reported until the end of the news story is that only 6.75% of the smokers given the nicotine replacement therapy managed to quit for six months -- and only half of them are expected to remain smoke-free in the future.
"These abysmal quit rates show that our current smoking cessation therapies are almost never effective," says ACSH's Dr. Gilbert Ross. "People who close their eyes to alternative cessation therapies, such as smokeless tobacco as harm reduction, are being ostriches at the expense of the over 40 million addicted smokers in this country -- and who knows how many millions around the world."
Unfortunately, the U.S. took a step in the wrong direction yesterday when the House of Representatives passed the Kennedy-Waxman bill giving the FDA regulatory control of tobacco and defeated Rep. Steven Buyer's (R-IN) harm reduction amendment in a 284-142 vote. Lawmakers expect a tighter vote in the Senate, and ACSH looks forward to offering our science-based perspective to the continuing debate. We wholeheartedly agree with Rep. Buyer when he says, "Effectively giving an FDA stamp of approval on cigarettes will improperly lead people to believe that these products are safe, and they really aren't. We want to move people from smoking down the continuum of risk to eventually quitting."
The current battle over the e-cigarette illustrates the problems with our country's approach to tobacco policy. The e-cigarette delivers a hit of nicotine vapor when a person "smokes" it, so smokers who are trying to quit can satisfy their craving without inhaling the harmful products of combustion produced by cigarettes. But because the FDA has yet to approve the e-cigarette as a nicotine-delivery device, this new technology could be banned until it undergoes the approval process. "You can't blame the FDA for enforcing the law, but we have bad laws about tobacco that lead to bad public policy outcomes," says ACSH's Jeff Stier.
Attack of the cell phone towers!
A group of Staten Island parents and lawmakers are up in arms about the possibility of cell phone towers sending low-level radiation into a nearby school. "When they traced the source of radiation, which was above average but not dangerous, they found that it wasn't connected to the cell phone towers at all," Dr. Ross remarks. "But they are still trying to get them removed!"
Dr. Whelan adds, "When people believe scares like this they become totally irrational. When they really believe that these towers are emitting dangerous levels of radiation, how do you convince them otherwise?"
Dr. Ross jokes, "The only way to appease them seems to be getting all the students at this school metal helmets." ACSH debunked the wrongheaded notion that cell phones cause brain cancer in our Top 10 Unfounded Health Scares of 2008. For more information, see our publication The Health Effects of Low-Level Radiation.
CPSIA remains intact, Prop 65 grows even more ridiculous
Unfortunately, the Senate rejected Senator Jim DeMint's (R-SC) amendment to the stimulus bill that would have reformed the Consumer Product Safety Improvement Act (CPSIA). "The Senate failed to take a breath of fresh air," Stier says. As we have written before, the CPSIA places an impossible burden on many small businesses by banning certain types of phthalates and requiring that every children's product be tested for minuscule levels of lead. If a business can't afford the expensive testing, it must throw out the products -- even all-terrain vehicles (ATVs) and children's books!
As summarized so succinctly in today's Wall Street Journal editorial, "With one stroke of the regulatory pen, an estimated $100 million of inventory can't be sold, and the industry loss may reach $1 billion."
In California, we see the results of another absurdly stringent "public health" measure, Proposition 65, which requires warnings to accompany any product that contains "toxic chemicals." To avoid lawsuits, businesses in the state have taken to posting frivolous "warning signs" about products that do not pose any danger to consumers' health.
"Prop 65 is not based on health or science, but rather perceptions and politics," Dr. Ross says. For more on the consequences of the misguided law, check out Stier's op-ed "Perils of Global Warnings" from the Washington Times.
Monday, April 6, 2009
Trees are growing faster and could buy time to halt global warming
Trees are growing faster and could buy time to halt global warming. By Urmee Khan
The Telegraph, Apr 06. 2009, 9:01AM BST
The phenomenon has been discovered in a variety of flora, ranging from tropical rainforests to British sugar beet crops.
It means they are soaking up at least some of the billions of tons of CO2 released into the atmosphere by humans that would otherwise be accelerating the rate of climate change.Plants survive by extracting CO2 from the air and using sunlight to convert it into proteins and sugars.
Since 1750 the concentration in the air has risen from of CO2 278 parts per million (ppm) to more than 380 ppm, making it easier for plants to acquire the CO2 needed for rapid growth.
A study by the University of Leeds, published in the science journal Nature, measured the girth of 70,000 trees across 10 African countries and compared them with similar records made four decades ago.
On average, the trees were getting bigger faster and researchers found that each hectare of African forest was trapping an extra 0.6 tons of CO2 a year compared with the 1960s.
If this is replicated across the world's tropical rainforests they would be removing nearly 5 billion tons of CO2 a year from the atmosphere.
Scientists have been looking for a similar impact on crop yields and the experiments generally suggest that raised CO2 levels would boost the yields of mainstream crops, such as maize, rice and soy, by about 13 per cent.
Professor Martin Parry, head of plant science at Rothamsted Research, Britain's leading crop institute, said: "There is no doubt that the enrichment of the air with CO2 is increasing plant growth rates in many areas.
"The problem is that humans are releasing so much that plants can remove only a fraction of it," he said.
Humans are believed to generate about 50 billion tons of the gas each year.
However, scientists have warned against drawing false comfort from such findings. They point out that although levels will boost plant growth, other factors associated with climate change, such as rising temperatures and drought, are likely to have a negative effect.
Fred Pearce, environment consultant for New Scientist, said: "We know that trees do absorb carbon dioxide from the atmosphere and about half is taken up from nature and half of that is by forests. But it doesn't change the story greenhouse gases are accumulating more than 2 per cent a year.
"It won't buy us much time as humans are releasing much more CO2 into the air, but it is useful information if it helps to protect existing forests."
The Telegraph, Apr 06. 2009, 9:01AM BST
The phenomenon has been discovered in a variety of flora, ranging from tropical rainforests to British sugar beet crops.
It means they are soaking up at least some of the billions of tons of CO2 released into the atmosphere by humans that would otherwise be accelerating the rate of climate change.Plants survive by extracting CO2 from the air and using sunlight to convert it into proteins and sugars.
Since 1750 the concentration in the air has risen from of CO2 278 parts per million (ppm) to more than 380 ppm, making it easier for plants to acquire the CO2 needed for rapid growth.
A study by the University of Leeds, published in the science journal Nature, measured the girth of 70,000 trees across 10 African countries and compared them with similar records made four decades ago.
On average, the trees were getting bigger faster and researchers found that each hectare of African forest was trapping an extra 0.6 tons of CO2 a year compared with the 1960s.
If this is replicated across the world's tropical rainforests they would be removing nearly 5 billion tons of CO2 a year from the atmosphere.
Scientists have been looking for a similar impact on crop yields and the experiments generally suggest that raised CO2 levels would boost the yields of mainstream crops, such as maize, rice and soy, by about 13 per cent.
Professor Martin Parry, head of plant science at Rothamsted Research, Britain's leading crop institute, said: "There is no doubt that the enrichment of the air with CO2 is increasing plant growth rates in many areas.
"The problem is that humans are releasing so much that plants can remove only a fraction of it," he said.
Humans are believed to generate about 50 billion tons of the gas each year.
However, scientists have warned against drawing false comfort from such findings. They point out that although levels will boost plant growth, other factors associated with climate change, such as rising temperatures and drought, are likely to have a negative effect.
Fred Pearce, environment consultant for New Scientist, said: "We know that trees do absorb carbon dioxide from the atmosphere and about half is taken up from nature and half of that is by forests. But it doesn't change the story greenhouse gases are accumulating more than 2 per cent a year.
"It won't buy us much time as humans are releasing much more CO2 into the air, but it is useful information if it helps to protect existing forests."
The Chairman of the Joint Chiefs of Staff on the nuclear threat from Tehran
Warnings on Iran. WSJ Editorial
The Chairman of the Joint Chiefs of Staff on the nuclear threat from Tehran.
WSJ, Apr 06, 2009
Benjamin Netanyahu formally became Israel's Prime Minister last week, and he could not have been blunter about the strategic challenge ahead: "It is a mark of disgrace for humanity that several decades after the Holocaust the world's response to the calls by Iran's leader to destroy the state of Israel is weak, there is no condemnation and decisive measures -- almost as if dismissed as routine." He added, "We cannot afford to take lightly megalomaniac tyrants who threaten to annihilate us."
Americans in key positions have noticed this Israeli message. In a meeting Thursday at the Journal, Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, told us that "there is a leadership in Israel that is not going to tolerate" a nuclear Iran. Tehran's atomic designs, he said, were a matter of "life or death" for the Jewish state. "The operative word is 'existential.'" When we asked him whether Israel was capable of inflicting meaningful damage to Iran's nuclear installations, his answer was a simple "Yes."
The Admiral was also clear about Iran's challenge to the U.S. "I think we've got a problem now. . . . I think the Iranians are on a path to building nuclear weapons." For the time being his counsel is diplomacy, noting that "Even in the darkest days of the Cold War we talked to the Soviets." But, he added, "we don't have a lot of time."
If Israel decides to strike Iran the consequences -- intended and unintended -- will be felt far and wide, including in Iraq where, Admiral Mullen says, Iran's ability to cause mayhem "has not maxed out at all." We thought readers might like to know how the Chairman sees the threat, and how well he appreciates Israel's peril.
The Chairman of the Joint Chiefs of Staff on the nuclear threat from Tehran.
WSJ, Apr 06, 2009
Benjamin Netanyahu formally became Israel's Prime Minister last week, and he could not have been blunter about the strategic challenge ahead: "It is a mark of disgrace for humanity that several decades after the Holocaust the world's response to the calls by Iran's leader to destroy the state of Israel is weak, there is no condemnation and decisive measures -- almost as if dismissed as routine." He added, "We cannot afford to take lightly megalomaniac tyrants who threaten to annihilate us."
Americans in key positions have noticed this Israeli message. In a meeting Thursday at the Journal, Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, told us that "there is a leadership in Israel that is not going to tolerate" a nuclear Iran. Tehran's atomic designs, he said, were a matter of "life or death" for the Jewish state. "The operative word is 'existential.'" When we asked him whether Israel was capable of inflicting meaningful damage to Iran's nuclear installations, his answer was a simple "Yes."
The Admiral was also clear about Iran's challenge to the U.S. "I think we've got a problem now. . . . I think the Iranians are on a path to building nuclear weapons." For the time being his counsel is diplomacy, noting that "Even in the darkest days of the Cold War we talked to the Soviets." But, he added, "we don't have a lot of time."
If Israel decides to strike Iran the consequences -- intended and unintended -- will be felt far and wide, including in Iraq where, Admiral Mullen says, Iran's ability to cause mayhem "has not maxed out at all." We thought readers might like to know how the Chairman sees the threat, and how well he appreciates Israel's peril.
Ukraine Powers Chinese Carriers
Ukraine Powers Chinese Carriers
Strategy Page, April 6, 2009
China is working closely with Ukraine to supply key components for the aircraft carriers China is building. Ukraine supplied many components for Russian carriers back in the days of the Soviet Union (which Ukraine was a part of). Now independent, Ukraine is eager to find customers for local manufacturers that can produce carrier components. Russia is no longer building carriers, despite talk of restarting that program.
Last year, Chinese officials visited Ukraine and inspected the naval aviation training facilities that were built there before the Soviet Union dissolved. Ukraine wants to use those facilities to establish an international center for training carrier aviators.
A major Ukrainian product the Chinese are interested in are ship engines, especially the large ones a carrier would require. Chinese gas turbines are not all that efficient and reliable. The Ukrainian UGT-16000 and UGT-25000 turbines, developed from the DT-59 they have been making since 1975, are major competitors for General Electric models used in large ships. Ukrainian firms build a number of other world class components for large ships, and China is looking to acquire equipment, and technology. Ukraine is aware of the fact that the Chinese steal technology, but right now Ukraine needs the business, and China needs the turbines.
Strategy Page, April 6, 2009
China is working closely with Ukraine to supply key components for the aircraft carriers China is building. Ukraine supplied many components for Russian carriers back in the days of the Soviet Union (which Ukraine was a part of). Now independent, Ukraine is eager to find customers for local manufacturers that can produce carrier components. Russia is no longer building carriers, despite talk of restarting that program.
Last year, Chinese officials visited Ukraine and inspected the naval aviation training facilities that were built there before the Soviet Union dissolved. Ukraine wants to use those facilities to establish an international center for training carrier aviators.
A major Ukrainian product the Chinese are interested in are ship engines, especially the large ones a carrier would require. Chinese gas turbines are not all that efficient and reliable. The Ukrainian UGT-16000 and UGT-25000 turbines, developed from the DT-59 they have been making since 1975, are major competitors for General Electric models used in large ships. Ukrainian firms build a number of other world class components for large ships, and China is looking to acquire equipment, and technology. Ukraine is aware of the fact that the Chinese steal technology, but right now Ukraine needs the business, and China needs the turbines.
WSJ Editorial Page on North Korea's Launch: The condemnations will probably soon become concessions
The Song of Kim Jong Il. WSJ Editorial
The condemnations will probably soon become concessions.
WSJ, Apr 06, 2009
A few hours after the launch Sunday of a long-range multistage rocket, North Korea's state media proclaimed that a communications satellite was in orbit and transmitting "immortal revolutionary paeans" back to Earth. The U.S. military, which apparently had trouble tuning in the "Song of General Kim Il Sung," announced that the satellite had fallen into the Pacific somewhere between Japan and Hawaii.
The technology may have failed to put a satellite into space, but North Korea's launch has succeeded in getting the world's attention. Most of the civilized world spent yesterday denouncing dictator Kim Jong Il's latest provocation, which violated a United Nations Security Council resolution barring the North from testing ballistic missile technology. However, if the international response keeps with past practice, the condemnations will soon give way to concessions. No wonder Kim keeps launching missiles.
The launch was a success, too, as a global advertisement to those in the market for vehicles to deliver weapons of mass destruction. That includes the North's No. 1 customer, Iran, which in February launched a small satellite thanks in part to North Korean missile technology. Iranian observers were reportedly on hand over the weekend at the launch site.
Sunday's fizzle doesn't mean the North didn't learn anything useful for the future of its long-range ballistic missile program. As learning tools, failures can be more instructive than successes, and the Taepodong-2 missile under development has the potential to reach the U.S. West Coast.
Pyongyang's action ought to prompt the Obama Administration to advance the fledgling missile defense system started by President Bush. Instead, the White House reportedly has told the Pentagon to cut spending on missile defense by $2 billion, or about 20%. Defense Secretary Robert Gates is expected to announce these and other budget cuts today.
Programs in jeopardy include the Airborne Laser, a modified 747 designed to take out ballistic missiles seconds after liftoff; expansion of the ground-based interceptor program in Alaska and California; and space-based missile surveillance and tracking. All three are part of the vision for a layered defense, in which the U.S. has several chances to destroy incoming missiles. The Obama Administration has already indicated it wants to go slow in building the "third site," the Europe-based radar and interceptors that would provide another layer of defense from Iranian missiles for the U.S. East Coast.
In 2006, Mr. Bush and Secretary of State Condoleezza Rice squandered the moment after the North's nuclear test when China was ready to apply serious pressure. Instead, they bought Kim's promise to give up his weapons, then let him delay and renegotiate the terms as he went, including agreeing to Kim's demand to take North Korea off the U.S. list of terror-sponsoring nations. Now he's playing the same brinksmanship with the Obama Administration.
This is Mr. Obama's chance to do better. But based on his comments during the campaign, as well as his statement yesterday urging renewed efforts through the Six Party Talks, the President seems unlikely to change course. Kim has every reason to expect that he will eventually get what he wants -- more recognition, more money and energy supplies from the U.S., China and South Korea, and a high likelihood that he'll get to keep his nukes and missiles too.
The condemnations will probably soon become concessions.
WSJ, Apr 06, 2009
A few hours after the launch Sunday of a long-range multistage rocket, North Korea's state media proclaimed that a communications satellite was in orbit and transmitting "immortal revolutionary paeans" back to Earth. The U.S. military, which apparently had trouble tuning in the "Song of General Kim Il Sung," announced that the satellite had fallen into the Pacific somewhere between Japan and Hawaii.
The technology may have failed to put a satellite into space, but North Korea's launch has succeeded in getting the world's attention. Most of the civilized world spent yesterday denouncing dictator Kim Jong Il's latest provocation, which violated a United Nations Security Council resolution barring the North from testing ballistic missile technology. However, if the international response keeps with past practice, the condemnations will soon give way to concessions. No wonder Kim keeps launching missiles.
The launch was a success, too, as a global advertisement to those in the market for vehicles to deliver weapons of mass destruction. That includes the North's No. 1 customer, Iran, which in February launched a small satellite thanks in part to North Korean missile technology. Iranian observers were reportedly on hand over the weekend at the launch site.
Sunday's fizzle doesn't mean the North didn't learn anything useful for the future of its long-range ballistic missile program. As learning tools, failures can be more instructive than successes, and the Taepodong-2 missile under development has the potential to reach the U.S. West Coast.
Pyongyang's action ought to prompt the Obama Administration to advance the fledgling missile defense system started by President Bush. Instead, the White House reportedly has told the Pentagon to cut spending on missile defense by $2 billion, or about 20%. Defense Secretary Robert Gates is expected to announce these and other budget cuts today.
Programs in jeopardy include the Airborne Laser, a modified 747 designed to take out ballistic missiles seconds after liftoff; expansion of the ground-based interceptor program in Alaska and California; and space-based missile surveillance and tracking. All three are part of the vision for a layered defense, in which the U.S. has several chances to destroy incoming missiles. The Obama Administration has already indicated it wants to go slow in building the "third site," the Europe-based radar and interceptors that would provide another layer of defense from Iranian missiles for the U.S. East Coast.
In 2006, Mr. Bush and Secretary of State Condoleezza Rice squandered the moment after the North's nuclear test when China was ready to apply serious pressure. Instead, they bought Kim's promise to give up his weapons, then let him delay and renegotiate the terms as he went, including agreeing to Kim's demand to take North Korea off the U.S. list of terror-sponsoring nations. Now he's playing the same brinksmanship with the Obama Administration.
This is Mr. Obama's chance to do better. But based on his comments during the campaign, as well as his statement yesterday urging renewed efforts through the Six Party Talks, the President seems unlikely to change course. Kim has every reason to expect that he will eventually get what he wants -- more recognition, more money and energy supplies from the U.S., China and South Korea, and a high likelihood that he'll get to keep his nukes and missiles too.
Obama's NK Reaction: More Talks
Obama's NK Reaction: More Talks. By John Bolton
The president sends the wrong messages to Israel and Iran.
WSJ, Apr 06, 2009
Prior to North Korea's launch yesterday of a Taepodong-2 ballistic missile, President Barack Obama declared that such an action would be "provocative." This public statement was an attempt to reinforce the administration's private efforts to urge the Democratic Peoples' Republic of Korea (DPRK) not to fire the missile.
That effort failed, as have countless other attempts to deal softly with Pyongyang. Incredibly, U.S. Special Envoy for North Korea Stephen Bosworth revealed -- just a few days before the launch -- that he was ready to visit Pyongyang and resume the six-party talks once the "dust from the missiles settles." It is no wonder the North fired away.
Once the missile shot was complete, the administration's answer was hand-wringing, more rhetoric and, oh yes, the obligatory trip to the U.N. Security Council so that it could scold the defiant DPRK. Beyond whatever happens in the Security Council, Mr. Obama seems to have no plan whatever.
In 2006, when Pyongyang last lit off a volley of missiles and then exploded a nuclear device, the Security Council responded unanimously with Resolutions 1695 and 1718, which imposed extensive military and some economic sanctions. Unfortunately, the impact of these resolutions was dramatically undercut by subsequent Bush administration diplomacy, which effectively let North Korea off the hook. By re-engaging Pyongyang diplomatically rather than increasing the external pressure, George W. Bush relegitimized the North and gave it yet more time to bargain.
Yesterday's launch is attributable to prior failures, but the global consequences now unfolding are Mr. Obama's responsibility. In fact, Secretary of Defense Robert Gates is expected to announce today deep cuts in the U.S. missile defense program, an extraordinarily ill-advised step.
The initial draft Security Council resolution responding to yesterday's missile launch, written by Japan and the U.S., is weak. It essentially only reaffirms Resolutions 1695 and 1718, and minimally tightens existing enforcement mechanisms. Moreover, China and Russia made it plain before the launch they had no interest in stricter sanctions -- even arguing with a straight face that Pyongyang was only interested in peaceful satellite communications.
What the Security Council will ultimately produce is of course uncertain -- but resolutions almost never get tougher as the drafting and negotiations proceed. Even worse than a weak resolution would be a "presidential statement," a toothless gesture of the Council's opinion. Either way, North Korea has again defied the Security Council, gotten away with its launch with the support of Russia and China, and now will likely confront only pleas by Mr. Obama and others to return to the six-party talks.
Those talks are exactly where North Korea wants to be. From them ever greater material and political benefits will flow to Pyongyang, in exchange for ever more hollow promises to dismantle its nuclear program.
So far, therefore, the missile launch is an unambiguous win for North Korea. (Although not orbiting a satellite, all three rocket stages apparently fired, achieving Pyongyang's longest missile flight yet.) But the negative repercussions will extend far beyond Northeast Asia.
Iran has carefully scrutinized the Obama administration's every action, and Tehran's only conclusion can be: It is past time to torque up the pressure on this new crowd in Washington. Not only is Iran's back now covered by its friends Russia, China and others on the U.N. Security Council, but it sees an American president so ready to bend his knee for public favor in Europe that the mullahs' wish list for U.S. concessions will grow by the minute.
Israel must also be carefully considering how the U.S. watched North Korea rip through "the international community." The most important lesson the new government headed by Prime Minister Benjamin Netanyahu should draw is: Look out for No. 1. If Israel isn't prepared to protect itself, including using military force, against Iran's nuclear weapons program, it certainly shouldn't be holding its breath for Mr. Obama to do anything.
Russia and China must also be relishing this outcome. They will have faced down Mr. Obama in his first real crisis, having provided Security Council cover for a criminal regime, and emerged unscathed. They will conclude that achieving their large agendas with the new administration can't be too hard. That conclusion may be unfair to the new American president; but it will surely color how Moscow and Beijing structure their policies and their diplomacy until proven otherwise. That alone is bad news for Washington and its allies.
Mr. Bolton, a senior fellow at the American Enterprise Institute, is the author of "Surrender Is Not an Option: Defending America at the United Nations and Abroad" (Simon & Schuster, 2007).
The president sends the wrong messages to Israel and Iran.
WSJ, Apr 06, 2009
Prior to North Korea's launch yesterday of a Taepodong-2 ballistic missile, President Barack Obama declared that such an action would be "provocative." This public statement was an attempt to reinforce the administration's private efforts to urge the Democratic Peoples' Republic of Korea (DPRK) not to fire the missile.
That effort failed, as have countless other attempts to deal softly with Pyongyang. Incredibly, U.S. Special Envoy for North Korea Stephen Bosworth revealed -- just a few days before the launch -- that he was ready to visit Pyongyang and resume the six-party talks once the "dust from the missiles settles." It is no wonder the North fired away.
Once the missile shot was complete, the administration's answer was hand-wringing, more rhetoric and, oh yes, the obligatory trip to the U.N. Security Council so that it could scold the defiant DPRK. Beyond whatever happens in the Security Council, Mr. Obama seems to have no plan whatever.
In 2006, when Pyongyang last lit off a volley of missiles and then exploded a nuclear device, the Security Council responded unanimously with Resolutions 1695 and 1718, which imposed extensive military and some economic sanctions. Unfortunately, the impact of these resolutions was dramatically undercut by subsequent Bush administration diplomacy, which effectively let North Korea off the hook. By re-engaging Pyongyang diplomatically rather than increasing the external pressure, George W. Bush relegitimized the North and gave it yet more time to bargain.
Yesterday's launch is attributable to prior failures, but the global consequences now unfolding are Mr. Obama's responsibility. In fact, Secretary of Defense Robert Gates is expected to announce today deep cuts in the U.S. missile defense program, an extraordinarily ill-advised step.
The initial draft Security Council resolution responding to yesterday's missile launch, written by Japan and the U.S., is weak. It essentially only reaffirms Resolutions 1695 and 1718, and minimally tightens existing enforcement mechanisms. Moreover, China and Russia made it plain before the launch they had no interest in stricter sanctions -- even arguing with a straight face that Pyongyang was only interested in peaceful satellite communications.
What the Security Council will ultimately produce is of course uncertain -- but resolutions almost never get tougher as the drafting and negotiations proceed. Even worse than a weak resolution would be a "presidential statement," a toothless gesture of the Council's opinion. Either way, North Korea has again defied the Security Council, gotten away with its launch with the support of Russia and China, and now will likely confront only pleas by Mr. Obama and others to return to the six-party talks.
Those talks are exactly where North Korea wants to be. From them ever greater material and political benefits will flow to Pyongyang, in exchange for ever more hollow promises to dismantle its nuclear program.
So far, therefore, the missile launch is an unambiguous win for North Korea. (Although not orbiting a satellite, all three rocket stages apparently fired, achieving Pyongyang's longest missile flight yet.) But the negative repercussions will extend far beyond Northeast Asia.
Iran has carefully scrutinized the Obama administration's every action, and Tehran's only conclusion can be: It is past time to torque up the pressure on this new crowd in Washington. Not only is Iran's back now covered by its friends Russia, China and others on the U.N. Security Council, but it sees an American president so ready to bend his knee for public favor in Europe that the mullahs' wish list for U.S. concessions will grow by the minute.
Israel must also be carefully considering how the U.S. watched North Korea rip through "the international community." The most important lesson the new government headed by Prime Minister Benjamin Netanyahu should draw is: Look out for No. 1. If Israel isn't prepared to protect itself, including using military force, against Iran's nuclear weapons program, it certainly shouldn't be holding its breath for Mr. Obama to do anything.
Russia and China must also be relishing this outcome. They will have faced down Mr. Obama in his first real crisis, having provided Security Council cover for a criminal regime, and emerged unscathed. They will conclude that achieving their large agendas with the new administration can't be too hard. That conclusion may be unfair to the new American president; but it will surely color how Moscow and Beijing structure their policies and their diplomacy until proven otherwise. That alone is bad news for Washington and its allies.
Mr. Bolton, a senior fellow at the American Enterprise Institute, is the author of "Surrender Is Not an Option: Defending America at the United Nations and Abroad" (Simon & Schuster, 2007).
Aid Keeps Latin America Poor - For real progress, they need the means to accumulate wealth
Aid Keeps Latin America Poor. By Mary Anastasia O'Grady
For real progress, they need the means to accumulate wealth.
WSJ, Apr 06, 2009
Excerpts:
[...]
U.S. Treasury Secretary Tim Geithner has a lot on his plate these days with the banking system on life-support, the economy in recession, and his office in charge of running the master plan to patch up the whole mess.
Still, President Barack Obama's top fix-it man managed to jet down to Medellin, Colombia, a week ago for the Inter-American Development Bank's (IDB) general assembly. His big contribution was to get behind a proposal to nearly triple the development bank's capital.
By supporting the bureaucratic status quo in Latin America, Mr. Geithner strengthens himself politically. All hail the Obama administration's first-string hurler, a man who never meets a problem that can't be solved by throwing more money around. But back in the real world, the expansion of the already menacing IDB is grim news for the serfs who toil in the feudal Latin American systems that the bank calls its "clients."
Drawing on the wisdom of Orwell, this is a good time to repeat what is already manifest: Latin America remains poor and backward not despite multilateral "assistance" but, in a large part, because of it. The IDB has been going at the problem of poverty in Latin America since 1959, but it hasn't acted alone. In the postwar period the World Bank, the International Monetary Fund and untold bilateral agencies have blanketed the region with aid. World-wide foreign aid has boomed. According to the Organization for Economic Cooperation and Development, "in 2008, total net official development assistance (ODA) from members of the OECD's Development Assistance Committee (DAC) rose by 10.2% in real terms to USD 119.8 billion. This is the highest dollar figure ever recorded."
Does it follow that poverty persists because the amounts have been just too measly to do the job? It does for Mr. Geithner and the foreign-aid brigades. But rather than rely on those with vested interests, it's more useful to look at the empirical evidence. A 2006 paper titled "Foreign Aid, Income Inequality and Poverty," from the research department of the IDB itself, looked at the period 1971-2002 and found "some weak evidence that foreign aid is conducive to the improvement of the distribution of income [sic]. When the quality of institutions is taken into account, however, this result is not robust. This finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions."
So now that we know it doesn't work, Mr. Geithner wants more of it. This is what the late, great development economist Peter Lord Bauer called "the disregard of reality." In a 1987 essay in the Cato Journal, he called the claim that poverty is a trap that cannot be escaped without external aid an "obvious conflict with simple reality." "All developed countries began as underdeveloped," Bauer wrote. "If the notion of the vicious circle were valid, mankind would still be in the Stone Age at best."
Bauer spent a lifetime studying development. In 1972 he published "Dissent on Development" sharply criticizing aid for its focus on "symptoms and effects" of poverty while "divert[ing] attention from the determinants of development." For Bauer, foreign aid was not just a waste of money; it worked against getting things right in those areas that really matter to progress. Those "determinants" are now widely acknowledged, even by researchers at the World Bank. They produce an annual "Doing Business" survey that looks at the regulatory burden in 181 countries and points out the critical link between economically free people and prosperity.
In a recent book titled "Lessons From the Poor" about successful entrepreneurs in the developing world, researcher Alvaro Vargas Llosa echoes these insights. "The decisive element" in bringing a society out of poverty is "the development of the entrepreneurial reserves that exist in its men and women," Mr. Vargas Llosa writes. "The institutions that grant more freedom to their citizens and more security to their citizens' possessions are those that best facilitate the accumulation of wealth."
It is obvious that economic liberty and property rights are the key drivers of development, and that there is no correlation between the volume of foreign aid a country receives and its respect for these values. Yet what is more troubling is the IDB's reputation for working against liberalization in the region, most notoriously, against the flat tax. With its institutional checkbook it easily overpowers civic groups that try to limit the power of government. In doing so it promotes neither development nor just societies.
For real progress, they need the means to accumulate wealth.
WSJ, Apr 06, 2009
Excerpts:
[...]
U.S. Treasury Secretary Tim Geithner has a lot on his plate these days with the banking system on life-support, the economy in recession, and his office in charge of running the master plan to patch up the whole mess.
Still, President Barack Obama's top fix-it man managed to jet down to Medellin, Colombia, a week ago for the Inter-American Development Bank's (IDB) general assembly. His big contribution was to get behind a proposal to nearly triple the development bank's capital.
By supporting the bureaucratic status quo in Latin America, Mr. Geithner strengthens himself politically. All hail the Obama administration's first-string hurler, a man who never meets a problem that can't be solved by throwing more money around. But back in the real world, the expansion of the already menacing IDB is grim news for the serfs who toil in the feudal Latin American systems that the bank calls its "clients."
Drawing on the wisdom of Orwell, this is a good time to repeat what is already manifest: Latin America remains poor and backward not despite multilateral "assistance" but, in a large part, because of it. The IDB has been going at the problem of poverty in Latin America since 1959, but it hasn't acted alone. In the postwar period the World Bank, the International Monetary Fund and untold bilateral agencies have blanketed the region with aid. World-wide foreign aid has boomed. According to the Organization for Economic Cooperation and Development, "in 2008, total net official development assistance (ODA) from members of the OECD's Development Assistance Committee (DAC) rose by 10.2% in real terms to USD 119.8 billion. This is the highest dollar figure ever recorded."
Does it follow that poverty persists because the amounts have been just too measly to do the job? It does for Mr. Geithner and the foreign-aid brigades. But rather than rely on those with vested interests, it's more useful to look at the empirical evidence. A 2006 paper titled "Foreign Aid, Income Inequality and Poverty," from the research department of the IDB itself, looked at the period 1971-2002 and found "some weak evidence that foreign aid is conducive to the improvement of the distribution of income [sic]. When the quality of institutions is taken into account, however, this result is not robust. This finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions."
So now that we know it doesn't work, Mr. Geithner wants more of it. This is what the late, great development economist Peter Lord Bauer called "the disregard of reality." In a 1987 essay in the Cato Journal, he called the claim that poverty is a trap that cannot be escaped without external aid an "obvious conflict with simple reality." "All developed countries began as underdeveloped," Bauer wrote. "If the notion of the vicious circle were valid, mankind would still be in the Stone Age at best."
Bauer spent a lifetime studying development. In 1972 he published "Dissent on Development" sharply criticizing aid for its focus on "symptoms and effects" of poverty while "divert[ing] attention from the determinants of development." For Bauer, foreign aid was not just a waste of money; it worked against getting things right in those areas that really matter to progress. Those "determinants" are now widely acknowledged, even by researchers at the World Bank. They produce an annual "Doing Business" survey that looks at the regulatory burden in 181 countries and points out the critical link between economically free people and prosperity.
In a recent book titled "Lessons From the Poor" about successful entrepreneurs in the developing world, researcher Alvaro Vargas Llosa echoes these insights. "The decisive element" in bringing a society out of poverty is "the development of the entrepreneurial reserves that exist in its men and women," Mr. Vargas Llosa writes. "The institutions that grant more freedom to their citizens and more security to their citizens' possessions are those that best facilitate the accumulation of wealth."
It is obvious that economic liberty and property rights are the key drivers of development, and that there is no correlation between the volume of foreign aid a country receives and its respect for these values. Yet what is more troubling is the IDB's reputation for working against liberalization in the region, most notoriously, against the flat tax. With its institutional checkbook it easily overpowers civic groups that try to limit the power of government. In doing so it promotes neither development nor just societies.
Sitting on evidence of voucher success, and the battle of New York
Democrats and Poor Kids. WSJ Editorial
Sitting on evidence of voucher success, and the battle of New York.
WSJ, Apr 06, 2009
Education Secretary Arne Duncan did a public service last week when he visited New York City and spoke up for charter schools and mayoral control of education. That was the reformer talking. The status quo Mr. Duncan was on display last month when he let Congress kill a District of Columbia voucher program even as he was sitting on evidence of its success.
In New York City with its 1.1 million students, mayoral control has resulted in better test scores and graduation rates, while expanding charter schools, which means more and better education choices for low-income families. But mayoral control expires in June unless state lawmakers renew it, and the United Federation of Teachers is working with Assembly Speaker Sheldon Silver to weaken or kill it.
President Obama's stimulus is sending some $100 billion to the nation's school districts. What will he demand in return? The state budget passed by the New York legislature last week freezes funding for charters but increases it by more that $400 million for other public schools. Perhaps a visit to a charter school in Harlem would help Mr. Obama honor his reform pledge. "I'm looking at the data here in front of me," Mr. Duncan told the New York Post. "Graduation rates are up. Test scores are up. Teacher salaries are up. Social promotion was eliminated. Dramatically increasing parental choice. That's real progress."
Mr. Duncan's help in New York is in stark contrast to his department's decision to sit on a performance review of the D.C. voucher program while Congress debated its future in March. The latest annual evaluation was finally released Friday, and it shows measurable academic gains. The Opportunity Scholarship Program provides $7,500 vouchers to 1,700 low-income families in D.C. to send their children to private schools. Ninety-nine percent of the children are black or Hispanic, and there are more than four applicants for each scholarship.
The 2008 report demonstrated progress among certain subgroups of children but not everyone. This year's report shows statistically significant academic gains for the entire voucher-receiving population. Children attending private schools with the aid of the scholarships are reading nearly a half-grade ahead of their peers who did not receive vouchers. Voucher recipients are doing no better in math but they're doing no worse. Which means that no voucher participant is in worse academic shape than before, and many students are much better off.
"There are transition difficulties, a culture shock upon entering a school where you're expected to pay attention, learn, do homework," says Jay Greene, an education scholar at the Manhattan Institute. "But these results fit a pattern that we've seen in other evaluations of vouchers. Benefits compound over time."
It's bad enough that Democrats are killing a program that parents love and is closing the achievement gap between poor minorities and whites. But as scandalous is that the Education Department almost certainly knew the results of this evaluation for months.
Voucher recipients were tested last spring. The scores were analyzed in the late summer and early fall, and in November preliminary results were presented to a team of advisers who work with the Education Department to produce the annual evaluation. Since Education officials are intimately involved in this process, they had to know what was in this evaluation even as Democrats passed (and Mr. Obama signed) language that ends the program after next year.
Opponents of school choice for poor children have long claimed they'd support vouchers if there was evidence that they work. While running for President last year, Mr. Obama told the Milwaukee Journal-Sentinel that if he saw more proof that they were successful, he would "not allow my predisposition to stand in the way of making sure that our kids can learn . . . You do what works for the kids." Except, apparently, when what works is opposed by unions.
Mr. Duncan's office spurned our repeated calls and emails asking what and when he and his aides knew about these results. We do know the Administration prohibited anyone involved with the evaluation from discussing it publicly. You'd think we were talking about nuclear secrets, not about a taxpayer-funded pilot program. A reasonable conclusion is that Mr. Duncan's department didn't want proof of voucher success to interfere with Senator Dick Durbin's campaign to kill vouchers at the behest of the teachers unions.
The decision to let 1,700 poor kids get tossed from private schools is a moral disgrace. It also exposes the ugly politics that lies beneath union and liberal efforts across the country to undermine mayoral control, charter schools, vouchers or any reform that threatens their monopoly over public education dollars and jobs. The Sheldon Silver-Dick Durbin Democrats aren't worried that school choice doesn't work. They're worried that it does, and if Messrs. Obama and Duncan want to succeed as reformers they need to say so consistently.
Sitting on evidence of voucher success, and the battle of New York.
WSJ, Apr 06, 2009
Education Secretary Arne Duncan did a public service last week when he visited New York City and spoke up for charter schools and mayoral control of education. That was the reformer talking. The status quo Mr. Duncan was on display last month when he let Congress kill a District of Columbia voucher program even as he was sitting on evidence of its success.
In New York City with its 1.1 million students, mayoral control has resulted in better test scores and graduation rates, while expanding charter schools, which means more and better education choices for low-income families. But mayoral control expires in June unless state lawmakers renew it, and the United Federation of Teachers is working with Assembly Speaker Sheldon Silver to weaken or kill it.
President Obama's stimulus is sending some $100 billion to the nation's school districts. What will he demand in return? The state budget passed by the New York legislature last week freezes funding for charters but increases it by more that $400 million for other public schools. Perhaps a visit to a charter school in Harlem would help Mr. Obama honor his reform pledge. "I'm looking at the data here in front of me," Mr. Duncan told the New York Post. "Graduation rates are up. Test scores are up. Teacher salaries are up. Social promotion was eliminated. Dramatically increasing parental choice. That's real progress."
Mr. Duncan's help in New York is in stark contrast to his department's decision to sit on a performance review of the D.C. voucher program while Congress debated its future in March. The latest annual evaluation was finally released Friday, and it shows measurable academic gains. The Opportunity Scholarship Program provides $7,500 vouchers to 1,700 low-income families in D.C. to send their children to private schools. Ninety-nine percent of the children are black or Hispanic, and there are more than four applicants for each scholarship.
The 2008 report demonstrated progress among certain subgroups of children but not everyone. This year's report shows statistically significant academic gains for the entire voucher-receiving population. Children attending private schools with the aid of the scholarships are reading nearly a half-grade ahead of their peers who did not receive vouchers. Voucher recipients are doing no better in math but they're doing no worse. Which means that no voucher participant is in worse academic shape than before, and many students are much better off.
"There are transition difficulties, a culture shock upon entering a school where you're expected to pay attention, learn, do homework," says Jay Greene, an education scholar at the Manhattan Institute. "But these results fit a pattern that we've seen in other evaluations of vouchers. Benefits compound over time."
It's bad enough that Democrats are killing a program that parents love and is closing the achievement gap between poor minorities and whites. But as scandalous is that the Education Department almost certainly knew the results of this evaluation for months.
Voucher recipients were tested last spring. The scores were analyzed in the late summer and early fall, and in November preliminary results were presented to a team of advisers who work with the Education Department to produce the annual evaluation. Since Education officials are intimately involved in this process, they had to know what was in this evaluation even as Democrats passed (and Mr. Obama signed) language that ends the program after next year.
Opponents of school choice for poor children have long claimed they'd support vouchers if there was evidence that they work. While running for President last year, Mr. Obama told the Milwaukee Journal-Sentinel that if he saw more proof that they were successful, he would "not allow my predisposition to stand in the way of making sure that our kids can learn . . . You do what works for the kids." Except, apparently, when what works is opposed by unions.
Mr. Duncan's office spurned our repeated calls and emails asking what and when he and his aides knew about these results. We do know the Administration prohibited anyone involved with the evaluation from discussing it publicly. You'd think we were talking about nuclear secrets, not about a taxpayer-funded pilot program. A reasonable conclusion is that Mr. Duncan's department didn't want proof of voucher success to interfere with Senator Dick Durbin's campaign to kill vouchers at the behest of the teachers unions.
The decision to let 1,700 poor kids get tossed from private schools is a moral disgrace. It also exposes the ugly politics that lies beneath union and liberal efforts across the country to undermine mayoral control, charter schools, vouchers or any reform that threatens their monopoly over public education dollars and jobs. The Sheldon Silver-Dick Durbin Democrats aren't worried that school choice doesn't work. They're worried that it does, and if Messrs. Obama and Duncan want to succeed as reformers they need to say so consistently.
Why the housing crash ruined the financial system but the dot-com collapse did not
From Bubble to Depression? By Steven Gjerstad and Vernon L. Smith
Why the housing crash ruined the financial system but the dot-com collapse did not.
WSJ, Apr 06, 2009
Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which -- when first studied in the 1980s -- were considered so transparent that bubbles would not be observed.
We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer.
But what sparks bubbles? Why does one large asset bubble -- like our dot-com bubble -- do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets -- momentum trading, liquidity, price-tier movements, and high-margin purchases -- combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy.
In just the past 40 years there were two other housing bubbles, with peaks in 1979 and 1989, but the largest one in U.S. history started in 1997, probably sparked by rising household income that began in 1992 combined with the elimination in 1997 of taxes on residential capital gains up to $500,000. Rising values in an asset market draw investor attention; the early stages of the housing bubble had this usual, self-reinforcing feature.
The 2001 recession might have ended the bubble, but the Federal Reserve decided to pursue an unusually expansionary monetary policy in order to counteract the downturn. When the Fed increased liquidity, money naturally flowed to the fastest expanding sector. Both the Clinton and Bush administrations aggressively pursued the goal of expanding homeownership, so credit standards eroded. Lenders and the investment banks that securitized mortgages used rising home prices to justify loans to buyers with limited assets and income. Rating agencies accepted the hypothesis of ever rising home values, gave large portions of each security issue an investment-grade rating, and investors gobbled them up.
But housing expenditures in the U.S. and most of the developed world have historically taken about 30% of household income. If housing prices more than double in a seven-year period without a commensurate increase in income, eventually something has to give. When subprime lending, the interest-only adjustable-rate mortgage (ARM), and the negative-equity option ARM were no longer able to sustain the flow of new buyers, the inevitable crash could no longer be delayed.
The price decline started in 2006. Then policies designed to promote the American dream instead produced a nightmare. Trillions of dollars of mortgages, written to buyers with slender equity, started a wave of delinquencies and defaults. Borrowers' losses were limited to their small down payments; hence, the lion's share of the losses was transmitted into the financial system and it collapsed.
During the 1976-79 and 1986-89 housing price bubbles, the effective federal-funds interest rate was rising while housing prices rose: The Federal Reserve, "leaning against the wind," helped mitigate the bubbles. In January 2001, however, after four years with average inflation-adjusted house price increases of 7.2% per year (about 6% above trend for the past 80 years), the Fed started to decrease the fed-funds rate. By December 2001, the rate had been reduced to its lowest level since 1962. In 2002 the average fed-funds rate was lower than in any year since the 1958 recession. In 2003 and 2004 the average fed-funds rates were lower than in any year since 1955 when the rate series began.
Monetary policy, mortgage finance, relaxed lending standards, and tax-free capital gains provided astonishing economic stimulus: Mortgage loan originations increased an average of 56% per year for three years -- from $1.05 trillion in 2000 to $3.95 trillion in 2003!
By the time the Federal Reserve began to slowly raise the fed-funds rate in May 2004, the Case-Shiller 20-city composite index had increased 15.4% during the previous 12 months. Yet the housing portion of the CPI for those same 12 months rose only 2.4%.
How could this happen? In 1983, the Bureau of Labor Statistics began to use rental equivalence for homeowner-occupied units instead of direct home-ownership costs. Between 1983 and 1996, the price-to-rental ratio increased from 19.0 to 20.2, so the change had little effect on measured inflation: The CPI underestimated inflation by about 0.1 percentage point per year during this period. Between 1999 and 2006, the price-to-rent ratio shot up from 20.8 to 32.3.
With home price increases out of the CPI and the price-to-rent ratio rapidly increasing, an important component of inflation remained outside the index. In 2004 alone, the price-rent ratio increased 12.3%. Inflation for that year was underestimated by 2.9 percentage points (since "owners' equivalent rent" is about 23% of the CPI). If home-ownership costs were included in the CPI, inflation would have been 6.2% instead of 3.3%.
With nominal interest rates around 6% and inflation around 6%, the real interest rate was near zero, so household borrowing took off. As measured by the Case-Shiller 10 city index, the accumulated inflation in home-ownership costs between January 1999 and June 2006 was 151%, but the CPI measured a mere 23% increase. As the Federal Reserve monitored inflation in the early part of this decade, home-price increases were no longer visible in the CPI, so the lax monetary policy continued. Even after the Fed began to slowly raise the fed-funds rate in May 2004, the average rate remained low and the bubble continued to inflate for two more years.
The unraveling of the bubble is in many ways the most fascinating part of the story, and the most painful reality we are now experiencing. The median price of existing homes had fallen from $230,000 in July to $217,300 in November 2006. By the beginning of 2007, in 17 of the 20 cities in the Case-Shiller index, prices were falling. Serious price declines had not yet begun, but the warning signs were there for alert observers.
Kate Kelly, writing in this newspaper (Dec. 14, 2007), tells the story of how Goldman Sachs avoided the fate of many of the other investment banks that packaged mortgages into securities. Goldman loaded up on the Markit ABX index of credit default swaps between early December 2006 and late February 2007, as their price dropped from 97.70 on Dec. 4 to under 64 by Feb. 27. But the market was not yet in free-fall: The insurance on AAA-rated parts of the mortgage-backed securities (MBS) remained inexpensive. By mid-summer 2007, concern spread to the AAA-rated tranches of MBS.
At the end of February 2007, the cost of $10 million of insurance on the AAA-rated portion of a mortgage-backed security was still only $68,000 plus a $9,000 annual premium. Housing-market conditions deteriorated further in the first half of 2007. Case-Shiller tiered price sequences in Los Angeles, San Francisco, San Diego and Miami all show serious declines by the summer of 2007. Prices in the low-price tier in San Francisco were down almost 13% from their peak by July 2007; in San Diego they were off 10% by July 2007. Startling developments began to unfold that month. Between July 9 and Aug. 3, 2007, the cost of insuring AAA MBS tranches went from $50,000 upfront plus a $9,000 annual premium for $10 million of insurance to over $900,000 upfront (plus the annual premium).
Once the cost of insuring new mortgage-backed securities skyrocketed, mortgage financing from MBS rapidly declined. Subprime originations plummeted from $160 billion in the third quarter of 2006 to $28 billion in the third quarter of 2007. Mortgage-backed security issuance fell comparably, from $483 billion in all of 2006 to only $30.7 billion in the third quarter of 2007. Other measures of new loan originations were falling at the same time. The liquidity that generated the housing market bubble was evaporating.
Trouble quickly spread from the cost of insuring mortgage-backed securities to problems with credit markets generally, as the spread between short-term U.S. Treasury debt and the LIBOR rate increased to 2.40% from 0.44% between Aug. 8 and Aug. 20, 2007. Since U.S. Treasury debt is generally considered secure, but a bank's loans to another bank carry some risk of default, the spread between these rates serves as an indicator of perceived risk in financial markets.
In one city after another, prices of homes in the low-price tier appreciated the most and then fell the most; prices in the high-priced tier appreciated least and fell the least. The price index graphs for Los Angeles, San Francisco, San Diego and Miami show that in all of these cities, prices in the low-price tier have fallen between 50% and 57%. Moreover, housing prices have continually declined in every market in the Case-Shiller index. According to First American CoreLogic, 10.5 million households had negative or near negative equity in December 2008. When housing prices turned down, many borrowers with low income and few assets other than their slender home equity faced foreclosure. The remaining losses had to be absorbed by the financial system. Consequently, the financial system has suffered a blow unlike anything since the Great Depression, and the source is the weak financial position of the people holding declining assets.
Earlier, during the downturn in the equities market between December 1999 and September 2002, approximately $10 trillion of equity was erased. But a measure of financial system performance, the Keefe, Bruyette, & Woods BKX index of financial firms, fell less than 6% during that period. In the current downturn, the value of residential real estate has fallen by approximately $3 trillion, but the BKX index has now fallen 75% from its peak of January 2007. The financial sector has been devastated in this crisis, whereas it was almost completely unaffected by the downturn in the equities market early in this decade.
How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?
In the equities-market downturn early in this decade, declining assets were held by institutional and individual investors that either owned the assets outright, or held only a small fraction on margin, so losses were absorbed by their owners. In the current crisis, declining housing assets were often, in effect, purchased between 90% and 100% on margin. In some of the cities hit hardest, borrowers who purchased in the low-price tier at the peak of the bubble have seen their home value decline 50% or more. Over the past 18 months as housing prices have fallen, millions of homes became worth less than the loans on them, huge losses have been transmitted to lending institutions, investment banks, investors in mortgage-backed securities, sellers of credit default swaps, and the insurer of last resort, the U.S. Treasury.
In an important paper in 1983, Ben Bernanke argued that during the Depression, severe damage to the financial system impeded its ability to perform its economic role of lending to households for durable goods consumption and to firms for production and trade. We are seeing this process playing out now as loan funds for automobile purchases have withered. Auto sales fell 41% between February 2008 and February 2009. Retail and labor markets too are now part of the collateral damage from the housing debacle. Housing peaked in early 2006. Losses from the mortgage market began to infect the financial system in 2006; asset prices in that sector began to decline at the end of 2006. Meanwhile, equities and the broader economy were performing well, but as the financial sector deteriorated, its problems blindsided the rest of the economy.
The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression. Total mortgage debt outstanding increased from $9.35 billion in 1920 to $29.44 billion in 1929. In 1920, residential mortgage debt was 10.2% of household wealth; by 1929, it was 27.2% of household wealth.
The Great Depression has been attributed to excessive speculation on Wall Street, especially between the spring of 1927 and the fall of 1929. Had the difficulties of the banking system been caused by losses on brokers' loans for margin purchases in 1929, the results should have been felt in the banks immediately after the stock market crash. But the banking system did not show serious strains until the fall of 1930.
Bank earnings reached a record $729 million in 1929. Yet bank exposures to real estate were substantial; as the decline in real estate prices accelerated, foreclosures wiped out banks by the thousands. Had the mounting difficulties of the banks and the final collapse of the banking system in the "Bank Holiday" in March 1933 been caused by contraction of the money supply, as Milton Friedman and Anna Schwartz argued, then the massive injections of liquidity over the past 18 months should have averted the collapse of the financial market during this current crisis.
The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn.
What we've offered in our discussion of this crisis is the back story to Mr. Bernanke's analysis of the Depression. Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.
Mr. Gjerstad is a visiting research associate at Chapman University. Mr. Smith is a professor of economics at Chapman University and the 2002 Nobel Laureate in Economics.
Why the housing crash ruined the financial system but the dot-com collapse did not.
WSJ, Apr 06, 2009
Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which -- when first studied in the 1980s -- were considered so transparent that bubbles would not be observed.
We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer.
But what sparks bubbles? Why does one large asset bubble -- like our dot-com bubble -- do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets -- momentum trading, liquidity, price-tier movements, and high-margin purchases -- combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy.
In just the past 40 years there were two other housing bubbles, with peaks in 1979 and 1989, but the largest one in U.S. history started in 1997, probably sparked by rising household income that began in 1992 combined with the elimination in 1997 of taxes on residential capital gains up to $500,000. Rising values in an asset market draw investor attention; the early stages of the housing bubble had this usual, self-reinforcing feature.The 2001 recession might have ended the bubble, but the Federal Reserve decided to pursue an unusually expansionary monetary policy in order to counteract the downturn. When the Fed increased liquidity, money naturally flowed to the fastest expanding sector. Both the Clinton and Bush administrations aggressively pursued the goal of expanding homeownership, so credit standards eroded. Lenders and the investment banks that securitized mortgages used rising home prices to justify loans to buyers with limited assets and income. Rating agencies accepted the hypothesis of ever rising home values, gave large portions of each security issue an investment-grade rating, and investors gobbled them up.
But housing expenditures in the U.S. and most of the developed world have historically taken about 30% of household income. If housing prices more than double in a seven-year period without a commensurate increase in income, eventually something has to give. When subprime lending, the interest-only adjustable-rate mortgage (ARM), and the negative-equity option ARM were no longer able to sustain the flow of new buyers, the inevitable crash could no longer be delayed.
The price decline started in 2006. Then policies designed to promote the American dream instead produced a nightmare. Trillions of dollars of mortgages, written to buyers with slender equity, started a wave of delinquencies and defaults. Borrowers' losses were limited to their small down payments; hence, the lion's share of the losses was transmitted into the financial system and it collapsed.
During the 1976-79 and 1986-89 housing price bubbles, the effective federal-funds interest rate was rising while housing prices rose: The Federal Reserve, "leaning against the wind," helped mitigate the bubbles. In January 2001, however, after four years with average inflation-adjusted house price increases of 7.2% per year (about 6% above trend for the past 80 years), the Fed started to decrease the fed-funds rate. By December 2001, the rate had been reduced to its lowest level since 1962. In 2002 the average fed-funds rate was lower than in any year since the 1958 recession. In 2003 and 2004 the average fed-funds rates were lower than in any year since 1955 when the rate series began.
Monetary policy, mortgage finance, relaxed lending standards, and tax-free capital gains provided astonishing economic stimulus: Mortgage loan originations increased an average of 56% per year for three years -- from $1.05 trillion in 2000 to $3.95 trillion in 2003!
By the time the Federal Reserve began to slowly raise the fed-funds rate in May 2004, the Case-Shiller 20-city composite index had increased 15.4% during the previous 12 months. Yet the housing portion of the CPI for those same 12 months rose only 2.4%.
How could this happen? In 1983, the Bureau of Labor Statistics began to use rental equivalence for homeowner-occupied units instead of direct home-ownership costs. Between 1983 and 1996, the price-to-rental ratio increased from 19.0 to 20.2, so the change had little effect on measured inflation: The CPI underestimated inflation by about 0.1 percentage point per year during this period. Between 1999 and 2006, the price-to-rent ratio shot up from 20.8 to 32.3.
With home price increases out of the CPI and the price-to-rent ratio rapidly increasing, an important component of inflation remained outside the index. In 2004 alone, the price-rent ratio increased 12.3%. Inflation for that year was underestimated by 2.9 percentage points (since "owners' equivalent rent" is about 23% of the CPI). If home-ownership costs were included in the CPI, inflation would have been 6.2% instead of 3.3%.
With nominal interest rates around 6% and inflation around 6%, the real interest rate was near zero, so household borrowing took off. As measured by the Case-Shiller 10 city index, the accumulated inflation in home-ownership costs between January 1999 and June 2006 was 151%, but the CPI measured a mere 23% increase. As the Federal Reserve monitored inflation in the early part of this decade, home-price increases were no longer visible in the CPI, so the lax monetary policy continued. Even after the Fed began to slowly raise the fed-funds rate in May 2004, the average rate remained low and the bubble continued to inflate for two more years.
The unraveling of the bubble is in many ways the most fascinating part of the story, and the most painful reality we are now experiencing. The median price of existing homes had fallen from $230,000 in July to $217,300 in November 2006. By the beginning of 2007, in 17 of the 20 cities in the Case-Shiller index, prices were falling. Serious price declines had not yet begun, but the warning signs were there for alert observers.
Kate Kelly, writing in this newspaper (Dec. 14, 2007), tells the story of how Goldman Sachs avoided the fate of many of the other investment banks that packaged mortgages into securities. Goldman loaded up on the Markit ABX index of credit default swaps between early December 2006 and late February 2007, as their price dropped from 97.70 on Dec. 4 to under 64 by Feb. 27. But the market was not yet in free-fall: The insurance on AAA-rated parts of the mortgage-backed securities (MBS) remained inexpensive. By mid-summer 2007, concern spread to the AAA-rated tranches of MBS.
At the end of February 2007, the cost of $10 million of insurance on the AAA-rated portion of a mortgage-backed security was still only $68,000 plus a $9,000 annual premium. Housing-market conditions deteriorated further in the first half of 2007. Case-Shiller tiered price sequences in Los Angeles, San Francisco, San Diego and Miami all show serious declines by the summer of 2007. Prices in the low-price tier in San Francisco were down almost 13% from their peak by July 2007; in San Diego they were off 10% by July 2007. Startling developments began to unfold that month. Between July 9 and Aug. 3, 2007, the cost of insuring AAA MBS tranches went from $50,000 upfront plus a $9,000 annual premium for $10 million of insurance to over $900,000 upfront (plus the annual premium).
Once the cost of insuring new mortgage-backed securities skyrocketed, mortgage financing from MBS rapidly declined. Subprime originations plummeted from $160 billion in the third quarter of 2006 to $28 billion in the third quarter of 2007. Mortgage-backed security issuance fell comparably, from $483 billion in all of 2006 to only $30.7 billion in the third quarter of 2007. Other measures of new loan originations were falling at the same time. The liquidity that generated the housing market bubble was evaporating.
Trouble quickly spread from the cost of insuring mortgage-backed securities to problems with credit markets generally, as the spread between short-term U.S. Treasury debt and the LIBOR rate increased to 2.40% from 0.44% between Aug. 8 and Aug. 20, 2007. Since U.S. Treasury debt is generally considered secure, but a bank's loans to another bank carry some risk of default, the spread between these rates serves as an indicator of perceived risk in financial markets.
In one city after another, prices of homes in the low-price tier appreciated the most and then fell the most; prices in the high-priced tier appreciated least and fell the least. The price index graphs for Los Angeles, San Francisco, San Diego and Miami show that in all of these cities, prices in the low-price tier have fallen between 50% and 57%. Moreover, housing prices have continually declined in every market in the Case-Shiller index. According to First American CoreLogic, 10.5 million households had negative or near negative equity in December 2008. When housing prices turned down, many borrowers with low income and few assets other than their slender home equity faced foreclosure. The remaining losses had to be absorbed by the financial system. Consequently, the financial system has suffered a blow unlike anything since the Great Depression, and the source is the weak financial position of the people holding declining assets.
Earlier, during the downturn in the equities market between December 1999 and September 2002, approximately $10 trillion of equity was erased. But a measure of financial system performance, the Keefe, Bruyette, & Woods BKX index of financial firms, fell less than 6% during that period. In the current downturn, the value of residential real estate has fallen by approximately $3 trillion, but the BKX index has now fallen 75% from its peak of January 2007. The financial sector has been devastated in this crisis, whereas it was almost completely unaffected by the downturn in the equities market early in this decade.
How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?
In the equities-market downturn early in this decade, declining assets were held by institutional and individual investors that either owned the assets outright, or held only a small fraction on margin, so losses were absorbed by their owners. In the current crisis, declining housing assets were often, in effect, purchased between 90% and 100% on margin. In some of the cities hit hardest, borrowers who purchased in the low-price tier at the peak of the bubble have seen their home value decline 50% or more. Over the past 18 months as housing prices have fallen, millions of homes became worth less than the loans on them, huge losses have been transmitted to lending institutions, investment banks, investors in mortgage-backed securities, sellers of credit default swaps, and the insurer of last resort, the U.S. Treasury.
In an important paper in 1983, Ben Bernanke argued that during the Depression, severe damage to the financial system impeded its ability to perform its economic role of lending to households for durable goods consumption and to firms for production and trade. We are seeing this process playing out now as loan funds for automobile purchases have withered. Auto sales fell 41% between February 2008 and February 2009. Retail and labor markets too are now part of the collateral damage from the housing debacle. Housing peaked in early 2006. Losses from the mortgage market began to infect the financial system in 2006; asset prices in that sector began to decline at the end of 2006. Meanwhile, equities and the broader economy were performing well, but as the financial sector deteriorated, its problems blindsided the rest of the economy.
The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression. Total mortgage debt outstanding increased from $9.35 billion in 1920 to $29.44 billion in 1929. In 1920, residential mortgage debt was 10.2% of household wealth; by 1929, it was 27.2% of household wealth.
The Great Depression has been attributed to excessive speculation on Wall Street, especially between the spring of 1927 and the fall of 1929. Had the difficulties of the banking system been caused by losses on brokers' loans for margin purchases in 1929, the results should have been felt in the banks immediately after the stock market crash. But the banking system did not show serious strains until the fall of 1930.
Bank earnings reached a record $729 million in 1929. Yet bank exposures to real estate were substantial; as the decline in real estate prices accelerated, foreclosures wiped out banks by the thousands. Had the mounting difficulties of the banks and the final collapse of the banking system in the "Bank Holiday" in March 1933 been caused by contraction of the money supply, as Milton Friedman and Anna Schwartz argued, then the massive injections of liquidity over the past 18 months should have averted the collapse of the financial market during this current crisis.
The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn.
What we've offered in our discussion of this crisis is the back story to Mr. Bernanke's analysis of the Depression. Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.
Mr. Gjerstad is a visiting research associate at Chapman University. Mr. Smith is a professor of economics at Chapman University and the 2002 Nobel Laureate in Economics.
Short '06 Lebanon War Stokes Pentagon Debate - Leaders Divided on Whether to Focus On Conventional or Irregular Combat
Short '06 Lebanon War Stokes Pentagon Debate. ByGreg Jaffe
Leaders Divided on Whether to Focus On Conventional or Irregular Combat
Washington Post, Monday, April 6, 2009; Page A01
A war that ended three years ago and involved not a single U.S. soldier has become the subject of an increasingly heated debate inside the Pentagon, one that could alter how the U.S. military fights in the future.
When Israel and Hezbollah battled for more than a month in Lebanon in the summer of 2006, the result was widely seen as a disaster for the Israeli military. Soon after the fighting ended, some military officers began to warn that the short, bloody and relatively conventional battle foreshadowed how future enemies of the United States might fight.
Since then, the Defense Department has dispatched as many as a dozen teams to interview Israeli officers who fought against Hezbollah. The Army and Marine Corps have sponsored a series of multimillion-dollar war games to test how U.S. forces might fare against a similar foe. "I've organized five major games in the last two years, and all of them have focused on Hezbollah," said Frank Hoffman, a research fellow at the Marine Corps Warfighting Laboratory in Quantico.
A big reason that the 34-day war is drawing such fevered attention is that it highlights a rift among military leaders: Some want to change the U.S. military so that it is better prepared for wars like the ones it is fighting in Iraq and Afghanistan, while others worry that such a shift would leave the United States vulnerable to a more conventional foe.
"The Lebanon war has become a bellwether," said Stephen Biddle, a senior fellow at the Council on Foreign Relations who has advised Gen. David H. Petraeus, head of the U.S. Central Command. "If you are opposed to transforming the military to fight low-intensity wars, it is your bloody sheet. It's discussed in almost coded communication to indicate which side of the argument you are on."
U.S. military experts were stunned by the destruction that Hezbollah forces, using sophisticated antitank guided missiles, were able to wreak on Israeli armor columns. Unlike the guerrilla forces in Iraq and Afghanistan, who employed mostly hit-and-run tactics, the Hezbollah fighters held their ground against Israeli forces in battles that stretched as long as 12 hours. They were able to eavesdrop on Israeli communications and even struck an Israeli ship with a cruise missile.
"From 2000 to 2006 Hezbollah embraced a new doctrine, transforming itself from a predominantly guerrilla force into a quasi-conventional fighting force," a study by the Army's Combat Studies Institute concluded last year. Another Pentagon report warned that Hezbollah forces were "extremely well trained, especially in the uses of antitank weapons and rockets" and added: "They well understood the vulnerabilities of Israeli armor."
Many top Army officials refer to the short battle almost as a morality play that illustrates the price of focusing too much on counterinsurgency wars at the expense of conventional combat. These officers note that, before the Lebanon war, Israeli forces had been heavily involved in occupation duty in the Palestinian territories.
"The real takeaway is that you have to find the time to train for major combat operations, even if you are fighting counterinsurgency wars," said one senior military analyst who studied the Lebanon war for the Center for Army Lessons Learned at Fort Leavenworth, Kan. Currently, the deployments to Iraq and Afghanistan have prevented Army units from conducting such training.
Army generals have also latched on to the Lebanon war to build support for multibillion-dollar weapons programs that are largely irrelevant to low-intensity wars such as those fought in Iraq and Afghanistan. A 30-page internal Army briefing, prepared for the Joint Chiefs of Staff and senior Pentagon civilians, recently sought to highlight how the $159 billion Future Combat Systems, a network of ground vehicles and sensors, could have been used to dispatch Hezbollah's forces quickly and with few American casualties.
"Hezbollah relies on low visibility and prepared defenses," one slide in the briefing reads. "FCS counters with sensors and robotics to maneuver out of contact."
Defense Secretary Robert M. Gates is expected to stake out a firm position in this debate as soon as today, when he announces the 2010 defense budget. That document is expected to cut or sharply curtail weapons systems designed for conventional wars, and to bolster intelligence and surveillance programs designed to help track down shadowy insurgents.
"This budget moves the needle closer to irregular warfare and counterinsurgency," Pentagon spokesman Geoff Morrell said. "It is not an abandonment of the need to prepare for conventional conflicts. But even moving that needle is a revolutionary thing in this building."
The changes reflect the growing prominence of the military's counterinsurgency camp -- the most prominent member of which is Petraeus -- in the Pentagon. President Obama, whose strategy in Afghanistan is focused on protecting the local population and denying the Islamist radicals a safe haven, has largely backed this group.
The question facing defense leaders is whether they can afford to build a force that can prevail in a counterinsurgency fight, where the focus is on protecting the civilian population and building indigenous army and police forces, as well as a more conventional battle.
Gen. George W. Casey Jr., the Army's top officer in the Pentagon, has said it is essential that the military be able to do both simultaneously. New Army doctrine, meanwhile, calls for a "full spectrum" service that is as good at rebuilding countries as it is at destroying opposing armies.
But other experts remain skeptical. "The idea that you can do it all is just wrong," said Biddle of the Council on Foreign Relations. Soldiers, who are home for as little as 12 months between deployments, do not have enough time to prepare adequately for both types of wars, he said.
Biddle and other counterinsurgency advocates argue that the military should focus on winning the wars in Iraq and Afghanistan and only then worry about what the next war will look like.
Some in this camp say that the threat posed by Hezbollah is being inflated by officers who are determined to return the Army to a more familiar past, built around preparing for conventional warfare.
Another question is whether the U.S. military is taking the proper lessons from the Israel-Hezbollah war. Its studies have focused almost exclusively on the battle in southern Lebanon and ignored Hezbollah's ongoing role in Lebanese society as a political party and humanitarian aid group. After the battle, Hezbollah forces moved in quickly with aid and reconstruction assistance.
"Even if the Israelis had done better operationally, I don't think they would have been victorious in the long run," said Andrew Exum, a former Army officer who has studied the battle from southern Lebanon. "For the Israelis, the war lasted for 34 days. We tend to forget that for Hezbollah, it is infinite."
Leaders Divided on Whether to Focus On Conventional or Irregular Combat
Washington Post, Monday, April 6, 2009; Page A01
A war that ended three years ago and involved not a single U.S. soldier has become the subject of an increasingly heated debate inside the Pentagon, one that could alter how the U.S. military fights in the future.
When Israel and Hezbollah battled for more than a month in Lebanon in the summer of 2006, the result was widely seen as a disaster for the Israeli military. Soon after the fighting ended, some military officers began to warn that the short, bloody and relatively conventional battle foreshadowed how future enemies of the United States might fight.
Since then, the Defense Department has dispatched as many as a dozen teams to interview Israeli officers who fought against Hezbollah. The Army and Marine Corps have sponsored a series of multimillion-dollar war games to test how U.S. forces might fare against a similar foe. "I've organized five major games in the last two years, and all of them have focused on Hezbollah," said Frank Hoffman, a research fellow at the Marine Corps Warfighting Laboratory in Quantico.
A big reason that the 34-day war is drawing such fevered attention is that it highlights a rift among military leaders: Some want to change the U.S. military so that it is better prepared for wars like the ones it is fighting in Iraq and Afghanistan, while others worry that such a shift would leave the United States vulnerable to a more conventional foe.
"The Lebanon war has become a bellwether," said Stephen Biddle, a senior fellow at the Council on Foreign Relations who has advised Gen. David H. Petraeus, head of the U.S. Central Command. "If you are opposed to transforming the military to fight low-intensity wars, it is your bloody sheet. It's discussed in almost coded communication to indicate which side of the argument you are on."
U.S. military experts were stunned by the destruction that Hezbollah forces, using sophisticated antitank guided missiles, were able to wreak on Israeli armor columns. Unlike the guerrilla forces in Iraq and Afghanistan, who employed mostly hit-and-run tactics, the Hezbollah fighters held their ground against Israeli forces in battles that stretched as long as 12 hours. They were able to eavesdrop on Israeli communications and even struck an Israeli ship with a cruise missile.
"From 2000 to 2006 Hezbollah embraced a new doctrine, transforming itself from a predominantly guerrilla force into a quasi-conventional fighting force," a study by the Army's Combat Studies Institute concluded last year. Another Pentagon report warned that Hezbollah forces were "extremely well trained, especially in the uses of antitank weapons and rockets" and added: "They well understood the vulnerabilities of Israeli armor."
Many top Army officials refer to the short battle almost as a morality play that illustrates the price of focusing too much on counterinsurgency wars at the expense of conventional combat. These officers note that, before the Lebanon war, Israeli forces had been heavily involved in occupation duty in the Palestinian territories.
"The real takeaway is that you have to find the time to train for major combat operations, even if you are fighting counterinsurgency wars," said one senior military analyst who studied the Lebanon war for the Center for Army Lessons Learned at Fort Leavenworth, Kan. Currently, the deployments to Iraq and Afghanistan have prevented Army units from conducting such training.
Army generals have also latched on to the Lebanon war to build support for multibillion-dollar weapons programs that are largely irrelevant to low-intensity wars such as those fought in Iraq and Afghanistan. A 30-page internal Army briefing, prepared for the Joint Chiefs of Staff and senior Pentagon civilians, recently sought to highlight how the $159 billion Future Combat Systems, a network of ground vehicles and sensors, could have been used to dispatch Hezbollah's forces quickly and with few American casualties.
"Hezbollah relies on low visibility and prepared defenses," one slide in the briefing reads. "FCS counters with sensors and robotics to maneuver out of contact."
Defense Secretary Robert M. Gates is expected to stake out a firm position in this debate as soon as today, when he announces the 2010 defense budget. That document is expected to cut or sharply curtail weapons systems designed for conventional wars, and to bolster intelligence and surveillance programs designed to help track down shadowy insurgents.
"This budget moves the needle closer to irregular warfare and counterinsurgency," Pentagon spokesman Geoff Morrell said. "It is not an abandonment of the need to prepare for conventional conflicts. But even moving that needle is a revolutionary thing in this building."
The changes reflect the growing prominence of the military's counterinsurgency camp -- the most prominent member of which is Petraeus -- in the Pentagon. President Obama, whose strategy in Afghanistan is focused on protecting the local population and denying the Islamist radicals a safe haven, has largely backed this group.
The question facing defense leaders is whether they can afford to build a force that can prevail in a counterinsurgency fight, where the focus is on protecting the civilian population and building indigenous army and police forces, as well as a more conventional battle.
Gen. George W. Casey Jr., the Army's top officer in the Pentagon, has said it is essential that the military be able to do both simultaneously. New Army doctrine, meanwhile, calls for a "full spectrum" service that is as good at rebuilding countries as it is at destroying opposing armies.
But other experts remain skeptical. "The idea that you can do it all is just wrong," said Biddle of the Council on Foreign Relations. Soldiers, who are home for as little as 12 months between deployments, do not have enough time to prepare adequately for both types of wars, he said.
Biddle and other counterinsurgency advocates argue that the military should focus on winning the wars in Iraq and Afghanistan and only then worry about what the next war will look like.
Some in this camp say that the threat posed by Hezbollah is being inflated by officers who are determined to return the Army to a more familiar past, built around preparing for conventional warfare.
Another question is whether the U.S. military is taking the proper lessons from the Israel-Hezbollah war. Its studies have focused almost exclusively on the battle in southern Lebanon and ignored Hezbollah's ongoing role in Lebanese society as a political party and humanitarian aid group. After the battle, Hezbollah forces moved in quickly with aid and reconstruction assistance.
"Even if the Israelis had done better operationally, I don't think they would have been victorious in the long run," said Andrew Exum, a former Army officer who has studied the battle from southern Lebanon. "For the Israelis, the war lasted for 34 days. We tend to forget that for Hezbollah, it is infinite."
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