Obama's message of weakness. By Mark Steyn
A superpower that feeds on mediocrity cannot survive for long on leftovers from the past.
Orange County Register, Friday, June 5, 2009
As recently as last summer, General Motors filing for bankruptcy would have been the biggest news story of the week. But it's not such a very great step from the unthinkable to the inevitable, and by the time it actually happened the market barely noticed, and the media were focused on the president's "address to the Muslim world." As it happens, these two stories are the same story: snapshots, at home and abroad, of the hyperpower in eclipse. It's a long time since anyone touted GM as the emblematic brand of America – What's good for GM is good for America, etc. In fact, it's more emblematic than ever: Like General Motors, the U.S. government spends more than it makes, and has airily committed itself to ever more unsustainable levels of benefits. GM has about 95,000 workers but provides health benefits to a million people: It's not a business enterprise, but a vast welfare plan with a tiny loss-making commercial sector. As GM goes, so goes America?
But who cares? Overseas, the coolest president in history was giving a speech. Or, as the official press release headlined it on the State Department Web site, "President Obama Speaks To The Muslim World From Cairo."
Let's pause right there: It's interesting how easily the words "the Muslim world" roll off the tongues of liberal secular progressives who'd choke on any equivalent reference to "the Christian world." When such hyperalert policemen of the perimeter between church and state endorse the former but not the latter, they're implicitly acknowledging that Islam is not merely a faith but a political project, too. There is an "Organization of the Islamic Conference," which is already the largest single voting bloc at the United Nations and is still adding new members. Imagine if someone proposed an "Organization of the Christian Conference" that would hold summits attended by prime ministers and Presidents, and vote as a bloc in transnational bodies. But, of course, there is no "Christian world": Europe is largely post-Christian and, as President Barack Obama bizarrely asserted to a European interviewer last week, America is "one of the largest Muslim countries in the world." Perhaps we're eligible for membership in the OIC.
I suppose the benign interpretation is that, as head of state of the last superpower, Obama is indulging in a little harmless condescension. In his Cairo speech, he congratulated Muslims on inventing algebra and quoted approvingly one of the less-bloodcurdling sections of the Quran. As sociohistorical scholarship goes, I found myself recalling that moment in the long twilight of the Habsburg Empire when Crown Prince Rudolph and his mistress were found dead at the royal hunting lodge at Mayerling – either a double suicide, or something even more sinister. Happily, in the Broadway musical version, instead of being found dead, the star-crossed lovers emigrate to America and settle down on a farm in Pennsylvania. Recently, my old comrade Stephen Fry gave an amusing lecture at the Royal Geographical Society in London on the popular Americanism, "When life hands you lemons, make lemonade" – or, if something's bitter and hard to swallow, add sugar and sell it. That's what the president did with Islam: He added sugar and sold it.
The speech nevertheless impressed many conservatives, including Rich Lowry, my esteemed editor at National Review, "esteemed editor" being the sort of thing one says before booting the boss in the crotch. Rich thought that the president succeeded in his principal task: "Fundamentally, Obama's goal was to tell the Muslim world, 'We respect and value you, your religion and your civilization, and only ask that you don't hate us and murder us in return.'" But those terms are too narrow. You don't have to murder a guy if he preemptively surrenders. And you don't even have to hate him if you're too busy despising him. The savvier Muslim potentates have no desire to be sitting in a smelly cave in the Hindu Kush, sharing a latrine with a dozen half-witted goatherds while plotting how to blow up the Empire State Building. Nevertheless, they share key goals with the cave dwellers – including the wish to expand the boundaries of "the Muslim world" and (as in the anti-blasphemy push at the U.N.) to place Islam, globally, beyond criticism. The nonterrorist advance of Islam is a significant challenge to Western notions of liberty and pluralism.
Once Obama moved on from the more generalized Islamoschmoozing to the details, the subtext – the absence of American will – became explicit. He used the cover of multilateralism and moral equivalence to communicate, consistently, American weakness: "No single nation should pick and choose which nations hold nuclear weapons." Perhaps by "no single nation" he means the "global community" should pick and choose, which means the U.N. Security Council, which means the Big Five, which means that Russia and China will pursue their own murky interests and that, in the absence of American leadership, Britain and France will reach their accommodations with a nuclear Iran, a nuclear North Korea and any other psychostate minded to join them.
On the other hand, a "single nation" certainly has the right to tell another nation anything it wants if that nation happens to be the Zionist Entity: As Hillary Clinton just instructed Israel regarding its West Bank communities, there has to be "a stop to settlements – not some settlements, not outposts, not natural-growth exceptions." No "natural growth"? You mean, if you and the missus have a kid, you've got to talk gran'ma into moving out? To Tel Aviv, or Brooklyn or wherever? At a stroke, the administration has endorsed "the Muslim world's" view of those non-Muslims who happen to find themselves within what it regards as lands belonging to Islam: the Jewish and Christian communities are free to stand still or shrink, but not to grow. Would Obama be comfortable mandating "no natural growth" to Israel's million-and-a-half Muslims? No. But the administration has embraced "the Muslim world's" commitment to one-way multiculturalism, whereby Islam expands in the West but Christianity and Judaism shrivel remorselessly in the Middle East.
And so it goes. Like General Motors, America is "too big to fail." So it won't, not immediately. It will linger on in a twilight existence, sclerotic and ineffectual, declining unto a kind of societal dementia, unable to keep pace with what's happening and with an ever more tenuous grip on its own past, but able on occasion to throw out impressive words albeit strung together without much meaning: empower, peace, justice, prosperity – just to take one windy gust from the president's Cairo speech.
There's better phrase-making in the current issue of Foreign Affairs, in a coinage of Leslie Gelb, president emeritus of the Committee on Foreign Relations. The president emeritus is a sober, judicious paragon of torpidly conventional wisdom. Nevertheless, musing on American decline, he writes, "The country's economy, infrastructure, public schools and political system have been allowed to deteriorate. The result has been diminished economic strength, a less-vital democracy, and a mediocrity of spirit." That last is the one to watch: A great power can survive a lot of things, but not "a mediocrity of spirit." A wealthy nation living on the accumulated cultural capital of a glorious past can dodge its rendezvous with fate, but only for a while. That sound you heard in Cairo is the tingy ping of a hollow superpower.
Sunday, June 7, 2009
'Atlas Shrugged': Ayn Rand laughs; the rest of us weep
'Atlas Shrugged': Ayn Rand laughs; the rest of us weep. By Frank Miele
Daily InterLake, Saturday, June 6, 2009 11:20 PM CDT
"I will stop the motor of the world."
With those words, a charismatic hero was born. John Galt, the mysterious character at the heart of Ayn Rand's "Atlas Shrugged," decided that he could not stand idly by as the nation put on chains and fetters as if they were party favors.
Today, more than 50 years after the novel was written, Galt is offering hope to many Americans who see the country on a slow but steady slide toward socialism. As we talk about the government takeover of General Motors, it is educational to remember that the fictional Galt rose up out of the ashes of another car company, the Twentieth Century Motor Company, which like GM, ended up in bankruptcy.
The allegoric lesson of Twentieth Century Motors is much more instructive for the country as a whole, however, than for another automaker, because it is about how "hope" and "change" can motivate people to make choices that lead inevitably to "despair" and 'stagnation."
A former worker at the plant, now a lonely tramp, tells the story years later of how the workers let themselves be inspired by the company's new owners to work for the common good. "They told us that this plan would achieve a noble ideal."
Yes, a noble ideal, a way to help each other, something no one could possibly oppose. But there were few details on the table when the company's workers were asked to vote on their future, just these vague promises and a few catchphrases on which to pin their hopes.
"None of us knew just how the plan would work, but every one of us thought that the next fellow knew it. And if anybody had doubts, he ... kept his mouth shut -- because they made it sound like anyone who'd oppose the plan was a child-killer at heart and less than a human being."
And so the workers voted overwhelmingly to follow the new plan, which would mean that no worker would fall through the cracks -- everyone would take care of everyone else. "We thought it was good," the tramp says wearily. "No, that's not true, either. We thought that we were supposed to think it was good."
And so begins this experiment in "modified" capitalism. As the worker explains it, "The plan was that everybody in the factory would work according to his ability, but would be paid according to his need." Of course, in the long run, "modified capitalism" turns out to be socialism or worse, and as Rand points out with brutal logic, it leads inevitably to a system that encourages laziness and lying and punishes success.
The tale of Twentieth Century Motors is one small sliver of "Atlas Shrugged," but on virtually every page of the gargantuan novel, there is some bit of wit or wisdom that presages the mess of the current era.
The 'shrug" of the title tells it all. It is a symbol of indifference, but also a symbol of frustration, and a telling representation of the tremendous power wielded by the talented individual such as John Galt. Atlas, the great being on whose shoulders rests the world, finally gets tired of being taken for granted, and up-ends literally everything with the slightest of gestures.
Likewise, "Atlas Shrugged" tells the tale of a handful of innovators who struggle to survive in an era of big government and corporate greed, and seem doomed to fail, until one man -- Galt -- dares to change everything. Rand said the idea came to her during a phone conversation when she asked a friend, "What if all the creative minds of the world went on strike?"
Few prophetic novels get everything right, and "Atlas Shrugged" gets plenty wrong, but Rand's image of recession-weary America as a nation sputtering toward collectivism and running out of intellectual steam is so familiar to observers of the current scene that her excesses and errors are easily forgiven.
In particular, her ability to lampoon government intervention in business is deadly accurate. Time after time, Congress passes laws in the novel that are trumpeted as necessary for the common good, but which ultimately weaken society in unexpected ways and enrich only a few (those whom Rand characterizes as "looters"). It is almost scary how much of the villainous agenda of Rand's novel would fit perfectly well into the world as envisioned by readers of the Huffington Post.
The "Anti-Dog-Eat-Dog Rule" passed by the railroad industry gives the National Alliance of Railroads the authority to protect established railroads from new competition. The theory seems to be that the established company has only limited resources and shouldn't have to stretch itself thin by defending itself against fresh and innovative competition. This is great if you care about protecting established companies, but not if you care about providing the consumer with the best service and prices.
It has to remind you a little bit of the government's takeover of GM. Pity poor Ford Motor Co. which was the only one of the Big Three automakers in the United States that was healthy enough to pass up government bailout money last November. Now, instead of owing money to the government, they actually have to compete AGAINST the government (the new owner of GM) selling cars.
Supporters of government intervention, of course, say they are doing what is necessary to clean up after the horrid capitalists who mismanaged their companies into bankruptcy, but that fails to acknowledge the fact that the American economy is far from capitalism. It is instead what Rand called with unfeigned disgust a "mixed economy" -- namely, a mix between freedom and regulation -- and it is the government's own policies which lead inevitably to economic failure.
The latest real-life government intrusion being plotted by the "looters' in Congress is to force the health insurance industry to jettison the basic principles under which it operates in order to once again serve the "common good," or as Rand put it, "a noble ideal." This suggests a basic misunderstanding of the principles of liberty and equality. "Equality of opportunity" is the God-given right that our Constitution is supposed to protect, but instead our government has decided to ensure "equality of results' and is willing to bankrupt us all to do so. In its wrong-headedness, at least, it is reminiscent of the "Equalization of Opportunity Bill" from "Atlas Shrugged," which forbids any one person or corporation from owning more than one type of business concern.
One disastrous result of that bill in the novel is that companies which had planned on expanding must instead shut down their older, still viable, operations in order to be able to expand into much more prosperous new ventures. Thus, when companies, following the logic of the Equalization of Opportunity Bill, start closing their factories on the East Coast in order to move to the West (Colorado is the symbol of American resilience and energy), Congress is suddenly enlisted to try to correct yet another unintended consequence. This time, there is demand for a Public Stability Law that would forbid companies from abandoning their current territory for a new one. The argument is that people have a right to expect jobs that existed yesterday to continue to exist tomorrow. But no explanation how Colorado is going to get the equipment, factories and jobs it needs while the government is propping up foundering industrial dinosaurs elsewhere.
Rand's vision of the economic madness of government "do-good-ism" culminates in Directive 10-289, which mandates that everything must stop where it is. The order doesn't just freeze wages and prices; it also forbids workers from changing jobs without permission from a federal board. It halts new product development (too confusing) and makes the U.S. government the keeper of all intellectual property as a means of ensuring that no one takes advantage of anyone else. Needless to say, with the government in charge of everything, chaos ensues.
These are just a few of the touchstones of "Atlas Shrugged" which resonate as pure prophecy to an audience that has lived through the American Recovery and Reinvestment Act of 2009. Perhaps that's why the book is more popular than ever, and why "Going Galt" has become a symbol for our time of resistance to over-regulation.
Critics were merciless in mocking Rand's magnus opus when it appeared in 1957, but 50 years later, as her worst fears are realized, it appears to be a bet certain that Ayn Rand will get the last laugh.
Frank Miele is managing editor of the Daily Inter Lake and writes a weekly column.
Daily InterLake, Saturday, June 6, 2009 11:20 PM CDT
"I will stop the motor of the world."
With those words, a charismatic hero was born. John Galt, the mysterious character at the heart of Ayn Rand's "Atlas Shrugged," decided that he could not stand idly by as the nation put on chains and fetters as if they were party favors.
Today, more than 50 years after the novel was written, Galt is offering hope to many Americans who see the country on a slow but steady slide toward socialism. As we talk about the government takeover of General Motors, it is educational to remember that the fictional Galt rose up out of the ashes of another car company, the Twentieth Century Motor Company, which like GM, ended up in bankruptcy.
The allegoric lesson of Twentieth Century Motors is much more instructive for the country as a whole, however, than for another automaker, because it is about how "hope" and "change" can motivate people to make choices that lead inevitably to "despair" and 'stagnation."
A former worker at the plant, now a lonely tramp, tells the story years later of how the workers let themselves be inspired by the company's new owners to work for the common good. "They told us that this plan would achieve a noble ideal."
Yes, a noble ideal, a way to help each other, something no one could possibly oppose. But there were few details on the table when the company's workers were asked to vote on their future, just these vague promises and a few catchphrases on which to pin their hopes.
"None of us knew just how the plan would work, but every one of us thought that the next fellow knew it. And if anybody had doubts, he ... kept his mouth shut -- because they made it sound like anyone who'd oppose the plan was a child-killer at heart and less than a human being."
And so the workers voted overwhelmingly to follow the new plan, which would mean that no worker would fall through the cracks -- everyone would take care of everyone else. "We thought it was good," the tramp says wearily. "No, that's not true, either. We thought that we were supposed to think it was good."
And so begins this experiment in "modified" capitalism. As the worker explains it, "The plan was that everybody in the factory would work according to his ability, but would be paid according to his need." Of course, in the long run, "modified capitalism" turns out to be socialism or worse, and as Rand points out with brutal logic, it leads inevitably to a system that encourages laziness and lying and punishes success.
The tale of Twentieth Century Motors is one small sliver of "Atlas Shrugged," but on virtually every page of the gargantuan novel, there is some bit of wit or wisdom that presages the mess of the current era.
The 'shrug" of the title tells it all. It is a symbol of indifference, but also a symbol of frustration, and a telling representation of the tremendous power wielded by the talented individual such as John Galt. Atlas, the great being on whose shoulders rests the world, finally gets tired of being taken for granted, and up-ends literally everything with the slightest of gestures.
Likewise, "Atlas Shrugged" tells the tale of a handful of innovators who struggle to survive in an era of big government and corporate greed, and seem doomed to fail, until one man -- Galt -- dares to change everything. Rand said the idea came to her during a phone conversation when she asked a friend, "What if all the creative minds of the world went on strike?"
Few prophetic novels get everything right, and "Atlas Shrugged" gets plenty wrong, but Rand's image of recession-weary America as a nation sputtering toward collectivism and running out of intellectual steam is so familiar to observers of the current scene that her excesses and errors are easily forgiven.
In particular, her ability to lampoon government intervention in business is deadly accurate. Time after time, Congress passes laws in the novel that are trumpeted as necessary for the common good, but which ultimately weaken society in unexpected ways and enrich only a few (those whom Rand characterizes as "looters"). It is almost scary how much of the villainous agenda of Rand's novel would fit perfectly well into the world as envisioned by readers of the Huffington Post.
The "Anti-Dog-Eat-Dog Rule" passed by the railroad industry gives the National Alliance of Railroads the authority to protect established railroads from new competition. The theory seems to be that the established company has only limited resources and shouldn't have to stretch itself thin by defending itself against fresh and innovative competition. This is great if you care about protecting established companies, but not if you care about providing the consumer with the best service and prices.
It has to remind you a little bit of the government's takeover of GM. Pity poor Ford Motor Co. which was the only one of the Big Three automakers in the United States that was healthy enough to pass up government bailout money last November. Now, instead of owing money to the government, they actually have to compete AGAINST the government (the new owner of GM) selling cars.
Supporters of government intervention, of course, say they are doing what is necessary to clean up after the horrid capitalists who mismanaged their companies into bankruptcy, but that fails to acknowledge the fact that the American economy is far from capitalism. It is instead what Rand called with unfeigned disgust a "mixed economy" -- namely, a mix between freedom and regulation -- and it is the government's own policies which lead inevitably to economic failure.
The latest real-life government intrusion being plotted by the "looters' in Congress is to force the health insurance industry to jettison the basic principles under which it operates in order to once again serve the "common good," or as Rand put it, "a noble ideal." This suggests a basic misunderstanding of the principles of liberty and equality. "Equality of opportunity" is the God-given right that our Constitution is supposed to protect, but instead our government has decided to ensure "equality of results' and is willing to bankrupt us all to do so. In its wrong-headedness, at least, it is reminiscent of the "Equalization of Opportunity Bill" from "Atlas Shrugged," which forbids any one person or corporation from owning more than one type of business concern.
One disastrous result of that bill in the novel is that companies which had planned on expanding must instead shut down their older, still viable, operations in order to be able to expand into much more prosperous new ventures. Thus, when companies, following the logic of the Equalization of Opportunity Bill, start closing their factories on the East Coast in order to move to the West (Colorado is the symbol of American resilience and energy), Congress is suddenly enlisted to try to correct yet another unintended consequence. This time, there is demand for a Public Stability Law that would forbid companies from abandoning their current territory for a new one. The argument is that people have a right to expect jobs that existed yesterday to continue to exist tomorrow. But no explanation how Colorado is going to get the equipment, factories and jobs it needs while the government is propping up foundering industrial dinosaurs elsewhere.
Rand's vision of the economic madness of government "do-good-ism" culminates in Directive 10-289, which mandates that everything must stop where it is. The order doesn't just freeze wages and prices; it also forbids workers from changing jobs without permission from a federal board. It halts new product development (too confusing) and makes the U.S. government the keeper of all intellectual property as a means of ensuring that no one takes advantage of anyone else. Needless to say, with the government in charge of everything, chaos ensues.
These are just a few of the touchstones of "Atlas Shrugged" which resonate as pure prophecy to an audience that has lived through the American Recovery and Reinvestment Act of 2009. Perhaps that's why the book is more popular than ever, and why "Going Galt" has become a symbol for our time of resistance to over-regulation.
Critics were merciless in mocking Rand's magnus opus when it appeared in 1957, but 50 years later, as her worst fears are realized, it appears to be a bet certain that Ayn Rand will get the last laugh.
Frank Miele is managing editor of the Daily Inter Lake and writes a weekly column.
Baby boomers heap insincere praise on the "greatest generation"
Too Much, Too Late. By David Gelernter
Baby boomers heap insincere praise on the "greatest generation."
My political credo is simple and many people share it: I am against phonies. A cultural establishment that (on the whole) doesn't give a damn about World War II or its veterans thinks it can undo a half-century of indifference verging on contempt by repeating a silly phrase ("the greatest generation") like a magic spell while deploying fulsome praise like carpet bombing.
The campaign is especially intense among members of the 1960s generation who once chose to treat all present and former soldiers like dirt and are willing at long last to risk some friendly words about World War II veterans, now that most are safely underground and guaranteed not to talk back, enjoy their celebrity or start acting like they own the joint. A quick glance at the famous Hemingway B.S. detector shows the needle pegged at Maximum, where it's been all week, from Memorial Day through the D-Day anniversary run-up.
When I was in junior high school long ago, a touring arts program visited schools in New York state. One performance consisted of a celebrated actress reciting Emily Dickinson's poetry onstage for 90 minutes or so. I defy any audience to listen attentively to 90 minutes of Dickinson without showing the strain, and my school definitely wasn't having any.A few minutes into the show, the auditorium was alive with student chatter, so loud a buzz you could barely hear the performance. Being a poetry-lover, I devoted myself to setting an example of rapt attention for, maybe, five minutes, at which point I threw in the towel and joined the mass murmur.
The actress manfully completed her performance. When it was over we gave her a stupendous ovation. We were glad it was finished and (more important) knew perfectly well that we had behaved like pigs and intended to make up for it by clapping and roaring and shouting. But the performer wasn't having any. She gave us a cold curtsy and left the stage and would not return for a second bow.
I have always admired her for that: a more memorable declaration than anything Dickinson ever wrote. And today's endless ovation for World War II vets doesn't change the fact that this nation has behaved boorishly, with colossal disrespect. If we cared about that war, the men who won it and the ideas it suggests, we would teach our children (at least) four topics:
• The major battles of the war. When I was a child in the 1960s, names like Corregidor and Iwo Jima were still sacred, and pronounced everywhere with respect. Writing in the 1960s about the battle of Midway, Samuel Eliot Morison stepped out of character to plead with his readers: "Threescore young aviators . . . met flaming death that day in reversing the verdict of battle.
Think of them, reader, every Fourth of June. They and their comrades who survived changed the whole course of the Pacific War." Today the Battle of Midway has become niche-market nostalgia material, and most children (and many adults) have never heard of it. Thus we honor "the greatest generation." (And if I hear that phrase one more time I will surely puke.)
• The bestiality of the Japanese. The Japanese army saw captive soldiers as cowards, lower than lice. If we forget this we dishonor the thousands who were tortured and murdered, and put ourselves in danger of believing the soul-corroding lie that all cultures are equally bad or good. Some Americans nowadays seem to think America's behavior during the war was worse than Japan's--we did intern many loyal Americans of Japanese descent. That was unforgivable--and unspeakably trivial compared to Japan's unique achievement, mass murder one atrocity at a time.
In "The Other Nuremberg," Arnold Brackman cites (for instance) "the case of Lucas Doctolero, crucified, nails driven through hands, feet and skull"; "the case of a blind woman who was dragged from her home November 17, 1943, stripped naked, and hanged"; "five Filipinos thrown into a latrine and buried alive." In the Japanese-occupied Philippines alone, at least 131,028 civilians and Allied prisoners of war were murdered. The Japanese committed crimes against Allied POWs and Asians that would be hard still, today, for a respectable newspaper even to describe. Mr. Brackman's 1987 book must be read by everyone who cares about World War II and its veterans, or the human race.
• The attitude of American intellectuals. Before Pearl Harbor but long after the character of Hitlerism was clear--after the Nuremberg laws, the Kristallnacht pogrom, the establishment of Dachau and the Gestapo--American intellectuals tended to be dead against the U.S. joining Britain's war on Hitler.
Today's students learn (sometimes) about right-wing isolationists like Charles Lindbergh and the America Firsters. They are less likely to read documents like this, which appeared in Partisan Review (the U.S. intelligentsia's No. 1 favorite mag) in fall 1939, signed by John Dewey, William Carlos Williams, Meyer Schapiro and many more of the era's leading lights. "The last war showed only too clearly that we can have no faith in imperialist crusades to bring freedom to any people. Our entry into the war, under the slogan of 'Stop Hitler!' would actually result in the immediate introduction of totalitarianism over here. . . . The American masses can best help [the German people] by fighting at home to keep their own liberties." The intelligentsia acted on its convictions. "By one means or another," Diana Trilling later wrote of this period, "most of the intellectuals of our acquaintance evaded the draft."
Why rake up these Profiles in Disgrace? Because in the Iraq War era they have a painfully familiar ring.
• The veterans' neglected voice. World War II produced an extraordinary literature of first-person soldier narratives--most of them out of print or unknown. Books like George MacDonald Fraser's "Quartered Safe Out Here," Philip Ardery's "Bomber Pilot," James Fahey's "Pacific War Diary." If we were serious about commemorating the war, we would do something serious. The Library of America includes two volumes on "Reporting World War II," but where are the soldiers' memoirs versus the reporters'? If we were serious, we would have every grade school in the nation introduce itself to local veterans and invite them over. We'd use software to record these informal talks and weave them into a National Second World War Narrative in cyberspace. That would be a monument worth having.
Speaking of which: I am privileged to know a gentleman who enlisted in the Army as an aviation cadet in 1942, served in combat as a navigator in a B-24, was shot down and interned in Switzerland, escaped, and flew in the air transport command for the rest of the war. He became a scientist and had a long, distinguished career. Among his friends he is a celebrated raconteur, and his prose is strong and charming. He wrote up his World War II experiences, and no one--no magazine, no book publisher--will take them on. My suggestions have all bombed out.
If you're interested, give me a call. But I'm not holding my breath. The country is too busy toasting the "greatest generation" to pay attention to its actual members.
Mr. Gelernter is a contributing editor of The Weekly Standard and professor of computer science at Yale.
Baby boomers heap insincere praise on the "greatest generation."
My political credo is simple and many people share it: I am against phonies. A cultural establishment that (on the whole) doesn't give a damn about World War II or its veterans thinks it can undo a half-century of indifference verging on contempt by repeating a silly phrase ("the greatest generation") like a magic spell while deploying fulsome praise like carpet bombing.
The campaign is especially intense among members of the 1960s generation who once chose to treat all present and former soldiers like dirt and are willing at long last to risk some friendly words about World War II veterans, now that most are safely underground and guaranteed not to talk back, enjoy their celebrity or start acting like they own the joint. A quick glance at the famous Hemingway B.S. detector shows the needle pegged at Maximum, where it's been all week, from Memorial Day through the D-Day anniversary run-up.
When I was in junior high school long ago, a touring arts program visited schools in New York state. One performance consisted of a celebrated actress reciting Emily Dickinson's poetry onstage for 90 minutes or so. I defy any audience to listen attentively to 90 minutes of Dickinson without showing the strain, and my school definitely wasn't having any.A few minutes into the show, the auditorium was alive with student chatter, so loud a buzz you could barely hear the performance. Being a poetry-lover, I devoted myself to setting an example of rapt attention for, maybe, five minutes, at which point I threw in the towel and joined the mass murmur.
The actress manfully completed her performance. When it was over we gave her a stupendous ovation. We were glad it was finished and (more important) knew perfectly well that we had behaved like pigs and intended to make up for it by clapping and roaring and shouting. But the performer wasn't having any. She gave us a cold curtsy and left the stage and would not return for a second bow.
I have always admired her for that: a more memorable declaration than anything Dickinson ever wrote. And today's endless ovation for World War II vets doesn't change the fact that this nation has behaved boorishly, with colossal disrespect. If we cared about that war, the men who won it and the ideas it suggests, we would teach our children (at least) four topics:
• The major battles of the war. When I was a child in the 1960s, names like Corregidor and Iwo Jima were still sacred, and pronounced everywhere with respect. Writing in the 1960s about the battle of Midway, Samuel Eliot Morison stepped out of character to plead with his readers: "Threescore young aviators . . . met flaming death that day in reversing the verdict of battle.
Think of them, reader, every Fourth of June. They and their comrades who survived changed the whole course of the Pacific War." Today the Battle of Midway has become niche-market nostalgia material, and most children (and many adults) have never heard of it. Thus we honor "the greatest generation." (And if I hear that phrase one more time I will surely puke.)
• The bestiality of the Japanese. The Japanese army saw captive soldiers as cowards, lower than lice. If we forget this we dishonor the thousands who were tortured and murdered, and put ourselves in danger of believing the soul-corroding lie that all cultures are equally bad or good. Some Americans nowadays seem to think America's behavior during the war was worse than Japan's--we did intern many loyal Americans of Japanese descent. That was unforgivable--and unspeakably trivial compared to Japan's unique achievement, mass murder one atrocity at a time.
In "The Other Nuremberg," Arnold Brackman cites (for instance) "the case of Lucas Doctolero, crucified, nails driven through hands, feet and skull"; "the case of a blind woman who was dragged from her home November 17, 1943, stripped naked, and hanged"; "five Filipinos thrown into a latrine and buried alive." In the Japanese-occupied Philippines alone, at least 131,028 civilians and Allied prisoners of war were murdered. The Japanese committed crimes against Allied POWs and Asians that would be hard still, today, for a respectable newspaper even to describe. Mr. Brackman's 1987 book must be read by everyone who cares about World War II and its veterans, or the human race.
• The attitude of American intellectuals. Before Pearl Harbor but long after the character of Hitlerism was clear--after the Nuremberg laws, the Kristallnacht pogrom, the establishment of Dachau and the Gestapo--American intellectuals tended to be dead against the U.S. joining Britain's war on Hitler.
Today's students learn (sometimes) about right-wing isolationists like Charles Lindbergh and the America Firsters. They are less likely to read documents like this, which appeared in Partisan Review (the U.S. intelligentsia's No. 1 favorite mag) in fall 1939, signed by John Dewey, William Carlos Williams, Meyer Schapiro and many more of the era's leading lights. "The last war showed only too clearly that we can have no faith in imperialist crusades to bring freedom to any people. Our entry into the war, under the slogan of 'Stop Hitler!' would actually result in the immediate introduction of totalitarianism over here. . . . The American masses can best help [the German people] by fighting at home to keep their own liberties." The intelligentsia acted on its convictions. "By one means or another," Diana Trilling later wrote of this period, "most of the intellectuals of our acquaintance evaded the draft."
Why rake up these Profiles in Disgrace? Because in the Iraq War era they have a painfully familiar ring.
• The veterans' neglected voice. World War II produced an extraordinary literature of first-person soldier narratives--most of them out of print or unknown. Books like George MacDonald Fraser's "Quartered Safe Out Here," Philip Ardery's "Bomber Pilot," James Fahey's "Pacific War Diary." If we were serious about commemorating the war, we would do something serious. The Library of America includes two volumes on "Reporting World War II," but where are the soldiers' memoirs versus the reporters'? If we were serious, we would have every grade school in the nation introduce itself to local veterans and invite them over. We'd use software to record these informal talks and weave them into a National Second World War Narrative in cyberspace. That would be a monument worth having.
Speaking of which: I am privileged to know a gentleman who enlisted in the Army as an aviation cadet in 1942, served in combat as a navigator in a B-24, was shot down and interned in Switzerland, escaped, and flew in the air transport command for the rest of the war. He became a scientist and had a long, distinguished career. Among his friends he is a celebrated raconteur, and his prose is strong and charming. He wrote up his World War II experiences, and no one--no magazine, no book publisher--will take them on. My suggestions have all bombed out.
If you're interested, give me a call. But I'm not holding my breath. The country is too busy toasting the "greatest generation" to pay attention to its actual members.
Mr. Gelernter is a contributing editor of The Weekly Standard and professor of computer science at Yale.
Federal President may not know it, but his 'Muslim world' is split by a war of ideas
Barack Obama extends his hand to Islam's despots. By Amir Taheri
The American President may not know it, but his 'Muslim world' is split by a war of ideas.
The Telegraph, Jun 06, 2009
What do you do when you have no policy, but want to appear as if you do? In the case of Barack Obama, the answer is simple: you go around the world making speeches about your "personal journey".
The latest example came last Thursday, when Mr Obama presented his "address to the Muslim world" to an invited audience of 2,500 officials at Cairo University. The exercise was a masterpiece of equivocation and naivety. The President said he was seeking "a new beginning between the US and Muslims around the world". This implied that "Muslims around the world" represent a single monolithic bloc – precisely the claim made by people like Osama bin Laden and Mahmoud Ahmadinejad, who believe that all Muslims belong to a single community, the "ummah", set apart from, and in conflict with, the rest of humanity.
Mr Obama ignored the fact that what he calls the "Muslim world" consists of 57 countries with Muslim majorities and a further 60 countries – including America and Europe – where Muslims represent substantial minorities. Trying to press a fifth of humanity into a single "ghetto" based on their religion is an exercise worthy of ideologues, not the leader of a major democracy.
Mr Obama's mea culpa extended beyond the short span of US history. He appropriated the guilt for ancient wars between Islam and Christendom, Western colonialism and America's support for despotic regimes during the Cold War. Then came the flattering narrative about Islam's place in history: ignoring the role of Greece, China, India and pre-Islamic Persia, he credited Islam with having invented modern medicine, algebra, navigation and even the use of pens and printing. Believing that flattery will get you anywhere, he put the number of Muslim Americans at seven million, when the total is not even half that number, promoting Islam to America's largest religion after Christianity.
The President promised to help change the US tax system to allow Muslims to pay zakat, the sharia tax, and threatened to prosecute those who do not allow Muslim women to cover their hair, despite the fact that this "hijab" is a political prop invented by radicals in the 1970s. As if he did not have enough on his plate, Mr Obama insisted that fighting "negative stereotypes of Islam" was "one of my duties as President of the United States". However, there was no threat to prosecute those who force the hijab on Muslim women through intimidation, blackmail and physical violence, nor any mention of the abominable treatment of Muslim women, including such horrors as "honour-killing". The best he could do was this platitude: "Our daughters can contribute just as much to society as our sons."
Having abandoned President Bush's support for democratic movements in the Middle East, Mr Obama said: "No system of government can or should be imposed on one nation by another." He made no mention of the tens of thousands of political prisoners in Muslim countries, and offered no support to those fighting for gender equality, independent trade unions and ethnic and religious minorities.
Buried within the text, possibly in the hope that few would notice, was an effective acceptance of Iran's nuclear ambitions: "No single nation should pick and choose which nations should hold nuclear weapons." Mr Obama did warn that an Iranian bomb could trigger a nuclear arms race in the region. However, the Cairo speech did not include the threat of action against the Islamic Republic – not even sanctions. The message was clear: the US was distancing itself from the resolutions passed against Iran by the UN Security Council.
As if all that weren't enough, Mr Obama dropped words such as "terror" and "terrorism" from his vocabulary. The killers of September 11 were "violent extremists", not "Islamist terrorists". In this respect, he is more politically correct than the Saudis and Egyptians, who have no qualms about describing those who kill in the name of Islam as terrorists.
Mr Obama may not know it, but his "Muslim world" is experiencing a civil war of ideas, in which movements for freedom and human rights are fighting despotic, fanatical and terrorist groups that use Islam as a fascist ideology. The President refused to acknowledge the existence of the two camps, let alone take sides. It was not surprising that the Muslim Brotherhood lauds him for "acknowledging the justice of our case" – nor that his speech was boycotted by the Egyptian democratic movement "Kifayah!" ("Enough!"), which said it could not endorse "a policy of support for despots in the name of fostering stability".
In other words, the President may find that by trying to turn everyone into a friend, he has merely added to his list of enemies.
The American President may not know it, but his 'Muslim world' is split by a war of ideas.
The Telegraph, Jun 06, 2009
What do you do when you have no policy, but want to appear as if you do? In the case of Barack Obama, the answer is simple: you go around the world making speeches about your "personal journey".
The latest example came last Thursday, when Mr Obama presented his "address to the Muslim world" to an invited audience of 2,500 officials at Cairo University. The exercise was a masterpiece of equivocation and naivety. The President said he was seeking "a new beginning between the US and Muslims around the world". This implied that "Muslims around the world" represent a single monolithic bloc – precisely the claim made by people like Osama bin Laden and Mahmoud Ahmadinejad, who believe that all Muslims belong to a single community, the "ummah", set apart from, and in conflict with, the rest of humanity.
Mr Obama ignored the fact that what he calls the "Muslim world" consists of 57 countries with Muslim majorities and a further 60 countries – including America and Europe – where Muslims represent substantial minorities. Trying to press a fifth of humanity into a single "ghetto" based on their religion is an exercise worthy of ideologues, not the leader of a major democracy.
Mr Obama's mea culpa extended beyond the short span of US history. He appropriated the guilt for ancient wars between Islam and Christendom, Western colonialism and America's support for despotic regimes during the Cold War. Then came the flattering narrative about Islam's place in history: ignoring the role of Greece, China, India and pre-Islamic Persia, he credited Islam with having invented modern medicine, algebra, navigation and even the use of pens and printing. Believing that flattery will get you anywhere, he put the number of Muslim Americans at seven million, when the total is not even half that number, promoting Islam to America's largest religion after Christianity.
The President promised to help change the US tax system to allow Muslims to pay zakat, the sharia tax, and threatened to prosecute those who do not allow Muslim women to cover their hair, despite the fact that this "hijab" is a political prop invented by radicals in the 1970s. As if he did not have enough on his plate, Mr Obama insisted that fighting "negative stereotypes of Islam" was "one of my duties as President of the United States". However, there was no threat to prosecute those who force the hijab on Muslim women through intimidation, blackmail and physical violence, nor any mention of the abominable treatment of Muslim women, including such horrors as "honour-killing". The best he could do was this platitude: "Our daughters can contribute just as much to society as our sons."
Having abandoned President Bush's support for democratic movements in the Middle East, Mr Obama said: "No system of government can or should be imposed on one nation by another." He made no mention of the tens of thousands of political prisoners in Muslim countries, and offered no support to those fighting for gender equality, independent trade unions and ethnic and religious minorities.
Buried within the text, possibly in the hope that few would notice, was an effective acceptance of Iran's nuclear ambitions: "No single nation should pick and choose which nations should hold nuclear weapons." Mr Obama did warn that an Iranian bomb could trigger a nuclear arms race in the region. However, the Cairo speech did not include the threat of action against the Islamic Republic – not even sanctions. The message was clear: the US was distancing itself from the resolutions passed against Iran by the UN Security Council.
As if all that weren't enough, Mr Obama dropped words such as "terror" and "terrorism" from his vocabulary. The killers of September 11 were "violent extremists", not "Islamist terrorists". In this respect, he is more politically correct than the Saudis and Egyptians, who have no qualms about describing those who kill in the name of Islam as terrorists.
Mr Obama may not know it, but his "Muslim world" is experiencing a civil war of ideas, in which movements for freedom and human rights are fighting despotic, fanatical and terrorist groups that use Islam as a fascist ideology. The President refused to acknowledge the existence of the two camps, let alone take sides. It was not surprising that the Muslim Brotherhood lauds him for "acknowledging the justice of our case" – nor that his speech was boycotted by the Egyptian democratic movement "Kifayah!" ("Enough!"), which said it could not endorse "a policy of support for despots in the name of fostering stability".
In other words, the President may find that by trying to turn everyone into a friend, he has merely added to his list of enemies.
Saturday, June 6, 2009
U.S. Applauds Consensual Agreement Among Mauritanian Parties
U.S. Applauds Consensual Agreement Among Mauritanian Parties. By Robert Wood, Deputy Spokesman
US State Dept, Bureau of Public Affairs
Washington, DC, June 5, 2009
The Government of the United States applauds the Mauritanian parties for reaching a consensual agreement that will restore constitutional order through a transitional process to resolve the current political crisis. We commend Senegalese President Wade for his vision and persistent pursuit of this agreement. The accord represents a laudable success for the African Union and the African people in resolving this crisis. The United States will, in conjunction with the other members of the International Contact Group and community, actively support all parties to this agreement, including efforts to ensure that the resultant elections are organized and held in a free, fair and credible manner.
PRN: 2009/552
US State Dept, Bureau of Public Affairs
Washington, DC, June 5, 2009
The Government of the United States applauds the Mauritanian parties for reaching a consensual agreement that will restore constitutional order through a transitional process to resolve the current political crisis. We commend Senegalese President Wade for his vision and persistent pursuit of this agreement. The accord represents a laudable success for the African Union and the African people in resolving this crisis. The United States will, in conjunction with the other members of the International Contact Group and community, actively support all parties to this agreement, including efforts to ensure that the resultant elections are organized and held in a free, fair and credible manner.
PRN: 2009/552
Friday, June 5, 2009
Global cereal production continures to reach unexpected highs - FAO report
Global cereal production continures to reach unexpected highs - FAO report
New York, Jun 4 2009 12:10PM
Following last year’s record-breaking cereal harvest, the 2009 crop is set to be the second highest documented yield, according to a new United Nations Food and Agriculture Organization (<"http://www.fao.org/%22%3EFAO) <"http://www.fao.org/news/story/en/item/20351/icode/%22%3Ereport released today.
The world’s cereals output is predicted to be 2,219 million tons in 2009, almost 3 per cent lower than in 2008, and the growth in consumption to slow to 1.3 per cent in 2009-2010, compared to 4 per cent in the previous period.
In its bi-annual “Food Outlook” report, FAO noted that the higher than expected forecast has allowed stocks to be replenished and as a result cushion global food supplies against future market shocks, such as the price hike crisis in 2008.
However, the report cautioned that prices remained high in many developing countries, and the loss of employment, income and other effects of the global economic crisis threatened the poor’s access to food.
The Rome-based agency’s report also predicted that world trade in 2009-2010 in cereals would fall by 4 per cent on last year, with the contraction mostly felt in wheat imports, which could be slashed by 10 million tons due to higher production in several wheat importing countries.
While a drop in prices is expected to save food importing countries as much as $226 billion in 2009 compared to the previous year, the continuing economic downturn could offset much of the benefit, the report warned.
FAO voiced concern over the weakening of the United States dollar and the sharp rebound of energy prices, which could exert upward pressure on international food prices.
But, “barring major crop setbacks, with world staple food stocks at more comfortable levels than in 2008, the food economy looks less vulnerable to those external developments than it was last year,” the report concluded.
In a related development, the head of the UN rural development agency said that “the impact on Africa of the recent food and fuel crisis, and now the unprecedented global economic crisis, has been severe and threatens to undo the continent’s notable economic progress.”
The President of the International Fund for Agricultural Development (<"http://www.ifad.org/%22%3EIFAD), Kanayo F. Nwanze, <"http://www.ifad.org/media/press/2009/28.htm%22%3Esaid that by investing in and creating a dynamic smallholder agriculture sector, African Governments can limit the impact of the global financial crisis on poor rural communities.
Some 80 million smallholder farms exist in Africa, supplying around 80 per cent of African agricultural production, noted Mr. Nwanze, ahead of the Joint Annual Meeting of Ministers of Finance and Economy of the African Union (AU) and of the UN Economic Commission for Africa (ECA) on 6-7 June in Cairo.
The theme of this year’s meeting, which Mr. Nwanze is attending, is “Enhancing the effectiveness of fiscal policy for domestic resources mobilization.”
New York, Jun 4 2009 12:10PM
Following last year’s record-breaking cereal harvest, the 2009 crop is set to be the second highest documented yield, according to a new United Nations Food and Agriculture Organization (<"http://www.fao.org/%22%3EFAO) <"http://www.fao.org/news/story/en/item/20351/icode/%22%3Ereport released today.
The world’s cereals output is predicted to be 2,219 million tons in 2009, almost 3 per cent lower than in 2008, and the growth in consumption to slow to 1.3 per cent in 2009-2010, compared to 4 per cent in the previous period.
In its bi-annual “Food Outlook” report, FAO noted that the higher than expected forecast has allowed stocks to be replenished and as a result cushion global food supplies against future market shocks, such as the price hike crisis in 2008.
However, the report cautioned that prices remained high in many developing countries, and the loss of employment, income and other effects of the global economic crisis threatened the poor’s access to food.
The Rome-based agency’s report also predicted that world trade in 2009-2010 in cereals would fall by 4 per cent on last year, with the contraction mostly felt in wheat imports, which could be slashed by 10 million tons due to higher production in several wheat importing countries.
While a drop in prices is expected to save food importing countries as much as $226 billion in 2009 compared to the previous year, the continuing economic downturn could offset much of the benefit, the report warned.
FAO voiced concern over the weakening of the United States dollar and the sharp rebound of energy prices, which could exert upward pressure on international food prices.
But, “barring major crop setbacks, with world staple food stocks at more comfortable levels than in 2008, the food economy looks less vulnerable to those external developments than it was last year,” the report concluded.
In a related development, the head of the UN rural development agency said that “the impact on Africa of the recent food and fuel crisis, and now the unprecedented global economic crisis, has been severe and threatens to undo the continent’s notable economic progress.”
The President of the International Fund for Agricultural Development (<"http://www.ifad.org/%22%3EIFAD), Kanayo F. Nwanze, <"http://www.ifad.org/media/press/2009/28.htm%22%3Esaid that by investing in and creating a dynamic smallholder agriculture sector, African Governments can limit the impact of the global financial crisis on poor rural communities.
Some 80 million smallholder farms exist in Africa, supplying around 80 per cent of African agricultural production, noted Mr. Nwanze, ahead of the Joint Annual Meeting of Ministers of Finance and Economy of the African Union (AU) and of the UN Economic Commission for Africa (ECA) on 6-7 June in Cairo.
The theme of this year’s meeting, which Mr. Nwanze is attending, is “Enhancing the effectiveness of fiscal policy for domestic resources mobilization.”
Urban Mass Transit is not a National Problem
Urban Mass Transit is not a National Problem. By Bob Poole, Director of Transportation Studies, Reason Foundation
At a time of unprecedented federal deficits, the idea of expanding the federal government’s spending into what is basically a local issue requires a very high level of justification. The others who have posted on this blog, arguing in favor of federal funding for transit operating costs, have failed to meet that standard.
Merely desiring federal money and having something nice to spend it on is hardly a justification. Not when, according to the Government Accountability Office, “the federal government’s financial condition and fiscal outlook are worse than many may understand. Specifically, the federal budget is on an unsustainable path—raising questions about whether people should assume federal funds will be available to help solve the nation’s current infrastructure challenges.” (GAO-08-763T, May 8, 2008)
Recently-retired Comptroller General David Walker devoted much of his energy in recent years to calling on the nation to rethink the role of the federal government. A sensible rethinking should ask which functions are truly national in scope, such that they serve all Americans and can best be carried out at a national scale. National defense is one such function. The Interstate highway system is another.
The federal government got into surface transportation funding in the 1950s on an interstate-commerce rationale. And indeed, it would have been difficult to build the nationwide Interstate system without the federal funding mechanism of highway user taxes that redistributed funds from high-traffic states to lower-traffic states for that specific purpose. But urban mass transit is a local and sometimes regional function. Its beneficiaries are primarily those who use it and secondarily those in that urban area who receive secondary benefits (such as slightly less traffic congestion and miniscule improvements in air quality). There are no national benefits.
And it’s not as if no other means of transit funding are available. Local transportation sales taxes exist in a growing number of urban areas and are a robust funding mechanism. All of California’s urban counties have such “self-help” taxes, providing a larger share of their budgets than federal transit aid. There is considerable potential in real-estate value capture that very few transit agencies have even attempted to exploit.
There are also perverse incentive effects when cities and their transit agencies can get “free” federal money. In a growing number of cases, when faced with the choice of a very costly light rail project or a far more affordable bus rapid transit (BRT) project, being able to get a large fraction of the cost as a gift from Washington biases the choice toward the more costly alternative. If the cost of the project had to be raised locally, there would be stronger incentives for cost-effectiveness to play a major role in such choices.
Finally, there is the question of whose money it is. Currently, most federal transit funding comes from the transit account of the Highway Trust Fund. In other words, the source of that funding is motorists and trucking companies, paying what are supposed to be user taxes in order to have a high-quality highway system to use. Ever since the 1964 Urban Mass Transit Act, the fraction of highway user taxes that can be diverted to non-highway uses has been steadily increased. Yet study after study in recent years has documented the poor condition of our highways and bridges, and the horrible congestion plaguing urban roadways. Taking an even bigger slice of the pie for urban transit would condemn the vast majority of Americans—for whom cars and trucks are their only viable alternative—to ever-worsening highway hell.
At a time of unprecedented federal deficits, the idea of expanding the federal government’s spending into what is basically a local issue requires a very high level of justification. The others who have posted on this blog, arguing in favor of federal funding for transit operating costs, have failed to meet that standard.
Merely desiring federal money and having something nice to spend it on is hardly a justification. Not when, according to the Government Accountability Office, “the federal government’s financial condition and fiscal outlook are worse than many may understand. Specifically, the federal budget is on an unsustainable path—raising questions about whether people should assume federal funds will be available to help solve the nation’s current infrastructure challenges.” (GAO-08-763T, May 8, 2008)
Recently-retired Comptroller General David Walker devoted much of his energy in recent years to calling on the nation to rethink the role of the federal government. A sensible rethinking should ask which functions are truly national in scope, such that they serve all Americans and can best be carried out at a national scale. National defense is one such function. The Interstate highway system is another.
The federal government got into surface transportation funding in the 1950s on an interstate-commerce rationale. And indeed, it would have been difficult to build the nationwide Interstate system without the federal funding mechanism of highway user taxes that redistributed funds from high-traffic states to lower-traffic states for that specific purpose. But urban mass transit is a local and sometimes regional function. Its beneficiaries are primarily those who use it and secondarily those in that urban area who receive secondary benefits (such as slightly less traffic congestion and miniscule improvements in air quality). There are no national benefits.
And it’s not as if no other means of transit funding are available. Local transportation sales taxes exist in a growing number of urban areas and are a robust funding mechanism. All of California’s urban counties have such “self-help” taxes, providing a larger share of their budgets than federal transit aid. There is considerable potential in real-estate value capture that very few transit agencies have even attempted to exploit.
There are also perverse incentive effects when cities and their transit agencies can get “free” federal money. In a growing number of cases, when faced with the choice of a very costly light rail project or a far more affordable bus rapid transit (BRT) project, being able to get a large fraction of the cost as a gift from Washington biases the choice toward the more costly alternative. If the cost of the project had to be raised locally, there would be stronger incentives for cost-effectiveness to play a major role in such choices.
Finally, there is the question of whose money it is. Currently, most federal transit funding comes from the transit account of the Highway Trust Fund. In other words, the source of that funding is motorists and trucking companies, paying what are supposed to be user taxes in order to have a high-quality highway system to use. Ever since the 1964 Urban Mass Transit Act, the fraction of highway user taxes that can be diverted to non-highway uses has been steadily increased. Yet study after study in recent years has documented the poor condition of our highways and bridges, and the horrible congestion plaguing urban roadways. Taking an even bigger slice of the pie for urban transit would condemn the vast majority of Americans—for whom cars and trucks are their only viable alternative—to ever-worsening highway hell.
Schwarzenegger Outlines Need for Privatization, Budget Reform in California
Schwarzenegger Outlines Need for Privatization, Budget Reform in California. By Leonard Gilroy
Out of Control Policy Blog, June 2, 2009, 10:02pm
Excerpts:
"Spending on prisons has nearly doubled in the last five years. We spend $49,000 per inmate per year; the national average is only $32,000. Now, other states have privately run correctional facilities that operate at half of the cost. Why can't we?
"We must also restructure the relationship between state and local government. We all hear from the local officials about the heavy hand of Sacramento. If we are providing fewer resources we have an obligation to cut most of the strings and mandates and to get out of the way. Right now we are cutting billions of dollars from our schools, so shouldn't we give districts more freedom and flexibility and not tie their hands with strict rules like who is allowed to mow the lawn or fix the roof, or do the plumbing?
"I'm also proposing once again to eliminate and consolidate more than a dozen state departments, boards and commissions. These include the Waste Management Board, the Court Reporters Board, the Department of Boating and Waterways and the Inspection and Maintenance Review Committee and so on.
"There is absolutely no reason to hold onto those redundant boards in the crisis. We should not and I will not, cut a dollar from education or a dollar from health care or a dollar from public safety or a dollar from our state parks without first cutting the Waste Management Board and other boards like it. (Applause) Every dollar that we save from those boards and commissions is a dollar that can help vulnerable citizens.
"I'm also proposing to sell off state property, because Sacramento should not be in the real estate business, especially when we are in a fiscal crisis like this. Now, I know that the money that we receive from this property won't go directly to the general fund; it will pay off debt. But that lowers our debt payment, which then does help the general fund. Everywhere I go I hear stories about families selling off their boats and motorcycles to make ends meet. They have garage sales, they have yard sales. They know that you don't have or keep a boat at the dock when you can't put food on the table.
"All of these proposals I have talked about for years and yet they never got done. I remember in 2004 I talked about blowing up the boxes and consolidating agencies. But now we are here in a crisis. Then we had the revenues go up and we had the economy come back in a big way, so we couldn't get it done. Now we're in a crisis and we are running out of excuses and we have run out of time. And the people have run out of patience. [...]
"Now, I know that Senator Steinberg is talking about reforming and restructuring the relationships between the state and local government and Senator Hollingsworth and the Republicans have some great ideas about performance-based budgeting. And in July, we should receive the bipartisan recommendation from our tax modernization commission. This will be a tremendous opportunity to make our revenues more reliable and less volatile and to help the state avoid the boom and the bust budgets that have brought us here today. Let's all work together on all of those issues and make it happen.
"I don't expect every single one of those reforms to happen within the next 14 days but we can certainly get them done before this party adjourns for summer recess on July 17th."
Out of Control Policy Blog, June 2, 2009, 10:02pm
Excerpts:
"Spending on prisons has nearly doubled in the last five years. We spend $49,000 per inmate per year; the national average is only $32,000. Now, other states have privately run correctional facilities that operate at half of the cost. Why can't we?
"We must also restructure the relationship between state and local government. We all hear from the local officials about the heavy hand of Sacramento. If we are providing fewer resources we have an obligation to cut most of the strings and mandates and to get out of the way. Right now we are cutting billions of dollars from our schools, so shouldn't we give districts more freedom and flexibility and not tie their hands with strict rules like who is allowed to mow the lawn or fix the roof, or do the plumbing?
"I'm also proposing once again to eliminate and consolidate more than a dozen state departments, boards and commissions. These include the Waste Management Board, the Court Reporters Board, the Department of Boating and Waterways and the Inspection and Maintenance Review Committee and so on.
"There is absolutely no reason to hold onto those redundant boards in the crisis. We should not and I will not, cut a dollar from education or a dollar from health care or a dollar from public safety or a dollar from our state parks without first cutting the Waste Management Board and other boards like it. (Applause) Every dollar that we save from those boards and commissions is a dollar that can help vulnerable citizens.
"I'm also proposing to sell off state property, because Sacramento should not be in the real estate business, especially when we are in a fiscal crisis like this. Now, I know that the money that we receive from this property won't go directly to the general fund; it will pay off debt. But that lowers our debt payment, which then does help the general fund. Everywhere I go I hear stories about families selling off their boats and motorcycles to make ends meet. They have garage sales, they have yard sales. They know that you don't have or keep a boat at the dock when you can't put food on the table.
"All of these proposals I have talked about for years and yet they never got done. I remember in 2004 I talked about blowing up the boxes and consolidating agencies. But now we are here in a crisis. Then we had the revenues go up and we had the economy come back in a big way, so we couldn't get it done. Now we're in a crisis and we are running out of excuses and we have run out of time. And the people have run out of patience. [...]
"Now, I know that Senator Steinberg is talking about reforming and restructuring the relationships between the state and local government and Senator Hollingsworth and the Republicans have some great ideas about performance-based budgeting. And in July, we should receive the bipartisan recommendation from our tax modernization commission. This will be a tremendous opportunity to make our revenues more reliable and less volatile and to help the state avoid the boom and the bust budgets that have brought us here today. Let's all work together on all of those issues and make it happen.
"I don't expect every single one of those reforms to happen within the next 14 days but we can certainly get them done before this party adjourns for summer recess on July 17th."
Thursday, June 4, 2009
Iran's Nuclear Threat: The Day After
Iran's Nuclear Threat: The Day After. By The Heritage Foundation Iran Working Group
Heritage, June 4, 2009
The Islamic Republic of Iran, which has pursued policies hostile to the United States since its founding in 1979, is now on the brink of attaining a nuclear weapons capability. U.S. Director of National Intelligence Dennis Blair testified before Congress on March 10 that "We assess Iran has the scientific, technical, and industrial capacity to eventually produce nuclear weapons." Although it is not clear exactly when Iran will realize this goal, Blair also testified that "We judge Iran probably would be technically capable of producing enough highly enriched uranium (HEU) for a weapon sometime during the 2010-2015 timeframe." While estimates vary, it is clear that the world's foremost sponsor of terrorism soon will be able to build one of the world's most terrifying weapons.
What happens next? The answer is that the U.S. should not wait to find out. Rather, it should immediately put in place the foundations of a strategy to dissuade Tehran from attaining a nuclear weapon through adroit diplomacy, disarm it through military force, or establish a robust framework of augmented deterrence to mitigate the threat posed by a nuclear Iran. Washington must take stronger actions now to prevent a future disaster from unfolding. After all, the U.S. will be dealing not just with a nuclear Iran, but with a potential cascade of nuclear powers in the Middle East.
[Check for full report at the link above]
Heritage, June 4, 2009
The Islamic Republic of Iran, which has pursued policies hostile to the United States since its founding in 1979, is now on the brink of attaining a nuclear weapons capability. U.S. Director of National Intelligence Dennis Blair testified before Congress on March 10 that "We assess Iran has the scientific, technical, and industrial capacity to eventually produce nuclear weapons." Although it is not clear exactly when Iran will realize this goal, Blair also testified that "We judge Iran probably would be technically capable of producing enough highly enriched uranium (HEU) for a weapon sometime during the 2010-2015 timeframe." While estimates vary, it is clear that the world's foremost sponsor of terrorism soon will be able to build one of the world's most terrifying weapons.
What happens next? The answer is that the U.S. should not wait to find out. Rather, it should immediately put in place the foundations of a strategy to dissuade Tehran from attaining a nuclear weapon through adroit diplomacy, disarm it through military force, or establish a robust framework of augmented deterrence to mitigate the threat posed by a nuclear Iran. Washington must take stronger actions now to prevent a future disaster from unfolding. After all, the U.S. will be dealing not just with a nuclear Iran, but with a potential cascade of nuclear powers in the Middle East.
[Check for full report at the link above]
Hurricane Damage and Global Warming
Hurricane Damage and Global Warming. By Daniel Sutter
How Bad Could It Get and What Can We Do about It Today?
CEI, June 3, 2009
Full study available in pdf
Climate experts and policy makers have debated the existence of a potential link between global warming and increased hurricane activity since the record-setting 2005 Atlantic hurricane season. While claims that hurricanes are already stronger due to climate change are highly controversial, research demonstrates that increases in societal vulnerability to hurricanes—the number of persons and amount of property in coastal areas—goes a long way toward explaining the increases in hurricane losses over time.
This paper focuses on hurricane damage projections, reviews them in detail, and critiques the projections. It details how existing public policies have helped increase hurricane losses. In its final section, the paper recommends specific policies to reduce populations’ vulnerability to hurricanes.
Existing public policies—including insurance regulation, government-subsidized flood insurance, improper mitigation, and faulty building code enforcement—contribute to unnecessarily risky and inefficient development along coastal areas by shifting the cost of hurricane damage ultimately onto third parties—mainly taxpayers. Poor policies lead to excessive vulnerability to hurricanes and would exacerbate the cost of any increase in storm activity, whether due to climate change or any other factor. Insurance subsidies and mitigation may not be normally considered part of the climate change debate, but within that debate reform of these policies now will constitute a “no regrets” strategy. In other words, reforms will yield benefits in all circumstances—especially if adverse climate change does occur.
How Bad Could It Get and What Can We Do about It Today?
CEI, June 3, 2009
Full study available in pdf
Climate experts and policy makers have debated the existence of a potential link between global warming and increased hurricane activity since the record-setting 2005 Atlantic hurricane season. While claims that hurricanes are already stronger due to climate change are highly controversial, research demonstrates that increases in societal vulnerability to hurricanes—the number of persons and amount of property in coastal areas—goes a long way toward explaining the increases in hurricane losses over time.
This paper focuses on hurricane damage projections, reviews them in detail, and critiques the projections. It details how existing public policies have helped increase hurricane losses. In its final section, the paper recommends specific policies to reduce populations’ vulnerability to hurricanes.
Existing public policies—including insurance regulation, government-subsidized flood insurance, improper mitigation, and faulty building code enforcement—contribute to unnecessarily risky and inefficient development along coastal areas by shifting the cost of hurricane damage ultimately onto third parties—mainly taxpayers. Poor policies lead to excessive vulnerability to hurricanes and would exacerbate the cost of any increase in storm activity, whether due to climate change or any other factor. Insurance subsidies and mitigation may not be normally considered part of the climate change debate, but within that debate reform of these policies now will constitute a “no regrets” strategy. In other words, reforms will yield benefits in all circumstances—especially if adverse climate change does occur.
Ten Thousand Commandments 2009
Ten Thousand Commandments 2009, by Clyde Wayne Crews
CEI, May 28, 2009
President Barack Obama’s federal budget for fiscal year (FY) 2010 proposed $3.552 trillion in discretionary, entitlement, and interest spending. The previous fiscal year, President George W. Bush had proposed the first-ever $3-trillion U.S. budget. President Bush was also the first to propose a $2-trillion federal budget—in 2002, a scant seven years ago.
Now the administration projects actual FY 2009 spending of almost $4 trillion ($3.938 trillion) instead of Bush’s $3 trillion, thanks to the late-2008 bailout and “stimulus” frenzy. The result: a projected FY 2009 deficit of a previously unthinkable $1.752 trillion. The Congressional Budget Office (CBO) paints an even more dismal picture.
To be sure, many other countries’ governments consume more of their national output than the U.S. government does; but in absolute terms, the U.S. government is the largest government on Earth, whether one looks at revenues or expenditures.
The “Hidden Tax” of Regulation
Those costs fully convey the federal government’s on-budget scope, and they are sobering enough. Yet the government’s reach extends even beyond the taxes Washington collects and the deficit spending and borrowing now surging. Federal environmental, safety and health, and economic regulations cost hundreds of billions of dollars every year over and above the costs of the official federal outlays that dominate the policy agenda now.
Firms generally pass along the costs of some taxes to consumers. Likewise, some regulatory compliance costs that businesses shoulder find their way into consumer prices. Precise regulatory costs can never be fully known; unlike taxes, they are unbudgeted and often indirect. But scattered government and private data exist on scores of regulations and the agencies that issue them, as well as on regulatory costs and benefits. Some of that information can be compiled to make the regulatory state somewhat more comprehensible. That is one purpose of the annual Ten Thousand Commandments report, highlights of which appear next:
• A very rough extrapolation from an estimate of the federal regulatory enterprise by economist Mark Crain estimates that regulatory compliance costs hit $1.172 trillion in 2008.
• Given 2008’s government spending of $2.98 trillion, the regulatory “hidden tax” stood at 39 percent of the level of federal spending itself. (Because of the months-old spending surge, this proportion will surely be lower next year.)
• Trillion-dollar deficits and regulatory costs in the trillions are both unsettling new developments for America. Although FY 2008 regulatory costs are more than double that year’s $459 billion budget deficit, the more recent deficit spending surge will catapult the deficit above the costs of regulation for the near future.
• CBO now projects 2009 federal spending to hit $4.004 trillion and the deficit to soar to $1.845 trillion. The game has changed; although these spending levels eclipse federal regulatory costs now, unchecked government spending translates, in later years, into greater regulation as well.
• Regulatory costs are equivalent to 65 percent of 2006 corporate pretax profits of $1.8 trillion.
• Regulatory costs rival estimated 2008 individual income taxes of $1.2 trillion.
• Regulatory costs dwarf corporate income taxes of $345 billion.• Regulatory costs of $1.172 trillion absorb 8 percent of the U.S. gross domestic product (GDP), estimated at $14.3 trillion in 2008.
• Combining regulatory costs with federal FY 2008 outlays of $2.978 trillion implies that the federal government’s share of the economy now reaches 29 percent.
• The Weidenbaum Center at Washington University in St. Louis and the Mercatus Center at George Mason University in Virginia jointly estimate that agencies spent $49.1 billion to administer and police the 2008 regulatory enterprise. Adding the $1.172 trillion in off-budget compliance costs brings the total regulatory burden to $1.221 trillion.
• The 2008 Federal Register is close to breaking the 80,000-page barrier. It contained 79,435 pages, up 10 percent from 72,090 pages in 2007—an all-time record high.
• Federal Register pages devoted specifically to final rules jumped nearly 16 percent, from 22,771 to a record 26,320.
• In 2008, agencies issued 3,830 final rules, a 6.5-percent increase from 3,595 rules in 2007.
• The annual outflow of roughly 4,000 final rules has meant that well over 40,000 final rules were issued during the past decade.
• Although regulatory agencies issued 3,830 final rules in 2008, Congress passed and the President signed into law a comparatively low 285 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies.
• According to the 2008 Unified Agenda, which lists federal regulatory actions at various stages of implementation, 61 federal departments, agencies, and commissions have 4,004 regulations in play at various stages of implementation.
• Of the 4,004 regulations now in the pipeline, 180 are “economically significant” rules packing at least $100 million in economic impact. Assuming these rulemakings are primarily regulatory rather than deregulatory, that number implies roughly $18 billion yearly in future off-budget regulatory effects.
• “Economically significant” rules increased by 13 percent between 2007 and 2008 (following a 14-percent increase the year before). As noted, high federal budgetary spending now likely implies higher future regulatory costs as well.
• The five most active rule-producing agencies—the departments of the Treasury, Agriculture, Commerce, and the Interior, along with the Environmental Protection Agency—account for 1,837 rules, or 46 percent of all rules in the Unified Agenda pipeline.
• Of the 4,004 regulations now in the works, 753 affect small business.
Full Document Available In PDF
CEI, May 28, 2009
President Barack Obama’s federal budget for fiscal year (FY) 2010 proposed $3.552 trillion in discretionary, entitlement, and interest spending. The previous fiscal year, President George W. Bush had proposed the first-ever $3-trillion U.S. budget. President Bush was also the first to propose a $2-trillion federal budget—in 2002, a scant seven years ago.
Now the administration projects actual FY 2009 spending of almost $4 trillion ($3.938 trillion) instead of Bush’s $3 trillion, thanks to the late-2008 bailout and “stimulus” frenzy. The result: a projected FY 2009 deficit of a previously unthinkable $1.752 trillion. The Congressional Budget Office (CBO) paints an even more dismal picture.
To be sure, many other countries’ governments consume more of their national output than the U.S. government does; but in absolute terms, the U.S. government is the largest government on Earth, whether one looks at revenues or expenditures.
The “Hidden Tax” of Regulation
Those costs fully convey the federal government’s on-budget scope, and they are sobering enough. Yet the government’s reach extends even beyond the taxes Washington collects and the deficit spending and borrowing now surging. Federal environmental, safety and health, and economic regulations cost hundreds of billions of dollars every year over and above the costs of the official federal outlays that dominate the policy agenda now.
Firms generally pass along the costs of some taxes to consumers. Likewise, some regulatory compliance costs that businesses shoulder find their way into consumer prices. Precise regulatory costs can never be fully known; unlike taxes, they are unbudgeted and often indirect. But scattered government and private data exist on scores of regulations and the agencies that issue them, as well as on regulatory costs and benefits. Some of that information can be compiled to make the regulatory state somewhat more comprehensible. That is one purpose of the annual Ten Thousand Commandments report, highlights of which appear next:
• A very rough extrapolation from an estimate of the federal regulatory enterprise by economist Mark Crain estimates that regulatory compliance costs hit $1.172 trillion in 2008.
• Given 2008’s government spending of $2.98 trillion, the regulatory “hidden tax” stood at 39 percent of the level of federal spending itself. (Because of the months-old spending surge, this proportion will surely be lower next year.)
• Trillion-dollar deficits and regulatory costs in the trillions are both unsettling new developments for America. Although FY 2008 regulatory costs are more than double that year’s $459 billion budget deficit, the more recent deficit spending surge will catapult the deficit above the costs of regulation for the near future.
• CBO now projects 2009 federal spending to hit $4.004 trillion and the deficit to soar to $1.845 trillion. The game has changed; although these spending levels eclipse federal regulatory costs now, unchecked government spending translates, in later years, into greater regulation as well.
• Regulatory costs are equivalent to 65 percent of 2006 corporate pretax profits of $1.8 trillion.
• Regulatory costs rival estimated 2008 individual income taxes of $1.2 trillion.
• Regulatory costs dwarf corporate income taxes of $345 billion.• Regulatory costs of $1.172 trillion absorb 8 percent of the U.S. gross domestic product (GDP), estimated at $14.3 trillion in 2008.
• Combining regulatory costs with federal FY 2008 outlays of $2.978 trillion implies that the federal government’s share of the economy now reaches 29 percent.
• The Weidenbaum Center at Washington University in St. Louis and the Mercatus Center at George Mason University in Virginia jointly estimate that agencies spent $49.1 billion to administer and police the 2008 regulatory enterprise. Adding the $1.172 trillion in off-budget compliance costs brings the total regulatory burden to $1.221 trillion.
• The 2008 Federal Register is close to breaking the 80,000-page barrier. It contained 79,435 pages, up 10 percent from 72,090 pages in 2007—an all-time record high.
• Federal Register pages devoted specifically to final rules jumped nearly 16 percent, from 22,771 to a record 26,320.
• In 2008, agencies issued 3,830 final rules, a 6.5-percent increase from 3,595 rules in 2007.
• The annual outflow of roughly 4,000 final rules has meant that well over 40,000 final rules were issued during the past decade.
• Although regulatory agencies issued 3,830 final rules in 2008, Congress passed and the President signed into law a comparatively low 285 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies.
• According to the 2008 Unified Agenda, which lists federal regulatory actions at various stages of implementation, 61 federal departments, agencies, and commissions have 4,004 regulations in play at various stages of implementation.
• Of the 4,004 regulations now in the pipeline, 180 are “economically significant” rules packing at least $100 million in economic impact. Assuming these rulemakings are primarily regulatory rather than deregulatory, that number implies roughly $18 billion yearly in future off-budget regulatory effects.
• “Economically significant” rules increased by 13 percent between 2007 and 2008 (following a 14-percent increase the year before). As noted, high federal budgetary spending now likely implies higher future regulatory costs as well.
• The five most active rule-producing agencies—the departments of the Treasury, Agriculture, Commerce, and the Interior, along with the Environmental Protection Agency—account for 1,837 rules, or 46 percent of all rules in the Unified Agenda pipeline.
• Of the 4,004 regulations now in the works, 753 affect small business.
Full Document Available In PDF
U.S. Contributes $75 Million for Childhood Immunization
U.S. Contributes $75 Million for Childhood Immunization
June 4, 2009
www.usaid.gov
WASHINGTON, DC -- The U.S. Agency for International Development (USAID) yesterday contributed $75 million to improve and expand children's immunization programs in developing countries.
The contribution is part of the overall U.S. commitment to global health and the new global health initiative, a 6-year, $63 billion dollar effort announced by President Obama in May.
The grant was announced by Deputy Secretary of State Jacob Lew at Global Alliance for Vaccines and Immunization (GAVI) Board of Directors Meeting at the World Bank.
“When children escape disease, they have a fighting chance to thrive and attend school,” said Lew. “As they grow into healthy adults, they can then contribute to the development of more vibrant and productive societies. Ensuring better health for the world's children is an investment in the prospects of the next generation. Today’s children will become tomorrow’s doctors, scientists, engineers, and leaders.”
The contribution brings the total U.S. commitment to $569 million to the GAVI effort. The U.S., through USAID, also serves on the GAVI Alliance Board, and provides technical guidance at the international and country levels.
Since GAVI’s launch nine years ago, more than three million premature deaths have been prevented, global immunization rates have risen by 10 percent, and approximately $4 billion has been committed to countries and immunization programs for vaccine procurement and delivery and strengthening of health systems.
To date, vaccines that have been funded by GAVI include vaccines against diphtheria, pertussis, tetanus, Hepatitis B, pneumonia, measles, and yellow fever. GAVI and its partners are preparing to finance the introduction of two new vaccines into the poorest countries, against pneumococcal disease and rotavirus. Together, pneumococcal diseases and rotavirus account for more than one million child deaths each year; a majority of these deaths can be prevented with existing vaccines. Support for GAVI-financed vaccines will enable countries to make significant progress toward the Millennium Development Goals between now and 2015.
Since the 1970s, USAID has worked with partners across the globe to confront that challenge and help immunize children in remote and underdeveloped parts of the world. Over the decades tens of millions of infants and children have gained protection from disease.
June 4, 2009
www.usaid.gov
WASHINGTON, DC -- The U.S. Agency for International Development (USAID) yesterday contributed $75 million to improve and expand children's immunization programs in developing countries.
The contribution is part of the overall U.S. commitment to global health and the new global health initiative, a 6-year, $63 billion dollar effort announced by President Obama in May.
The grant was announced by Deputy Secretary of State Jacob Lew at Global Alliance for Vaccines and Immunization (GAVI) Board of Directors Meeting at the World Bank.
“When children escape disease, they have a fighting chance to thrive and attend school,” said Lew. “As they grow into healthy adults, they can then contribute to the development of more vibrant and productive societies. Ensuring better health for the world's children is an investment in the prospects of the next generation. Today’s children will become tomorrow’s doctors, scientists, engineers, and leaders.”
The contribution brings the total U.S. commitment to $569 million to the GAVI effort. The U.S., through USAID, also serves on the GAVI Alliance Board, and provides technical guidance at the international and country levels.
Since GAVI’s launch nine years ago, more than three million premature deaths have been prevented, global immunization rates have risen by 10 percent, and approximately $4 billion has been committed to countries and immunization programs for vaccine procurement and delivery and strengthening of health systems.
To date, vaccines that have been funded by GAVI include vaccines against diphtheria, pertussis, tetanus, Hepatitis B, pneumonia, measles, and yellow fever. GAVI and its partners are preparing to finance the introduction of two new vaccines into the poorest countries, against pneumococcal disease and rotavirus. Together, pneumococcal diseases and rotavirus account for more than one million child deaths each year; a majority of these deaths can be prevented with existing vaccines. Support for GAVI-financed vaccines will enable countries to make significant progress toward the Millennium Development Goals between now and 2015.
Since the 1970s, USAID has worked with partners across the globe to confront that challenge and help immunize children in remote and underdeveloped parts of the world. Over the decades tens of millions of infants and children have gained protection from disease.
Cap-and-Trade: All Cost, No Benefit
Cap-and-Trade: All Cost, No Benefit. By Martin Feldstein
WaPo, Monday, June 1, 2009
The Obama administration and congressional Democrats have proposed a major cap-and-trade system aimed at reducing carbon dioxide emissions. Scientists agree that CO2 emissions around the world could lead to rising temperatures with serious long-term environmental consequences. But that is not a reason to enact a U.S. cap-and-trade system until there is a global agreement on CO2 reduction. The proposed legislation would have a trivially small effect on global warming while imposing substantial costs on all American households. And to get political support in key states, the legislation would abandon the auctioning of permits in favor of giving permits to selected corporations.
The leading legislative proposal, the Waxman-Markey bill that was recently passed out of the House Energy and Commerce Committee, would reduce allowable CO2 emissions to 83 percent of the 2005 level by 2020, then gradually decrease the amount further. Under the cap-and-trade system, the federal government would limit the total volume of CO2 that U.S. companies can emit each year and would issue permits that companies would be required to have for each ton of CO2 emitted. Once issued, these permits would be tradable and could be bought and sold, establishing a market price reflecting the targeted CO2 reduction, with a tougher CO2 standard and fewer available permits leading to higher prices.
Companies would buy permits from each other as long as it is cheaper to do that than to make the technological changes needed to eliminate an equivalent amount of CO2 emissions. Companies would also pass along the cost of the permits in their prices, pushing up the relative price of CO2-intensive goods and services such as gasoline, electricity and a range of industrial products. Consumers would respond by cutting back on consumption of CO2-intensive products in favor of other goods and services. This pass-through of the permit cost in higher consumer prices is the primary way the cap-and-trade system would reduce the production of CO2 in the United States.
The Congressional Budget Office recently estimated that the resulting increases in consumer prices needed to achieve a 15 percent CO2 reduction -- slightly less than the Waxman-Markey target -- would raise the cost of living of a typical household by $1,600 a year. Some expert studies estimate that the cost to households could be substantially higher. The future cost to the typical household would rise significantly as the government reduces the total allowable amount of CO2.
Americans should ask themselves whether this annual tax of $1,600-plus per family is justified by the very small resulting decline in global CO2. Since the U.S. share of global CO2 production is now less than 25 percent (and is projected to decline as China and other developing nations grow), a 15 percent fall in U.S. CO2 output would lower global CO2 output by less than 4 percent. Its impact on global warming would be virtually unnoticeable. The U.S. should wait until there is a global agreement on CO2 that includes China and India before committing to costly reductions in the United States.
The CBO estimates that the sale of the permits for a 15 percent CO2 reduction would raise revenue of about $80 billion a year over the next decade. It is remarkable, then, that the Waxman-Markey bill would give away some 85 percent of the permits over the next 20 years to various businesses instead of selling them at auction. The price of the permits and the burden to households would be the same whether the permits are sold or given away. But by giving them away the government would not collect the revenue that could, at least in principle, be used to offset some of the higher cost to households.
The Waxman-Markey bill would give away 30 percent of the permits to local electricity distribution companies with the expectation that their regulators would require those firms to pass the benefit on to their customers. If they do this by not raising prices, there would be less CO2 reduction through lower electricity consumption. The permit price would then have to be higher to achieve more CO2 reduction on all other products. Some electricity consumers would benefit, but the cost to all other American families would be higher.
In my judgment, the proposed cap-and-trade system would be a costly policy that would penalize Americans with little effect on global warming. The proposal to give away most of the permits only makes a bad idea worse. Taxpayers and legislators should keep these things in mind before enacting any cap-and-trade system.
Martin Feldstein, a professor of economics at Harvard University and president emeritus of the nonprofit National Bureau of Economic Research, was chairman of the Council of Economic Advisers from 1982 to 1984.
WaPo, Monday, June 1, 2009
The Obama administration and congressional Democrats have proposed a major cap-and-trade system aimed at reducing carbon dioxide emissions. Scientists agree that CO2 emissions around the world could lead to rising temperatures with serious long-term environmental consequences. But that is not a reason to enact a U.S. cap-and-trade system until there is a global agreement on CO2 reduction. The proposed legislation would have a trivially small effect on global warming while imposing substantial costs on all American households. And to get political support in key states, the legislation would abandon the auctioning of permits in favor of giving permits to selected corporations.
The leading legislative proposal, the Waxman-Markey bill that was recently passed out of the House Energy and Commerce Committee, would reduce allowable CO2 emissions to 83 percent of the 2005 level by 2020, then gradually decrease the amount further. Under the cap-and-trade system, the federal government would limit the total volume of CO2 that U.S. companies can emit each year and would issue permits that companies would be required to have for each ton of CO2 emitted. Once issued, these permits would be tradable and could be bought and sold, establishing a market price reflecting the targeted CO2 reduction, with a tougher CO2 standard and fewer available permits leading to higher prices.
Companies would buy permits from each other as long as it is cheaper to do that than to make the technological changes needed to eliminate an equivalent amount of CO2 emissions. Companies would also pass along the cost of the permits in their prices, pushing up the relative price of CO2-intensive goods and services such as gasoline, electricity and a range of industrial products. Consumers would respond by cutting back on consumption of CO2-intensive products in favor of other goods and services. This pass-through of the permit cost in higher consumer prices is the primary way the cap-and-trade system would reduce the production of CO2 in the United States.
The Congressional Budget Office recently estimated that the resulting increases in consumer prices needed to achieve a 15 percent CO2 reduction -- slightly less than the Waxman-Markey target -- would raise the cost of living of a typical household by $1,600 a year. Some expert studies estimate that the cost to households could be substantially higher. The future cost to the typical household would rise significantly as the government reduces the total allowable amount of CO2.
Americans should ask themselves whether this annual tax of $1,600-plus per family is justified by the very small resulting decline in global CO2. Since the U.S. share of global CO2 production is now less than 25 percent (and is projected to decline as China and other developing nations grow), a 15 percent fall in U.S. CO2 output would lower global CO2 output by less than 4 percent. Its impact on global warming would be virtually unnoticeable. The U.S. should wait until there is a global agreement on CO2 that includes China and India before committing to costly reductions in the United States.
The CBO estimates that the sale of the permits for a 15 percent CO2 reduction would raise revenue of about $80 billion a year over the next decade. It is remarkable, then, that the Waxman-Markey bill would give away some 85 percent of the permits over the next 20 years to various businesses instead of selling them at auction. The price of the permits and the burden to households would be the same whether the permits are sold or given away. But by giving them away the government would not collect the revenue that could, at least in principle, be used to offset some of the higher cost to households.
The Waxman-Markey bill would give away 30 percent of the permits to local electricity distribution companies with the expectation that their regulators would require those firms to pass the benefit on to their customers. If they do this by not raising prices, there would be less CO2 reduction through lower electricity consumption. The permit price would then have to be higher to achieve more CO2 reduction on all other products. Some electricity consumers would benefit, but the cost to all other American families would be higher.
In my judgment, the proposed cap-and-trade system would be a costly policy that would penalize Americans with little effect on global warming. The proposal to give away most of the permits only makes a bad idea worse. Taxpayers and legislators should keep these things in mind before enacting any cap-and-trade system.
Martin Feldstein, a professor of economics at Harvard University and president emeritus of the nonprofit National Bureau of Economic Research, was chairman of the Council of Economic Advisers from 1982 to 1984.
The North Korean Syndrome- Talk,Test, Talk Again,Test Again
The North Korean Syndrome- Talk,Test, Talk Again,Test Again. By B.Raman
C3S Paper No.278 dated May 30, 2009
Years before 2006, North Korea had a tested medium-range missile capability and was developing a long-range capability which could hit targets in the US. If its objective was only to have the capability to target South Korea and Japan, it did not need a long-range capability. It wanted the long-range capability to intimidate and threaten the US. But its economy was in such a bad shape that it did not have the money to spend on its missile programme.
2. And that money came from Pakistan and Iran. They funded research and development of the North Korean missile programme as a quid pro quo for North Korea’s sharing its expertise and technology with them and selling to them some of the missiles. The Pakistan-North Korea missile development co-operation started clandestinely in 1993 when Benazir Bhutto was the Prime Minister, but it came to public notice in 1998 when Pakistan tested its so-called Ghauri missile, which was nothing but a re-baptised version of a North Korean missile. Benazir Bhutto, who was then in the opposition, publicly claimed credit for giving Pakistan a deterrent capability against India by persuading North Korea during a clandestine visit from Beijing in 1993 to co-operate with Pakistan in missile development. Around the same time, reports also started coming in of Iran’s missile procurement relationship with North Korea.
3.When Pervez Musharraf was the President of Pakistan, it had carried out a number of firings of medium and long-range missiles capable of hitting the major cities of India. These were not test firings. These were firings meant to demonstrate Pakistan’s possession of such missiles and to psychologically intimidate India. I had pointed out on many occasions that Pakistan’s action in carrying out so many demonstration firings spoke of the large stock of missiles which it has got from North Korea. Even Osama bin Laden, in one of his messages, taunted Musharraf for ordering a demonstration firing of a missile whenever he was facing difficulty at home.
4. Around the same time, Iran started emulating Pakistan by carrying out demonstration firings of missiles in order to psychologically intimidate Israel. Apart from oral warnings and threats to board North Korean ships suspected of carrying prohibited equipment to other countries, the US did nothing.Even if one can understand its inability to act against North Korea due to a fear of an irresponsible state like North Korea provoking a war in the Korean region, one failed to understand its inability to act against Pakistan and to encourage Israel to similarly act against Iran.
5.In 2003, the international community learnt with shock and surprise that Pakistan’s weapons of mass destruction capability relationship with North Korea was not confined to missiles, but also covered military nuclear capability.A.Q.Khan, the Pakistani nuclear scientist, was found to have supplied nuclear-related eqipment and technology not only to Iran and Libya, two Muslim countries, but also to North Korea. It was a nuclear-missile barter relationship. This relationship had continued at least till the Kargil conflict between India and Pakistan in 1999 when, according to Khan’s own admission to some journalists, Musharraf sent him to North Korea to procure urgently some surface-to-air missiles.
6. When all these factors came to notice one after the other since Pakistan’s firing of the Ghauri missile in April,1998, the US had three options:
8. The result:North Korea is a demonstrated nuclear power with a delivery capability at least against South Korea and Japan, if not yet against the US. It has carried out two tests, with the second one earlier in May,2009, reportedly being more powerful and more sophisticated than the first one in 2006. It has reportedly re-started the re-processing of spent fuel rods which would add to its stockpile of fissile material.
9. Pre-emption is no longer an option. Can North Korea be pressured or cajoled through China to come back to the negotiating table and to renew its commitment to the denuclearisation path? Even if one succeeds, it is very likely that after some talks, it will break the agreement reached under some other pretext. It broke the last agreement under the pretext that the UN imposed sanctions against it for allegedly testing a communication satellite. The next time, it will find some other pretext.
10. All US administrations have fought shy of a confrontation with North Korea. The Barack Obama administration even more so than its predecessors. The North Korean leadership has concluded that not only the US, but even Japan and South Korea do not have the stomach for a policy of confrontation. It, therefore, feels it does not have to fear either pre-emption or confrontation.
11. There is one option still left—- threaten China with the danger of the international community closing its eyes to Japan acquiring a military nuclear capability if China does not force North Korea to de-nuclearise. Will it work? It may or may not, but in the absence of any other options, it is well worth giving a try.
12. Even while struggling and juggling with various options available against North Korea, it is important for the Obama Administration to remember that Teheran is closely watching how Obama handles North Korea. Any sign of further weakness and accommodation with North Korea could encourage Iran in its nuclear obstinacy. This is definitely not the time for the Obama Administration to convey a wrong message to Iran that ties between the US and Israel are weakening. The US will end up by undermining a steadfast ally for the sake of better relations with an unpredictable country. The US may have valid reasons for improving its relations with Iran, but this should not be at the expense of its relations with Israel.
(The writer, Mr B.Raman, is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies.)
C3S Paper No.278 dated May 30, 2009
Years before 2006, North Korea had a tested medium-range missile capability and was developing a long-range capability which could hit targets in the US. If its objective was only to have the capability to target South Korea and Japan, it did not need a long-range capability. It wanted the long-range capability to intimidate and threaten the US. But its economy was in such a bad shape that it did not have the money to spend on its missile programme.
2. And that money came from Pakistan and Iran. They funded research and development of the North Korean missile programme as a quid pro quo for North Korea’s sharing its expertise and technology with them and selling to them some of the missiles. The Pakistan-North Korea missile development co-operation started clandestinely in 1993 when Benazir Bhutto was the Prime Minister, but it came to public notice in 1998 when Pakistan tested its so-called Ghauri missile, which was nothing but a re-baptised version of a North Korean missile. Benazir Bhutto, who was then in the opposition, publicly claimed credit for giving Pakistan a deterrent capability against India by persuading North Korea during a clandestine visit from Beijing in 1993 to co-operate with Pakistan in missile development. Around the same time, reports also started coming in of Iran’s missile procurement relationship with North Korea.
3.When Pervez Musharraf was the President of Pakistan, it had carried out a number of firings of medium and long-range missiles capable of hitting the major cities of India. These were not test firings. These were firings meant to demonstrate Pakistan’s possession of such missiles and to psychologically intimidate India. I had pointed out on many occasions that Pakistan’s action in carrying out so many demonstration firings spoke of the large stock of missiles which it has got from North Korea. Even Osama bin Laden, in one of his messages, taunted Musharraf for ordering a demonstration firing of a missile whenever he was facing difficulty at home.
4. Around the same time, Iran started emulating Pakistan by carrying out demonstration firings of missiles in order to psychologically intimidate Israel. Apart from oral warnings and threats to board North Korean ships suspected of carrying prohibited equipment to other countries, the US did nothing.Even if one can understand its inability to act against North Korea due to a fear of an irresponsible state like North Korea provoking a war in the Korean region, one failed to understand its inability to act against Pakistan and to encourage Israel to similarly act against Iran.
5.In 2003, the international community learnt with shock and surprise that Pakistan’s weapons of mass destruction capability relationship with North Korea was not confined to missiles, but also covered military nuclear capability.A.Q.Khan, the Pakistani nuclear scientist, was found to have supplied nuclear-related eqipment and technology not only to Iran and Libya, two Muslim countries, but also to North Korea. It was a nuclear-missile barter relationship. This relationship had continued at least till the Kargil conflict between India and Pakistan in 1999 when, according to Khan’s own admission to some journalists, Musharraf sent him to North Korea to procure urgently some surface-to-air missiles.
6. When all these factors came to notice one after the other since Pakistan’s firing of the Ghauri missile in April,1998, the US had three options:
- Act against North Korea through a pre-emptive strike against its nuclear and missile production facilities . It did not do so due to a fear of the unpredictable behaviour of North Korea which could have led to a war in the Korean region.
- Act against Pakistan in order to penalise it for its relations with North Korea and to force it to terminate its relationship. This might not have forced North Korea to stop its programme, but it might have slowed down its programme due to financial difficulties. It would have also given some indication of the US resolve to act. The US did nothing. After 9/11, co-operation ftrom Pakistan against Al Qaeda assumed greater importance for US policy-makers than options of action to stop North Korea from acquiring a military nuclear capability.
- Similarly, act against Iran or encourage Israel to act. From time to time, statements were made that all options were open—-meaning even a military strike against the nuclear establishments in Iran. In the case of powers such as North Korea and Iran, empty warnings without a demonstration of the resolve to act create only contempt.
8. The result:North Korea is a demonstrated nuclear power with a delivery capability at least against South Korea and Japan, if not yet against the US. It has carried out two tests, with the second one earlier in May,2009, reportedly being more powerful and more sophisticated than the first one in 2006. It has reportedly re-started the re-processing of spent fuel rods which would add to its stockpile of fissile material.
9. Pre-emption is no longer an option. Can North Korea be pressured or cajoled through China to come back to the negotiating table and to renew its commitment to the denuclearisation path? Even if one succeeds, it is very likely that after some talks, it will break the agreement reached under some other pretext. It broke the last agreement under the pretext that the UN imposed sanctions against it for allegedly testing a communication satellite. The next time, it will find some other pretext.
10. All US administrations have fought shy of a confrontation with North Korea. The Barack Obama administration even more so than its predecessors. The North Korean leadership has concluded that not only the US, but even Japan and South Korea do not have the stomach for a policy of confrontation. It, therefore, feels it does not have to fear either pre-emption or confrontation.
11. There is one option still left—- threaten China with the danger of the international community closing its eyes to Japan acquiring a military nuclear capability if China does not force North Korea to de-nuclearise. Will it work? It may or may not, but in the absence of any other options, it is well worth giving a try.
12. Even while struggling and juggling with various options available against North Korea, it is important for the Obama Administration to remember that Teheran is closely watching how Obama handles North Korea. Any sign of further weakness and accommodation with North Korea could encourage Iran in its nuclear obstinacy. This is definitely not the time for the Obama Administration to convey a wrong message to Iran that ties between the US and Israel are weakening. The US will end up by undermining a steadfast ally for the sake of better relations with an unpredictable country. The US may have valid reasons for improving its relations with Iran, but this should not be at the expense of its relations with Israel.
(The writer, Mr B.Raman, is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies.)
The evidence from Europe shows that consumption taxes go hand-in-hand with rising income taxes
VATs Mean Big Government. By DANIEL J. MITCHELL
The evidence from Europe shows that consumption taxes go hand-in-hand with rising income taxes.
The Wall Street Journal, page A15, Jun 04, 2009
There is growing interest in Washington in a new national consumption tax, otherwise known as a value-added tax or VAT. Senate Budget Committee Chairman Kent Conrad (D., N.D.), for example, recently told the Washington Post that "a VAT" has "got to be on the table" as part of "fundamental tax reform."
President Barack Obama is already looking at a wide range of other potential tax increases, including higher income tax rates, restrictions on itemized deductions, an energy tax, and higher payroll tax rates. Even if they all became law, the revenues would not come close to satisfying his and Congress's appetite for bigger government, particularly a government-run health-care scheme.
At the same time, our aging population and unconstrained entitlement programs mean that a dramatic expansion in the size of government will occur automatically in coming decades unless Medicare, Medicaid and Social Security are reformed. Simply stated, there's no way to finance all this new spending without an additional, broad-based tax. That's exactly why a VAT -- which is like a national sales tax collected at each stage of the production process, rather than at the final point of sale -- should be resisted.
The classical argument in favor of a VAT says that it's desirable because it has a single rate and is based on consumption. It is true that single-rate systems (assuming a reasonable rate) are less harmful than discriminatory regimes with "progressive" rates. It's also true that a consumption-based tax would not inflict as much damage as our internal revenue code, with its multiple layers of tax on income that is saved and invested. But these arguments only apply if a VAT replaces the current tax system -- which is not the case here. And the evidence from Europe suggests it's not a good idea to add a somewhat-bad tax like the VAT on top of a really bad tax system.
VATs are associated with both higher overall tax burdens and more government spending. In 1965, before the VAT swept across Europe, the average tax burden for advanced European economies (the EU-15) was 27.7% of economic output, roughly comparable to the U.S., where taxes were 24.7% of GDP, according to data from the Organization for Economic Cooperation and Development OECD). European nations began to impose VATs in the late 1960s, and now the European Union requires all members to have a VAT of at least 15%.
Results? By 2006, the OECD reports that the average tax burden for EU-15 nations had climbed to 39.8% of GDP. The tax burden also has increased in the U.S., but at a much slower rate, rising to 28% for that year.
The spending side of the fiscal equation is equally dismal. In 1965, according to European Commission figures, government spending in EU-15 nations averaged 30.1% of GDP, not much higher than the 28.3% of economic output consumed by U.S. government spending. According to 2007 data, government spending now consumes 47.1% of GDP in the EU-15, significantly higher than the 35.3% burden of government in the U.S.
Another argument for the VAT concedes it will increase the overall tax burden but preclude higher taxes on personal income and corporate income. The evidence from Europe says otherwise. Taxes on income and profits consumed 8.8% of GDP in Europe in 1965, giving Europe a competitive advantage over the U.S., where they consumed 11.9%. By 2006, OECD data show that the tax burden on income and profits climbed to 13.8% of GDP in Europe, slightly higher than the 13.5% figure for the U.S.
Last but not least, some protectionists in the business community and on Capitol Hill are attracted by the VAT because it is "border adjusted." This means that there is no VAT on exports, but the VAT is imposed on imports. For people who obsess about trade deficits this is seen as a positive feature. But they do not understand how a VAT works.
Under current law, American goods sold in America do not pay a VAT -- but neither do German-produced goods that are sold in the U.S. Likewise, any American-produced goods sold in Germany today are hit by a VAT, as are, of course, German-made goods. In short, there already is a level playing field.
The income tax system we have today is a nightmarish combination of class warfare and corrupt loopholes. Adding a VAT does not undo any of the damage it imposes. All that happens is that politicians get more money to spend and a chance to auction off a new set of tax breaks to interest groups. That's good for Washington, but bad for America.
Mr. Mitchell is a senior fellow at the Cato Institute.
The evidence from Europe shows that consumption taxes go hand-in-hand with rising income taxes.
The Wall Street Journal, page A15, Jun 04, 2009
There is growing interest in Washington in a new national consumption tax, otherwise known as a value-added tax or VAT. Senate Budget Committee Chairman Kent Conrad (D., N.D.), for example, recently told the Washington Post that "a VAT" has "got to be on the table" as part of "fundamental tax reform."
President Barack Obama is already looking at a wide range of other potential tax increases, including higher income tax rates, restrictions on itemized deductions, an energy tax, and higher payroll tax rates. Even if they all became law, the revenues would not come close to satisfying his and Congress's appetite for bigger government, particularly a government-run health-care scheme.
At the same time, our aging population and unconstrained entitlement programs mean that a dramatic expansion in the size of government will occur automatically in coming decades unless Medicare, Medicaid and Social Security are reformed. Simply stated, there's no way to finance all this new spending without an additional, broad-based tax. That's exactly why a VAT -- which is like a national sales tax collected at each stage of the production process, rather than at the final point of sale -- should be resisted.
The classical argument in favor of a VAT says that it's desirable because it has a single rate and is based on consumption. It is true that single-rate systems (assuming a reasonable rate) are less harmful than discriminatory regimes with "progressive" rates. It's also true that a consumption-based tax would not inflict as much damage as our internal revenue code, with its multiple layers of tax on income that is saved and invested. But these arguments only apply if a VAT replaces the current tax system -- which is not the case here. And the evidence from Europe suggests it's not a good idea to add a somewhat-bad tax like the VAT on top of a really bad tax system.
VATs are associated with both higher overall tax burdens and more government spending. In 1965, before the VAT swept across Europe, the average tax burden for advanced European economies (the EU-15) was 27.7% of economic output, roughly comparable to the U.S., where taxes were 24.7% of GDP, according to data from the Organization for Economic Cooperation and Development OECD). European nations began to impose VATs in the late 1960s, and now the European Union requires all members to have a VAT of at least 15%.
Results? By 2006, the OECD reports that the average tax burden for EU-15 nations had climbed to 39.8% of GDP. The tax burden also has increased in the U.S., but at a much slower rate, rising to 28% for that year.
The spending side of the fiscal equation is equally dismal. In 1965, according to European Commission figures, government spending in EU-15 nations averaged 30.1% of GDP, not much higher than the 28.3% of economic output consumed by U.S. government spending. According to 2007 data, government spending now consumes 47.1% of GDP in the EU-15, significantly higher than the 35.3% burden of government in the U.S.
Another argument for the VAT concedes it will increase the overall tax burden but preclude higher taxes on personal income and corporate income. The evidence from Europe says otherwise. Taxes on income and profits consumed 8.8% of GDP in Europe in 1965, giving Europe a competitive advantage over the U.S., where they consumed 11.9%. By 2006, OECD data show that the tax burden on income and profits climbed to 13.8% of GDP in Europe, slightly higher than the 13.5% figure for the U.S.
Last but not least, some protectionists in the business community and on Capitol Hill are attracted by the VAT because it is "border adjusted." This means that there is no VAT on exports, but the VAT is imposed on imports. For people who obsess about trade deficits this is seen as a positive feature. But they do not understand how a VAT works.
Under current law, American goods sold in America do not pay a VAT -- but neither do German-produced goods that are sold in the U.S. Likewise, any American-produced goods sold in Germany today are hit by a VAT, as are, of course, German-made goods. In short, there already is a level playing field.
The income tax system we have today is a nightmarish combination of class warfare and corrupt loopholes. Adding a VAT does not undo any of the damage it imposes. All that happens is that politicians get more money to spend and a chance to auction off a new set of tax breaks to interest groups. That's good for Washington, but bad for America.
Mr. Mitchell is a senior fellow at the Cato Institute.
Merkel for the Fed: The German leader's welcome rebuke to central bankers
Merkel for the Fed. WSJ Editorial
The German leader's welcome rebuke to central bankers.
The Wall Street Journal, page A14, Jun 04, 2009
To the Red Sox winning the World Series, we can now add another miracle for the ages: A politician demanding tighter money. We refer to German Chancellor Angela Merkel, who in a Berlin speech Tuesday rebuked the world's central bankers, notably including the U.S. Federal Reserve, for being too politically accommodating. Hallelujah, sister.
"The independence of the European Central Bank must be preserved and the things that other central banks are now doing must be retracted," Mrs. Merkel told a meeting sponsored by Germany's association of metal- and electrical-industry employers. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time." Referring to the U.S. central bank specifically, she said "I view with a great deal of skepticism the extent of the Fed's powers."
Usually when a politician lobbies a central bank, it's to demand easier money. We can't recall a similar tight-money intervention from a national leader, save perhaps Ronald Reagan's quiet support for Paul Volcker in the 1980s. Mrs. Merkel may have been channeling Ludwig Erhard, the great Chancellor whose hard-money policies helped to catapult the German economy from the ruins of World War II. Looking further back, she no doubt knows that the Weimer inflation of the 1920s paved the way for Hitler.
Whatever her inspiration, this is the second time Mrs. Merkel has volunteered to be the designated driver amid the G-20's fiscal and monetary binge. Three months ago, she led a revolt against President Obama's demand that Europe follow his Keynesian spending spree. Her spending restraint is already looking wise as the U.S. asks the world to finance a debt burden rising to World War II levels.
Now she's taking aim at monetary excess, even as the European Central Bank is being lobbied to pursue the same kind of "quantitative easing" that the U.S. Fed has carried out. The ECB is preparing to announce the details of its purchase of $85 billion in low-risk (mostly corporate) debt, and Ms. Merkel may have wanted to send a signal that it ought to stop there. She also rightly fingered "monetary policy in the United States" that was "politically supported" as a main cause of the current mess.
As it happens, Fed Chairman Ben Bernanke was asked about Mrs. Merkel's remarks yesterday during testimony on Capitol Hill. He said he "respectfully" disagreed, adding that, "The U.S. and global economies, including Germany, have faced an extraordinary combination of a financial crisis . . . plus a very serious downturn. I am comfortable with the policy actions that the Federal Reserve has taken."
We'd agree -- and maybe Ms. Merkel would too -- that the Fed clearly needed to counter the declining velocity of money amid the autumn and winter panic. We've also given Mr. Bernanke the benefit of the doubt on some of his liquidity interventions. But the Fed has since elbowed its way into fiscal policy by buying housing and other dodgy assets, and it is also directly monetizing federal debt by buying Treasurys. The latter move appears to have had the opposite of its intended effect, scaring the world's investors to bid up long-term rates for fear the Fed has sold its independence to Congress and the White House. The Fed should call a halt to such purchases at its monetary policy meeting later this month.
Notwithstanding Mr. Bernanke's "comfort" with his actions so far, the world is wondering when the Fed will start to remove the flood of money it has injected into the economy during the crisis. Mr. Bernanke says not to worry, as his mentor Alan Greenspan also did yesterday. But this is cold comfort given their earlier track record. The Fed's habit is to look at backward indicators, such as the cost-of-living index and the jobless rate, rather than at currency and commodity prices that can warn of asset bubbles and inflation ahead. This is precisely the mistake both men made in 2003, as the recently released Fed transcripts from that year illustrate. The warning that Mrs. Merkel -- and China and the financial markets -- is sounding is whether the Fed will have the political courage to start removing that liquidity even if the unemployment rate is high, and before it creates another mess.
Meanwhile, on Capitol Hill yesterday Mr. Bernanke preferred to do some fiscal policy moonlighting. "Unless we demonstrate a strong commitment to fiscal sustainability in the longer run," he said, "we will have neither financial stability nor healthy economic growth." We can see why Mr. Bernanke would want to change the subject from his own monetary responsibilities, but he'd be wiser to heed Mrs. Merkel.
The German leader's welcome rebuke to central bankers.
The Wall Street Journal, page A14, Jun 04, 2009
To the Red Sox winning the World Series, we can now add another miracle for the ages: A politician demanding tighter money. We refer to German Chancellor Angela Merkel, who in a Berlin speech Tuesday rebuked the world's central bankers, notably including the U.S. Federal Reserve, for being too politically accommodating. Hallelujah, sister.
"The independence of the European Central Bank must be preserved and the things that other central banks are now doing must be retracted," Mrs. Merkel told a meeting sponsored by Germany's association of metal- and electrical-industry employers. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time." Referring to the U.S. central bank specifically, she said "I view with a great deal of skepticism the extent of the Fed's powers."
Usually when a politician lobbies a central bank, it's to demand easier money. We can't recall a similar tight-money intervention from a national leader, save perhaps Ronald Reagan's quiet support for Paul Volcker in the 1980s. Mrs. Merkel may have been channeling Ludwig Erhard, the great Chancellor whose hard-money policies helped to catapult the German economy from the ruins of World War II. Looking further back, she no doubt knows that the Weimer inflation of the 1920s paved the way for Hitler.
Whatever her inspiration, this is the second time Mrs. Merkel has volunteered to be the designated driver amid the G-20's fiscal and monetary binge. Three months ago, she led a revolt against President Obama's demand that Europe follow his Keynesian spending spree. Her spending restraint is already looking wise as the U.S. asks the world to finance a debt burden rising to World War II levels.
Now she's taking aim at monetary excess, even as the European Central Bank is being lobbied to pursue the same kind of "quantitative easing" that the U.S. Fed has carried out. The ECB is preparing to announce the details of its purchase of $85 billion in low-risk (mostly corporate) debt, and Ms. Merkel may have wanted to send a signal that it ought to stop there. She also rightly fingered "monetary policy in the United States" that was "politically supported" as a main cause of the current mess.
As it happens, Fed Chairman Ben Bernanke was asked about Mrs. Merkel's remarks yesterday during testimony on Capitol Hill. He said he "respectfully" disagreed, adding that, "The U.S. and global economies, including Germany, have faced an extraordinary combination of a financial crisis . . . plus a very serious downturn. I am comfortable with the policy actions that the Federal Reserve has taken."
We'd agree -- and maybe Ms. Merkel would too -- that the Fed clearly needed to counter the declining velocity of money amid the autumn and winter panic. We've also given Mr. Bernanke the benefit of the doubt on some of his liquidity interventions. But the Fed has since elbowed its way into fiscal policy by buying housing and other dodgy assets, and it is also directly monetizing federal debt by buying Treasurys. The latter move appears to have had the opposite of its intended effect, scaring the world's investors to bid up long-term rates for fear the Fed has sold its independence to Congress and the White House. The Fed should call a halt to such purchases at its monetary policy meeting later this month.
Notwithstanding Mr. Bernanke's "comfort" with his actions so far, the world is wondering when the Fed will start to remove the flood of money it has injected into the economy during the crisis. Mr. Bernanke says not to worry, as his mentor Alan Greenspan also did yesterday. But this is cold comfort given their earlier track record. The Fed's habit is to look at backward indicators, such as the cost-of-living index and the jobless rate, rather than at currency and commodity prices that can warn of asset bubbles and inflation ahead. This is precisely the mistake both men made in 2003, as the recently released Fed transcripts from that year illustrate. The warning that Mrs. Merkel -- and China and the financial markets -- is sounding is whether the Fed will have the political courage to start removing that liquidity even if the unemployment rate is high, and before it creates another mess.
Meanwhile, on Capitol Hill yesterday Mr. Bernanke preferred to do some fiscal policy moonlighting. "Unless we demonstrate a strong commitment to fiscal sustainability in the longer run," he said, "we will have neither financial stability nor healthy economic growth." We can see why Mr. Bernanke would want to change the subject from his own monetary responsibilities, but he'd be wiser to heed Mrs. Merkel.
WaPo: Once again Russia amasses troops and stages provocations
Another Summer in Georgia. WaPo Editorial
Once again Russia amasses troops and stages provocations.
Thursday, June 4, 2009
A YEAR AGO, Russian military maneuvers and provocations of the former Soviet republic of Georgia caused a couple of astute observers to predict that Moscow was laying the groundwork for a military invasion of its democratic and pro-Western neighbor. The warnings were laughed off -- until Russian forces poured across Georgia's borders on the night of Aug. 7, routing the Georgian army and driving thousands of ethnic Georgians from two breakaway provinces. Ten months later, with another summer approaching, Russia is once again mounting provocations on the ground and in diplomatic forums; once again it has scheduled a large military training exercise for July in the region bordering Georgia.
Could Vladimir Putin be contemplating another military operation to finish off the Georgian government of Mikheil Saakashvili -- whom Mr. Putin once vowed to "hang by his balls"? Once again, the scenario is easy to dismiss: The Russian leadership, after all, is engaged in an effort to "reset" relations with the United States; it is seeking support in Europe for discussions on a new "security architecture." Another fight with Georgia could blow up both efforts.
Still, the facts are these: Russia, in open violation of the cease-fire deal Mr. Putin made with French President Nicolas Sarkozy, has never withdrawn its troops to pre-war positions. Instead it has reinforced its units in Georgia and has between 5,000 and 7,500 soldiers in the provinces of South Ossetia and Abkhazia, which Moscow now treats as independent states. There are frequent incidents in the border areas, and Russia recently refused to renew the mandate of an international observer mission that had been deployed in and around South Ossetia.
If hostilities were renewed, Georgia wouldn't have much chance to defend itself. Its defense minister says that the country has not been able to replace much of the equipment lost in the last war. The Obama administration, which is hoping to complete the outlines of a new strategic arms agreement with Russia by the time of a July summit meeting, hasn't supplied the Georgian government with the air defenses or anti-tank weapons it would need to resist another Russian assault.
Mr. Saakashvili's best defense, of course, remains political support from the United States, the European Union and NATO. So far, at least, White House rhetoric in support of Georgian independence has remained firm. The sometimes-impulsive Georgian leader has helped himself with his patient and tolerant management of opposition demonstrations that have disrupted Tbilisi for nearly two months; he needs to be as skillful in sidestepping provocations along the frontier, so as to avoid providing the Kremlin with an excuse for intervention. But a peaceful summer in Georgia will also require firmness from Mr. Obama: He must leave no doubt that another Russian advance in Georgia would be devastating for U.S.-Russian relations.
Once again Russia amasses troops and stages provocations.
Thursday, June 4, 2009
A YEAR AGO, Russian military maneuvers and provocations of the former Soviet republic of Georgia caused a couple of astute observers to predict that Moscow was laying the groundwork for a military invasion of its democratic and pro-Western neighbor. The warnings were laughed off -- until Russian forces poured across Georgia's borders on the night of Aug. 7, routing the Georgian army and driving thousands of ethnic Georgians from two breakaway provinces. Ten months later, with another summer approaching, Russia is once again mounting provocations on the ground and in diplomatic forums; once again it has scheduled a large military training exercise for July in the region bordering Georgia.
Could Vladimir Putin be contemplating another military operation to finish off the Georgian government of Mikheil Saakashvili -- whom Mr. Putin once vowed to "hang by his balls"? Once again, the scenario is easy to dismiss: The Russian leadership, after all, is engaged in an effort to "reset" relations with the United States; it is seeking support in Europe for discussions on a new "security architecture." Another fight with Georgia could blow up both efforts.
Still, the facts are these: Russia, in open violation of the cease-fire deal Mr. Putin made with French President Nicolas Sarkozy, has never withdrawn its troops to pre-war positions. Instead it has reinforced its units in Georgia and has between 5,000 and 7,500 soldiers in the provinces of South Ossetia and Abkhazia, which Moscow now treats as independent states. There are frequent incidents in the border areas, and Russia recently refused to renew the mandate of an international observer mission that had been deployed in and around South Ossetia.
If hostilities were renewed, Georgia wouldn't have much chance to defend itself. Its defense minister says that the country has not been able to replace much of the equipment lost in the last war. The Obama administration, which is hoping to complete the outlines of a new strategic arms agreement with Russia by the time of a July summit meeting, hasn't supplied the Georgian government with the air defenses or anti-tank weapons it would need to resist another Russian assault.
Mr. Saakashvili's best defense, of course, remains political support from the United States, the European Union and NATO. So far, at least, White House rhetoric in support of Georgian independence has remained firm. The sometimes-impulsive Georgian leader has helped himself with his patient and tolerant management of opposition demonstrations that have disrupted Tbilisi for nearly two months; he needs to be as skillful in sidestepping provocations along the frontier, so as to avoid providing the Kremlin with an excuse for intervention. But a peaceful summer in Georgia will also require firmness from Mr. Obama: He must leave no doubt that another Russian advance in Georgia would be devastating for U.S.-Russian relations.
Wednesday, June 3, 2009
The Potential Role of Entitlement or Budget Commissions in Addressing Long-term Budget Problems
The Potential Role of Entitlement or Budget Commissions in Addressing Long-term Budget Problems. By The Fiscal Seminar Group
Brookings, June 03, 2009
The United States is facing a looming fiscal imbalance brought on by the aging of the population and rapidly rising health care costs. And while the credit crisis and recession are understandably of top concern to policymakers at the moment, the long-run fiscal outlook, seemingly deteriorating further day by day, cannot be ignored.
Unfortunately, the current political environment creates strong disincentives for individual politicians to tackle the tough choices required to put our fiscal house back in order. An appointed commission could offer an alternative mechanism through which to address these thorny but critical issues by undertaking the heavy lifting of developing options and building the political consensus necessary to enact legislation. As evidence of the popularity of this idea, over a dozen bills were introduced in the 110th Congress that would have created commissions to find politically and fiscally acceptable solutions for reforming entitlements, taxes, the budgeting process, or some combination of the three. This paper reviews some of the recent history of appointed commissions and discusses the issues surrounding their potential role in long-term federal budgeting.
Brookings, June 03, 2009
The United States is facing a looming fiscal imbalance brought on by the aging of the population and rapidly rising health care costs. And while the credit crisis and recession are understandably of top concern to policymakers at the moment, the long-run fiscal outlook, seemingly deteriorating further day by day, cannot be ignored.
Unfortunately, the current political environment creates strong disincentives for individual politicians to tackle the tough choices required to put our fiscal house back in order. An appointed commission could offer an alternative mechanism through which to address these thorny but critical issues by undertaking the heavy lifting of developing options and building the political consensus necessary to enact legislation. As evidence of the popularity of this idea, over a dozen bills were introduced in the 110th Congress that would have created commissions to find politically and fiscally acceptable solutions for reforming entitlements, taxes, the budgeting process, or some combination of the three. This paper reviews some of the recent history of appointed commissions and discusses the issues surrounding their potential role in long-term federal budgeting.
Is Universal Coverage Comparatively Effective?
Is Universal Coverage Comparatively Effective? By Michael F. Cannon
This article appeared on KaiserHealthNews.org on May 31, 2009.
As congressional Democrats prepare to deliver on President Barack Obama's goal of "expanding coverage to all Americans,"(.pdf) an important question remains unanswered: is universal coverage worth the money?
Extending health insurance coverage to the estimated 46 million (.pdf) Americans without it could easily cost $2 trillion over the next 10 years. If the underlying goal is to make people healthier, are there other ways to spend that $2 trillion that would help Americans, including the uninsured, live even longer, healthier lives? There may well be, and one can hardly imagine a more fit topic for comparative-effectiveness research.
Health reformers love a good we-all-know statement, like, "We all know that health insurance is a good investment," or, "We all know that investing in preventive care saves money."
Health economists, on the other hand, enjoy embarrassing the we-all-know-it-alls. For example, a recent New England Journal of Medicine article concluded, "Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not."
Likewise, economists Helen Levy of the University of Michigan and David Meltzer of the University of Chicago have thrown cold water on the conventional wisdom that expanding health insurance is a good investment.
In 2004, Levy and Meltzer reviewed the literature for the Urban Institute and concluded: "There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than onâ?¦other possibilities," such as programs that fund inner-city clinics, screen for discrete diseases such as hypertension, or promote better nutrition.
Writing in the Annual Review of Public Health in 2008, Levy and Meltzer reaffirmed that conclusion: "The central question of how health insurance affects health, for whom it matters, and how much, remains largely unanswered at the level of detail needed to inform policy decisions."
"Understanding the magnitude of health benefits associated with insurance is not just an academic exercise," they explain, "it is crucial to ensuring that the benefits of a given amount of public spending on health are maximized."
Not only is there "no evidence" that universal coverage is the most cost-effective use of our $2 trillion, the benefits may not exceed the costs at all.
In a 2008 article for the Journal of Public Economics, Amy Finkelstein of the Massachusetts Institute of Technology and Robin McKnight of Wellesley College reported that even though Medicare achieved universal coverage for the elderly, it had no impact on elderly mortality rates in its first 10 years. Medicare may (or may not) have improved enrollees' health in other ways. Yet Finkelstein's and McKnight's results leave open the question of whether those and any additional benefits were worth Medicare's substantial cost.
For decades, health reformers have been beating the drums for "evidence-based medicine," all the while ignoring the lack of evidence behind the push for universal coverage. "Science for thee," we lecture physicians, "but not for me."
It's time to start practicing evidence-based health policy. Here's how.
Before Congress spends $2 trillion on reforms of unknown value, it should direct the $1.1 billion it has allocated for "comparative effectiveness" research toward experiments that will tell us whether universal coverage or some other strategy would deliver the most health for the money.
The idea has precedent. In the 1970s, at a time when many reformers were demanding to make health care "free" for all, Congress funded a massive social experiment to test the idea. The RAND Health Insurance Experiment startled reformers by showing that "free" care cost far more than mere catastrophic health insurance, yet offered little or no additional improvements in health.
Levy and Meltzer note that "definitive answers" will come only by "investing in social experiments designed to answer specific questions about the value of improved health insurance coverage or other policies to improve health." George Mason University economist Robin Hanson has even started a petition to demand a new RAND-like experiment, which he estimates would cost a mere $500 million over 10 years.
I oppose spending taxpayer dollars on such research, for reasons both principled and practical. But if Congress is going to spend the money anyway, the least it could do is let us know whether universal coverage is a comparatively effective use of our $2 trillion.
Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What's Holding Back Care and How to Free It.
This article appeared on KaiserHealthNews.org on May 31, 2009.
As congressional Democrats prepare to deliver on President Barack Obama's goal of "expanding coverage to all Americans,"(.pdf) an important question remains unanswered: is universal coverage worth the money?
Extending health insurance coverage to the estimated 46 million (.pdf) Americans without it could easily cost $2 trillion over the next 10 years. If the underlying goal is to make people healthier, are there other ways to spend that $2 trillion that would help Americans, including the uninsured, live even longer, healthier lives? There may well be, and one can hardly imagine a more fit topic for comparative-effectiveness research.
Health reformers love a good we-all-know statement, like, "We all know that health insurance is a good investment," or, "We all know that investing in preventive care saves money."
Health economists, on the other hand, enjoy embarrassing the we-all-know-it-alls. For example, a recent New England Journal of Medicine article concluded, "Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not."
Likewise, economists Helen Levy of the University of Michigan and David Meltzer of the University of Chicago have thrown cold water on the conventional wisdom that expanding health insurance is a good investment.
In 2004, Levy and Meltzer reviewed the literature for the Urban Institute and concluded: "There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than onâ?¦other possibilities," such as programs that fund inner-city clinics, screen for discrete diseases such as hypertension, or promote better nutrition.
Writing in the Annual Review of Public Health in 2008, Levy and Meltzer reaffirmed that conclusion: "The central question of how health insurance affects health, for whom it matters, and how much, remains largely unanswered at the level of detail needed to inform policy decisions."
"Understanding the magnitude of health benefits associated with insurance is not just an academic exercise," they explain, "it is crucial to ensuring that the benefits of a given amount of public spending on health are maximized."
Not only is there "no evidence" that universal coverage is the most cost-effective use of our $2 trillion, the benefits may not exceed the costs at all.
In a 2008 article for the Journal of Public Economics, Amy Finkelstein of the Massachusetts Institute of Technology and Robin McKnight of Wellesley College reported that even though Medicare achieved universal coverage for the elderly, it had no impact on elderly mortality rates in its first 10 years. Medicare may (or may not) have improved enrollees' health in other ways. Yet Finkelstein's and McKnight's results leave open the question of whether those and any additional benefits were worth Medicare's substantial cost.
For decades, health reformers have been beating the drums for "evidence-based medicine," all the while ignoring the lack of evidence behind the push for universal coverage. "Science for thee," we lecture physicians, "but not for me."
It's time to start practicing evidence-based health policy. Here's how.
Before Congress spends $2 trillion on reforms of unknown value, it should direct the $1.1 billion it has allocated for "comparative effectiveness" research toward experiments that will tell us whether universal coverage or some other strategy would deliver the most health for the money.
The idea has precedent. In the 1970s, at a time when many reformers were demanding to make health care "free" for all, Congress funded a massive social experiment to test the idea. The RAND Health Insurance Experiment startled reformers by showing that "free" care cost far more than mere catastrophic health insurance, yet offered little or no additional improvements in health.
Levy and Meltzer note that "definitive answers" will come only by "investing in social experiments designed to answer specific questions about the value of improved health insurance coverage or other policies to improve health." George Mason University economist Robin Hanson has even started a petition to demand a new RAND-like experiment, which he estimates would cost a mere $500 million over 10 years.
I oppose spending taxpayer dollars on such research, for reasons both principled and practical. But if Congress is going to spend the money anyway, the least it could do is let us know whether universal coverage is a comparatively effective use of our $2 trillion.
Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What's Holding Back Care and How to Free It.
Lessons from setting the freight railroads free
If Obama Had Carter's Courage . . . By HOLMAN W. JENKINS, JR.
Lessons from setting the freight railroads free.
WSJ, Jun 03, 2009
Barack Obama is no Jimmy Carter. The latter really did face the unraveling of an indispensable industry. Mr. Obama faces not a collapse of the domestic auto industry, but collapse of two companies miserable enough to have been extant in the 1930s when the Wagner Act was foisted upon the industry.
We have a second auto industry, founded after the political and legal system had thought better of mandatory unionization, born of foreign parents, mostly in the South. It's surviving the recession without extraordinary help.
In Mr. Carter's day, bankruptcies were scything through the railroad sector, hurtling toward a rendezvous with nationalization. Conrail, an amalgam of failed Northeastern lines, had already been taken over and analysts foresaw a $300 billion bill (in today's dollars) in the likely prospect that Washington would soon have to operate the rest of the nation's freight railroads.
A disaster must be truly sizable before Congress will correct its own errors -- and the railroads were such a case.
Rail executives and economists had been arguing since the 1920s, when competition from trucks and planes began to emerge, that comprehensive federal regulation had only distorted the industry's pricing, driven away investment, and made competitive adaptation impossible. But the argument had a new ring now that Washington would have to bear the political risk of operating and subsidizing the nation's rail services.
It still took some doing on Mr. Carter's part. When the bill stalled, a hundred phone calls went from the White House to congressmen, including 10 by Mr. Carter in a single evening. The bill essentially no longer required railroads to provide services at a loss to please certain constituencies. It meant going up against farmers, labor, utilities, mining interests, and even some railroads -- whereas Mr. Obama's auto bailout tries to appease key lobbies like labor and greens, which is why it can't work.
In his message to Congress, Mr. Carter warned of a "catastrophic series of bankruptcies" and "massive federal expenditure" unless deregulation was allowed to "overhaul our nation's rail system, leading to higher labor productivity and more efficient use of plant and equipment."
Involving Congress meant the plan had to be explained and rationally coherent -- features missing from Mr. Obama's contradictory auto policies.
In 1980, Congress passed the Staggers Act, ending a century of federal regulation and leading to the railroad industry's renaissance. Leo Mullin, then a young Conrail veep, would later look back and praise all involved for having the fortitude to recognize that salvaging the taxpayer's investment in Conrail meant more than fixing a single broken company -- it meant fixing a defective regulatory environment.
That fortitude is exactly what's missing today, as it was missing from Mr. Obama's statement on Monday, which attributed GM's failure to sins by everyone but Washington.
We're still waiting for the brave, original thinking that we were told Mr. Obama represented. Like Washington circa 1978, he has landed for once in a situation where something more than symbolism is required of him. He has finally glided into the land of the real, where the key measurable outcome is no longer whether an audience is glowing with self-approval when he leaves the room.
To wit, will GM become self-sustaining and profitable, as he promises, or a bottomless drain for taxpayer subsidies? (The same question applies to Chrysler and, likely, Ford, which may have only prolonged the Ford family's run at the top by mortgaging the company to the hilt just before the lending markets closed down.)
Nothing really will be solved, even by GM's bankruptcy, until Washington recognizes its own policy incoherence -- namely the impossibility of reconciling stiff fuel mileage mandates with gasoline prices set by the market, with a domestic labor monopoly, with a high degree of openness to international trade. (You can have three, but not four.)
It took 103 years after the Interstate Commerce Act for Congress to junk the regulatory apparatus that destroyed the railroads. To get rid of CAFE after only 34 years would be some kind of record -- if Mr. Obama had Mr. Carter's courage.
Let's face it: CAFE has done nothing to reduce gasoline usage or oil imports (car owners just end up driving more miles). In 34 years, not a whisper of testimony has come from any quarter that the policy actually works. It only causes U.S. manufacturers to make small cars and dump them at a loss on the public, subsidized with the profits of pickups and SUVs.
Detroit doesn't have to match the transplants in wages and benefits, but CAFE distorted what would have been the Big Three's natural path of adaptation to the natural fact of growing diversity in the marketplace with the arrival of foreign manufacturers. Detroit would have focused on market segments where it could compete profitably even with its higher labor cost -- on bigger, pricier vehicles where labor cost is a lower share of value added.
Unfortunately, Mr. Obama, that freethinker, took to the CAFE fraud like a bat to a belfry. He signaled his arrival on the presidential stage by sternly demanding higher mileage standards early in his campaign. The "change" candidate who might have broken with a generation of political cant about CAFE instead appropriated the fraud for his own careerist purposes.
That tangled web now catches him in a fatal contradiction as he pours tens of billions of taxpayer dollars into the failed business model that CAFE foisted on Detroit.
Lessons from setting the freight railroads free.
WSJ, Jun 03, 2009
Barack Obama is no Jimmy Carter. The latter really did face the unraveling of an indispensable industry. Mr. Obama faces not a collapse of the domestic auto industry, but collapse of two companies miserable enough to have been extant in the 1930s when the Wagner Act was foisted upon the industry.
We have a second auto industry, founded after the political and legal system had thought better of mandatory unionization, born of foreign parents, mostly in the South. It's surviving the recession without extraordinary help.
In Mr. Carter's day, bankruptcies were scything through the railroad sector, hurtling toward a rendezvous with nationalization. Conrail, an amalgam of failed Northeastern lines, had already been taken over and analysts foresaw a $300 billion bill (in today's dollars) in the likely prospect that Washington would soon have to operate the rest of the nation's freight railroads.
A disaster must be truly sizable before Congress will correct its own errors -- and the railroads were such a case.
Rail executives and economists had been arguing since the 1920s, when competition from trucks and planes began to emerge, that comprehensive federal regulation had only distorted the industry's pricing, driven away investment, and made competitive adaptation impossible. But the argument had a new ring now that Washington would have to bear the political risk of operating and subsidizing the nation's rail services.
It still took some doing on Mr. Carter's part. When the bill stalled, a hundred phone calls went from the White House to congressmen, including 10 by Mr. Carter in a single evening. The bill essentially no longer required railroads to provide services at a loss to please certain constituencies. It meant going up against farmers, labor, utilities, mining interests, and even some railroads -- whereas Mr. Obama's auto bailout tries to appease key lobbies like labor and greens, which is why it can't work.
In his message to Congress, Mr. Carter warned of a "catastrophic series of bankruptcies" and "massive federal expenditure" unless deregulation was allowed to "overhaul our nation's rail system, leading to higher labor productivity and more efficient use of plant and equipment."
Involving Congress meant the plan had to be explained and rationally coherent -- features missing from Mr. Obama's contradictory auto policies.
In 1980, Congress passed the Staggers Act, ending a century of federal regulation and leading to the railroad industry's renaissance. Leo Mullin, then a young Conrail veep, would later look back and praise all involved for having the fortitude to recognize that salvaging the taxpayer's investment in Conrail meant more than fixing a single broken company -- it meant fixing a defective regulatory environment.
That fortitude is exactly what's missing today, as it was missing from Mr. Obama's statement on Monday, which attributed GM's failure to sins by everyone but Washington.
We're still waiting for the brave, original thinking that we were told Mr. Obama represented. Like Washington circa 1978, he has landed for once in a situation where something more than symbolism is required of him. He has finally glided into the land of the real, where the key measurable outcome is no longer whether an audience is glowing with self-approval when he leaves the room.
To wit, will GM become self-sustaining and profitable, as he promises, or a bottomless drain for taxpayer subsidies? (The same question applies to Chrysler and, likely, Ford, which may have only prolonged the Ford family's run at the top by mortgaging the company to the hilt just before the lending markets closed down.)
Nothing really will be solved, even by GM's bankruptcy, until Washington recognizes its own policy incoherence -- namely the impossibility of reconciling stiff fuel mileage mandates with gasoline prices set by the market, with a domestic labor monopoly, with a high degree of openness to international trade. (You can have three, but not four.)
It took 103 years after the Interstate Commerce Act for Congress to junk the regulatory apparatus that destroyed the railroads. To get rid of CAFE after only 34 years would be some kind of record -- if Mr. Obama had Mr. Carter's courage.
Let's face it: CAFE has done nothing to reduce gasoline usage or oil imports (car owners just end up driving more miles). In 34 years, not a whisper of testimony has come from any quarter that the policy actually works. It only causes U.S. manufacturers to make small cars and dump them at a loss on the public, subsidized with the profits of pickups and SUVs.
Detroit doesn't have to match the transplants in wages and benefits, but CAFE distorted what would have been the Big Three's natural path of adaptation to the natural fact of growing diversity in the marketplace with the arrival of foreign manufacturers. Detroit would have focused on market segments where it could compete profitably even with its higher labor cost -- on bigger, pricier vehicles where labor cost is a lower share of value added.
Unfortunately, Mr. Obama, that freethinker, took to the CAFE fraud like a bat to a belfry. He signaled his arrival on the presidential stage by sternly demanding higher mileage standards early in his campaign. The "change" candidate who might have broken with a generation of political cant about CAFE instead appropriated the fraud for his own careerist purposes.
That tangled web now catches him in a fatal contradiction as he pours tens of billions of taxpayer dollars into the failed business model that CAFE foisted on Detroit.
Global Humanitarian Forum report: A Methodological Embarassment
A Methodological Embarassment, by Roger Pielke, Jr.
Prometheus, May 29th, 2009
Excerpts:
I am quoted in today’s NYT on a new report issued by the Global Humanitarian Forum which makes the absurd claim that 315,000 deaths a year can be attributed to the effects of rising greenhouse gas concentrations. Here is what I said:
Roger A. Pielke Jr., a political scientist at the University of Colorado, Boulder, who studies disaster trends, said the forum’s report was “a methodological embarrassment” because there was no way to distinguish deaths or economic losses related to human-driven global warming amid the much larger losses resulting from the growth in populations and economic development in vulnerable regions. Dr. Pielke said that “climate change is an important problem requiring our utmost attention.” But the report, he said, “will harm the cause for action on both climate change and disasters because it is so deeply flawed.”
Strong comments I know. Shoddy work on disasters and climate change is the norm, unfortunately, and something I’ve been closely following for well over a decade. I have no illusions that this latest concoction will be repeatedly cited regardless.
Below are my comments to the NYT upon reading the report (cleaned up and formatted). Caution, strong views ahead.
Let me apologize for the length of this reply. But it is important to be clear and to set the record straight.
Let me say first that human-caused climate change is an important problem requiring our utmost attention. Second, the effects of disasters, particularly in poorer countries, is also an important problem that to some degree has been overlooked, as I have argued for many years.
However, I cannot express how strongly I feel that this report has done a disservice to both issues. It is a methodological embarrassment and poster child for how to lie with statistics. The report will harm the cause for action on both climate change and disasters because it is so deeply flawed.
It will give ammunition to those opposed to action and divert attention away from the people who actually need help in the face of disasters, yet through this report have been reduced to a bloodless statistic for use in the promotional battle over climate policies. The report is worse than fiction, it is a lie. These are strong words I know.
1. Let me first start by noting that the same group that did the analysis for the UN, the Geo-Risks group in Munich Re, earlier this year published a peer-reviewed paper arguing that the signal of human-caused climate change could not presently be seen in the loss data on disasters. [...]
3. The report cites and undates the Stern Review Report estimates of disaster losses, however, in a peer-reviewed paper I showed that these estimates were off by an order of magnitude and relied on a similar sort of statistical gamesmanship to develop its results (and of course this critique was ignored):
Pielke, Jr., R. A., 2007. Mistreatment of the economic impacts of extreme events in the Stern Review Report on the Economics of Climate Change, Global Environmental Change, 17:302-310. (PDF)
This report is an embarrassment to the GHF and to those who have put their names on it as representing a scientifically robust analysis. It is not even close.
Best regards,
Roger
Prometheus, May 29th, 2009
Excerpts:
I am quoted in today’s NYT on a new report issued by the Global Humanitarian Forum which makes the absurd claim that 315,000 deaths a year can be attributed to the effects of rising greenhouse gas concentrations. Here is what I said:
Roger A. Pielke Jr., a political scientist at the University of Colorado, Boulder, who studies disaster trends, said the forum’s report was “a methodological embarrassment” because there was no way to distinguish deaths or economic losses related to human-driven global warming amid the much larger losses resulting from the growth in populations and economic development in vulnerable regions. Dr. Pielke said that “climate change is an important problem requiring our utmost attention.” But the report, he said, “will harm the cause for action on both climate change and disasters because it is so deeply flawed.”
Strong comments I know. Shoddy work on disasters and climate change is the norm, unfortunately, and something I’ve been closely following for well over a decade. I have no illusions that this latest concoction will be repeatedly cited regardless.
Below are my comments to the NYT upon reading the report (cleaned up and formatted). Caution, strong views ahead.
Let me apologize for the length of this reply. But it is important to be clear and to set the record straight.
Let me say first that human-caused climate change is an important problem requiring our utmost attention. Second, the effects of disasters, particularly in poorer countries, is also an important problem that to some degree has been overlooked, as I have argued for many years.
However, I cannot express how strongly I feel that this report has done a disservice to both issues. It is a methodological embarrassment and poster child for how to lie with statistics. The report will harm the cause for action on both climate change and disasters because it is so deeply flawed.
It will give ammunition to those opposed to action and divert attention away from the people who actually need help in the face of disasters, yet through this report have been reduced to a bloodless statistic for use in the promotional battle over climate policies. The report is worse than fiction, it is a lie. These are strong words I know.
1. Let me first start by noting that the same group that did the analysis for the UN, the Geo-Risks group in Munich Re, earlier this year published a peer-reviewed paper arguing that the signal of human-caused climate change could not presently be seen in the loss data on disasters. [...]
3. The report cites and undates the Stern Review Report estimates of disaster losses, however, in a peer-reviewed paper I showed that these estimates were off by an order of magnitude and relied on a similar sort of statistical gamesmanship to develop its results (and of course this critique was ignored):
Pielke, Jr., R. A., 2007. Mistreatment of the economic impacts of extreme events in the Stern Review Report on the Economics of Climate Change, Global Environmental Change, 17:302-310. (PDF)
This report is an embarrassment to the GHF and to those who have put their names on it as representing a scientifically robust analysis. It is not even close.
Best regards,
Roger
Federal President should stop apologising for America
Barack Obama should stop apologising for America. By Nile Gardiner
It is time for President Obama to recognise that his strategy is weakening his country and making the United States more vulnerable to attack, says Nile Gardiner.
The Telegraph, Jun 02, 2009 10:41AM BST
No leader in American history has gone to greater lengths than Barack Obama to make amends for his own country. From condemnation of American “arrogance” in a speech in Strasbourg to acknowledging U.S. “mistakes” before millions of Muslims on Arab television, Obama has rarely missed an opportunity to apologise for the actions of the American people.
President Obama has elevated the art of national self-loathing to new heights, and seems to delight in prostrating the most powerful nation on the face of the earth before its critics and rivals, especially on foreign soil. The Obama worldview revolves around the central premise that the United States must be humble and “engage” and work with its enemies through the application of “smart power”. There is nothing smart, however, in appeasing rogue states such as North Korea or Iran.
The Obama doctrine is now lying in tatters after North Korean tyrant Kim Jong-Il and Iranian demagogue Mahmoud Ahmadinejad met Obama’s recent overtures with missile tests and even a nuclear blast from Pyongyang. The president’s video message in March offering “a new beginning” to “the people and leaders of the Islamic Republic of Iran” was followed by the launch of a surface-to-surface missile with a range of 1,200 miles capable of reaching southern Europe. Incredibly, the U.S. response has been to slash defense spending, with a dramatic scaling down of plans for a global missile defence shield.
The world today is considerably more dangerous than it was in the days of the Bush Administration, and the Obama White House has nothing to show for its weak-kneed efforts. The brutal truth is that the United States is increasingly viewed as a soft touch by its enemies, increasingly jeered rather than feared.
When he travels to the Middle East and Europe this week, the president will have ample opportunity to do what he does best – atone for America’s past. After a brief visit to Saudi Arabia he will deliver a major address to the Muslim world in Cairo, before travelling to Germany to visit the Buchenwald Nazi concentration camp and meet with Chancellor Angela Merkel in Dresden. His world tour ends with his participation in ceremonies marking the 65th anniversary of the D-Day landings in Normandy.
It will be hugely tempting for the rock star president to play to his Arab and European audiences by scoring points against his hugely unpopular predecessor. He could easily rail against the Bush Administration’s enhanced interrogation techniques, boast of the impending closure of the Guantanamo detention facility, or revive the ghosts of Abu Ghraib. The president’s advisers are no doubt furiously trying to outdo one another with the most original mea culpas.
Obama’s supine approach has become a humiliating spectacle for a country that, together with Great Britain, has done more to advance the cause of liberty and freedom across the world than any nation in the world. Every groveling apology by the president undermines America’s confidence, standing and power, and strengthens the hand of those who seek her destruction.
It is time for President Obama to recognise that his new strategy is weakening his country and making the United States more vulnerable to attack. The dream of America haters who revel in the vision of the humbling of a superpower, is being realised by an administration that has so far fundamentally rejected the idea of American exceptionalism.
The world needs a president who aggressively projects American power on the world stage, rather than seeks the adoration of traditionally hostile foreign audiences. In Egypt, Obama should not be afraid to offend the sensibilities of Muslim leaders, by calling for religious tolerance, freedom of speech, worship and association, and a rejection of Islamist extremism.
In Germany, the president should call on Europe to learn the lessons of the Holocaust and stand and fight against totalitarianism, whether in the form of the Taliban in Afghanistan or the Mullahs of Tehran in their drive for nuclear domination of the Middle East. He must urge the Germans to end their massive investments in Iran, which shamefully help sustain a regime that threatens to wipe the descendents of the survivors of the Final Solution from the face of the earth.
In Normandy, President Obama should take great pride in America’s role in the liberation of Europe and remind his French hosts that Europe is free today because of the huge sacrifice of American, British and Commonwealth forces. This is a moment for the president to recognise American global power and the role it has played as a great force for good, as well as the broader importance of the transatlantic alliance and the Anglo-American Special Relationship.
No one expects Barack Obama to adopt the swagger of a John Wayne or Clint Eastwood when he travels to the Middle East and Western Europe. But he should adopt a more forceful and confident approach to international affairs that marks him as a force to be reckoned with rather than a Jimmy Carter-like pushover. It is not too late for the president to acknowledge that the time for apologies is over, that the world needs robust American leadership that projects strength and power rather than timidity and weakness.
Nile Gardiner is the Director of the Margaret Thatcher Center for Freedom at the Heritage Foundation in Washington, D.C.
It is time for President Obama to recognise that his strategy is weakening his country and making the United States more vulnerable to attack, says Nile Gardiner.
The Telegraph, Jun 02, 2009 10:41AM BST
No leader in American history has gone to greater lengths than Barack Obama to make amends for his own country. From condemnation of American “arrogance” in a speech in Strasbourg to acknowledging U.S. “mistakes” before millions of Muslims on Arab television, Obama has rarely missed an opportunity to apologise for the actions of the American people.
President Obama has elevated the art of national self-loathing to new heights, and seems to delight in prostrating the most powerful nation on the face of the earth before its critics and rivals, especially on foreign soil. The Obama worldview revolves around the central premise that the United States must be humble and “engage” and work with its enemies through the application of “smart power”. There is nothing smart, however, in appeasing rogue states such as North Korea or Iran.
The Obama doctrine is now lying in tatters after North Korean tyrant Kim Jong-Il and Iranian demagogue Mahmoud Ahmadinejad met Obama’s recent overtures with missile tests and even a nuclear blast from Pyongyang. The president’s video message in March offering “a new beginning” to “the people and leaders of the Islamic Republic of Iran” was followed by the launch of a surface-to-surface missile with a range of 1,200 miles capable of reaching southern Europe. Incredibly, the U.S. response has been to slash defense spending, with a dramatic scaling down of plans for a global missile defence shield.
The world today is considerably more dangerous than it was in the days of the Bush Administration, and the Obama White House has nothing to show for its weak-kneed efforts. The brutal truth is that the United States is increasingly viewed as a soft touch by its enemies, increasingly jeered rather than feared.
When he travels to the Middle East and Europe this week, the president will have ample opportunity to do what he does best – atone for America’s past. After a brief visit to Saudi Arabia he will deliver a major address to the Muslim world in Cairo, before travelling to Germany to visit the Buchenwald Nazi concentration camp and meet with Chancellor Angela Merkel in Dresden. His world tour ends with his participation in ceremonies marking the 65th anniversary of the D-Day landings in Normandy.
It will be hugely tempting for the rock star president to play to his Arab and European audiences by scoring points against his hugely unpopular predecessor. He could easily rail against the Bush Administration’s enhanced interrogation techniques, boast of the impending closure of the Guantanamo detention facility, or revive the ghosts of Abu Ghraib. The president’s advisers are no doubt furiously trying to outdo one another with the most original mea culpas.
Obama’s supine approach has become a humiliating spectacle for a country that, together with Great Britain, has done more to advance the cause of liberty and freedom across the world than any nation in the world. Every groveling apology by the president undermines America’s confidence, standing and power, and strengthens the hand of those who seek her destruction.
It is time for President Obama to recognise that his new strategy is weakening his country and making the United States more vulnerable to attack. The dream of America haters who revel in the vision of the humbling of a superpower, is being realised by an administration that has so far fundamentally rejected the idea of American exceptionalism.
The world needs a president who aggressively projects American power on the world stage, rather than seeks the adoration of traditionally hostile foreign audiences. In Egypt, Obama should not be afraid to offend the sensibilities of Muslim leaders, by calling for religious tolerance, freedom of speech, worship and association, and a rejection of Islamist extremism.
In Germany, the president should call on Europe to learn the lessons of the Holocaust and stand and fight against totalitarianism, whether in the form of the Taliban in Afghanistan or the Mullahs of Tehran in their drive for nuclear domination of the Middle East. He must urge the Germans to end their massive investments in Iran, which shamefully help sustain a regime that threatens to wipe the descendents of the survivors of the Final Solution from the face of the earth.
In Normandy, President Obama should take great pride in America’s role in the liberation of Europe and remind his French hosts that Europe is free today because of the huge sacrifice of American, British and Commonwealth forces. This is a moment for the president to recognise American global power and the role it has played as a great force for good, as well as the broader importance of the transatlantic alliance and the Anglo-American Special Relationship.
No one expects Barack Obama to adopt the swagger of a John Wayne or Clint Eastwood when he travels to the Middle East and Western Europe. But he should adopt a more forceful and confident approach to international affairs that marks him as a force to be reckoned with rather than a Jimmy Carter-like pushover. It is not too late for the president to acknowledge that the time for apologies is over, that the world needs robust American leadership that projects strength and power rather than timidity and weakness.
Nile Gardiner is the Director of the Margaret Thatcher Center for Freedom at the Heritage Foundation in Washington, D.C.
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