Health Reform and Competitiveness. WSJ Editorial
WSJ, Jun 17, 2009
Democrats have spent years arguing that corporate tax rates don't matter to U.S. competitiveness. But all of a sudden one of their favorite arguments for government-run health care has become . . . U.S. corporate competitiveness. Political conversions on this scale could use a little scrutiny.
"Businesses now recognize that if we don't get a handle on this stuff then they are going to continue to be operating at a competitive disadvantage with other countries," President Obama recently remarked. "And so they anxiously seek serious reform."
Sure enough, many business leaders who should know better have picked up the White House theme. "You won't fundamentally solve the problems in business until you solve the problem of spiraling health-care costs, which is driving everybody crazy," said Google CEO Eric Schmidt the other day.
Messrs. Obama and Schmidt need to brush up on their economics. Employers may write the checks to the insurance companies, but workers still pay for the coverage they get from those employers. The total cost of an employee is what matters to businesses, and fringe benefits are as much a part of compensation as cash wages. When health costs rise, firms don't become less competitive, as if insurance were lopped out of profits. Instead, nonhealth compensation drops. Or wages rise more slowly than they otherwise would.
A recent study from none other than the White House Council of Economic Advisers notes exactly this point: If medical spending continues to accelerate, it expects take-home pay to stagnate. According to the New York Times, White House economic aide Larry Summers pressured CEA chairman Christine Romer to make the competitiveness argument, "adding that it was among the political advisers' favorite 'talking points.'" Ms. Romer pointedly retorted, "I'm not going to put schlocky arguments in there." How the schlock gets into Mr. Obama's speeches is a different question.
It's certainly true that the U.S. employer-based insurance system can dampen entrepreneurial spirits. There's the "job lock" phenomenon, in which employees fear leaving a less productive job because they're afraid to lose their health benefits. Another problem is that insurance costs more for small groups than the large risk pools that big corporations assemble, meaning that it's harder to form new businesses that can offer policies. But all this is really an argument for developing the individual health insurance market, where policies would follow workers, not jobs.
As for the competitiveness line, it's nonsense for most companies. The exceptions are heavily unionized businesses like auto makers that have locked themselves in to gold-plated coverage, especially for retirees. They have a harder time adjusting health costs and wages. Other companies might get a bit more running room in the short run if government assumed all health costs a la the single-payer systems of Western Europe. But over time the market would clear -- compensation being determined by the demand for and supply of labor -- and wages would rise. Or they might not rise at all if health-care costs are merely replaced by the tax increases necessary to finance Mr. Obama's new multi-trillion-dollar entitlement.
This is where the real competitiveness argument is precisely the opposite of the one pitched by Messrs. Obama and Schmidt. Consider the European welfare states, where costly entitlements and regulations make it extremely expensive to hire new workers. The nearby table lays out the tax wedge, the share of labor costs that never reaches employees but instead goes straight to government. In Germany, France and Italy, the tax wedge hovers around 50%, in part to pay for state-provided health care.
By contrast, the U.S. tax wedge was around 30% in 2008, according to the OECD. In other words, the costs of providing insurance would merely be converted into a larger wedge, which would itself eat into compensation. This is why Europe has tended to have higher unemployment and slower economic growth over the past 30 years.
If Democrats really want to increase U.S. competitiveness, they could look at the corporate income tax, which is the second highest in the industrialized world and a major impediment to U.S. job creation when global capital is so fluid. Or drop their proposals to raise personal income-tax rates, which affect thousands of small- and medium-size businesses that have fled the corporate tax regime as limited liability companies or Subchapter S corporations. Or cut capital gains rates, which deter risk taking and investment. Or rethink their plans to rig the rules in favor of organized labor by doing away with secret ballots in union elections.
On all these issues and more, Democrats want to increase, not reduce, the burdens on U.S. business. Their health-care line is, per Ms. Romer, "schlocky" political spin.
Wednesday, June 17, 2009
WSJ Editorial Page on Federal President's Position on Iran's Elections
Obama's Iran Abdication. WSJ Editorial
Democracy interferes with his nuclear diplomacy script.
The Wall Street Journal, Jun 17, 2009, page A12
The President yesterday denounced the "extent of the fraud" and the "shocking" and "brutal" response of the Iranian regime to public demonstrations in Tehran these past four days.
"These elections are an atrocity," he said. "If [Mahmoud] Ahmadinejad had made such progress since the last elections, if he won two-thirds of the vote, why such violence?" The statement named the regime as the cause of the outrage in Iran and, without meddling or picking favorites, stood up for Iranian democracy.
The President who spoke those words was France's Nicolas Sarkozy.
The French are hardly known for their idealistic foreign policy and moral fortitude. Then again many global roles are reversing in the era of Obama. The American President didn't have anything to say the first two days after polls closed in Iran on Friday and an improbable landslide victory for Mr. Ahmadinejad sparked the protests. "I have deep concerns about the election," he said yesterday at the White House, when he finally did find his voice. "When I see violence directed at peaceful protestors, when I see peaceful dissent being suppressed, wherever that takes place, it is of concern to me and it's of concern to the American people."
Spoken like a good lawyer. Mr. Obama didn't call the vote fraudulent, though he did allow that Ayatollah Ali Khamenei "understands the Iranian people have deep concerns about the election." This is a generous interpretation of the Supreme Leader's effort to defuse public rage by mooting a possible recount of select precincts. "How that plays out," Mr. Obama said, "is ultimately for the Iranian people to decide." Sort of like the 2000 Florida recount, no doubt.
From the start of this Iranian election, Administration officials said the U.S. should avoid becoming an issue in the campaign that the regime might exploit. Before votes were cast, this hands-off strategy made sense in that the election didn't present a real choice for Iranians. Whether President Ahmadinejad or his chief challenger, Mir Hossein Mousavi, won wouldn't change the mullahs' ultimate political control. Mr. Mousavi had been Ayatollah Khomeini's Prime Minister, hardly the resume of a revolutionary.
But Friday's vote and aftermath have changed those facts on the ground. Like other authoritarians -- Ferdinand Marcos in 1986 or Slobodan Milosevic in 2000 -- Tehran misjudged its own people. Having put a democratic veneer around their theocracy, they attempted to steal an election in such a blatant way that it has become a new and profound challenge to their legitimacy. Especially in the cities, Iranians are fed up with the corruption and incompetence rampant in the Islamic Republic. This dissatisfaction was galvanized by the regime's contempt for their votes and found an accidental leader in Mr. Mousavi. The movement has now taken on a life of its own, with consequences no one can predict.
The Obama Administration came into office with a realpolitik script to goad the mullahs into a "grand bargain" on its nuclear program. But Team Obama isn't proving to be good at the improv. His foreign policy gurus drew up an agenda defined mainly in opposition to the perceived Bush legacy: The U.S. will sit down with the likes of Iran, North Korea or Russia and hash out deals. In a Journal story on Monday, a senior U.S. official bordered on enthusiastic about confirming an Ahmadinejad victory as soon as possible. "Had there been a transition to a new government, a new president wouldn't have emerged until August. In some respects, this might allow Iran to engage the international community quicker." The popular uprising in Iran is so inconvenient to this agenda.
President Obama elaborates on this point with his now-frequent moral equivalance. Yesterday he invoked the CIA's role in the 1953 coup against Iranian leader Mohammad Mossadeq to explain his reticence. "Now, it's not productive, given the history of the U.S.-Iranian relations, to be seen as meddling -- the U.S. President meddling in Iranian elections," Mr. Obama said.
As far as we can tell, the CIA or other government agencies aren't directing the protests or bankrolling Mr. Mousavi. Beyond token Congressional support for civil society groups and the brave reporting of the Persian-language and U.S.-funded Radio Farda, America's role here is limited. Less than a fortnight ago, in Cairo, Mr. Obama touted his commitment to "governments that reflect the will of the people." Now the President who likes to say that "words matter" refuses to utter a word of support to Iran's people. By that measure, the U.S. should never have supported Soviet dissidents because it would have interfered with nuclear arms control.
The Iranian rebellion, though too soon to call a revolution, is turning out to be that 3 a.m. phone call for Mr. Obama. As a French President shows up the American on moral clarity, Hillary Clinton's point about his inexperience and instincts in a crisis is turning out to be prescient.
Democracy interferes with his nuclear diplomacy script.
The Wall Street Journal, Jun 17, 2009, page A12
The President yesterday denounced the "extent of the fraud" and the "shocking" and "brutal" response of the Iranian regime to public demonstrations in Tehran these past four days.
"These elections are an atrocity," he said. "If [Mahmoud] Ahmadinejad had made such progress since the last elections, if he won two-thirds of the vote, why such violence?" The statement named the regime as the cause of the outrage in Iran and, without meddling or picking favorites, stood up for Iranian democracy.
The President who spoke those words was France's Nicolas Sarkozy.
The French are hardly known for their idealistic foreign policy and moral fortitude. Then again many global roles are reversing in the era of Obama. The American President didn't have anything to say the first two days after polls closed in Iran on Friday and an improbable landslide victory for Mr. Ahmadinejad sparked the protests. "I have deep concerns about the election," he said yesterday at the White House, when he finally did find his voice. "When I see violence directed at peaceful protestors, when I see peaceful dissent being suppressed, wherever that takes place, it is of concern to me and it's of concern to the American people."
Spoken like a good lawyer. Mr. Obama didn't call the vote fraudulent, though he did allow that Ayatollah Ali Khamenei "understands the Iranian people have deep concerns about the election." This is a generous interpretation of the Supreme Leader's effort to defuse public rage by mooting a possible recount of select precincts. "How that plays out," Mr. Obama said, "is ultimately for the Iranian people to decide." Sort of like the 2000 Florida recount, no doubt.
From the start of this Iranian election, Administration officials said the U.S. should avoid becoming an issue in the campaign that the regime might exploit. Before votes were cast, this hands-off strategy made sense in that the election didn't present a real choice for Iranians. Whether President Ahmadinejad or his chief challenger, Mir Hossein Mousavi, won wouldn't change the mullahs' ultimate political control. Mr. Mousavi had been Ayatollah Khomeini's Prime Minister, hardly the resume of a revolutionary.
But Friday's vote and aftermath have changed those facts on the ground. Like other authoritarians -- Ferdinand Marcos in 1986 or Slobodan Milosevic in 2000 -- Tehran misjudged its own people. Having put a democratic veneer around their theocracy, they attempted to steal an election in such a blatant way that it has become a new and profound challenge to their legitimacy. Especially in the cities, Iranians are fed up with the corruption and incompetence rampant in the Islamic Republic. This dissatisfaction was galvanized by the regime's contempt for their votes and found an accidental leader in Mr. Mousavi. The movement has now taken on a life of its own, with consequences no one can predict.
The Obama Administration came into office with a realpolitik script to goad the mullahs into a "grand bargain" on its nuclear program. But Team Obama isn't proving to be good at the improv. His foreign policy gurus drew up an agenda defined mainly in opposition to the perceived Bush legacy: The U.S. will sit down with the likes of Iran, North Korea or Russia and hash out deals. In a Journal story on Monday, a senior U.S. official bordered on enthusiastic about confirming an Ahmadinejad victory as soon as possible. "Had there been a transition to a new government, a new president wouldn't have emerged until August. In some respects, this might allow Iran to engage the international community quicker." The popular uprising in Iran is so inconvenient to this agenda.
President Obama elaborates on this point with his now-frequent moral equivalance. Yesterday he invoked the CIA's role in the 1953 coup against Iranian leader Mohammad Mossadeq to explain his reticence. "Now, it's not productive, given the history of the U.S.-Iranian relations, to be seen as meddling -- the U.S. President meddling in Iranian elections," Mr. Obama said.
As far as we can tell, the CIA or other government agencies aren't directing the protests or bankrolling Mr. Mousavi. Beyond token Congressional support for civil society groups and the brave reporting of the Persian-language and U.S.-funded Radio Farda, America's role here is limited. Less than a fortnight ago, in Cairo, Mr. Obama touted his commitment to "governments that reflect the will of the people." Now the President who likes to say that "words matter" refuses to utter a word of support to Iran's people. By that measure, the U.S. should never have supported Soviet dissidents because it would have interfered with nuclear arms control.
The Iranian rebellion, though too soon to call a revolution, is turning out to be that 3 a.m. phone call for Mr. Obama. As a French President shows up the American on moral clarity, Hillary Clinton's point about his inexperience and instincts in a crisis is turning out to be prescient.
Tuesday, June 16, 2009
The Group of Friends of the UN Secretary General on the UN Observer Mission in Georgia Resolution
Joint Statement by the Group of Friends of the UN Secretary General on the United Nations Observer Mission in Georgia Resolution
Bureau of Public Affairs, Office of the Spokesman
US State Dept, Washington, DC, Tue, 16 Jun 2009 17:35:10 -0500
Following is the text of a Joint Statement by the Spokespersons of the United Kingdom, the United States, Germany, and France as members of the Group of Friends of the UN Secretary General.
Begin Text:
We deeply regret Russia’s decision to veto a resolution on the United Nations Observer Mission in Georgia (UNOMIG), which has resulted in the termination of the Security Council mandate for the Mission after 15 years of valuable service providing military transparency on the ground, promoting the human rights of the local population, and seeking to create conditions for the voluntary, safe, and dignified return of internally displaced persons and refugees. We note that Russia had twice accepted a reference to UNSCR 1808 since the August conflict, in resolutions 1839 and 1866. The closure of the UN mission, like that of the OSCE mission, is a setback to international efforts to resolve this conflict.
We call on all parties with forces on the ground to exercise the utmost restraint and to abide by the August 12 and September 8 ceasefire agreements. We call on all participants in the Geneva talks to commit themselves to continuing efforts to find a peaceful and political resolution to the conflict and to alleviate the plight of refugees and IDPs. We reaffirm our firm support for the European Union Monitoring Mission.
We also reiterate our strong support for Georgia's independence, sovereignty and territorial integrity within its internationally recognized borders.
###
PRN: 2009/602
Bureau of Public Affairs, Office of the Spokesman
US State Dept, Washington, DC, Tue, 16 Jun 2009 17:35:10 -0500
Following is the text of a Joint Statement by the Spokespersons of the United Kingdom, the United States, Germany, and France as members of the Group of Friends of the UN Secretary General.
Begin Text:
We deeply regret Russia’s decision to veto a resolution on the United Nations Observer Mission in Georgia (UNOMIG), which has resulted in the termination of the Security Council mandate for the Mission after 15 years of valuable service providing military transparency on the ground, promoting the human rights of the local population, and seeking to create conditions for the voluntary, safe, and dignified return of internally displaced persons and refugees. We note that Russia had twice accepted a reference to UNSCR 1808 since the August conflict, in resolutions 1839 and 1866. The closure of the UN mission, like that of the OSCE mission, is a setback to international efforts to resolve this conflict.
We call on all parties with forces on the ground to exercise the utmost restraint and to abide by the August 12 and September 8 ceasefire agreements. We call on all participants in the Geneva talks to commit themselves to continuing efforts to find a peaceful and political resolution to the conflict and to alleviate the plight of refugees and IDPs. We reaffirm our firm support for the European Union Monitoring Mission.
We also reiterate our strong support for Georgia's independence, sovereignty and territorial integrity within its internationally recognized borders.
###
PRN: 2009/602
The Language of Macroeconomics: The National Income Accounts
Paraphrasing Macroeconomics: Understanding the Wealth of Nations. By David Miles, Imperial College, and Andrew Scott, London Business School. Chichester, UK: John Wiley & Sons, 2005
Chapter 2
---------
The Language of Macroeconomics: The National Income Accounts
------------------------------------------------------------
2.1 What Do Macroeconomists Measure?
-------------------------------------
At the foundation of macroeconomics is a concern with human welfare[, but it] is notoriously hard to calculate, particularly in macroeconomics where the relevant measure is the welfare of society as a whole. Even if we could accurately measure individual welfare, how can we compare levels of happiness across individuals and construct an aggregate measure?
Rather than try and directly measure welfare, macroeconomists take a short cut. They focus on the amount of goods and services—the “output”—produced within an economy. The justification for this is simple—if an economy produces more output, then it can meet more of the demands of society. Using output as a measure of welfare [now begs] many questions[, since there is no consensus on values and half of the population worries about the environment, inequality, etc.]
These questions suggest that output will only be an approximation to wider concepts of welfare ... But producing more output should enable a society to increase its standard of living.
2.2 How Do Macroeconomists Measure Output?
-------------------------------------------
> Real vs Nominal output
Chained weights
GDP deflator = Nominal GDP/Real GDP
Real GDP focuses on how production in the economy changes by using constant prices. Nominal GDPchanges because of changes in production and changes in prices.
2.3 Output as Value Added
--------------------------
Value added is the difference between the value of the output sold and the cost of purchasing raw materials and intermediate goods needed to produce output.
2.4 National Income Accounts
-----------------------------
Output, income and expenditure
AD: aggregate demand
AS: aggregate supply
AD = Y output + M imports = C + I + G + X, or Y = C + I + G + (X-M) (net exports)
I = Ik gross fixed capital formation (the new capital stock installed) + Iinventories (output not sold)
Is it true that AD = AS = Y? No:
Desired AD = C + Id + G + X, Id = Ik + Iidesired
Actual AD = C + Ia + G + X, Ia = Ik + Iiactual
---------> Actual AD = AS = Y
GDP can be measured either as value of output produced, the income earned in the economy by capital and labor, or the expenditure on final products.
> GDP or GNI?
GNI = GDP + remittances_nationalcompanies + remittances_nationals + Foreign aid you receive - remittances_foreigncompanies - remittances_foreignindividuals - Foreign aid you give to others
2.5 How Large Are Modern Economies?
------------------------------------
Comparing countries' GDP via exchange rates
Comparing countries' GDP taking into account PPP
GDP per capita
2.6 Total Output and Total Happiness
-------------------------------------
GDP measures economic activity, but is a good measure of standard of living?
There are two separate issues lurking here. The first is a measurement one—is GDP correctly measured (which is not) and, if not, does this reduce its ability to approximate the standard of living? Some see corrections to make:
Families frequently have money earners and people that provide services (cooking, child caring, elderly caring, administration). Purchasing these services and goods in the market is a substantial amount. For 2000, the U.K. Office of National Statistics estimates that compared with GDP of £892bn, household production provided services that would have been worth £693bn if purchased through the market with childcare accounting for £220.5bn.
Another measurement problem for GDP is environmental pollution and the destruction of natural resources.
The second is a conceptual one—even if it is properly measured, does GDP really capture our concepts of welfare? For economists, measures of aggregate output are still the dominant indicators of the standard of living, but alternative measures have been suggested: Human Development Index (HDI).
Although there are these patterns of outliers, the overall correlation remains strong—GDP seems a useful approximation for even broader measures of welfare.
C O N C E P T U A L Q U E S T I O N S
FAST ANWSERS, not checking the literature
1. (Section 2.2) “[An economist] is someone who knows the price of everything and the value of nothing.” (Adapted from George Bernard Shaw.)
Discuss.
Besides mediocre economists, who damage the profession with badly communicated opinions, there are truths (the state of knowledge at least) that are inconvenient for others to hear, and this knowledge seems too cold, rational and unsensitive to the needs of the poor. If 90 pct of the people had an economic education probably the number of bleeding hearts would diminish. Or not.
2. (2.3) Coffee beans cost only a few cents when imported. But to buy a coffee at a coffee bar costs far more. What does this tell you about value added?
3. (2.3/2.4) Try to explain to someone who had never thought about measuring the value of economic activity why the output, income, and expenditure ways of measuring national production should give the same answer. It helps to think of a simple economy producing only two or three different things.
4. (2.5) Would you expect that a country where the share of wages and salaries in GDP was falling, and the share of profits and interest was rising, to be one where consumption as a percent of national income was also shifting? Why? Would you expect the distribution of income to
become more unequal? Suppose the trends were due to demographic shifts, more specifically to a rapidly aging population. Would this change your answers?
5. (2.5) Do you think it is easier to evaluate the relative welfare of different generations of people in one country (by comparing per capita GDP over time), or to compare the relative standards of living in different countries at a point in time (by converting current per capita GDPs into a common currency)?
6. (2.5) How would you treat the activities of criminals in GDP accounting? What about the activities of the police force?
.1 Parasites
.2 A waste of resources, a tax on the economy.
7. (2.6) The Beatles claimed that “I don’t care too much for money, money can’t buy me love.” (Shortly after first making this claim they joined the ranks of the richest people in the world.) Does their claim undermine the use of GDP to measure welfare?
A N A L Y T I C A L Q U E S T I O N S
For another day.
Chapter 2
---------
The Language of Macroeconomics: The National Income Accounts
------------------------------------------------------------
2.1 What Do Macroeconomists Measure?
-------------------------------------
At the foundation of macroeconomics is a concern with human welfare[, but it] is notoriously hard to calculate, particularly in macroeconomics where the relevant measure is the welfare of society as a whole. Even if we could accurately measure individual welfare, how can we compare levels of happiness across individuals and construct an aggregate measure?
Rather than try and directly measure welfare, macroeconomists take a short cut. They focus on the amount of goods and services—the “output”—produced within an economy. The justification for this is simple—if an economy produces more output, then it can meet more of the demands of society. Using output as a measure of welfare [now begs] many questions[, since there is no consensus on values and half of the population worries about the environment, inequality, etc.]
These questions suggest that output will only be an approximation to wider concepts of welfare ... But producing more output should enable a society to increase its standard of living.
2.2 How Do Macroeconomists Measure Output?
-------------------------------------------
> Real vs Nominal output
Chained weights
GDP deflator = Nominal GDP/Real GDP
Real GDP focuses on how production in the economy changes by using constant prices. Nominal GDPchanges because of changes in production and changes in prices.
2.3 Output as Value Added
--------------------------
Value added is the difference between the value of the output sold and the cost of purchasing raw materials and intermediate goods needed to produce output.
2.4 National Income Accounts
-----------------------------
Output, income and expenditure
AD: aggregate demand
AS: aggregate supply
AD = Y output + M imports = C + I + G + X, or Y = C + I + G + (X-M) (net exports)
I = Ik gross fixed capital formation (the new capital stock installed) + Iinventories (output not sold)
Is it true that AD = AS = Y? No:
Desired AD = C + Id + G + X, Id = Ik + Iidesired
Actual AD = C + Ia + G + X, Ia = Ik + Iiactual
---------> Actual AD = AS = Y
GDP can be measured either as value of output produced, the income earned in the economy by capital and labor, or the expenditure on final products.
> GDP or GNI?
GNI = GDP + remittances_nationalcompanies + remittances_nationals + Foreign aid you receive - remittances_foreigncompanies - remittances_foreignindividuals - Foreign aid you give to others
2.5 How Large Are Modern Economies?
------------------------------------
Comparing countries' GDP via exchange rates
Comparing countries' GDP taking into account PPP
GDP per capita
2.6 Total Output and Total Happiness
-------------------------------------
GDP measures economic activity, but is a good measure of standard of living?
There are two separate issues lurking here. The first is a measurement one—is GDP correctly measured (which is not) and, if not, does this reduce its ability to approximate the standard of living? Some see corrections to make:
Families frequently have money earners and people that provide services (cooking, child caring, elderly caring, administration). Purchasing these services and goods in the market is a substantial amount. For 2000, the U.K. Office of National Statistics estimates that compared with GDP of £892bn, household production provided services that would have been worth £693bn if purchased through the market with childcare accounting for £220.5bn.
Another measurement problem for GDP is environmental pollution and the destruction of natural resources.
The second is a conceptual one—even if it is properly measured, does GDP really capture our concepts of welfare? For economists, measures of aggregate output are still the dominant indicators of the standard of living, but alternative measures have been suggested: Human Development Index (HDI).
Although there are these patterns of outliers, the overall correlation remains strong—GDP seems a useful approximation for even broader measures of welfare.
C O N C E P T U A L Q U E S T I O N S
FAST ANWSERS, not checking the literature
1. (Section 2.2) “[An economist] is someone who knows the price of everything and the value of nothing.” (Adapted from George Bernard Shaw.)
Discuss.
Besides mediocre economists, who damage the profession with badly communicated opinions, there are truths (the state of knowledge at least) that are inconvenient for others to hear, and this knowledge seems too cold, rational and unsensitive to the needs of the poor. If 90 pct of the people had an economic education probably the number of bleeding hearts would diminish. Or not.
2. (2.3) Coffee beans cost only a few cents when imported. But to buy a coffee at a coffee bar costs far more. What does this tell you about value added?
3. (2.3/2.4) Try to explain to someone who had never thought about measuring the value of economic activity why the output, income, and expenditure ways of measuring national production should give the same answer. It helps to think of a simple economy producing only two or three different things.
4. (2.5) Would you expect that a country where the share of wages and salaries in GDP was falling, and the share of profits and interest was rising, to be one where consumption as a percent of national income was also shifting? Why? Would you expect the distribution of income to
become more unequal? Suppose the trends were due to demographic shifts, more specifically to a rapidly aging population. Would this change your answers?
5. (2.5) Do you think it is easier to evaluate the relative welfare of different generations of people in one country (by comparing per capita GDP over time), or to compare the relative standards of living in different countries at a point in time (by converting current per capita GDPs into a common currency)?
6. (2.5) How would you treat the activities of criminals in GDP accounting? What about the activities of the police force?
.1 Parasites
.2 A waste of resources, a tax on the economy.
7. (2.6) The Beatles claimed that “I don’t care too much for money, money can’t buy me love.” (Shortly after first making this claim they joined the ranks of the richest people in the world.) Does their claim undermine the use of GDP to measure welfare?
A N A L Y T I C A L Q U E S T I O N S
For another day.
We're unable to read our own body language
We're unable to read our own body language
British Psychological Society, Monday, Jun 15, 2009
Reference: Hofmann, W., Gschwendner, T., & Schmitt, M. (2009). The road to the unconscious self not taken: Discrepancies between self- and observer-inferences about implicit dispositions from nonverbal behavioural cues. European Journal of Personality, 23 (4), 343-366 DOI: 10.1002/per.722
A fascinating study has shown that we're unable to read insights into ourselves from watching a video of our own body language. It's as if we have an egocentric blind spot. Outside observers, by contrast, can watch the same video and make revealing insights into our personality.
The premise of the new study is the tip-of-the-iceberg idea that what we know about ourselves is fairly limited, with many of our impulses, traits and beliefs residing below the level of conscious access. The researchers wondered whether people would be able to form a truer picture of themselves when presented with a video of their own body language.
In an initial study, Wilhelm Hofmann and colleagues first had dozens of undergrad students rate how much of an extrovert they are, using both explicit and implicit measures. The explicit measure simply required the students to say whether they agreed that they were talkative, shy and so on. The implicit measure used was the Implicit Association Test. Briefly, this reveals how much people associate ideas in their mind, by seeing whether they are quicker or slower to respond when two ideas are allocated the same response key on a keyboard.
Next, the participants recorded a one minute television commercial for a beauty product (they'd been told the study was about personality and advertising). The participants then watched back the video of themselves, having been given guidance on non-verbal cues that can reveal how extraverted or introverted a person is. Based on their observation of the video, they were then asked to rate their own personality again, using the explicit measure.
The key question was whether seeing their non-verbal behaviour on video would allow the participants to rate their personality in a way that was consistent with their earlier scores on the implicit test.
Long story short - they weren't able to. The participants' extraversion scores on the implicit test showed no association with their subsequent explicit ratings of themselves, and there was no evidence either that they'd used their non-verbal behaviours (such as amount of eye contact with the camera) to inform their self-ratings.
In striking contrast, outside observers who watched the videos made ratings of the participants' personalities that did correlate with those same participants' implicit personality scores, and it was clear that it was the participants' non-verbal behaviours that mediated this correlation (that is, the observers had used the participants' non-verbal behaviours to inform their judgements about the participants' personalities).
Two further experiments showed that this general pattern of findings held even when participants were given a financial incentive to rate their own personality accurately, as if from an outside observer's perspective, and also when the task involved anxiety personality ratings following the delivery of a short speech.
What was going on? Why can't we use a video of ourselves to improve the accuracy of our self-perception? One answer could lie in cognitive dissonance - the need for us to hold consistent beliefs about ourselves. People may well be extremely reluctant to revise their self-perceptions, even in the face of powerful objective evidence. A detail in the final experiment supports this idea. Participants seemed able to use the videos to inform their ratings of their "state" anxiety (their anxiety "in the moment") even while leaving their scores for their "trait" anxiety unchanged."
When applied to the question of how people may gain knowledge about their unconscious self, the present set of studies demonstrates that self-perceivers do not appear to pay as much attention to and make as much use of available behavioural information as neutral observers," the researchers said.
British Psychological Society, Monday, Jun 15, 2009
Reference: Hofmann, W., Gschwendner, T., & Schmitt, M. (2009). The road to the unconscious self not taken: Discrepancies between self- and observer-inferences about implicit dispositions from nonverbal behavioural cues. European Journal of Personality, 23 (4), 343-366 DOI: 10.1002/per.722
A fascinating study has shown that we're unable to read insights into ourselves from watching a video of our own body language. It's as if we have an egocentric blind spot. Outside observers, by contrast, can watch the same video and make revealing insights into our personality.
The premise of the new study is the tip-of-the-iceberg idea that what we know about ourselves is fairly limited, with many of our impulses, traits and beliefs residing below the level of conscious access. The researchers wondered whether people would be able to form a truer picture of themselves when presented with a video of their own body language.
In an initial study, Wilhelm Hofmann and colleagues first had dozens of undergrad students rate how much of an extrovert they are, using both explicit and implicit measures. The explicit measure simply required the students to say whether they agreed that they were talkative, shy and so on. The implicit measure used was the Implicit Association Test. Briefly, this reveals how much people associate ideas in their mind, by seeing whether they are quicker or slower to respond when two ideas are allocated the same response key on a keyboard.
Next, the participants recorded a one minute television commercial for a beauty product (they'd been told the study was about personality and advertising). The participants then watched back the video of themselves, having been given guidance on non-verbal cues that can reveal how extraverted or introverted a person is. Based on their observation of the video, they were then asked to rate their own personality again, using the explicit measure.
The key question was whether seeing their non-verbal behaviour on video would allow the participants to rate their personality in a way that was consistent with their earlier scores on the implicit test.
Long story short - they weren't able to. The participants' extraversion scores on the implicit test showed no association with their subsequent explicit ratings of themselves, and there was no evidence either that they'd used their non-verbal behaviours (such as amount of eye contact with the camera) to inform their self-ratings.
In striking contrast, outside observers who watched the videos made ratings of the participants' personalities that did correlate with those same participants' implicit personality scores, and it was clear that it was the participants' non-verbal behaviours that mediated this correlation (that is, the observers had used the participants' non-verbal behaviours to inform their judgements about the participants' personalities).
Two further experiments showed that this general pattern of findings held even when participants were given a financial incentive to rate their own personality accurately, as if from an outside observer's perspective, and also when the task involved anxiety personality ratings following the delivery of a short speech.
What was going on? Why can't we use a video of ourselves to improve the accuracy of our self-perception? One answer could lie in cognitive dissonance - the need for us to hold consistent beliefs about ourselves. People may well be extremely reluctant to revise their self-perceptions, even in the face of powerful objective evidence. A detail in the final experiment supports this idea. Participants seemed able to use the videos to inform their ratings of their "state" anxiety (their anxiety "in the moment") even while leaving their scores for their "trait" anxiety unchanged."
When applied to the question of how people may gain knowledge about their unconscious self, the present set of studies demonstrates that self-perceivers do not appear to pay as much attention to and make as much use of available behavioural information as neutral observers," the researchers said.
Sunday, June 14, 2009
Sotomayor's Mind-Numbing Speeches
Sotomayor's Mind-Numbing Speeches. By Matthew J. Franck
Bench Memos/NRO, Thursday, June 11, 2009
I have just come up for air from the stifling smog of banality generated by the collected speeches of Sonia Sotomayor. They can be seen as the attachments to Question 12d on this page set up by the Senate Judiciary Committee, but let me hasten to add that I have wasted my morning on reading them so you don't have to.
I was interested in part in whether I was right to speculate yesterday that maybe her best-known speech, 2001's "A Latina Judge's Voice," was partly "unscripted" or ab-libbed, since that might explain the occasionally bad writing in its published form. It could not have been wholly off-the-cuff, of course, with its recitation of statistics and its quotations from a few sources—but those might have been on notecards. Having gone through virtually all the speeches on the Senate website, I can say that what the Berkeley La Raza Law Journal published was almost certainly based on a prepared text. I say that for a couple of reasons.
First, Judge Sotomayor's speeches all display mediocre writing, and frequently exhibit errors of various kinds, and the copies of them that have been made public are in most cases quite obviously her own originals. She said of herself as long ago as 1994 that "I consider myself merely an average writer," and as recently as 2007 that "[w]riting remains a challenge for me even today . . . I am not a natural writer." This is a salutary self-awareness, because her speeches are bad—uniformly boring, almost invariably devoid of actual ideas, and completely forgettable. I am not sure she has ever uttered an interesting thought off the bench—unless you count her celebration of the "wise Latina," which is interesting only to the pathologist of confused identity politics.
Second, Sotomayor's speeches are mind-numbingly repetitious when read in series. This may seem an unfair comment; each one was presumably a first-time listening experience for her audience (one can hope, anyway). But reading them in series, I began quietly to mutter to the speaker, "Get some new material. Aren't you boring yourself?" She didn't just once deliver the line "I became a Latina by the way I love and the way I live my life"; she delivered it easily a dozen times to (mostly Hispanic) audiences over the course of ten years or so. And the repetition allows us to see the same little mistakes over and over. To take just two: Sotomayor has a fond memory from her childhood of the Mexican comedian Cantinflas, but she never once spells his name correctly in at least a half dozen speeches (after which I stopped counting). And she likes relating how the city girl came to Princeton and had never heard a cricket before, and how she imagined it looked like "Jimmy the Cricket" from the Disney movie Pinocchio (once she called him "Jiminy the Cricket," which gets a little closer, but in subsequent speeches she went back to Jimmy). Such repeated mistakes over a period of years provide us with some assurance that all the errors we see are her own, and not transcription errors from audio recordings. So when she refers to "Anthony Scalia" for "Antonin" or "Thurmond Marshall" for "Thurgood," we can be pretty sure that's Sotomayor's own mistake.
I can also confirm what others have observed about the notorious "wise Latina" speech at Berkeley: that it was not an isolated instance of such an argument against traditional notions of judicial impartiality.
Sotomayor's speeches for the most part fall into three large categories: 1) celebrations of her Latina background, combined with exhortations to strive as she has done, delivered to young Hispanic audiences; 2) encouragement to law students to take up pro bono work and benefit their communities; and 3) brief descriptive accounts of the work of the courts on which she has served, trial and appellate. In the first category there are mostly harmless hurrahs for being Hispanic or Latino or Puerto Rican or whatever. Many of these contain a variant of this paragraph from 1998:
America has a deeply confused image of itself that is a perpetual source of tension. We are a nation that takes pride in our ethnic diversity, recognizing its importance in shaping our society and in adding richness to its existence. Yet, we simultaneously insist that we can and must function and live in a race- and color-blind way that ignores those very differences that in other contexts we laud. That tension between the melting pot and the salad bowl, to borrow recently popular metaphors in New York, is being hotly debated today in national discussions about affirmative action. This tension leads many of us to struggle with maintaining and promoting our cultural and ethnic identities in a society which is often ambivalent about how to deal with its differences.
Nothing here, without more, should cause anyone to conclude that Sotomayor is for race-consciousness in judging. The paragraph is almost studiously non-committal and merely descriptive, except for its initial characterization of the "tension" between diversity and colorblind equality as a mark of a country that has a "deeply confused image of itself." Lots of Americans could easily explain to Judge Sotomayor how this is no source of confusion at all.
But then, overlapping with all these mostly boring celebrations of the joys of being a Latina, we find the speeches that do indicate something about Sotomayor's view of judging. The Berkeley La Raza speech, given in October 2001, was given again in almost identical form on February 26, 2002, and October 22, 2003. And an earlier version, containing much of the same material but not yet polished into its best-known form, was given on March 17, 1994 in Puerto Rico, on the topic of "Women in the Judiciary." Because of that topic and the audience listening to the speech, Sotomayor referred to a "wise woman with the richness of her experiences" rather than a "wise Latina." But the essentials of the speeches we know from 2001 and later were all there: the disagreement with Judge Miriam Cedarbaum's argument for judicial neutrality, the expectation that better judging will come from women and minorities because they are women and minorities, and the plumping for more appointments of Hispanic judges in particular.
In sum, we can say that Judge Sotomayor has, with few exceptions, given just three or four speeches to public audiences in her career—the same three or four, over and over and over. One of her repeated themes is on the virtue of race-conscious and sex-conscious bias in judging. Like her other themes, this one cannot be "walked back" by White House claims that she "misspoke" or could have made her point differently. She is, on the evidence of her speeches, a great self-absorbed bore, a mediocrity as a writer, and a polished practitioner of identity politics.
Bench Memos/NRO, Thursday, June 11, 2009
I have just come up for air from the stifling smog of banality generated by the collected speeches of Sonia Sotomayor. They can be seen as the attachments to Question 12d on this page set up by the Senate Judiciary Committee, but let me hasten to add that I have wasted my morning on reading them so you don't have to.
I was interested in part in whether I was right to speculate yesterday that maybe her best-known speech, 2001's "A Latina Judge's Voice," was partly "unscripted" or ab-libbed, since that might explain the occasionally bad writing in its published form. It could not have been wholly off-the-cuff, of course, with its recitation of statistics and its quotations from a few sources—but those might have been on notecards. Having gone through virtually all the speeches on the Senate website, I can say that what the Berkeley La Raza Law Journal published was almost certainly based on a prepared text. I say that for a couple of reasons.
First, Judge Sotomayor's speeches all display mediocre writing, and frequently exhibit errors of various kinds, and the copies of them that have been made public are in most cases quite obviously her own originals. She said of herself as long ago as 1994 that "I consider myself merely an average writer," and as recently as 2007 that "[w]riting remains a challenge for me even today . . . I am not a natural writer." This is a salutary self-awareness, because her speeches are bad—uniformly boring, almost invariably devoid of actual ideas, and completely forgettable. I am not sure she has ever uttered an interesting thought off the bench—unless you count her celebration of the "wise Latina," which is interesting only to the pathologist of confused identity politics.
Second, Sotomayor's speeches are mind-numbingly repetitious when read in series. This may seem an unfair comment; each one was presumably a first-time listening experience for her audience (one can hope, anyway). But reading them in series, I began quietly to mutter to the speaker, "Get some new material. Aren't you boring yourself?" She didn't just once deliver the line "I became a Latina by the way I love and the way I live my life"; she delivered it easily a dozen times to (mostly Hispanic) audiences over the course of ten years or so. And the repetition allows us to see the same little mistakes over and over. To take just two: Sotomayor has a fond memory from her childhood of the Mexican comedian Cantinflas, but she never once spells his name correctly in at least a half dozen speeches (after which I stopped counting). And she likes relating how the city girl came to Princeton and had never heard a cricket before, and how she imagined it looked like "Jimmy the Cricket" from the Disney movie Pinocchio (once she called him "Jiminy the Cricket," which gets a little closer, but in subsequent speeches she went back to Jimmy). Such repeated mistakes over a period of years provide us with some assurance that all the errors we see are her own, and not transcription errors from audio recordings. So when she refers to "Anthony Scalia" for "Antonin" or "Thurmond Marshall" for "Thurgood," we can be pretty sure that's Sotomayor's own mistake.
I can also confirm what others have observed about the notorious "wise Latina" speech at Berkeley: that it was not an isolated instance of such an argument against traditional notions of judicial impartiality.
Sotomayor's speeches for the most part fall into three large categories: 1) celebrations of her Latina background, combined with exhortations to strive as she has done, delivered to young Hispanic audiences; 2) encouragement to law students to take up pro bono work and benefit their communities; and 3) brief descriptive accounts of the work of the courts on which she has served, trial and appellate. In the first category there are mostly harmless hurrahs for being Hispanic or Latino or Puerto Rican or whatever. Many of these contain a variant of this paragraph from 1998:
America has a deeply confused image of itself that is a perpetual source of tension. We are a nation that takes pride in our ethnic diversity, recognizing its importance in shaping our society and in adding richness to its existence. Yet, we simultaneously insist that we can and must function and live in a race- and color-blind way that ignores those very differences that in other contexts we laud. That tension between the melting pot and the salad bowl, to borrow recently popular metaphors in New York, is being hotly debated today in national discussions about affirmative action. This tension leads many of us to struggle with maintaining and promoting our cultural and ethnic identities in a society which is often ambivalent about how to deal with its differences.
Nothing here, without more, should cause anyone to conclude that Sotomayor is for race-consciousness in judging. The paragraph is almost studiously non-committal and merely descriptive, except for its initial characterization of the "tension" between diversity and colorblind equality as a mark of a country that has a "deeply confused image of itself." Lots of Americans could easily explain to Judge Sotomayor how this is no source of confusion at all.
But then, overlapping with all these mostly boring celebrations of the joys of being a Latina, we find the speeches that do indicate something about Sotomayor's view of judging. The Berkeley La Raza speech, given in October 2001, was given again in almost identical form on February 26, 2002, and October 22, 2003. And an earlier version, containing much of the same material but not yet polished into its best-known form, was given on March 17, 1994 in Puerto Rico, on the topic of "Women in the Judiciary." Because of that topic and the audience listening to the speech, Sotomayor referred to a "wise woman with the richness of her experiences" rather than a "wise Latina." But the essentials of the speeches we know from 2001 and later were all there: the disagreement with Judge Miriam Cedarbaum's argument for judicial neutrality, the expectation that better judging will come from women and minorities because they are women and minorities, and the plumping for more appointments of Hispanic judges in particular.
In sum, we can say that Judge Sotomayor has, with few exceptions, given just three or four speeches to public audiences in her career—the same three or four, over and over and over. One of her repeated themes is on the virtue of race-conscious and sex-conscious bias in judging. Like her other themes, this one cannot be "walked back" by White House claims that she "misspoke" or could have made her point differently. She is, on the evidence of her speeches, a great self-absorbed bore, a mediocrity as a writer, and a polished practitioner of identity politics.
WaPo: The Obama Diet it's not going to slim down the federal budget anytime soon
The Obama Diet. WaPo Editorial
It's not going to slim down the federal budget anytime soon.
WaPo, Friday, June 12, 2009
IMAGINE GOING on a diet in which you figure out how many calories a day you eat and pledge to make up for any amount beyond that with vigorous exercise. Except that your regular consumption includes four gooey slices of chocolate cake daily -- which you have no intention of giving up. You might not put on weight as quickly, but you're not likely to slim down, either. This is about what President Obama proposed this week with new legislation to codify congressional pay-as-you-go rules. "The 'pay-as-you-go rule' is very simple," the president said. "Congress can only spend a dollar if it saves a dollar elsewhere."
Well, not exactly. First, as under existing House and Senate rules, what is known as the PAYGO law would not apply to discretionary spending programs, which account for about 40 percent of the federal budget; these programs, which Congress reviews and funds yearly, could continue to grow without corresponding cuts or new revenue. Only extra spending for mandatory programs (Medicare, Social Security and the like) and tax provisions would be covered. Second, Mr. Obama would write into the law four whopping exceptions to the pay-as-you-go rule: extending most of the Bush tax cuts, keeping the estate tax at its current level, preventing the alternative minimum tax from hitting more taxpayers and increasing Medicare payments to doctors. This adds up to a $2.8 trillion loophole over 10 years.
What to make of this move? Well, it's better than nothing, and if implemented it would improve on the record of Mr. Obama's predecessor, who -- with plenty of Democratic encouragement -- dug the entitlement hole even deeper with the creation of a Medicare prescription drug plan that was not paid for. By contrast, Mr. Obama vows that his health-care reform will have to be financed with spending cuts or tax increases. That is important under the current budgetary circumstances, and to the extent that pay-as-you-go legislation would make it more difficult for lawmakers to get around their self-imposed rules simply by voting to ignore them, all the better.
But the president's self-congratulatory back-patting about fiscal rectitude is more than a bit hard to take in light of the huge exceptions he would grant. Yes, the president inherited a budget in arrears, an economy in tatters and a tax system that is unsustainable as written. It was necessary to add to the deficit in the short term to jolt the economy back to life. The House has these four exemptions in its pay-as-you-go rule; even without the Obama exceptions, there was no reasonable hope that these costs would be paid for.
Yet Mr. Obama's professions of being willing to make hard choices are belied by his failure to adjust his spending plans to budgetary reality. Something will need to give -- either raising significantly more revenue or dramatically scaling back government. He doesn't deserve much credit for a pay-as-you-go proposal that elides this reality instead of confronting it.
It's not going to slim down the federal budget anytime soon.
WaPo, Friday, June 12, 2009
IMAGINE GOING on a diet in which you figure out how many calories a day you eat and pledge to make up for any amount beyond that with vigorous exercise. Except that your regular consumption includes four gooey slices of chocolate cake daily -- which you have no intention of giving up. You might not put on weight as quickly, but you're not likely to slim down, either. This is about what President Obama proposed this week with new legislation to codify congressional pay-as-you-go rules. "The 'pay-as-you-go rule' is very simple," the president said. "Congress can only spend a dollar if it saves a dollar elsewhere."
Well, not exactly. First, as under existing House and Senate rules, what is known as the PAYGO law would not apply to discretionary spending programs, which account for about 40 percent of the federal budget; these programs, which Congress reviews and funds yearly, could continue to grow without corresponding cuts or new revenue. Only extra spending for mandatory programs (Medicare, Social Security and the like) and tax provisions would be covered. Second, Mr. Obama would write into the law four whopping exceptions to the pay-as-you-go rule: extending most of the Bush tax cuts, keeping the estate tax at its current level, preventing the alternative minimum tax from hitting more taxpayers and increasing Medicare payments to doctors. This adds up to a $2.8 trillion loophole over 10 years.
What to make of this move? Well, it's better than nothing, and if implemented it would improve on the record of Mr. Obama's predecessor, who -- with plenty of Democratic encouragement -- dug the entitlement hole even deeper with the creation of a Medicare prescription drug plan that was not paid for. By contrast, Mr. Obama vows that his health-care reform will have to be financed with spending cuts or tax increases. That is important under the current budgetary circumstances, and to the extent that pay-as-you-go legislation would make it more difficult for lawmakers to get around their self-imposed rules simply by voting to ignore them, all the better.
But the president's self-congratulatory back-patting about fiscal rectitude is more than a bit hard to take in light of the huge exceptions he would grant. Yes, the president inherited a budget in arrears, an economy in tatters and a tax system that is unsustainable as written. It was necessary to add to the deficit in the short term to jolt the economy back to life. The House has these four exemptions in its pay-as-you-go rule; even without the Obama exceptions, there was no reasonable hope that these costs would be paid for.
Yet Mr. Obama's professions of being willing to make hard choices are belied by his failure to adjust his spending plans to budgetary reality. Something will need to give -- either raising significantly more revenue or dramatically scaling back government. He doesn't deserve much credit for a pay-as-you-go proposal that elides this reality instead of confronting it.
Naturalism Has Been Hijacked
Naturalism Has Been Hijacked. By George Ball
Man is not a cancer on the planet.
WSJ, Jun 13, 2009
Mankind has really been put in its place over the past 500 years. Why only the other day, back in 1400, the sun orbited the earth; man was God's consummate work of art; humans were masters of themselves and the domain God provided for them.
Our secular fall from grace began with Copernicus, who dislodged the world from its celestial catbird seat. Later, Darwin established that man, far from being the animal kingdom's pièce de résistance, was a bit like a baboon in clothes. Then Mendel documented the laws of inheritance -- so much for free will -- and Freud subordinated what was then left of our minds to unseemly drives over which we have little control.
In the 20th century, technology assumed a size and complexity too big to fit into what was left of our brains. In the 1890s, an intelligent layman could achieve a rudimentary grasp of the scope of current scientific thought. Perhaps no one -- scientist or not -- fathoms the full scope of technology today.
According to scientist and futurist Raymond Kurzweil, the coming technological-evolutionary quantum leap, known as the Singularity, will erase the line between human beings and technology. He maintains that technology's exponential progress will result in part-human, part-machine beings with infinitely greater brain power and life-spans approaching immortality.
Mr. Kurzweil envisions the time, if a body part fails, one need only grab its replacement from the pantry and snap it in place. Already, lawyers are busy devising the constitutional framework for a post-human future, in view of the shifting nature of what comprises a human being. The classic paradox comes to mind: Once the knife's blade and handle are each replaced several times, is it still the same knife? Once all your parts have been replaced a few times, are you still you?
Now a segment of the Green movement presents a fresh challenge to mankind's place within nature. Humans, the thinking goes, are one species among the many, a life form coexisting with others, our rights commensurate with those of snail darters, mosquitoes and coral reefs.
The new environmentalist thinking occupies that treacherous terrain between rationality and romanticism. It's highly logical, too, an all-encompassing equation where everything is equivalent to everything else -- communism at a cellular level.
The premise glows with the innocence we forsook when Adam larcenously appropriated an apple from its rightful owner, the tree.
This dangerous new unnatural naturalism sees the planet as a realm of halcyon purity. Conversely, mankind is portrayed as a cancer on the planet. Welcome to secular subhumanism.
The Earth-Firsters are not fools. There are choice elements in their deranged philosophy that merit consideration; such is the essence of temptation. However, their failure is that they undermine their cause with acts of brutality. Theodore Kaczynski, the Unabomber, a Ph.D. with kindred neo-Luddite views, was one such activist run amok, responsible for dozens of injuries and four deaths. He is a case study of how, contaminated with extreme emotion, logic becomes toxic.
Self-described "evo-lutionaries" and animal-rights activists feel justified in spiking trees, burning down housing developments, vandalizing laboratories and threatening the lives of researchers and their families. By all means save the Red-Cockaded Woodpecker, but not at the cost of human lives, no matter how few. That way lies madness.
One activist author posits that the planet can support only one billion people -- a number surely including the writer, his friends and extended family. Another activist advocates saving the world through euthanasia, abortion, suicide and sodomy. However, the truly repugnant part of this story is that these are both tenured professors in wealthy universities.
In Switzerland, proposed legislation protects the rights of plants. As you roam the Swiss mountains, do not violate the rights of the wildflowers by picking them: An undercover gnome might arrest you. Internationally, the greener-than-thou brigade scorns bioengineered seeds -- the 20th century achievement that vastly increased the world's food supply and rescued billions from starvation -- forgetting that nature has been creating hybrids since the beginning of time.
A Yale professor maintains that owning pets is a kind of species colonialism, an exploitative master-subject relationship. The word "pet" is now viewed as pejorative; if you must hold a creature hostage, call it your "animal companion."
The political views of the Eco-elitists defy easy categorization, if not also comprehension. Their anti-business stance might mark them as liberals, while their hard-edged fundamentalist views about nature and brittle nostalgia for a lost Peaceable Kingdom are surely conservative.
Perhaps they are little more than one of nature's newest 21st century hybrids: Progressive-Reactionaries.
Mr. Ball is chairman of W. Atlee Burpee & Co., and a former president of the American Horticultural Society. This op-ed was adapted from an entry on his blog (www. heronswoodvoice.com).
Man is not a cancer on the planet.
WSJ, Jun 13, 2009
Mankind has really been put in its place over the past 500 years. Why only the other day, back in 1400, the sun orbited the earth; man was God's consummate work of art; humans were masters of themselves and the domain God provided for them.
Our secular fall from grace began with Copernicus, who dislodged the world from its celestial catbird seat. Later, Darwin established that man, far from being the animal kingdom's pièce de résistance, was a bit like a baboon in clothes. Then Mendel documented the laws of inheritance -- so much for free will -- and Freud subordinated what was then left of our minds to unseemly drives over which we have little control.
In the 20th century, technology assumed a size and complexity too big to fit into what was left of our brains. In the 1890s, an intelligent layman could achieve a rudimentary grasp of the scope of current scientific thought. Perhaps no one -- scientist or not -- fathoms the full scope of technology today.
According to scientist and futurist Raymond Kurzweil, the coming technological-evolutionary quantum leap, known as the Singularity, will erase the line between human beings and technology. He maintains that technology's exponential progress will result in part-human, part-machine beings with infinitely greater brain power and life-spans approaching immortality.
Mr. Kurzweil envisions the time, if a body part fails, one need only grab its replacement from the pantry and snap it in place. Already, lawyers are busy devising the constitutional framework for a post-human future, in view of the shifting nature of what comprises a human being. The classic paradox comes to mind: Once the knife's blade and handle are each replaced several times, is it still the same knife? Once all your parts have been replaced a few times, are you still you?
Now a segment of the Green movement presents a fresh challenge to mankind's place within nature. Humans, the thinking goes, are one species among the many, a life form coexisting with others, our rights commensurate with those of snail darters, mosquitoes and coral reefs.
The new environmentalist thinking occupies that treacherous terrain between rationality and romanticism. It's highly logical, too, an all-encompassing equation where everything is equivalent to everything else -- communism at a cellular level.
The premise glows with the innocence we forsook when Adam larcenously appropriated an apple from its rightful owner, the tree.
This dangerous new unnatural naturalism sees the planet as a realm of halcyon purity. Conversely, mankind is portrayed as a cancer on the planet. Welcome to secular subhumanism.
The Earth-Firsters are not fools. There are choice elements in their deranged philosophy that merit consideration; such is the essence of temptation. However, their failure is that they undermine their cause with acts of brutality. Theodore Kaczynski, the Unabomber, a Ph.D. with kindred neo-Luddite views, was one such activist run amok, responsible for dozens of injuries and four deaths. He is a case study of how, contaminated with extreme emotion, logic becomes toxic.
Self-described "evo-lutionaries" and animal-rights activists feel justified in spiking trees, burning down housing developments, vandalizing laboratories and threatening the lives of researchers and their families. By all means save the Red-Cockaded Woodpecker, but not at the cost of human lives, no matter how few. That way lies madness.
One activist author posits that the planet can support only one billion people -- a number surely including the writer, his friends and extended family. Another activist advocates saving the world through euthanasia, abortion, suicide and sodomy. However, the truly repugnant part of this story is that these are both tenured professors in wealthy universities.
In Switzerland, proposed legislation protects the rights of plants. As you roam the Swiss mountains, do not violate the rights of the wildflowers by picking them: An undercover gnome might arrest you. Internationally, the greener-than-thou brigade scorns bioengineered seeds -- the 20th century achievement that vastly increased the world's food supply and rescued billions from starvation -- forgetting that nature has been creating hybrids since the beginning of time.
A Yale professor maintains that owning pets is a kind of species colonialism, an exploitative master-subject relationship. The word "pet" is now viewed as pejorative; if you must hold a creature hostage, call it your "animal companion."
The political views of the Eco-elitists defy easy categorization, if not also comprehension. Their anti-business stance might mark them as liberals, while their hard-edged fundamentalist views about nature and brittle nostalgia for a lost Peaceable Kingdom are surely conservative.
Perhaps they are little more than one of nature's newest 21st century hybrids: Progressive-Reactionaries.
Mr. Ball is chairman of W. Atlee Burpee & Co., and a former president of the American Horticultural Society. This op-ed was adapted from an entry on his blog (www. heronswoodvoice.com).
A society of children cannot survive?
Retreat into Apathy. By Mark Steyn
A society of children cannot survive.
NRO, Jun 13, 2009
Willie Whitelaw, a genial old buffer who served as Margaret Thatcher’s deputy for many years, once accused the Labour party of going around Britain stirring up apathy. Viscount Whitelaw’s apparent paradox is, in fact, a shrewd political insight, and all the sharper for being accidental. Big government depends, in large part, on going around the country stirring up apathy — creating the sense that problems are so big, so complex, so intractable that even attempting to think about them for yourself gives you such a splitting headache it’s easier to shrug and accept as given the proposition that only government can deal with them.
Take health care. Have you read any of these health-care plans? Of course not. They’re huge and turgid and unreadable. Unless you’re a health-care lobbyist, a health-care think-tanker, a health-care correspondent, or some other fellow who’s paid directly or indirectly to plough through this stuff, why bother? None of the senators whose names are on the bills have read ’em; why should you?
And you can understand why they drag on a bit. If you attempt to devise a health-care “plan” for 300 million people, it’s bound to get a bit complicated. But a health-care plan for you, Joe Schmoe of 27 Elm Street, didn’t used to be that complicated, did it? Let’s say you carelessly drop Ted Kennedy’s health-care plan on your foot and it breaks your toe. In the old days, you’d go to your doctor (or, indeed, believe it or not, have him come to you), he’d patch you up, and you’d write him a check. That’s the way it was in most of the developed world within living memory. Now, under the guise of “insurance,” various third parties intercede between the doctor and your checkbook, and to this the government proposes adding a massive federal bureaucracy, in the interests of “controlling costs.” The British National Health Service is the biggest employer not just in the United Kingdom, but in the whole of Europe. Care to estimate the size and budget of a U.S. health bureaucracy?
According to the U.N. figures, life expectancy in the United States is 78 years; in the United Kingdom, it’s 79 — yay, go socialized health care! On the other hand, in Albania, where the entire population chain-smokes and the health-care system involves swimming to Italy, life expectancy is still 71 years — or about where America was a generation or so back. Once you get childhood mortality under control, and observe basic hygiene and lifestyle precautions, the health “system” is relatively marginal. One notes that, even in Somalia, which still has high childhood mortality, not to mention a state of permanent civil war, functioning government has entirely collapsed and yet life expectancy has increased from 49 to 55. Maybe if government were to collapse entirely in Washington, our life expectancy would show equally remarkable gains. Just thinking outside the box here.
When President Obama tells you he’s “reforming” health care to “control costs,” the point to remember is that the only way to “control costs” in health care is to have less of it. In a government system, the doctor, the nurse, the janitor, and the Assistant Deputy Associate Director of Cost-Control System Management all have to be paid every Friday, so the sole means of “controlling costs” is to restrict the patient’s access to treatment. In the Province of Quebec, patients with severe incontinence — i.e., they’re in the bathroom twelve times a night — wait three years for a simple 30-minute procedure. True, Quebeckers have a year or two on Americans in the life-expectancy hit parade, but, if you’re making twelve trips a night to the john 365 times a year for three years, in terms of life-spent-outside-the-bathroom expectancy, an uninsured Vermonter may actually come out ahead.
As Louis XV is said to have predicted, “Après moi, le deluge” — which seems as incisive an observation as any on a world in which freeborn citizens of the wealthiest societies in human history are content to rise from their beds every half-hour every night and traipse to the toilet for yet another flush simply because a government bureaucracy orders them to do so. “Health” is potentially a big-ticket item, but so’s a house and a car, and most folks manage to handle those without a Government Accommodation Plan or a Government Motor Vehicles System — or, at any rate, they did in pre-bailout America.
More important, there is a cost to governmentalizing every responsibility of adulthood — and it is, in Lord Whitelaw’s phrase, the stirring up of apathy. If you wander round Liverpool or Antwerp, Hamburg or Lyons, the fatalism is palpable. In Britain, once the crucible of freedom, civic life is all but dead: In Wales, Northern Ireland, and Scotland, some three-quarters of the economy is government spending; a malign alliance between state bureaucrats and state dependents has corroded democracy, perhaps irreparably. In England, the ground ceded to the worst sociopathic pathologies advances every day — and the latest report on “the seven evils” afflicting an ever more unlovely land blames “poverty” and “individualism,” failing to understand that if you remove the burdens of individual responsibility while loosening all restraint on individual hedonism the vaporization of the public space is all but inevitable. In Ontario, Christine Elliott, a candidate for the leadership of the so-called Conservative party, is praised by the media for offering a more emollient conservatism predicated on “the need to take care of vulnerable people.”
Look, by historical standards, we’re loaded: We have TVs and iPods and machines to wash our clothes and our dishes. We’re the first society in which a symptom of poverty is obesity: Every man his own William Howard Taft. Of course we’re “vulnerable”: By definition, we always are. But to demand a government organized on the principle of preemptively “taking care” of potential “vulnerabilities” is to make all of us, in the long run, far more vulnerable. A society of children cannot survive, no matter how all-embracing the government nanny.
I get a lot of mail each week arguing that, when folks see the price tag attached to Obama’s plans, they’ll get angry. Maybe. But, if Europe’s a guide, at least as many people will retreat into apathy. Once big government’s in place, it’s very hard to go back.
— Mark Steyn, a National Review columnist, is author of America Alone.
A society of children cannot survive.
NRO, Jun 13, 2009
Willie Whitelaw, a genial old buffer who served as Margaret Thatcher’s deputy for many years, once accused the Labour party of going around Britain stirring up apathy. Viscount Whitelaw’s apparent paradox is, in fact, a shrewd political insight, and all the sharper for being accidental. Big government depends, in large part, on going around the country stirring up apathy — creating the sense that problems are so big, so complex, so intractable that even attempting to think about them for yourself gives you such a splitting headache it’s easier to shrug and accept as given the proposition that only government can deal with them.
Take health care. Have you read any of these health-care plans? Of course not. They’re huge and turgid and unreadable. Unless you’re a health-care lobbyist, a health-care think-tanker, a health-care correspondent, or some other fellow who’s paid directly or indirectly to plough through this stuff, why bother? None of the senators whose names are on the bills have read ’em; why should you?
And you can understand why they drag on a bit. If you attempt to devise a health-care “plan” for 300 million people, it’s bound to get a bit complicated. But a health-care plan for you, Joe Schmoe of 27 Elm Street, didn’t used to be that complicated, did it? Let’s say you carelessly drop Ted Kennedy’s health-care plan on your foot and it breaks your toe. In the old days, you’d go to your doctor (or, indeed, believe it or not, have him come to you), he’d patch you up, and you’d write him a check. That’s the way it was in most of the developed world within living memory. Now, under the guise of “insurance,” various third parties intercede between the doctor and your checkbook, and to this the government proposes adding a massive federal bureaucracy, in the interests of “controlling costs.” The British National Health Service is the biggest employer not just in the United Kingdom, but in the whole of Europe. Care to estimate the size and budget of a U.S. health bureaucracy?
According to the U.N. figures, life expectancy in the United States is 78 years; in the United Kingdom, it’s 79 — yay, go socialized health care! On the other hand, in Albania, where the entire population chain-smokes and the health-care system involves swimming to Italy, life expectancy is still 71 years — or about where America was a generation or so back. Once you get childhood mortality under control, and observe basic hygiene and lifestyle precautions, the health “system” is relatively marginal. One notes that, even in Somalia, which still has high childhood mortality, not to mention a state of permanent civil war, functioning government has entirely collapsed and yet life expectancy has increased from 49 to 55. Maybe if government were to collapse entirely in Washington, our life expectancy would show equally remarkable gains. Just thinking outside the box here.
When President Obama tells you he’s “reforming” health care to “control costs,” the point to remember is that the only way to “control costs” in health care is to have less of it. In a government system, the doctor, the nurse, the janitor, and the Assistant Deputy Associate Director of Cost-Control System Management all have to be paid every Friday, so the sole means of “controlling costs” is to restrict the patient’s access to treatment. In the Province of Quebec, patients with severe incontinence — i.e., they’re in the bathroom twelve times a night — wait three years for a simple 30-minute procedure. True, Quebeckers have a year or two on Americans in the life-expectancy hit parade, but, if you’re making twelve trips a night to the john 365 times a year for three years, in terms of life-spent-outside-the-bathroom expectancy, an uninsured Vermonter may actually come out ahead.
As Louis XV is said to have predicted, “Après moi, le deluge” — which seems as incisive an observation as any on a world in which freeborn citizens of the wealthiest societies in human history are content to rise from their beds every half-hour every night and traipse to the toilet for yet another flush simply because a government bureaucracy orders them to do so. “Health” is potentially a big-ticket item, but so’s a house and a car, and most folks manage to handle those without a Government Accommodation Plan or a Government Motor Vehicles System — or, at any rate, they did in pre-bailout America.
More important, there is a cost to governmentalizing every responsibility of adulthood — and it is, in Lord Whitelaw’s phrase, the stirring up of apathy. If you wander round Liverpool or Antwerp, Hamburg or Lyons, the fatalism is palpable. In Britain, once the crucible of freedom, civic life is all but dead: In Wales, Northern Ireland, and Scotland, some three-quarters of the economy is government spending; a malign alliance between state bureaucrats and state dependents has corroded democracy, perhaps irreparably. In England, the ground ceded to the worst sociopathic pathologies advances every day — and the latest report on “the seven evils” afflicting an ever more unlovely land blames “poverty” and “individualism,” failing to understand that if you remove the burdens of individual responsibility while loosening all restraint on individual hedonism the vaporization of the public space is all but inevitable. In Ontario, Christine Elliott, a candidate for the leadership of the so-called Conservative party, is praised by the media for offering a more emollient conservatism predicated on “the need to take care of vulnerable people.”
Look, by historical standards, we’re loaded: We have TVs and iPods and machines to wash our clothes and our dishes. We’re the first society in which a symptom of poverty is obesity: Every man his own William Howard Taft. Of course we’re “vulnerable”: By definition, we always are. But to demand a government organized on the principle of preemptively “taking care” of potential “vulnerabilities” is to make all of us, in the long run, far more vulnerable. A society of children cannot survive, no matter how all-embracing the government nanny.
I get a lot of mail each week arguing that, when folks see the price tag attached to Obama’s plans, they’ll get angry. Maybe. But, if Europe’s a guide, at least as many people will retreat into apathy. Once big government’s in place, it’s very hard to go back.
— Mark Steyn, a National Review columnist, is author of America Alone.
Texas Tort Bar: The plaintiffs-lawyer lobby blows $9 million and gets nowhere
Texas Tort Victories. WSJ Editorial
The plaintiffs-lawyer lobby blows $9 million and gets nowhere.
WSJ, Jun 13, 2009
Texas recently finished its legislative session, and the best news is what didn't pass. Namely, some 900 bills put forward by the tort bar.
The plaintiffs-lawyer lobby spent $9 million in last year's state legislative elections to help smooth the way for these bills, which were designed to roll back tort reforms passed in recent years, or to create new ways to sue. Yet that money wasn't enough to convince most Texas legislators to give up two-decades of hard-won legal progress, which ranges from class-action clean-up to medical liability reform.
Among the more notable failed proposals were a bill that would have shifted the burden of medical proof away from plaintiffs and on to defendants in asbestos and mesothelioma cases; an attempt to rip up Texas's successful system of trying multidistrict litigation in a single court; and legislation to allow plaintiffs to sue for "phantom" medical expenses.
Part of this success was due to the legislature's gridlock over a controversial voter ID bill. Yet Republicans who run the Senate and House also did yeoman's work to keep many bills from ever reaching the floor. Republicans also got a helping hand from a number of brave, antilawsuit Democrats, many of them from South Texas, where litigation has exacted more of an economic toll.
Speaking of the economy, it's notable that Texas created more new jobs last year than the other 49 states combined. Texas's low tax burden is one reason. But also important is a fairer legal environment in which companies are less likely than they were a generation ago to face jackpot justice.
The plaintiffs-lawyer lobby blows $9 million and gets nowhere.
WSJ, Jun 13, 2009
Texas recently finished its legislative session, and the best news is what didn't pass. Namely, some 900 bills put forward by the tort bar.
The plaintiffs-lawyer lobby spent $9 million in last year's state legislative elections to help smooth the way for these bills, which were designed to roll back tort reforms passed in recent years, or to create new ways to sue. Yet that money wasn't enough to convince most Texas legislators to give up two-decades of hard-won legal progress, which ranges from class-action clean-up to medical liability reform.
Among the more notable failed proposals were a bill that would have shifted the burden of medical proof away from plaintiffs and on to defendants in asbestos and mesothelioma cases; an attempt to rip up Texas's successful system of trying multidistrict litigation in a single court; and legislation to allow plaintiffs to sue for "phantom" medical expenses.
Part of this success was due to the legislature's gridlock over a controversial voter ID bill. Yet Republicans who run the Senate and House also did yeoman's work to keep many bills from ever reaching the floor. Republicans also got a helping hand from a number of brave, antilawsuit Democrats, many of them from South Texas, where litigation has exacted more of an economic toll.
Speaking of the economy, it's notable that Texas created more new jobs last year than the other 49 states combined. Texas's low tax burden is one reason. But also important is a fairer legal environment in which companies are less likely than they were a generation ago to face jackpot justice.
College: If they can find time for feminist theory, they can find time for Edmund Burke
Conservatism and the University Curriculum. By Peter Berkowitz
If they can find time for feminist theory, they can find time for Edmund Burke.
The political science departments at elite private universities such as Harvard and Yale, at leading small liberal arts colleges like Swarthmore and Williams, and at distinguished large public universities like the University of Maryland and the University of California, Berkeley, offer undergraduates a variety of courses on a range of topics. But one topic the undergraduates at these institutions -- and at the vast majority of other universities and colleges -- are unlikely to find covered is conservatism.
There is no legitimate intellectual justification for this omission. The exclusion of conservative ideas from the curriculum contravenes the requirements of a liberal education and an objective study of political science.
Political science departments are generally divided into the subfields of American politics, comparative politics, international relations, and political theory. Conservative ideas are relevant in all four, but the obvious areas within the political science discipline to teach about the great tradition of conservative ideas and thinkers are American politics and political theory. That rarely happens today.
To be sure, a political science department may feature a course on American political thought that includes a few papers from "The Federalist" and some chapters from Alexis de Tocqueville's "Democracy in America."
But most students will hear next to nothing about the conservative tradition in American politics that stretches from John Adams to Theodore Roosevelt to William F. Buckley Jr. to Milton Friedman to Ronald Reagan. This tradition emphasizes moral and intellectual excellence, worries that democratic practices and egalitarian norms will threaten individual liberty, attends to the claims of religion and the role it can play in educating citizens for liberty, and provides both a vigorous defense of free-market capitalism and a powerful critique of capitalism's relentless overturning of established ways. It also recognized early that communism represented an implacable enemy of freedom. And for 30 years it has been animated by a fascinating quarrel between traditionalists, libertarians and neoconservatives.
While ignoring conservatism, the political theory subfield regularly offers specialized courses in liberal theory and democratic theory; African-American political thought and feminist political theory; the social theory of Karl Marx, Emile Durkheim, Max Weber and the neo-Marxist Frankfurt school; and numerous versions of postmodern political theory.
Students may encounter in various political theory courses an essay by the British historian and philosopher Michael Oakeshott, or a chapter from a book by the German-born American political philosopher Leo Strauss. But they will learn very little about the constellation of ideas and thinkers linked in many cases by a common concern with the dangers to liberty that stem from the excesses to which liberty and equality give rise.
That constellation begins to come into focus at the end of the 18th century with Edmund Burke's "Reflections on the Revolution in France." It draws on the conservative side of the liberal tradition, particularly Adam Smith and David Hume and includes Tocqueville's great writings on democracy and aristocracy and John Stuart Mill's classical liberalism. It gets new life in the years following World War II from Friedrich Hayek's seminal writings on liberty and limited government and Russell Kirk's reconstruction of traditionalist conservatism. And it is elevated by Michael Oakeshott's eloquent reflections on the pervasive tendency in modern politics to substitute abstract reason for experience and historical knowledge, and by Leo Strauss's deft explorations of the dependence of liberty on moral and intellectual virtue.
Without an introduction to the conservative tradition in America and the conservative dimensions of modern political philosophy, political science students are condemned to a substantially incomplete and seriously unbalanced knowledge of their subject. Courses on this tradition should be mandatory for students of politics; today they are not even an option at most American universities.
When progressives, who dominate the academy, confront arguments about the need for the curriculum to give greater attention to conservative ideas, they often hear them as a demand for affirmative action. Usually they mishear. Certainly affirmative action for conservatives is a terrible idea.
Political science departments should not seek out professors with conservative political opinions. Nor should they lower scholarly standards. That approach would embrace the very assumption that has corrupted liberal education: that to study and teach particular political ideas one's identity is more important than the breadth and depth of one's knowledge and the rigor of one's thinking
One need not be a Puritan to study and teach colonial American religious thought, an ancient Israelite to study and teach biblical thought, or a conservative or Republican to study and teach conservative ideas. Affirmative action in university hiring for political conservatives should be firmly rejected, certainly by conservatives and defenders of liberal education.
To be sure, if political science departments were compelled to hire competent scholars to offer courses on conservative ideas and conservative thinkers, the result would be more faculty positions filled by political conservatives, since they and not progressives tend to take an interest in studying conservative thought. But there is no reason why scholars with progressive political opinions and who belong to the Democratic Party can not, out of a desire to understand American political history and modern political philosophy, study and teach conservatism in accordance with high intellectual standards. It would be good if they did.
It would also be good if every political science department offered a complementary course on the history of progressivism in America. This would discourage professors from conflating American political thought as a whole with progressivism, which they do in a variety of ways, starting with the questions they tend to ask and those they refuse to entertain.
Incorporating courses on conservatism in the curriculum may, as students graduate, disperse, and pursue their lives, yield the political benefit of an increase in mutual understanding between left and right. In this way, reforming the curriculum could diminish the polarization that afflicts our political and intellectual classes. But that benefit is admittedly distant and speculative.
In the near term, giving conservative ideas their due will have the concrete and immediate benefit of advancing liberal education's proper and commendable goal, which is the formation of free and well-furnished minds.
Mr. Berkowitz is a senior fellow at Stanford University's Hoover Institution.
If they can find time for feminist theory, they can find time for Edmund Burke.
The political science departments at elite private universities such as Harvard and Yale, at leading small liberal arts colleges like Swarthmore and Williams, and at distinguished large public universities like the University of Maryland and the University of California, Berkeley, offer undergraduates a variety of courses on a range of topics. But one topic the undergraduates at these institutions -- and at the vast majority of other universities and colleges -- are unlikely to find covered is conservatism.
There is no legitimate intellectual justification for this omission. The exclusion of conservative ideas from the curriculum contravenes the requirements of a liberal education and an objective study of political science.
Political science departments are generally divided into the subfields of American politics, comparative politics, international relations, and political theory. Conservative ideas are relevant in all four, but the obvious areas within the political science discipline to teach about the great tradition of conservative ideas and thinkers are American politics and political theory. That rarely happens today.
To be sure, a political science department may feature a course on American political thought that includes a few papers from "The Federalist" and some chapters from Alexis de Tocqueville's "Democracy in America."
But most students will hear next to nothing about the conservative tradition in American politics that stretches from John Adams to Theodore Roosevelt to William F. Buckley Jr. to Milton Friedman to Ronald Reagan. This tradition emphasizes moral and intellectual excellence, worries that democratic practices and egalitarian norms will threaten individual liberty, attends to the claims of religion and the role it can play in educating citizens for liberty, and provides both a vigorous defense of free-market capitalism and a powerful critique of capitalism's relentless overturning of established ways. It also recognized early that communism represented an implacable enemy of freedom. And for 30 years it has been animated by a fascinating quarrel between traditionalists, libertarians and neoconservatives.
While ignoring conservatism, the political theory subfield regularly offers specialized courses in liberal theory and democratic theory; African-American political thought and feminist political theory; the social theory of Karl Marx, Emile Durkheim, Max Weber and the neo-Marxist Frankfurt school; and numerous versions of postmodern political theory.
Students may encounter in various political theory courses an essay by the British historian and philosopher Michael Oakeshott, or a chapter from a book by the German-born American political philosopher Leo Strauss. But they will learn very little about the constellation of ideas and thinkers linked in many cases by a common concern with the dangers to liberty that stem from the excesses to which liberty and equality give rise.
That constellation begins to come into focus at the end of the 18th century with Edmund Burke's "Reflections on the Revolution in France." It draws on the conservative side of the liberal tradition, particularly Adam Smith and David Hume and includes Tocqueville's great writings on democracy and aristocracy and John Stuart Mill's classical liberalism. It gets new life in the years following World War II from Friedrich Hayek's seminal writings on liberty and limited government and Russell Kirk's reconstruction of traditionalist conservatism. And it is elevated by Michael Oakeshott's eloquent reflections on the pervasive tendency in modern politics to substitute abstract reason for experience and historical knowledge, and by Leo Strauss's deft explorations of the dependence of liberty on moral and intellectual virtue.
Without an introduction to the conservative tradition in America and the conservative dimensions of modern political philosophy, political science students are condemned to a substantially incomplete and seriously unbalanced knowledge of their subject. Courses on this tradition should be mandatory for students of politics; today they are not even an option at most American universities.
When progressives, who dominate the academy, confront arguments about the need for the curriculum to give greater attention to conservative ideas, they often hear them as a demand for affirmative action. Usually they mishear. Certainly affirmative action for conservatives is a terrible idea.
Political science departments should not seek out professors with conservative political opinions. Nor should they lower scholarly standards. That approach would embrace the very assumption that has corrupted liberal education: that to study and teach particular political ideas one's identity is more important than the breadth and depth of one's knowledge and the rigor of one's thinking
One need not be a Puritan to study and teach colonial American religious thought, an ancient Israelite to study and teach biblical thought, or a conservative or Republican to study and teach conservative ideas. Affirmative action in university hiring for political conservatives should be firmly rejected, certainly by conservatives and defenders of liberal education.
To be sure, if political science departments were compelled to hire competent scholars to offer courses on conservative ideas and conservative thinkers, the result would be more faculty positions filled by political conservatives, since they and not progressives tend to take an interest in studying conservative thought. But there is no reason why scholars with progressive political opinions and who belong to the Democratic Party can not, out of a desire to understand American political history and modern political philosophy, study and teach conservatism in accordance with high intellectual standards. It would be good if they did.
It would also be good if every political science department offered a complementary course on the history of progressivism in America. This would discourage professors from conflating American political thought as a whole with progressivism, which they do in a variety of ways, starting with the questions they tend to ask and those they refuse to entertain.
Incorporating courses on conservatism in the curriculum may, as students graduate, disperse, and pursue their lives, yield the political benefit of an increase in mutual understanding between left and right. In this way, reforming the curriculum could diminish the polarization that afflicts our political and intellectual classes. But that benefit is admittedly distant and speculative.
In the near term, giving conservative ideas their due will have the concrete and immediate benefit of advancing liberal education's proper and commendable goal, which is the formation of free and well-furnished minds.
Mr. Berkowitz is a senior fellow at Stanford University's Hoover Institution.
North Korea Says It Will Start Enriching Uranium - Also Will Weaponize All the Plutonium It Can Find
North Korea Says It Will Start Enriching Uranium. By Blaine Harden
Weapons Move Is 'Retaliation' for Sanctions
Washingt, Sunday, June 14, 2009
TOKYO, June 13 -- North Korea adamantly denied for seven years that it had a program for making nuclear weapons from enriched uranium.
But on Saturday, a few hours after the U.N. Security Council slapped it with tough new sanctions for detonating a second nuclear device, the government of Kim Jong Il changed its tune, vowing that it would start enriching uranium to make more nuclear weapons.
Declaring that it would meet sanctions with "retaliation," North Korea also pledged to "weaponize" all the plutonium it could extract from used fuel rods at its Yongbyon nuclear plant, which was partially disabled last year as part of the North's agreement to win food, fuel and diplomatic concessions in return for a promise to end its nuclear program.
That agreement collapsed in April, when North Korea -- fuming about Security Council condemnation of its March launch of a long-range missile -- kicked U.N. weapons inspectors out of the country and began work to restart its plutonium factory. It tested a second bomb on May 25, and South Korean officials have said more missile launches and a third nuclear test are possible in the near future.
"It makes no difference to North Korea whether its nuclear status is recognized or not," the Foreign Ministry in Pyongyang said in a statement carried by the state news agency. "It has become an absolutely impossible option for North Korea to even think about giving up its nuclear weapons."
The 15-member Security Council unanimously passed a resolution Friday that imposes broad financial, trade and military sanctions on North Korea, while also calling on states, for the first time, to seize banned weapons and technology from the North that are found aboard ships on the high seas.
North Korea seemed Saturday to have interpreted the seizure resolution as a "blockade." But at the insistence of China and Russia, the North's traditional allies, the resolution does not authorize the use of military action to enforce any seizure that a North Korean vessel might resist, nor does it restrict shipments of food or other nonmilitary goods.
"An attempted blockade of any kind by the United States and its followers will be regarded as an act of war and met with a decisive military response," North Korea said.
Secretary of State Hillary Rodham Clinton said North Korea's "continuing provocative actions are deeply regrettable."
The bellicose language in North Korea's statement -- which describes the Security Council action as "another ugly product of American-led international pressure" -- is similar in tone to previous North Korean responses to U.N. sanctions.
But the North's announcement that it would process enriched uranium to make more weapons was an extraordinary public admission of active involvement in a program whose existence has been denied by Pyongyang since 2002, when it was first mentioned in a U.S. intelligence report.
That year, the Bush administration accused North Korea of secretly continuing with nuclear weapons development in violation of a 1994 agreement. It then canceled construction of two light-water reactors in the North that were to have been used to produce electricity for the impoverished country.
But in 2007, the Bush administration began to back off its assertions that North Korea had an active program to enrich uranium. The chief U.S. intelligence officer for North Korea, Joseph R. DeTrani, told Congress at the time that although there was "high confidence" that North Korea had acquired materials that could be used in a "production-scale" uranium program, there was only "mid-confidence" that such a program existed.
Uranium enrichment, which offers a different route for making nuclear weapons than plutonium, uses centrifuges to spin hot uranium gas into weapons-grade fuel.
Insisting that it had no uranium-enrichment program, the North Korean government took an American diplomat to a missile factory in 2007, where there were aluminum tubes that some experts had said could be used in uranium enrichment. North Korea allowed the diplomat to take home some samples.
Traces of enriched uranium were unexpectedly discovered on those samples. Other traces were found on the pages of reactor records that North Korea turned over to the United States in 2008, as part of now-aborted negotiations on denuclearizing the North.
In recent years, U.S. officials have suggested that although North Korea has tried to enrich uranium, it has not been very successful.
North Korea on Saturday said it has indeed made progress.
"Enough success has been made in developing uranium-enrichment technology to provide nuclear fuel to allow the experimental procedure," the government said. "The process of uranium enrichment will be commenced."
This may have been bluster, at least in the short term.
It will take many years for the North to develop the uranium route to a bomb, according to Siegfried S. Hecker, a periodic visitor to the Yongbyon complex who was director of Los Alamos National Laboratory and is co-director of Stanford University's Center for International Security and Cooperation.
Writing last month in Foreign Policy magazine, Hecker said North Korea lacks uranium centrifuge materials, technology and know-how. He warned, however, that Iran has mastered this technology and could help the North move forward with uranium enrichment. North Korea and Iran have shared long-range missile technology that could enable both countries to deliver a nuclear warhead.
North Korea also said Saturday that the spent fuel rods at its Yongbyon reactor are being reprocessed, with all the resulting plutonium to be used in nuclear weapons. The government said that it has reprocessed more than a third of them.
Hecker said in a recent interview that there is enough plutonium in the spent rods for "one or two more" nuclear tests. He also said it would take the North about six months to restart its Yongbyon plant, and that it could then produce enough plutonium to make about one nuclear bomb a year for the next decade.
Early this year, North Korean officials said that technicians have used all the plutonium previously manufactured at Yongbyon to make nuclear weapons.
In South Korea on Saturday, several analysts said the North's fist-shaking response to Security Council sanctions suggests that hard-liners in the country's military are exercising increasing power in running the government.
Kim Jong Il suffered a stroke last summer and has appeared frail in public appearances. He is believed to have chosen his youngest son, Jong Un, as his successor. It is unknown, however, how far the succession process has progressed in the secretive communist state.
"Given Kim's ailing health . . . the North Korean leader is likely to have yielded to the demands and pressure of military people who have little awareness of the outside world," said Koh Yu-hwan, a professor of North Korean studies at Dongguk University in Seoul.
Special correspondent Stella Kim in Seoul contributed to this report.
Weapons Move Is 'Retaliation' for Sanctions
Washingt, Sunday, June 14, 2009
TOKYO, June 13 -- North Korea adamantly denied for seven years that it had a program for making nuclear weapons from enriched uranium.
But on Saturday, a few hours after the U.N. Security Council slapped it with tough new sanctions for detonating a second nuclear device, the government of Kim Jong Il changed its tune, vowing that it would start enriching uranium to make more nuclear weapons.
Declaring that it would meet sanctions with "retaliation," North Korea also pledged to "weaponize" all the plutonium it could extract from used fuel rods at its Yongbyon nuclear plant, which was partially disabled last year as part of the North's agreement to win food, fuel and diplomatic concessions in return for a promise to end its nuclear program.
That agreement collapsed in April, when North Korea -- fuming about Security Council condemnation of its March launch of a long-range missile -- kicked U.N. weapons inspectors out of the country and began work to restart its plutonium factory. It tested a second bomb on May 25, and South Korean officials have said more missile launches and a third nuclear test are possible in the near future.
"It makes no difference to North Korea whether its nuclear status is recognized or not," the Foreign Ministry in Pyongyang said in a statement carried by the state news agency. "It has become an absolutely impossible option for North Korea to even think about giving up its nuclear weapons."
The 15-member Security Council unanimously passed a resolution Friday that imposes broad financial, trade and military sanctions on North Korea, while also calling on states, for the first time, to seize banned weapons and technology from the North that are found aboard ships on the high seas.
North Korea seemed Saturday to have interpreted the seizure resolution as a "blockade." But at the insistence of China and Russia, the North's traditional allies, the resolution does not authorize the use of military action to enforce any seizure that a North Korean vessel might resist, nor does it restrict shipments of food or other nonmilitary goods.
"An attempted blockade of any kind by the United States and its followers will be regarded as an act of war and met with a decisive military response," North Korea said.
Secretary of State Hillary Rodham Clinton said North Korea's "continuing provocative actions are deeply regrettable."
The bellicose language in North Korea's statement -- which describes the Security Council action as "another ugly product of American-led international pressure" -- is similar in tone to previous North Korean responses to U.N. sanctions.
But the North's announcement that it would process enriched uranium to make more weapons was an extraordinary public admission of active involvement in a program whose existence has been denied by Pyongyang since 2002, when it was first mentioned in a U.S. intelligence report.
That year, the Bush administration accused North Korea of secretly continuing with nuclear weapons development in violation of a 1994 agreement. It then canceled construction of two light-water reactors in the North that were to have been used to produce electricity for the impoverished country.
But in 2007, the Bush administration began to back off its assertions that North Korea had an active program to enrich uranium. The chief U.S. intelligence officer for North Korea, Joseph R. DeTrani, told Congress at the time that although there was "high confidence" that North Korea had acquired materials that could be used in a "production-scale" uranium program, there was only "mid-confidence" that such a program existed.
Uranium enrichment, which offers a different route for making nuclear weapons than plutonium, uses centrifuges to spin hot uranium gas into weapons-grade fuel.
Insisting that it had no uranium-enrichment program, the North Korean government took an American diplomat to a missile factory in 2007, where there were aluminum tubes that some experts had said could be used in uranium enrichment. North Korea allowed the diplomat to take home some samples.
Traces of enriched uranium were unexpectedly discovered on those samples. Other traces were found on the pages of reactor records that North Korea turned over to the United States in 2008, as part of now-aborted negotiations on denuclearizing the North.
In recent years, U.S. officials have suggested that although North Korea has tried to enrich uranium, it has not been very successful.
North Korea on Saturday said it has indeed made progress.
"Enough success has been made in developing uranium-enrichment technology to provide nuclear fuel to allow the experimental procedure," the government said. "The process of uranium enrichment will be commenced."
This may have been bluster, at least in the short term.
It will take many years for the North to develop the uranium route to a bomb, according to Siegfried S. Hecker, a periodic visitor to the Yongbyon complex who was director of Los Alamos National Laboratory and is co-director of Stanford University's Center for International Security and Cooperation.
Writing last month in Foreign Policy magazine, Hecker said North Korea lacks uranium centrifuge materials, technology and know-how. He warned, however, that Iran has mastered this technology and could help the North move forward with uranium enrichment. North Korea and Iran have shared long-range missile technology that could enable both countries to deliver a nuclear warhead.
North Korea also said Saturday that the spent fuel rods at its Yongbyon reactor are being reprocessed, with all the resulting plutonium to be used in nuclear weapons. The government said that it has reprocessed more than a third of them.
Hecker said in a recent interview that there is enough plutonium in the spent rods for "one or two more" nuclear tests. He also said it would take the North about six months to restart its Yongbyon plant, and that it could then produce enough plutonium to make about one nuclear bomb a year for the next decade.
Early this year, North Korean officials said that technicians have used all the plutonium previously manufactured at Yongbyon to make nuclear weapons.
In South Korea on Saturday, several analysts said the North's fist-shaking response to Security Council sanctions suggests that hard-liners in the country's military are exercising increasing power in running the government.
Kim Jong Il suffered a stroke last summer and has appeared frail in public appearances. He is believed to have chosen his youngest son, Jong Un, as his successor. It is unknown, however, how far the succession process has progressed in the secretive communist state.
"Given Kim's ailing health . . . the North Korean leader is likely to have yielded to the demands and pressure of military people who have little awareness of the outside world," said Koh Yu-hwan, a professor of North Korean studies at Dongguk University in Seoul.
Special correspondent Stella Kim in Seoul contributed to this report.
Wednesday, June 10, 2009
EPA's IRIS program (Integrated Risk Information System)
Stifling Innovation. By Dr. Gilbert Ross M.D.TCS Daily, Jun 04, 2009
Despite the plethora of bad economic news this year, good news abounds for pro-regulatory, litigation-happy "consumer activists" on the left -- and their attorney camp-followers.
Environmental Protection Agency Administrator Lisa Jackson recently announced her plan to subject chemicals in our environment to even more stringent risk assessments, chasing minuscule risks to human health for no real purpose. Her plan involves the IRIS program -- Integrated Risk Information System -- which will now be used to characterize health risks of chemicals, however tiny the exposure. The chemophobes running the EPA are once more taking the lead in promulgating junk science, likely in an effort to justify their request for a budget increase of 37%, amounting to over $10 billion.
It appears Jackson's unstated goal is to import here, by stealth, the European system, which employs the Precautionary Principle. This dogma asserts that substances in our environment are hazardous until proven otherwise, necessitating bans and product withdrawals until long-term studies prove them safe. This "better safe than sorry" tenet would lead to stagnation of new product development. What company with any sense would invest millions of dollars in formulating any truly new product, knowing that litigation and regulation will force them to delay marketing until some far-off approval from the EPA? Worse still, the "toxicity" of synthetic chemicals is inferred from high-dose rodent tests, bearing little or no relevance to human health.
While Jackson states that this overhaul is needed to improve "transparency" of risk assessment for public health entities, the real beneficiaries will be plaintiffs' attorneys, who will use these "risks" as a basis of litigation, alleging various adverse health effects. Even the threat of such lawsuits will likely cause many companies to cave in to activists' demands for product withdrawals or scary labeling -- with big settlements as part of the deal. None of this has anything to do with enhancing human health.
The new administration is pushing an anti-business agenda, cutting through resistance from industry and true consumer advocates. Recently, President Obama ruled that federal agencies must review regulations dating back to the Clinton years to eliminate some that relied on federal preemption (that is, even products deemed safe at the federal level will now be more easily subject to state-by-state lawsuits). With uniform federal-level regulations comes a stable business climate for development of innovative new products. Conversely, the imminent loss of such stability -- as federal dominance yields to a patchwork of unwieldy local laws -- will lead to risk-aversion and stagnation. Unmoored local standards will ultimately be deformed by persuasive trial lawyers and lay juries.
New product development will slow to a trickle -- consumer choice on a range of products will become the victim of stultifying intimidation from "consumer activists" and their coterie of lawyers, as has already been demonstrated in the area of innovative pharmaceuticals.
The Association of Trial Lawyers of America has lately refashioned itself as the "American Association for Justice," and its membership would have you believe they are now merely simple seekers of Truth and Justice -- but this tiger has not changed its stripes. The trial lawyers' concern with "the rule of law," which they claim motivates their new campaign against preemption, goes exactly as far as strategically necessary to produce big damage awards or settlements -- wrung from jury-fearing, meek corporate bottom-liners.
Add to this that Justice Souter, a relative moderate on many regulatory issues, will soon be replaced by the more "empathic" and lawsuit friendly Sonia Sotomayor, and we have a formula for even more trouble ahead.
In this climate, every time EPA -- with its new, stricter, more precautionary approach -- hints even in a non-committal fashion at the possible "toxicity" of some chemical or product, it will be inviting a wave of state-by-state lawsuits, with the plaintiffs stifling industry and likely getting a sympathetic hearing from the High Court at the end of the day. Let us hope Congress and the public are very cautious about embracing EPA's precautionary new mission.
Gilbert Ross, M.D., is Medical Director of the American Council on Science and Health (ACSH.org).
Despite the plethora of bad economic news this year, good news abounds for pro-regulatory, litigation-happy "consumer activists" on the left -- and their attorney camp-followers.
Environmental Protection Agency Administrator Lisa Jackson recently announced her plan to subject chemicals in our environment to even more stringent risk assessments, chasing minuscule risks to human health for no real purpose. Her plan involves the IRIS program -- Integrated Risk Information System -- which will now be used to characterize health risks of chemicals, however tiny the exposure. The chemophobes running the EPA are once more taking the lead in promulgating junk science, likely in an effort to justify their request for a budget increase of 37%, amounting to over $10 billion.
It appears Jackson's unstated goal is to import here, by stealth, the European system, which employs the Precautionary Principle. This dogma asserts that substances in our environment are hazardous until proven otherwise, necessitating bans and product withdrawals until long-term studies prove them safe. This "better safe than sorry" tenet would lead to stagnation of new product development. What company with any sense would invest millions of dollars in formulating any truly new product, knowing that litigation and regulation will force them to delay marketing until some far-off approval from the EPA? Worse still, the "toxicity" of synthetic chemicals is inferred from high-dose rodent tests, bearing little or no relevance to human health.
While Jackson states that this overhaul is needed to improve "transparency" of risk assessment for public health entities, the real beneficiaries will be plaintiffs' attorneys, who will use these "risks" as a basis of litigation, alleging various adverse health effects. Even the threat of such lawsuits will likely cause many companies to cave in to activists' demands for product withdrawals or scary labeling -- with big settlements as part of the deal. None of this has anything to do with enhancing human health.
The new administration is pushing an anti-business agenda, cutting through resistance from industry and true consumer advocates. Recently, President Obama ruled that federal agencies must review regulations dating back to the Clinton years to eliminate some that relied on federal preemption (that is, even products deemed safe at the federal level will now be more easily subject to state-by-state lawsuits). With uniform federal-level regulations comes a stable business climate for development of innovative new products. Conversely, the imminent loss of such stability -- as federal dominance yields to a patchwork of unwieldy local laws -- will lead to risk-aversion and stagnation. Unmoored local standards will ultimately be deformed by persuasive trial lawyers and lay juries.
New product development will slow to a trickle -- consumer choice on a range of products will become the victim of stultifying intimidation from "consumer activists" and their coterie of lawyers, as has already been demonstrated in the area of innovative pharmaceuticals.
The Association of Trial Lawyers of America has lately refashioned itself as the "American Association for Justice," and its membership would have you believe they are now merely simple seekers of Truth and Justice -- but this tiger has not changed its stripes. The trial lawyers' concern with "the rule of law," which they claim motivates their new campaign against preemption, goes exactly as far as strategically necessary to produce big damage awards or settlements -- wrung from jury-fearing, meek corporate bottom-liners.
Add to this that Justice Souter, a relative moderate on many regulatory issues, will soon be replaced by the more "empathic" and lawsuit friendly Sonia Sotomayor, and we have a formula for even more trouble ahead.
In this climate, every time EPA -- with its new, stricter, more precautionary approach -- hints even in a non-committal fashion at the possible "toxicity" of some chemical or product, it will be inviting a wave of state-by-state lawsuits, with the plaintiffs stifling industry and likely getting a sympathetic hearing from the High Court at the end of the day. Let us hope Congress and the public are very cautious about embracing EPA's precautionary new mission.
Gilbert Ross, M.D., is Medical Director of the American Council on Science and Health (ACSH.org).
The EPA’s risk-assessment practices are harming public health and the economy
The EPA’s Protection Racket. By Jeff Stier, Esq., Angela Logomasini
Its risk-assessment practices are harming public health and the economy
ACSH, Tuesday, June 9, 2009 ARTICLES Publication Date: June 9, 2009
This piece first appeared on NationalReview.com on June 9, 2009:
The Environmental Protection Agency is making “significant strides” on issues such as “protecting children’s health” and “confronting climate change,” says a memo from EPA administrator Lisa P. Jackson. Not surprisingly, the agency has requested a 37 percent budget increase for fiscal year 2010.
Politically speaking, the new Obama EPA may indeed be making some strides. But what concrete public-health benefits can Jackson — or any EPA administrator — realistically claim to have achieved?
The EPA’s public-health mission is misleading, because it is charged with addressing risks that are too small to measure or be regulated away. The agency’s current risk-assessment practices compound the problem, harming both public health and our economic well-being. The agency issues extremely high benefit estimates for its regulations. But these estimates are out of touch with reality.
For example, the White House Office of Information and Regulatory Affairs (OIRA) reported in 2004 that over a ten-year period, most of the benefits from significant federal regulations resulted from just four EPA Clean Air Act rules. The OIRA noted that the uncertainty related to EPA estimates was “large.” A better description would be to say that the estimates are “highly implausible.”
Retired scientist Michael Gough, formerly with the U.S. Office of Technology Assessment, has demonstrated that the total number of cancers that the EPA could feasibly regulate away is small. Gough came to this result by analyzing the data found in Sir Richard Doll and Richard Peto’s landmark 1981 study on the causes of cancer, along with risks estimates in the 1989 EPA study Reducing Risk.
Reducing Risk was an internal EPA research project designed to assess whether the agency was on the right track. It determined that the EPA had set the wrong priorities, devoting substantial resources to low-tier risks. This report remains relevant today, as do Gough’s findings.
Using data from Reducing Risk and the Doll-Peto study, Gough found that no more than 3 percent of all cancers can be associated with environmental pollution. “If the EPA risk assessment techniques are accurate,” he wrote, “and all identified carcinogens amenable to EPA regulations were completely controlled,” which is impossible, “about 6,400 cancer deaths annually (about 1.3% of the current annual total of 435,000 cancer deaths) would be prevented. When cancer risks are estimated using a method like that employed by the Food and Drug Administration (FDA), the number of regulatable cancers is smaller, about 1,400 (about 0.25%).”
It is worth emphasizing that the widely accepted Doll-Peto study shows that the overwhelming majority of cancers result from sources outside EPA control. That is why the World Health Organization has suggested in its World Cancer Report (2003) that cancer-prevention efforts should focus on three factors: tobacco use, diet, and infections — which together, the WHO notes, account for 75 percent of all cancer cases worldwide.
The EPA’s mission involves spending considerable amounts of tax dollars to regulate risks that are in most cases too insignificant to be scientifically demonstrated. The agency has compounded this problem by employing highly questionable scientific assumptions when assessing risks — such as emphasizing high-dose rodent studies.
The environmentalists like animal tests and the uncertainty of their results. These studies give the EPA an excuse to rely on the precautionary principle — the notion that, without full knowledge of the risks, it is “better to be safe than sorry,” and thus better to regulate even more tightly.
Reliance on animal studies also allows regulators to choose from a wide range of animals when extrapolating to humans. A certain chemical doesn’t cause cancer in rats? Try it on mice. Or monkeys. Then say that humans are just like whichever animal eventually got cancer after being given a very high dose — and add that humans (particularly children) may be even more sensitive. Regulations end up having layer after layer of extra precaution.
No wonder activists feigned outrage when the EPA considered a study to assess the effects of common household chemicals and pesticides on toddlers. The study wouldn’t have exposed kids to additional chemicals — only observed kids whose families already used existing, EPA-approved products sold on the market. The National Academy of Sciences approved the ethics of such an approach, but activists quashed it — knowing that the EPA would be left relying on vaguer animal studies when crafting regulations.
Further faulty studies and misguided regulations do more than hinder the economy. They also lead to bans on valuable products that otherwise could be saving lives, such as chemicals that fight disease-carrying insects, retard the spread of fires, and help grow healthy fruits and vegetables (one of the few dietary factors shown to combat cancer).
Ironically, contracting the EPA’s budget would do more for public health than increasing it. Congress should keep this in mind. Until the EPA refocuses its scientific assumptions to target genuine risk, lawmakers should not boost its funding.
Angela Logomasini is director of risk and environmental policy at the Competitive Enterprise Institute. Jeff Stier is an associate director of the American Council on Science and Health.
Its risk-assessment practices are harming public health and the economy
ACSH, Tuesday, June 9, 2009 ARTICLES Publication Date: June 9, 2009
This piece first appeared on NationalReview.com on June 9, 2009:
The Environmental Protection Agency is making “significant strides” on issues such as “protecting children’s health” and “confronting climate change,” says a memo from EPA administrator Lisa P. Jackson. Not surprisingly, the agency has requested a 37 percent budget increase for fiscal year 2010.
Politically speaking, the new Obama EPA may indeed be making some strides. But what concrete public-health benefits can Jackson — or any EPA administrator — realistically claim to have achieved?
The EPA’s public-health mission is misleading, because it is charged with addressing risks that are too small to measure or be regulated away. The agency’s current risk-assessment practices compound the problem, harming both public health and our economic well-being. The agency issues extremely high benefit estimates for its regulations. But these estimates are out of touch with reality.
For example, the White House Office of Information and Regulatory Affairs (OIRA) reported in 2004 that over a ten-year period, most of the benefits from significant federal regulations resulted from just four EPA Clean Air Act rules. The OIRA noted that the uncertainty related to EPA estimates was “large.” A better description would be to say that the estimates are “highly implausible.”
Retired scientist Michael Gough, formerly with the U.S. Office of Technology Assessment, has demonstrated that the total number of cancers that the EPA could feasibly regulate away is small. Gough came to this result by analyzing the data found in Sir Richard Doll and Richard Peto’s landmark 1981 study on the causes of cancer, along with risks estimates in the 1989 EPA study Reducing Risk.
Reducing Risk was an internal EPA research project designed to assess whether the agency was on the right track. It determined that the EPA had set the wrong priorities, devoting substantial resources to low-tier risks. This report remains relevant today, as do Gough’s findings.
Using data from Reducing Risk and the Doll-Peto study, Gough found that no more than 3 percent of all cancers can be associated with environmental pollution. “If the EPA risk assessment techniques are accurate,” he wrote, “and all identified carcinogens amenable to EPA regulations were completely controlled,” which is impossible, “about 6,400 cancer deaths annually (about 1.3% of the current annual total of 435,000 cancer deaths) would be prevented. When cancer risks are estimated using a method like that employed by the Food and Drug Administration (FDA), the number of regulatable cancers is smaller, about 1,400 (about 0.25%).”
It is worth emphasizing that the widely accepted Doll-Peto study shows that the overwhelming majority of cancers result from sources outside EPA control. That is why the World Health Organization has suggested in its World Cancer Report (2003) that cancer-prevention efforts should focus on three factors: tobacco use, diet, and infections — which together, the WHO notes, account for 75 percent of all cancer cases worldwide.
The EPA’s mission involves spending considerable amounts of tax dollars to regulate risks that are in most cases too insignificant to be scientifically demonstrated. The agency has compounded this problem by employing highly questionable scientific assumptions when assessing risks — such as emphasizing high-dose rodent studies.
The environmentalists like animal tests and the uncertainty of their results. These studies give the EPA an excuse to rely on the precautionary principle — the notion that, without full knowledge of the risks, it is “better to be safe than sorry,” and thus better to regulate even more tightly.
Reliance on animal studies also allows regulators to choose from a wide range of animals when extrapolating to humans. A certain chemical doesn’t cause cancer in rats? Try it on mice. Or monkeys. Then say that humans are just like whichever animal eventually got cancer after being given a very high dose — and add that humans (particularly children) may be even more sensitive. Regulations end up having layer after layer of extra precaution.
No wonder activists feigned outrage when the EPA considered a study to assess the effects of common household chemicals and pesticides on toddlers. The study wouldn’t have exposed kids to additional chemicals — only observed kids whose families already used existing, EPA-approved products sold on the market. The National Academy of Sciences approved the ethics of such an approach, but activists quashed it — knowing that the EPA would be left relying on vaguer animal studies when crafting regulations.
Further faulty studies and misguided regulations do more than hinder the economy. They also lead to bans on valuable products that otherwise could be saving lives, such as chemicals that fight disease-carrying insects, retard the spread of fires, and help grow healthy fruits and vegetables (one of the few dietary factors shown to combat cancer).
Ironically, contracting the EPA’s budget would do more for public health than increasing it. Congress should keep this in mind. Until the EPA refocuses its scientific assumptions to target genuine risk, lawmakers should not boost its funding.
Angela Logomasini is director of risk and environmental policy at the Competitive Enterprise Institute. Jeff Stier is an associate director of the American Council on Science and Health.
Brookings O'Hanlon: Obama's Defense Budget Gap
Obama's Defense Budget Gap. By Michael O'Hanlon
WaPo, Wednesday, June 10, 2009
After three months of very impressive decisions regarding national security, President Obama made perhaps his first significant mistake. It concerns the defense budget, where his plans are insufficient to support the national security establishment over the next five years. Thankfully, this mistake can be fixed before it causes big harm -- either by Congress this year or the administration itself next year.
The administration is hardly slashing funds for defense; it is simply adopting a policy of zero real growth in the "base budget" (the part that does not include war costs, which are too unpredictable to include in this analysis). Specifically, the base budget is to grow 2 percent a year over the next five years. But with the inflation rate expected to average over 1.5 percent, the net effect is essentially no real growth. Cumulatively, that would leave us about $150 billion short of actual funding requirements through 2014. The administration is right to propose increasing resources for the State Department and aid programs. But it is unwise politics and unwise strategy to put these key elements of foreign policy in direct competition with each other, as appears to be the case in the new budget.
For the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year). Simply put, the costs of holding on to good people, providing them with health care and other benefits, keeping equipment functional, maintaining training regimes, and buying increasingly complex equipment tend to grow faster than inflation. This is, of course, no more an absolute rule than is Moore's law about changes in computing capacity. But like Moore's law, it tends to hold up remarkably well with time, especially when downsizing the Defense Department's force structure is not really an option, and it is not today.
It is easiest to understand this by examining the four main categories of Pentagon spending: military personnel, operations and maintenance, procurement, and research and development. Regarding the first, there were times in the 1970s when we starved personnel accounts, but the result was a dispirited and "hollow" force. At a time of war, when we are asking so few troops to do so much for so long, this is not a viable option. In fact, over the years of the Bush presidency, personnel spending increased 100 percent. About 25 percent of that was due to the cumulative effects of inflation and another quarter to mobilizing reservists and enlarging the force. But the remaining half was real cost growth averaging 5 percent a year. Even if we slow the trend, we can't realistically end it.
Operations and maintenance costs are always what budgeteers want to cut -- and always the area where they overestimate the potential for savings. This was the case in the 1990s; almost every year the Clinton administration hoped to economize on such expenses through new types of efficiencies, but almost every year it wound up needing to add to those accounts retroactively. Among defense budget specialists, the real debate is whether inflation-adjusted operations and maintenance costs per person grow at 2 percent annually or 3 percent or somewhere in between.
Procurement and research and development are the chief areas in which Defense Secretary Robert Gates has sought savings in the proposals he announced in April. He has proposed cuts to programs including the F-22 fighter, the DDG-1000 destroyer, the Army's Future Combat System, the presidential helicopter fleet, the transformational communications satellite, aircraft carrier production runs, the airborne laser missile defense program and the next-generation bomber. These are solid proposals; he could make additional cuts to the V-22 Osprey and the F-35 Joint Strike Fighter programs, as well as existing nuclear weapons platforms.
It is important to note, though, that these aren't cuts in current costs; they are cuts in plans. When you eliminate a defense program, you still typically must buy something to replace aging equipment, even if the alternative is less expensive. Moreover, a lot of equipment (much of it purchased under Ronald Reagan and the first President Bush) is wearing out, and we need to replace it soon. Making greater use of service-life extension programs, modifications to existing weapons, and inexpensive but high-performance modern technologies such as advanced munitions and robotics can keep a check on cost growth. But these steps can't freeze costs.
Putting all of this together, the Congressional Budget Office has estimated that real defense spending would have to be about 10 percent greater than today over roughly the next decade to afford what is on the Pentagon's books. The CBO has not recalculated in light of Gates's plans, but a rough estimate suggests the need for 7 to 8 percent higher spending for an average year in the future. That is another way of saying that we need roughly 2 percent real growth per year, while Obama offers zero. By 2014, this amounts to a difference of about $50 billion in the annual budget, and a cumulative five-year discrepancy of about $150 billion. Once increased, defense spending would still decline as a fraction of gross domestic product, but not as much as is currently forecast. The plan will have to change. The question is whether we do it now or do it later.
Michael O'Hanlon, a senior fellow at the Brookings Institution and a former analyst at the Congressional Budget Office, is the author of the new book "Budgeting for Hard Power."
WaPo, Wednesday, June 10, 2009
After three months of very impressive decisions regarding national security, President Obama made perhaps his first significant mistake. It concerns the defense budget, where his plans are insufficient to support the national security establishment over the next five years. Thankfully, this mistake can be fixed before it causes big harm -- either by Congress this year or the administration itself next year.
The administration is hardly slashing funds for defense; it is simply adopting a policy of zero real growth in the "base budget" (the part that does not include war costs, which are too unpredictable to include in this analysis). Specifically, the base budget is to grow 2 percent a year over the next five years. But with the inflation rate expected to average over 1.5 percent, the net effect is essentially no real growth. Cumulatively, that would leave us about $150 billion short of actual funding requirements through 2014. The administration is right to propose increasing resources for the State Department and aid programs. But it is unwise politics and unwise strategy to put these key elements of foreign policy in direct competition with each other, as appears to be the case in the new budget.
For the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year). Simply put, the costs of holding on to good people, providing them with health care and other benefits, keeping equipment functional, maintaining training regimes, and buying increasingly complex equipment tend to grow faster than inflation. This is, of course, no more an absolute rule than is Moore's law about changes in computing capacity. But like Moore's law, it tends to hold up remarkably well with time, especially when downsizing the Defense Department's force structure is not really an option, and it is not today.
It is easiest to understand this by examining the four main categories of Pentagon spending: military personnel, operations and maintenance, procurement, and research and development. Regarding the first, there were times in the 1970s when we starved personnel accounts, but the result was a dispirited and "hollow" force. At a time of war, when we are asking so few troops to do so much for so long, this is not a viable option. In fact, over the years of the Bush presidency, personnel spending increased 100 percent. About 25 percent of that was due to the cumulative effects of inflation and another quarter to mobilizing reservists and enlarging the force. But the remaining half was real cost growth averaging 5 percent a year. Even if we slow the trend, we can't realistically end it.
Operations and maintenance costs are always what budgeteers want to cut -- and always the area where they overestimate the potential for savings. This was the case in the 1990s; almost every year the Clinton administration hoped to economize on such expenses through new types of efficiencies, but almost every year it wound up needing to add to those accounts retroactively. Among defense budget specialists, the real debate is whether inflation-adjusted operations and maintenance costs per person grow at 2 percent annually or 3 percent or somewhere in between.
Procurement and research and development are the chief areas in which Defense Secretary Robert Gates has sought savings in the proposals he announced in April. He has proposed cuts to programs including the F-22 fighter, the DDG-1000 destroyer, the Army's Future Combat System, the presidential helicopter fleet, the transformational communications satellite, aircraft carrier production runs, the airborne laser missile defense program and the next-generation bomber. These are solid proposals; he could make additional cuts to the V-22 Osprey and the F-35 Joint Strike Fighter programs, as well as existing nuclear weapons platforms.
It is important to note, though, that these aren't cuts in current costs; they are cuts in plans. When you eliminate a defense program, you still typically must buy something to replace aging equipment, even if the alternative is less expensive. Moreover, a lot of equipment (much of it purchased under Ronald Reagan and the first President Bush) is wearing out, and we need to replace it soon. Making greater use of service-life extension programs, modifications to existing weapons, and inexpensive but high-performance modern technologies such as advanced munitions and robotics can keep a check on cost growth. But these steps can't freeze costs.
Putting all of this together, the Congressional Budget Office has estimated that real defense spending would have to be about 10 percent greater than today over roughly the next decade to afford what is on the Pentagon's books. The CBO has not recalculated in light of Gates's plans, but a rough estimate suggests the need for 7 to 8 percent higher spending for an average year in the future. That is another way of saying that we need roughly 2 percent real growth per year, while Obama offers zero. By 2014, this amounts to a difference of about $50 billion in the annual budget, and a cumulative five-year discrepancy of about $150 billion. Once increased, defense spending would still decline as a fraction of gross domestic product, but not as much as is currently forecast. The plan will have to change. The question is whether we do it now or do it later.
Michael O'Hanlon, a senior fellow at the Brookings Institution and a former analyst at the Congressional Budget Office, is the author of the new book "Budgeting for Hard Power."
When ‘Green’ Travel isn’t ‘Green’ - Thesis by Mikhail Chester
When ‘Green’ Travel isn’t ‘Green’. By Greg Pollowitz
Planet Gore/NRO, Monday, June 08, 2009
Here's a great article via Breitbart on the difficulty of determining what the "greenest" form of travel actually is. Worth reading in its entirety, but here's an excerpt:
So you always prefer to take the train or the bus rather than a plane, and avoid using a car whenever you can, faithful to the belief that this inflicts less harm to the planet.
Well, there could be a nasty surprise in store for you, for taking public transport may not be as green as you automatically think, says a new US study.
Its authors point out an array of factors that are often unknown to the public.
These are hidden or displaced emissions that ramp up the simple "tailpipe" tally, which is based on how much carbon is spewed out by the fossil fuels used to make a trip.
Environmental engineers Mikhail Chester and Arpad Horvath at the University of California at Davis say that when these costs are included, a more complex and challenging picture emerges.
In some circumstances, for instance, it could be more eco-friendly to drive into a city — even in an SUV, the bete noire of green groups — rather than take a suburban train. It depends on seat occupancy and the underlying carbon cost of the mode of transport.
"We are encouraging people to look at not the average ranking of modes, because there is a different basket of configurations that determine the outcome," Chester told AFP in a phone interview.
"There's no overall solution that's the same all the time."
Planet Gore/NRO, Monday, June 08, 2009
Here's a great article via Breitbart on the difficulty of determining what the "greenest" form of travel actually is. Worth reading in its entirety, but here's an excerpt:
So you always prefer to take the train or the bus rather than a plane, and avoid using a car whenever you can, faithful to the belief that this inflicts less harm to the planet.
Well, there could be a nasty surprise in store for you, for taking public transport may not be as green as you automatically think, says a new US study.
Its authors point out an array of factors that are often unknown to the public.
These are hidden or displaced emissions that ramp up the simple "tailpipe" tally, which is based on how much carbon is spewed out by the fossil fuels used to make a trip.
Environmental engineers Mikhail Chester and Arpad Horvath at the University of California at Davis say that when these costs are included, a more complex and challenging picture emerges.
In some circumstances, for instance, it could be more eco-friendly to drive into a city — even in an SUV, the bete noire of green groups — rather than take a suburban train. It depends on seat occupancy and the underlying carbon cost of the mode of transport.
"We are encouraging people to look at not the average ranking of modes, because there is a different basket of configurations that determine the outcome," Chester told AFP in a phone interview.
"There's no overall solution that's the same all the time."
The Infomercial Comes to Life in India's Remotest Villages
The Infomercial Comes to Life in India's Remotest Villages. By Eric Bellman
Traveling Salesman Mr. Sharma Sings, Jokes To Spread Gospel of Global Consumerism
WSJ, Jun 10, 2009, page A1
BENIPUR VILLAGE, India -- Advertisers in India can't rely on TV, radio or even newspapers to reach the country's 700 million rural consumers. So they use Sandeep Sharma.
On dirt roads across the subcontinent, the former wedding singer cracks jokes, gives demonstrations and stages game shows to spread global consumerism, one village at a time.
He is one of thousands of traveling performers who bring the world's biggest brands to audiences of a handful in the remotest reaches of the nation. He offers free Castrol oil changes for tractors. He dishes out bowls of Nestlé noodles in village schools. He pushes Unilever soaps and creams. He promotes tooth powder and condoms.
"Stick to the countryside if you want to be successful," the 34-year-old says, beaming after a recent performance before a small crowd of villagers in stifling heat. "When we arrive, the whole village comes out."
It's a good time to be a traveling salesman in India, relatively speaking. Insulated from the worst of the global recession, India's rural consumers are spending as never before. International brands -- eager for ways to offset contracting markets elsewhere -- are sending out armies of salesmen like Mr. Sharma. Overall advertising spending climbed about 10% in India last year. Rural advertising grew at more than four times that rate.
The standard procedure for Mr. Sharma starts with kowtowing to village elders in order to get permission to set up his mobile stage and to try to find out who in the village has money. He then rouses the villagers. He used to walk around with a megaphone announcing the show, but dogs chased him. Now he drives around in his truck with the music turned up or hands out candy to children, asking them to bring out their neighbors.
Mud Huts
One recent afternoon in the single-road village of Benipur (pop. 5,000), he opened the back of his truck to reveal a stage, speakers and bright posters. The village is a sandy strip of one-story houses and simple shops, most of them brick but a few made of mud with thatched roofs. The road up to the village is flanked with carefully constructed 10-foot towers of cow dung, burned as fuel for cooking and heating. Trucks, tractors, scooters and herds of goats slow as they see the stage. A curious crowd grows. The music starts. Mr. Sharma shouts into the microphone.
"You have to sacrifice so much in life, but these Nokia handsets have all the extras," he says, waving his hands. "Nokia makes life easier."
He pulls barefoot people onto the stage and quizzes them about the product. When they answer the questions correctly, they get a Nokia keychain in the shape of a guitar. Two other performers do a skit mimicking characters from a popular Hindi film.
"Brother, why would you need a cellphone?" one performer asks as he passes the only microphone. "To flirt with the most popular girl in the village," comes the answer. The crowd giggles.
As Mr. Sharma pitches, village life goes on. Next to his truck, villagers pump water from a well. Across the street, a couple of farmers shoe a horse. Two cows, unmoved, stand across the street for the whole show.
[See the full article at the link above.]
Traveling Salesman Mr. Sharma Sings, Jokes To Spread Gospel of Global Consumerism
WSJ, Jun 10, 2009, page A1
BENIPUR VILLAGE, India -- Advertisers in India can't rely on TV, radio or even newspapers to reach the country's 700 million rural consumers. So they use Sandeep Sharma.
On dirt roads across the subcontinent, the former wedding singer cracks jokes, gives demonstrations and stages game shows to spread global consumerism, one village at a time.
He is one of thousands of traveling performers who bring the world's biggest brands to audiences of a handful in the remotest reaches of the nation. He offers free Castrol oil changes for tractors. He dishes out bowls of Nestlé noodles in village schools. He pushes Unilever soaps and creams. He promotes tooth powder and condoms.
"Stick to the countryside if you want to be successful," the 34-year-old says, beaming after a recent performance before a small crowd of villagers in stifling heat. "When we arrive, the whole village comes out."
It's a good time to be a traveling salesman in India, relatively speaking. Insulated from the worst of the global recession, India's rural consumers are spending as never before. International brands -- eager for ways to offset contracting markets elsewhere -- are sending out armies of salesmen like Mr. Sharma. Overall advertising spending climbed about 10% in India last year. Rural advertising grew at more than four times that rate.
The standard procedure for Mr. Sharma starts with kowtowing to village elders in order to get permission to set up his mobile stage and to try to find out who in the village has money. He then rouses the villagers. He used to walk around with a megaphone announcing the show, but dogs chased him. Now he drives around in his truck with the music turned up or hands out candy to children, asking them to bring out their neighbors.
Mud Huts
One recent afternoon in the single-road village of Benipur (pop. 5,000), he opened the back of his truck to reveal a stage, speakers and bright posters. The village is a sandy strip of one-story houses and simple shops, most of them brick but a few made of mud with thatched roofs. The road up to the village is flanked with carefully constructed 10-foot towers of cow dung, burned as fuel for cooking and heating. Trucks, tractors, scooters and herds of goats slow as they see the stage. A curious crowd grows. The music starts. Mr. Sharma shouts into the microphone.
"You have to sacrifice so much in life, but these Nokia handsets have all the extras," he says, waving his hands. "Nokia makes life easier."
He pulls barefoot people onto the stage and quizzes them about the product. When they answer the questions correctly, they get a Nokia keychain in the shape of a guitar. Two other performers do a skit mimicking characters from a popular Hindi film.
"Brother, why would you need a cellphone?" one performer asks as he passes the only microphone. "To flirt with the most popular girl in the village," comes the answer. The crowd giggles.
As Mr. Sharma pitches, village life goes on. Next to his truck, villagers pump water from a well. Across the street, a couple of farmers shoe a horse. Two cows, unmoved, stand across the street for the whole show.
[See the full article at the link above.]
Get Ready for Inflation and Higher Interest Rates
Get Ready for Inflation and Higher Interest Rates. By Arthur Laffer
The unprecedented expansion of the money supply could make the '70s look benign.
WSJ, Jun 10, 2009
Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be "wasted." Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now.
Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That's more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers' expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.
With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs -- such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid -- are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.
But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.
About eight months ago, starting in early September 2008, the Bernanke Fed did an abrupt about-face and radically increased the monetary base -- which is comprised of currency in circulation, member bank reserves held at the Fed, and vault cash -- by a little less than $1 trillion. The Fed controls the monetary base 100% and does so by purchasing and selling assets in the open market. By such a radical move, the Fed signaled a 180-degree shift in its focus from an anti-inflation position to an anti-deflation position.
[graph, annual percentage change in the monetary base, 1961-2009 http://s.wsj.net/public/resources/images/ED-AJ638A_laffe_NS_20090609175213.gif]
The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart nearby). It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless. The currency-in-circulation component of the monetary base -- which prior to the expansion had comprised 95% of the monetary base -- has risen by a little less than 10%, while bank reserves have increased almost 20-fold. Now the currency-in-circulation component of the monetary base is a smidgen less than 50% of the monetary base. Yikes!
Bank reserves are crucially important because they are the foundation upon which banks are able to expand their liabilities and thereby increase the quantity of money.
Banks are required to hold a certain fraction of their liabilities -- demand deposits and other checkable deposits -- in reserves held at the Fed or in vault cash. Prior to the huge increase in bank reserves, banks had been constrained from expanding loans by their reserve positions. They weren't able to inject liquidity into the economy, which had been so desperately needed in response to the liquidity crisis that began in 2007 and continued into 2008. But since last September, all of that has changed. Banks now have huge amounts of excess reserves, enabling them to make lots of net new loans.
The way a bank or the banking system makes new loans is conceptually pretty simple. Banks find an entity that they believe to be credit-worthy that also wants a loan, and in exchange for the new company's IOU (i.e., loan) the bank opens up a checking account for the customer. For the bank's sake, the hope is that the interest paid by the borrower more than makes up for the cost and risk of the loan. The recently ballyhooed "stress tests" on banks are nothing more than checking how well a bank can weather differing levels of default risk.
What's important for the overall economy, however, is how fast these loans are made and how rapidly the quantity of money increases. For our purposes, money is the sum total of all currency in circulation, bank demand deposits, other checkable deposits, and travelers checks (economists call this M1). When reserve constraints on banks are removed, it does take the banks time to make new loans. But given sufficient time, they will make enough new loans until they are once again reserve constrained. The expansion of money, given an increase in the monetary base, is inevitable, and will ultimately result in higher inflation and interest rates. In shorter time frames, the expansion of money can also result in higher stock prices, a weaker currency, and increases in commodity prices such as oil and gold.
At present, banks are doing just what we would expect them to do. They are making new loans and increasing overall bank liabilities (i.e., money). The 12-month growth rate of M1 is now in the 15% range, and close to its highest level in the past half century.
With an increased trust in the overall banking system, the panic demand for money has begun to and should continue to recede. The dramatic drop in output and employment in the U.S. economy will also reduce the demand for money. Reduced demand for money combined with rapid growth in money is a surefire recipe for inflation and higher interest rates. The higher interest rates themselves will also further reduce the demand for money, thereby exacerbating inflationary pressures. It's a catch-22.
It's difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed's actions because, frankly, we haven't ever seen anything like this in the U.S. To date what's happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn't a pretty picture.
Now the Fed can, and I believe should, do what it must to mitigate the inevitable consequences of its unwarranted increase in the monetary base. It should contract the monetary base back to where it otherwise would have been, plus a slight increase geared toward economic expansion. Absent this major contraction in the monetary base, the Fed should increase reserve requirements on member banks to absorb the excess reserves. Given that banks are now paid interest on their reserves and short-term rates are very low, raising reserve requirements should not exact too much of a penalty on the banking system, and the long-term gains of the lessened inflation would many times over warrant whatever short-term costs there might be.
Alas, I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury's planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds.
In addition, a rapid contraction of the monetary base as I propose would cause a contraction in bank lending, or at best limited expansion. This is exactly what happened in 2000 and 2001 when the Fed contracted the monetary base the last time. The economy quickly dipped into recession. While the short-term pain of a deepened recession is quite sharp, the long-term consequences of double-digit inflation are devastating. For Fed Chairman Ben Bernanke it's a Hobson's choice. For me the issue is how to protect assets for my grandchildren.
Mr. Laffer is the chairman of Laffer Associates and co-author of "The End of Prosperity: How Higher Taxes Will Doom the Economy -- If We Let It Happen" (Threshold, 2008).
The unprecedented expansion of the money supply could make the '70s look benign.
WSJ, Jun 10, 2009
Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be "wasted." Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now.
Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That's more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers' expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.
With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs -- such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid -- are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.
But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.
About eight months ago, starting in early September 2008, the Bernanke Fed did an abrupt about-face and radically increased the monetary base -- which is comprised of currency in circulation, member bank reserves held at the Fed, and vault cash -- by a little less than $1 trillion. The Fed controls the monetary base 100% and does so by purchasing and selling assets in the open market. By such a radical move, the Fed signaled a 180-degree shift in its focus from an anti-inflation position to an anti-deflation position.
[graph, annual percentage change in the monetary base, 1961-2009 http://s.wsj.net/public/resources/images/ED-AJ638A_laffe_NS_20090609175213.gif]
The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart nearby). It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless. The currency-in-circulation component of the monetary base -- which prior to the expansion had comprised 95% of the monetary base -- has risen by a little less than 10%, while bank reserves have increased almost 20-fold. Now the currency-in-circulation component of the monetary base is a smidgen less than 50% of the monetary base. Yikes!
Bank reserves are crucially important because they are the foundation upon which banks are able to expand their liabilities and thereby increase the quantity of money.
Banks are required to hold a certain fraction of their liabilities -- demand deposits and other checkable deposits -- in reserves held at the Fed or in vault cash. Prior to the huge increase in bank reserves, banks had been constrained from expanding loans by their reserve positions. They weren't able to inject liquidity into the economy, which had been so desperately needed in response to the liquidity crisis that began in 2007 and continued into 2008. But since last September, all of that has changed. Banks now have huge amounts of excess reserves, enabling them to make lots of net new loans.
The way a bank or the banking system makes new loans is conceptually pretty simple. Banks find an entity that they believe to be credit-worthy that also wants a loan, and in exchange for the new company's IOU (i.e., loan) the bank opens up a checking account for the customer. For the bank's sake, the hope is that the interest paid by the borrower more than makes up for the cost and risk of the loan. The recently ballyhooed "stress tests" on banks are nothing more than checking how well a bank can weather differing levels of default risk.
What's important for the overall economy, however, is how fast these loans are made and how rapidly the quantity of money increases. For our purposes, money is the sum total of all currency in circulation, bank demand deposits, other checkable deposits, and travelers checks (economists call this M1). When reserve constraints on banks are removed, it does take the banks time to make new loans. But given sufficient time, they will make enough new loans until they are once again reserve constrained. The expansion of money, given an increase in the monetary base, is inevitable, and will ultimately result in higher inflation and interest rates. In shorter time frames, the expansion of money can also result in higher stock prices, a weaker currency, and increases in commodity prices such as oil and gold.
At present, banks are doing just what we would expect them to do. They are making new loans and increasing overall bank liabilities (i.e., money). The 12-month growth rate of M1 is now in the 15% range, and close to its highest level in the past half century.
With an increased trust in the overall banking system, the panic demand for money has begun to and should continue to recede. The dramatic drop in output and employment in the U.S. economy will also reduce the demand for money. Reduced demand for money combined with rapid growth in money is a surefire recipe for inflation and higher interest rates. The higher interest rates themselves will also further reduce the demand for money, thereby exacerbating inflationary pressures. It's a catch-22.
It's difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed's actions because, frankly, we haven't ever seen anything like this in the U.S. To date what's happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn't a pretty picture.
Now the Fed can, and I believe should, do what it must to mitigate the inevitable consequences of its unwarranted increase in the monetary base. It should contract the monetary base back to where it otherwise would have been, plus a slight increase geared toward economic expansion. Absent this major contraction in the monetary base, the Fed should increase reserve requirements on member banks to absorb the excess reserves. Given that banks are now paid interest on their reserves and short-term rates are very low, raising reserve requirements should not exact too much of a penalty on the banking system, and the long-term gains of the lessened inflation would many times over warrant whatever short-term costs there might be.
Alas, I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury's planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds.
In addition, a rapid contraction of the monetary base as I propose would cause a contraction in bank lending, or at best limited expansion. This is exactly what happened in 2000 and 2001 when the Fed contracted the monetary base the last time. The economy quickly dipped into recession. While the short-term pain of a deepened recession is quite sharp, the long-term consequences of double-digit inflation are devastating. For Fed Chairman Ben Bernanke it's a Hobson's choice. For me the issue is how to protect assets for my grandchildren.
Mr. Laffer is the chairman of Laffer Associates and co-author of "The End of Prosperity: How Higher Taxes Will Doom the Economy -- If We Let It Happen" (Threshold, 2008).
GM Needs a Political Strategy
GM Needs a Political Strategy. By Holman W Jenkins, Jr
Whitacre is not there to sell cars.
WSJ, Jun 10, 2009
What's good for Ma Bell is good for GM.
That was our second thought on hearing that former AT&T chief Ed Whitacre would become the new GM board chairman once the company reorganized under Obamaruptcy. Our first thought was: Now Ivan Seidenberg has to get a car company.
Mr. Whitacre came up as an engineer and ran AT&T from 1990 to 2007. He'll feel right at home. Whether he liked it or not, government was his partner all the way at AT&T. The company may not have been owned by the feds, as GM now is, but government had its finger in every decision he made. Then again, politics was and ever has been integral to GM long before it turned to the government for a bailout. Succeeding for Mr. Whitacre will mean, first and foremost, making sense of GM's relationship with Washington.
Mildly laughable is the recent published insistence by Obama car czars Steve Rattner and Ron Bloom that GM would be run on a strictly commercial basis while in government hands. Would that it had ever been so.
Already federal money is clearly being used to provide a softer landing for the UAW than labor would have gotten in a bankruptcy reorganization under private investors. The bailout has also deeply politicized the company's business model by privileging its money-losing domestic operations, saddled with the UAW, over its money-making foreign ones. A truly commercial vulture investor would have done the opposite: dumped North America and kept the promising businesses in China, Russia, Europe and Latin America.
More than that, the bailout has disassembled what was finally becoming an integrated, global GM, rather than a collection of rivalrous regional interests. Australia's GM Holden Ltd. had emerged as the engineering center for GM's new rear-drive platform, underlying the rightly praised Pontiac G8 and Chevy Camaro. Now GM, under the terms of the federal bailout, won't be able to invest in its Australian affiliate until it has paid back its government loans.
But then GM has suffered from excessive political attention for most of its existence. Wonder where its famously defensive, obfuscatory "culture" comes from? This is where. The company never has been able to launch a model or close a factory without weighing the political consequences. It can't control its dealer network because dealers are a powerful interest group in every state capital. GM cannot market a car without first knowing how regulators will treat it for fuel-economy purposes, so GM can know how many it can afford to sell (if it's a big car) or how many it must sell (if it's a small one).
Most of all, GM cannot sit down with the UAW without knowing that Democratic politicians, on whom GM relies for help in Washington, will only be satisfied if the UAW (with its power over the re-election hopes of officeholders all over the upper Midwest) is satisfied.
All this means Mr. Whitacre may well be the right man for GM. What the company needs more than anything else is a political strategy. Its loss of political clout has been catastrophic, leading to (among other things) devastating new CAFE regs. But he has one big leg up on his GM predecessors: A Democratic administration now owns GM and needs it to succeed financially. The voice of reason will be heard because it's in Democrats' interest to hear it. He can surely expect, for instance, to find Team Obama amenable to a certain amount of quiet fudging of its new fuel mileage rules to keep GM's pickup and SUV profits flowing.
Make no mistake. Mr. Whitacre's task won't be selling cars (somebody else can do that) but reshaping the policy environment in which GM must operate. His model should be another Ed -- Ed Jordan, who as chief of the nationalized Conrail never received the credit he deserved for rescuing the carrier by leading the charge for regulatory reform on Capitol Hill.
His braintruster was Leo Mullin, who went on to lead Delta Air Lines, and who as a young Conrail veep built the case that Conrail would become a permanent drain on taxpayers unless the rail industry were free to design and price its services with the sole object of making a profit for investors.
Mr. Mullin later recalled for author Rush Loving Jr: "Most people would say you're kind of crazy. It's your job to run your company in the environment you have. And Jordan said, 'No, it can't be done that way.' . . . And he deserves a hell of a lot of credit for that." Without the Jordan strategy, Conrail never would have been successfully privatized after he left.
Mr. Whitacre hasn't spoken, but we suspect he's going to GM for the same reason Ed Liddy (another Ed) went to AIG or David Petraeus went to Iraq: patriotism. His job will bring lots of battles, but none more important than untangling the unholy conflict between Mr. Obama's fuel-mileage goals and his hopes for a "viable" domestic auto industry. Good luck.
Whitacre is not there to sell cars.
WSJ, Jun 10, 2009
What's good for Ma Bell is good for GM.
That was our second thought on hearing that former AT&T chief Ed Whitacre would become the new GM board chairman once the company reorganized under Obamaruptcy. Our first thought was: Now Ivan Seidenberg has to get a car company.
Mr. Whitacre came up as an engineer and ran AT&T from 1990 to 2007. He'll feel right at home. Whether he liked it or not, government was his partner all the way at AT&T. The company may not have been owned by the feds, as GM now is, but government had its finger in every decision he made. Then again, politics was and ever has been integral to GM long before it turned to the government for a bailout. Succeeding for Mr. Whitacre will mean, first and foremost, making sense of GM's relationship with Washington.
Mildly laughable is the recent published insistence by Obama car czars Steve Rattner and Ron Bloom that GM would be run on a strictly commercial basis while in government hands. Would that it had ever been so.
Already federal money is clearly being used to provide a softer landing for the UAW than labor would have gotten in a bankruptcy reorganization under private investors. The bailout has also deeply politicized the company's business model by privileging its money-losing domestic operations, saddled with the UAW, over its money-making foreign ones. A truly commercial vulture investor would have done the opposite: dumped North America and kept the promising businesses in China, Russia, Europe and Latin America.
More than that, the bailout has disassembled what was finally becoming an integrated, global GM, rather than a collection of rivalrous regional interests. Australia's GM Holden Ltd. had emerged as the engineering center for GM's new rear-drive platform, underlying the rightly praised Pontiac G8 and Chevy Camaro. Now GM, under the terms of the federal bailout, won't be able to invest in its Australian affiliate until it has paid back its government loans.
But then GM has suffered from excessive political attention for most of its existence. Wonder where its famously defensive, obfuscatory "culture" comes from? This is where. The company never has been able to launch a model or close a factory without weighing the political consequences. It can't control its dealer network because dealers are a powerful interest group in every state capital. GM cannot market a car without first knowing how regulators will treat it for fuel-economy purposes, so GM can know how many it can afford to sell (if it's a big car) or how many it must sell (if it's a small one).
Most of all, GM cannot sit down with the UAW without knowing that Democratic politicians, on whom GM relies for help in Washington, will only be satisfied if the UAW (with its power over the re-election hopes of officeholders all over the upper Midwest) is satisfied.
All this means Mr. Whitacre may well be the right man for GM. What the company needs more than anything else is a political strategy. Its loss of political clout has been catastrophic, leading to (among other things) devastating new CAFE regs. But he has one big leg up on his GM predecessors: A Democratic administration now owns GM and needs it to succeed financially. The voice of reason will be heard because it's in Democrats' interest to hear it. He can surely expect, for instance, to find Team Obama amenable to a certain amount of quiet fudging of its new fuel mileage rules to keep GM's pickup and SUV profits flowing.
Make no mistake. Mr. Whitacre's task won't be selling cars (somebody else can do that) but reshaping the policy environment in which GM must operate. His model should be another Ed -- Ed Jordan, who as chief of the nationalized Conrail never received the credit he deserved for rescuing the carrier by leading the charge for regulatory reform on Capitol Hill.
His braintruster was Leo Mullin, who went on to lead Delta Air Lines, and who as a young Conrail veep built the case that Conrail would become a permanent drain on taxpayers unless the rail industry were free to design and price its services with the sole object of making a profit for investors.
Mr. Mullin later recalled for author Rush Loving Jr: "Most people would say you're kind of crazy. It's your job to run your company in the environment you have. And Jordan said, 'No, it can't be done that way.' . . . And he deserves a hell of a lot of credit for that." Without the Jordan strategy, Conrail never would have been successfully privatized after he left.
Mr. Whitacre hasn't spoken, but we suspect he's going to GM for the same reason Ed Liddy (another Ed) went to AIG or David Petraeus went to Iraq: patriotism. His job will bring lots of battles, but none more important than untangling the unholy conflict between Mr. Obama's fuel-mileage goals and his hopes for a "viable" domestic auto industry. Good luck.
North Korea Deserves the Diplomacy of Silence
North Korea Deserves the Diplomacy of Silence. By Edward N Luttwak
What Churchill called 'jaw-jaw' has produced nothing, except more provocations.
WSJ, Jun 0, 2009
Mr. Luttwak, a senior adviser at the Center for Strategic and International Studies, is the author of "Strategy: The Logic of War and Peace" (Belknap, 2002).
What Churchill called 'jaw-jaw' has produced nothing, except more provocations.
WSJ, Jun 0, 2009
Mr. Luttwak, a senior adviser at the Center for Strategic and International Studies, is the author of "Strategy: The Logic of War and Peace" (Belknap, 2002).
Iran's Potemkin Election: Only candidates vetted by the ruling clerics have been allowed to stand
Iran's Potemkin Election. By Con Coughlin
Only candidates vetted by the ruling clerics have been allowed to stand.
WSJ, Jun 10, 2009
Mr. Coughlin is the executive foreign editor of the Daily Telegraph in London and the author of "Khomeini's Ghost: The Iranian Revolution and the Rise of Militant Islam" (Ecco, 2009).
Only candidates vetted by the ruling clerics have been allowed to stand.
WSJ, Jun 10, 2009
Mr. Coughlin is the executive foreign editor of the Daily Telegraph in London and the author of "Khomeini's Ghost: The Iranian Revolution and the Rise of Militant Islam" (Ecco, 2009).
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