Although I have some rather substantial policy disagreements with President Obama, I don't doubt that he's an intelligent person. Furthermore, I think he's spent a lot of time thinking about his world view--how he sees the world; how he sees others; what he thinks others think of him and, by extension, what they think of the United States.
Unfortunately, I don't think he's subjected that world view to a lot of criticism. My sense is that he is surrounded by people who either aren't his intellectual equal or simply don't think carefully about what their world view is. As a result, the President seems lost when others act in ways he doesn't expect.
I saw this pretty clearly when he tried to rethink his Afghanistan strategy--it took 100+ days to come up with a strategy that didn't seem particularly coherent, and that wasn't sold particularly well. It's almost as if his advisors can't communicate with a military that they think is still living in 1985. In fact, the military leadership today probably understands nuanced diplomacy better than the State Department.
But, we saw a similar incoherence this week, in the wake of the failed Northwest airline attack. The President stayed on vacation--that makes sense; you don't want to encourage the enemy by making this larger than it already is. But, his advisors seemed to stay on vacation, too. It took 3 days for Secretary Napolitano to admit security had failed--seriously? Now a group is claiming credit. Are they involved? We have the terrorist in custody--what does he say? If the group did it, we should've been blaming them first, to send a strategic message that we know. If the terrorist acted alone, we should already be ridiculing the Al Qaeda group's claim. But, we're not doing either. We're letting the other side set the communications agenda.
No one in the administration seems to have thought about what the world is really like, and the fact that the administration is expected to have answers for everything, all the time. That's not fair, and it isn't even reasonable, but it comes with the office. They aren't just a domestic administration; they have to deal with foreign policy, too. And that means more than platitudes about how everyone loves us now that George W. Bush is no longer President. It seems like there are a lot of people who hated us under Clinton, and it seems that they still exist.
Love him or hate him, Bush had a clear world view, that he intended to make "Islamo-fascism" simply unacceptable to civilized peoples everywhere. Pretty heady; maybe arrogant. But, at least he knew what he wanted the world to look like when we were done. Any military planner will tell you that's the first step in outlining a strategy--define the end state.
Time for the Obama administration to start thinking a little more about what they want the world to look like, or some very unpleasant "others" are going to offer their version, instead.
Monday, December 28, 2009
Sunday, December 13, 2009
Climate Shame
So, thousands of emails between climate scientists are either hacked or released by a whistleblower. What to make of this?
First off, a caveat--I'm not going to offer my opinion on climate change, since by remaining anonymous, my opinion is no more or less authoritative than any other layman's. But, I will say this--I was taught the scientific method in school, and I read. A lot.
A couple weeks ago, Paul Krugman assured us on ABC's "This Week" that this was just the normal course of academic discussion--that we need to understand academics get fired up when they are arguing their case internally. I'm not clear why an economist's opinion is any more valid than mine on climate change, but I'll take that for what it's worth.
Which is not much.
Sorry, Mr. Krugman, I've read the emails. Not all of them; I have a day job. But to claim this is just the normal course of scientific research is to damn all science. Saying you will delete data before releasing it isn't hyperbole; it's misconduct. Refusing to honor Freedom of Information Act requests because you believe you're just being harassed? I can't speak for the UK's version, but in the United States, the whole point of FOIA is that the holder of the data doesn't get to decide whether you're worth the bother. They want it, you've got it, hand it over. Period. That's the law. Or, to put it a bit more indelicately, it's NOT YOUR DATA. Unless you personally funded your research out of your own pocket, IT ISN'T YOURS. It isn't yours to withold, and it isn't your position to pass judgement on anyone asking for it--whether they have a Nobel Prize or are a kook in the basement.
Since we're talking about scientists, not lawyers, I could perhaps excuse their lack of understanding. What I can't excuse is the very idea that a scientist would find it acceptable to pressure others to boycott opposition, suppress research, or hide behind anything in a quest to keep data hidden. The whole point of scientific research is that it has to be repeatable. Once is a fluke, and if data doesn't fit the theory, then the theory has to be reworked. Perhaps the underlying hypothesis is still correct, but your desire on the matter is irrelevant. If you want to prove the doubters wrong, you'll have to give them your data, publish their research, and then demolish it. Anything else simply encourages conspiracy theorists.
So, forgive me if I don't just relax, now that the Associated Press has read all the emails, sent them to "experts," and concluded that these scientists were "overly generous" in their interpretations, but that we shouldn't conclude they were wrong about climate change.
It doesn't work that way. They have demonstrated a lack of ethics. As a result, I can't believe any of their conclusions anymore--all the more so because I'm not a climate scientist, so I can't personally verify their data, methods, and conclusions. Neither can these "experts" in the course of a couple weeks--so they are simply siding with colleagues, whether they know them or not. Until all the research is meticulously, laboriously reviewed--decades worth, by experts from both sides, in open forums, which will cost billions--then we are simply taking it on faith that the underlying science must still be sound. After all, there's consensus on this, right?
Just like there was a scientific consensus, for about a thousand years, that the Sun went around the Earth. Until someone took another look at the data.
First off, a caveat--I'm not going to offer my opinion on climate change, since by remaining anonymous, my opinion is no more or less authoritative than any other layman's. But, I will say this--I was taught the scientific method in school, and I read. A lot.
A couple weeks ago, Paul Krugman assured us on ABC's "This Week" that this was just the normal course of academic discussion--that we need to understand academics get fired up when they are arguing their case internally. I'm not clear why an economist's opinion is any more valid than mine on climate change, but I'll take that for what it's worth.
Which is not much.
Sorry, Mr. Krugman, I've read the emails. Not all of them; I have a day job. But to claim this is just the normal course of scientific research is to damn all science. Saying you will delete data before releasing it isn't hyperbole; it's misconduct. Refusing to honor Freedom of Information Act requests because you believe you're just being harassed? I can't speak for the UK's version, but in the United States, the whole point of FOIA is that the holder of the data doesn't get to decide whether you're worth the bother. They want it, you've got it, hand it over. Period. That's the law. Or, to put it a bit more indelicately, it's NOT YOUR DATA. Unless you personally funded your research out of your own pocket, IT ISN'T YOURS. It isn't yours to withold, and it isn't your position to pass judgement on anyone asking for it--whether they have a Nobel Prize or are a kook in the basement.
Since we're talking about scientists, not lawyers, I could perhaps excuse their lack of understanding. What I can't excuse is the very idea that a scientist would find it acceptable to pressure others to boycott opposition, suppress research, or hide behind anything in a quest to keep data hidden. The whole point of scientific research is that it has to be repeatable. Once is a fluke, and if data doesn't fit the theory, then the theory has to be reworked. Perhaps the underlying hypothesis is still correct, but your desire on the matter is irrelevant. If you want to prove the doubters wrong, you'll have to give them your data, publish their research, and then demolish it. Anything else simply encourages conspiracy theorists.
So, forgive me if I don't just relax, now that the Associated Press has read all the emails, sent them to "experts," and concluded that these scientists were "overly generous" in their interpretations, but that we shouldn't conclude they were wrong about climate change.
It doesn't work that way. They have demonstrated a lack of ethics. As a result, I can't believe any of their conclusions anymore--all the more so because I'm not a climate scientist, so I can't personally verify their data, methods, and conclusions. Neither can these "experts" in the course of a couple weeks--so they are simply siding with colleagues, whether they know them or not. Until all the research is meticulously, laboriously reviewed--decades worth, by experts from both sides, in open forums, which will cost billions--then we are simply taking it on faith that the underlying science must still be sound. After all, there's consensus on this, right?
Just like there was a scientific consensus, for about a thousand years, that the Sun went around the Earth. Until someone took another look at the data.
Monday, September 28, 2009
Conspiracy and Absurdity
First, let me allay any concern that I can't praise President Obama when he does something right. In that, I am wholeheartedly agreeing with Dana Perino that the President did an admirable job calling out Iran on their second, hidden uranium enrichment facility. Despite Iran's attempt to preempt the news cycle, and their attempt afterwards to change the subject with missile tests, the President, along with the president of France and prime minister of Britain, did a nice job.
Next, on to former President Bill Clinton, who has decided that the right wing conspiracy is back, and it's the cause of all President Obama's problems, just as it was the cause of all his. Really? I hate to be the bearer of bad news, but the whole point of the 9-12 Tea Party protests is that there is no leader of the opposition. It's just a popular movement--which is ironic, since President Obama's schtick is to be a populist. ("I'm the only one between you and the pitchforks." Remember that warning to the banks?)
Right wing conspiracy. Okay, just for fun, let's play along. In that case, I suppose Mr. Clinton would agree that there's a vast left wing conspiracy that was opposing former President Bush? No? Then, is it a vast left wing conspiracy that's preventing President Obama's 60 vote majority in the Senate and huge majority in the House from attaining his goals? Again, no? It's...the right wing? The Republicans? Who don't have the votes to stop anything?
Sorry, Bill. That's so silly, it's not even up to Jimmy Carter standards. In fact, it's so absurd, I have to wonder, why you would even say such a thing? Is it simply that you assume the press will dutifully report whatever you want? In that case, shame on both of you.
Next, on to former President Bill Clinton, who has decided that the right wing conspiracy is back, and it's the cause of all President Obama's problems, just as it was the cause of all his. Really? I hate to be the bearer of bad news, but the whole point of the 9-12 Tea Party protests is that there is no leader of the opposition. It's just a popular movement--which is ironic, since President Obama's schtick is to be a populist. ("I'm the only one between you and the pitchforks." Remember that warning to the banks?)
Right wing conspiracy. Okay, just for fun, let's play along. In that case, I suppose Mr. Clinton would agree that there's a vast left wing conspiracy that was opposing former President Bush? No? Then, is it a vast left wing conspiracy that's preventing President Obama's 60 vote majority in the Senate and huge majority in the House from attaining his goals? Again, no? It's...the right wing? The Republicans? Who don't have the votes to stop anything?
Sorry, Bill. That's so silly, it's not even up to Jimmy Carter standards. In fact, it's so absurd, I have to wonder, why you would even say such a thing? Is it simply that you assume the press will dutifully report whatever you want? In that case, shame on both of you.
Thursday, September 24, 2009
ACORN: Slavery Is Okay
Nothing quite like an incendiary headline to make the point--as long as it's accurate. I think it is.
The current blowup between ACORN, a couple undercover journalists, and Fox News (who simply reported a story interesting enough that it got immediate action in both houses of the US Congress) utterly misses the point.
The journalists and Fox point out that the hidden camera video shows ACORN is corrupt. ACORN insists the journalists are somehow entrapping them. There is a ridiculous charge that the journalists broke the law--if that's the case, then the law is so obviously unconstitutional, its supporters should be embarrassed. Neither is asking the most important question.
Why do the ACORN employees seem to think human trafficking--a.k.a. slavery--is okay?
Serious question. The undercover journalist/activist said he was going to bring underage El Salvadoran girls to the US to be prostitutes. And, by "underage," they didn't mean seventeen-and-a-half. They said 13 to 16. THIRTEEN. There's a word for that--SLAVERY. But, the ACORN employee (who was interestingly enough, black) didn't seem to have a problem with that.
I am truly stunned. I have long concluded that most racism exists on the left. I have always accepted that the left has different standards of acceptable conduct, and that maybe they could consider prostitution a victimless crime. Reasonable people can disagree about that.
But, to blithely accept the idea of sex slavery as something that doesn't even merit a comment? A remark? The slightest objection? What kind of person could do that?
That, frankly, is a lot more interesting to me than some corrupt organization. No one seems horrified. Why not?
Maybe that explains why human trafficking still exists. It's much more popular to talk about a slavery that ended 150 years ago than it is to talk about the slavery that's still going on. Easier, too--because there are things, besides talk, that can be done to end something that's still occurring.
I think they call that an inconvenient truth.
The current blowup between ACORN, a couple undercover journalists, and Fox News (who simply reported a story interesting enough that it got immediate action in both houses of the US Congress) utterly misses the point.
The journalists and Fox point out that the hidden camera video shows ACORN is corrupt. ACORN insists the journalists are somehow entrapping them. There is a ridiculous charge that the journalists broke the law--if that's the case, then the law is so obviously unconstitutional, its supporters should be embarrassed. Neither is asking the most important question.
Why do the ACORN employees seem to think human trafficking--a.k.a. slavery--is okay?
Serious question. The undercover journalist/activist said he was going to bring underage El Salvadoran girls to the US to be prostitutes. And, by "underage," they didn't mean seventeen-and-a-half. They said 13 to 16. THIRTEEN. There's a word for that--SLAVERY. But, the ACORN employee (who was interestingly enough, black) didn't seem to have a problem with that.
I am truly stunned. I have long concluded that most racism exists on the left. I have always accepted that the left has different standards of acceptable conduct, and that maybe they could consider prostitution a victimless crime. Reasonable people can disagree about that.
But, to blithely accept the idea of sex slavery as something that doesn't even merit a comment? A remark? The slightest objection? What kind of person could do that?
That, frankly, is a lot more interesting to me than some corrupt organization. No one seems horrified. Why not?
Maybe that explains why human trafficking still exists. It's much more popular to talk about a slavery that ended 150 years ago than it is to talk about the slavery that's still going on. Easier, too--because there are things, besides talk, that can be done to end something that's still occurring.
I think they call that an inconvenient truth.
Thursday, September 17, 2009
Dissent is Racist? You can't be serious.
I normally prefer the long form for blogs, but this one is just too infuriating not to just vent.
So, former President Jimmy Carter says that opposition to President Barack Obama is racist? Are you kidding me? Let's see where that logic goes: If I oppose President Obama's ideas, I'm racist. If I oppose Hillary Clinton's ideas, I suppose I must be sexist. And if I oppose John Edwards, I'm...against big hair? Against philandering? Against having affairs with your wife when she's in remission from cancer?
Are you kidding me?
I recall then-Senator Clinton arguing that, "We have the right to debate, and to disagree with any administration!!!!!!!" I add the screamers because--well, because she was yelling. But, she had a point, it works both ways, and I've since adopted her comment as this blog's subtitle. So, I will politely respond...
President Carter, if you have racist guilt about your Southern upbringing, I'm sorry. But, please don't project that guilt on me. I lost several bets in 2008 because I was certain Condi Rice would be the Republican VP candidate. If that's not enough for you, let me make it crystal clear:
Rice/Cheney 2012.
Is that enough?
So, former President Jimmy Carter says that opposition to President Barack Obama is racist? Are you kidding me? Let's see where that logic goes: If I oppose President Obama's ideas, I'm racist. If I oppose Hillary Clinton's ideas, I suppose I must be sexist. And if I oppose John Edwards, I'm...against big hair? Against philandering? Against having affairs with your wife when she's in remission from cancer?
Are you kidding me?
I recall then-Senator Clinton arguing that, "We have the right to debate, and to disagree with any administration!!!!!!!" I add the screamers because--well, because she was yelling. But, she had a point, it works both ways, and I've since adopted her comment as this blog's subtitle. So, I will politely respond...
President Carter, if you have racist guilt about your Southern upbringing, I'm sorry. But, please don't project that guilt on me. I lost several bets in 2008 because I was certain Condi Rice would be the Republican VP candidate. If that's not enough for you, let me make it crystal clear:
Rice/Cheney 2012.
Is that enough?
Sunday, August 23, 2009
Time to Get Back to Work
Okay, time to get back at it. Lots to think about; lots to write about. Among the topics banging around inside my head:
"Wealth versus Treasure"
"Dear Mr. President--That's How Our System Is Designed"
"Why Is Russia So Worried About Our Missile Defense?"
"Wealth versus Treasure"
"Dear Mr. President--That's How Our System Is Designed"
"Why Is Russia So Worried About Our Missile Defense?"
Tuesday, July 21, 2009
Where Does the Time Go?
It's amazing how Real Life gets in the way of philosophical pondering, even when there's lots of news. Soon...
In the meantime, check out the blogs I'm following. Some post less often than me; others post several times a day. And, there's a nice variation of topic and viewpoint.
In the meantime, I have a couple hundred emails to deal with.
In the meantime, check out the blogs I'm following. Some post less often than me; others post several times a day. And, there's a nice variation of topic and viewpoint.
In the meantime, I have a couple hundred emails to deal with.
Sunday, June 14, 2009
The Fallacy of Stimulus
Like many people, last year’s collapse of the financial system led me to take another look at the economics I learned in college. In earlier posts, I’ve mused about the notion that we’re all missing something—that there’s some subtlety that it takes a Keynes or a Krugman to figure out.
I’ve changed my mind. This plan is ridiculous, and it takes nothing more than common sense and experience to see that.
Over the last six months, the Obama administration and Congress have poured trillions into the economy in an attempt to avert more serious recession. The idea was that Roosevelt didn’t ‘spend enough, fast enough,’ and that was a major contributor to the Great Depression. My gut and my study of history told me that was wrong—it's pretty obvious that Roosevelt's tax policies prolonged the Great Depression, and only World War II pulled us out. Moreover, I’ve worked in government, and with government, so I was immediately suspicious of the concept of “shovel ready” projects. No one—no one—plans, designs, and approves a project knowing they don’t have money for it. Oh, sure, you can find the one exception, but even money says that “exception” is actually a project that was funded that lost its funding.
The crux of the problem came home last week when Vice President Biden made a comment that the government would have to reinvigorate its efforts to get the stimulus money spent—that only some $40 billion or so of the $787 billion authorized had actually been spent. For me, that was the alarm bell that finally made me realize all those (mostly conservative) pundits were right—most of this “stimulus” won’t be spent until 2010, well after it could do any good. In fact, it will be spent just in time to help with the 2010 elections, and if the incumbents are lucky, just before too much money in the system sparks inflation. (Although the President has a plan to curb inflation—he will be raising taxes in 2010, by letting the Bush tax cuts expire.)
The simple truth is that governments cannot spend billions extra in a matter of weeks. The system just doesn’t work that way. Even after the money is authorized by Congress, it takes months just to get it obligated on a contract. It takes more months to get it expended—and until it’s expended, it isn’t stimulating anything. And, while “months” is really, really fast when you’re building something, it’s far too slow to have any relevance to the business cycle.
I don’t know if the Keynesians just don’t understand the reality of bureaucracies, or if their faith in theory has simply blinded them to it. I do know that common sense tells me there are two ways to get money into the economy rapidly: 1) cut taxes, 2) hand out cash.
It has become popular to argue that this collapse has “proven” supply-side economics doesn’t work. I have yet to see anyone actually make that case with anything other than partisan talking points, and I don’t think they can. Instead, they rely on the populist argument that cutting income tax only helps the rich—because half of Americans pay no income tax at all. Um, okay—I thought we were talking economic stimulus? When did we switch to social policy? We can certainly have that discussion, but conflating the two issues suggests the redistributors have a not-so-hidden agenda.
But, if you’re worried about getting money into everyone’s hands, it isn’t just income tax that can be cut. Slash the corporate income tax, and 1) companies can cut prices; which 2) makes goods more affordable; which 3) increases demand; which 4) increases the need for labor. It isn’t just shareholders who benefit—everyone does. But, of course, that’s not popular to say in these populist times. (And shareholders benefiting just creates stimulus, too--because they either spend or invest their profit, and if they invest it, that just gives it to someone else to spend. Stimulus all around.)
This leads us to consider option two: handing out cash. That will certainly get money into everyone’s pockets, but there’s an obvious problem—for the 50% of Americans who pay no income tax, you’ve simply taken capital out of the system, because you have to borrow that money to pay them off. (And, please, spare me the argument that these folks pay Social Security taxes—they will get that back fivefold when they retire, and again, we aren't talking social policy here.) So, you may get a very short term stimulus from the demand, but you’re choking the engine that will ultimately create more jobs.
Finally, that brings us to the ultimate Keynesian argument—that deficit spending is okay in a recession, because the capital you’re borrowing isn’t being used, anyway. While that might be the case in some recessions, it certainly is not the case now—the major argument the populists are making against the banks is that they aren’t lending. Of course, they aren’t lending because they’re scared to death about what's next and what's really on their balance sheets, so they are keeping higher reserves. How, exactly, does government stripping those reserves out of the system improve confidence? It doesn’t, of course.
Which is why I am, just now, starting to worry about stagflation.
I’ve changed my mind. This plan is ridiculous, and it takes nothing more than common sense and experience to see that.
Over the last six months, the Obama administration and Congress have poured trillions into the economy in an attempt to avert more serious recession. The idea was that Roosevelt didn’t ‘spend enough, fast enough,’ and that was a major contributor to the Great Depression. My gut and my study of history told me that was wrong—it's pretty obvious that Roosevelt's tax policies prolonged the Great Depression, and only World War II pulled us out. Moreover, I’ve worked in government, and with government, so I was immediately suspicious of the concept of “shovel ready” projects. No one—no one—plans, designs, and approves a project knowing they don’t have money for it. Oh, sure, you can find the one exception, but even money says that “exception” is actually a project that was funded that lost its funding.
The crux of the problem came home last week when Vice President Biden made a comment that the government would have to reinvigorate its efforts to get the stimulus money spent—that only some $40 billion or so of the $787 billion authorized had actually been spent. For me, that was the alarm bell that finally made me realize all those (mostly conservative) pundits were right—most of this “stimulus” won’t be spent until 2010, well after it could do any good. In fact, it will be spent just in time to help with the 2010 elections, and if the incumbents are lucky, just before too much money in the system sparks inflation. (Although the President has a plan to curb inflation—he will be raising taxes in 2010, by letting the Bush tax cuts expire.)
The simple truth is that governments cannot spend billions extra in a matter of weeks. The system just doesn’t work that way. Even after the money is authorized by Congress, it takes months just to get it obligated on a contract. It takes more months to get it expended—and until it’s expended, it isn’t stimulating anything. And, while “months” is really, really fast when you’re building something, it’s far too slow to have any relevance to the business cycle.
I don’t know if the Keynesians just don’t understand the reality of bureaucracies, or if their faith in theory has simply blinded them to it. I do know that common sense tells me there are two ways to get money into the economy rapidly: 1) cut taxes, 2) hand out cash.
It has become popular to argue that this collapse has “proven” supply-side economics doesn’t work. I have yet to see anyone actually make that case with anything other than partisan talking points, and I don’t think they can. Instead, they rely on the populist argument that cutting income tax only helps the rich—because half of Americans pay no income tax at all. Um, okay—I thought we were talking economic stimulus? When did we switch to social policy? We can certainly have that discussion, but conflating the two issues suggests the redistributors have a not-so-hidden agenda.
But, if you’re worried about getting money into everyone’s hands, it isn’t just income tax that can be cut. Slash the corporate income tax, and 1) companies can cut prices; which 2) makes goods more affordable; which 3) increases demand; which 4) increases the need for labor. It isn’t just shareholders who benefit—everyone does. But, of course, that’s not popular to say in these populist times. (And shareholders benefiting just creates stimulus, too--because they either spend or invest their profit, and if they invest it, that just gives it to someone else to spend. Stimulus all around.)
This leads us to consider option two: handing out cash. That will certainly get money into everyone’s pockets, but there’s an obvious problem—for the 50% of Americans who pay no income tax, you’ve simply taken capital out of the system, because you have to borrow that money to pay them off. (And, please, spare me the argument that these folks pay Social Security taxes—they will get that back fivefold when they retire, and again, we aren't talking social policy here.) So, you may get a very short term stimulus from the demand, but you’re choking the engine that will ultimately create more jobs.
Finally, that brings us to the ultimate Keynesian argument—that deficit spending is okay in a recession, because the capital you’re borrowing isn’t being used, anyway. While that might be the case in some recessions, it certainly is not the case now—the major argument the populists are making against the banks is that they aren’t lending. Of course, they aren’t lending because they’re scared to death about what's next and what's really on their balance sheets, so they are keeping higher reserves. How, exactly, does government stripping those reserves out of the system improve confidence? It doesn’t, of course.
Which is why I am, just now, starting to worry about stagflation.
Sunday, May 10, 2009
Piracy on the High Seas
The recent capture of the Maersk Alabama off Somalia put a spotlight on a problem that the shipping industry has been dealing with for years. For most people, piracy is something from the history books, but may I recommend John S. Burnett’s Dangerous Waters: Modern Piracy and Terrorism on the High Seas for a more up-to-date look. Burnett focuses on the piracy problems in and around the Straits of Malacca, between Indonesia and Malaysia, which will lead to some interesting observations.
Piracy exists because piracy pays. Modern ships, and modern cargos, are enormously expensive, and no ship moves without insurance. Given a choice between paying a $2 million ransom and risking a $100 million ship and cargo, the cost/benefit answer is easy. Of course, paying the ransom just tells the pirates that they have a good business model—that crime pays.
An interesting aspect of piracy is that it is one of two crimes defined universally. The other is human trafficking (a.k.a. slavery). In other words, it is defined as a crime worldwide, and every nation has jurisdiction under the International Convention on the Law of the Sea. The United States hasn’t ratified ICLOS, but the UN assures us that the treaty has become customary international law. Interesting, but it doesn’t really matter, because Title 18, US Code, defines piracy as a crime punishable by life in prison.
So, what is piracy? Well, obviously, taking over or robbing a ship on the high seas. But, an important aspect is that if a ship is captured by pirates, it becomes a pirate ship. So, you don’t have to “catch them in the act” of taking over a ship. And, since a captured ship becomes a pirate, its flag no longer matters—you don’t legally have to ask permission from the ship’s flag state to take action.
Then, why is piracy so politically charged? Well, the first problem is that no one wants to take the pirates into custody. While any nation can legally prosecute pirates, few want a bunch of Somali teenagers in their prisons. Kenya is an exception—it has recognized that piracy will affect it directly. If insurance companies insist ships take the long route around the Cape of Good Hope, the ships no longer call at Kenyan ports. So, Kenya has been willing to take captured pirates and put them on trial. (There are other nations that will take them, but they skip the trial part before passing sentence. That discourages a lot of countries from letting their navies participate in counter-piracy operations.)
The other problem is the worry about injuring or killing the merchant crew. If they are hostages, then even though a warship has a legal right to intervene in the pirate situation, it gets diplomatically complicated when a warship from nation A injures a crewman from nation B are on a ship flagged in nation C, owned by a company in nation D. And warships, generally, don't like anything that smells like "law enforcement"--even when they're allowed to do it.
There are also some limits. For instance, under ICLOS, only a warship can investigate an unknown vessel to determine whether it’s a pirate. Any ship not flying a flag on the high seas may be investigated, but only a warship can determine whether the suspect is a fishing trawler or a pirate mother ship (or a drug runner).
Who besides a warship would want to do that? That’s more interesting. The US Constitution authorizes Congress to define piracy and felonies on the high seas, and to grant letters of marque—which is a government authorization for a private ship to conduct specific warlike activities (boarding, seizing, sinking, etc.) At the Treaty of Paris, signatory nations declared that privateering was abolished, but the United States—and a lot of other nations—aren’t signatories, and abolishing privateering was more about ending commerce raiding than anything else. US law still describes how to obtain a letter of marque.
What’s really interesting is that under Title 33, US Code (Chapter 7, Section 386, if you want to look it up), the President is specifically authorized to use warships or private ships to deal with pirates!
So, what happened to piracy in the Straits of Malacca? It still happens, but this is the most important lesson: Malaysia decided it had had enough, and sent its navy to deal with the problem. It didn’t take long for pirates (many from across the strait in Indonesia) to get the idea that the business model had changed. That tells us that this isn’t an impossible problem—it isn’t a war on drugs, or poverty, or whatever. Piracy can be solved, or at least contained—after all, murder is illegal, but it happens. But it will take more than talk and hand wringing. It will take international will, or at least the will of a few nation states, for that to happen.
Piracy exists because piracy pays. Modern ships, and modern cargos, are enormously expensive, and no ship moves without insurance. Given a choice between paying a $2 million ransom and risking a $100 million ship and cargo, the cost/benefit answer is easy. Of course, paying the ransom just tells the pirates that they have a good business model—that crime pays.
An interesting aspect of piracy is that it is one of two crimes defined universally. The other is human trafficking (a.k.a. slavery). In other words, it is defined as a crime worldwide, and every nation has jurisdiction under the International Convention on the Law of the Sea. The United States hasn’t ratified ICLOS, but the UN assures us that the treaty has become customary international law. Interesting, but it doesn’t really matter, because Title 18, US Code, defines piracy as a crime punishable by life in prison.
So, what is piracy? Well, obviously, taking over or robbing a ship on the high seas. But, an important aspect is that if a ship is captured by pirates, it becomes a pirate ship. So, you don’t have to “catch them in the act” of taking over a ship. And, since a captured ship becomes a pirate, its flag no longer matters—you don’t legally have to ask permission from the ship’s flag state to take action.
Then, why is piracy so politically charged? Well, the first problem is that no one wants to take the pirates into custody. While any nation can legally prosecute pirates, few want a bunch of Somali teenagers in their prisons. Kenya is an exception—it has recognized that piracy will affect it directly. If insurance companies insist ships take the long route around the Cape of Good Hope, the ships no longer call at Kenyan ports. So, Kenya has been willing to take captured pirates and put them on trial. (There are other nations that will take them, but they skip the trial part before passing sentence. That discourages a lot of countries from letting their navies participate in counter-piracy operations.)
The other problem is the worry about injuring or killing the merchant crew. If they are hostages, then even though a warship has a legal right to intervene in the pirate situation, it gets diplomatically complicated when a warship from nation A injures a crewman from nation B are on a ship flagged in nation C, owned by a company in nation D. And warships, generally, don't like anything that smells like "law enforcement"--even when they're allowed to do it.
There are also some limits. For instance, under ICLOS, only a warship can investigate an unknown vessel to determine whether it’s a pirate. Any ship not flying a flag on the high seas may be investigated, but only a warship can determine whether the suspect is a fishing trawler or a pirate mother ship (or a drug runner).
Who besides a warship would want to do that? That’s more interesting. The US Constitution authorizes Congress to define piracy and felonies on the high seas, and to grant letters of marque—which is a government authorization for a private ship to conduct specific warlike activities (boarding, seizing, sinking, etc.) At the Treaty of Paris, signatory nations declared that privateering was abolished, but the United States—and a lot of other nations—aren’t signatories, and abolishing privateering was more about ending commerce raiding than anything else. US law still describes how to obtain a letter of marque.
What’s really interesting is that under Title 33, US Code (Chapter 7, Section 386, if you want to look it up), the President is specifically authorized to use warships or private ships to deal with pirates!
So, what happened to piracy in the Straits of Malacca? It still happens, but this is the most important lesson: Malaysia decided it had had enough, and sent its navy to deal with the problem. It didn’t take long for pirates (many from across the strait in Indonesia) to get the idea that the business model had changed. That tells us that this isn’t an impossible problem—it isn’t a war on drugs, or poverty, or whatever. Piracy can be solved, or at least contained—after all, murder is illegal, but it happens. But it will take more than talk and hand wringing. It will take international will, or at least the will of a few nation states, for that to happen.
Thursday, April 16, 2009
The Trouble with Closing Gitmo
In one of his first acts upon assuming office, President Obama ordered the Guantanamo Bay prison closed within a year. The detainees there were to be…well, that’s still a little unclear. The President seems to have run into the same problem as his predecessor. President George W. Bush also wanted to close Gitmo, but said, essentially, that no one could figure out what to do with the people there. Apparently, President Obama’s staff decided they were much smarter. If only the lawyers had bothered to read a little law, first.
Let’s run a thought experiment. Suppose, for the sake of discussion, we all decide the folks at Guantanamo are all prisoners of war. That gives them certain protections, but also establishes that they may be held until hostilities are over. Hostilities, quite obviously, are not over in Afghanistan or Iraq. A reasonable person could argue that hostilities in Afghanistan may last for decades.
Can we keep these people in prison for decades? Without trial? Without any right of habeas corpus?
Um, yes. That’s the whole point of being a POW. You aren’t a criminal, but you will be held until the war is over. It’s also possible to be held by a neutral party (think Switzerland in WWII)—who has an obligation to inter you until the war is over.
But, you say, this war may last generations? Correct—that’s exactly what former President Bush said. It's not our fault that the enemy decided on a strategy that could take generations.
Wait, though—Bush argued that the detainees weren’t POW’s. They were “unlawful combatants.” What’s that about?
Well, the problem is that there are combatants and noncombatants. People in uniform are combatants. They have a right under international law to engage in combat, and to kill when operating under the lawful orders of their nation-state. When they kill, it isn’t a crime. (It goes back to the Treaty of Westphalia.)
Civilians are non-combatants. They have a right to be protected, and combatants must conduct themselves in a way that avoids unnecessary harm to non-combatants. But, here’s the key: non-combatants do NOT have the right to kill. They may NOT participate in combat. If they do so, not only do they forfeit their protections, but they may be considered criminals, and charged with war crimes.
The problem arises when people who wouldn’t normally have any right to be combatants decide to take up arms. The Geneva Conventions acknowledge this possibility, but they don’t really explain what to do. But, just ask the question logically—if a person with the right to engage in combat can be legally held for decades (as a POW), then why would a person with a questionable right to engage in combat get more consideration? That just doesn’t follow.
Bush tried to solve that problem with war crimes tribunals, specifically authorized by Congress, as specifically directed by the Judicial branch. The reason the tribunals don’t look exactly like US court trials is because they aren’t US court trials. Sorry to break it to the lawyers, but there is more to the US Code than Title 18. Specifically, there’s Title 10, which governs military operations. (There’s also Title 33, but we’ll talk about that next time.)
President Obama has stopped the tribunals, and is insisting that the detainees can be given trials under the US criminal system. Lots of folks have argued we should simply give them trials. Okay, then here’s my question…
What do you do when the jury finds a detainee “not guilty”? That’s the point of a trial, right? You have to consider that the accused might be “not guilty.” If you don’t seriously consider that, then you are engaged in a show trial.
If you start with the premise that the detainees are unlawful combatants, then “not guilty” simply means they had a right to engage in combat operations. They are not guilty of war crimes. That makes them POW’s. But, POW’s may still be held until hostilities are over, after which they will be repatriated. This isn’t a game; those are the rules of armed conflict. If you start with the premise that the detainees are ordinary criminals, then “not guilty” means you let them go. Immediately. Are we seriously considering that?
Suddenly Bush's argument doesn't seem so stupid, does it? It almost seems like he really thought about the problem. Maybe he shouldn't be the only one.
Let’s run a thought experiment. Suppose, for the sake of discussion, we all decide the folks at Guantanamo are all prisoners of war. That gives them certain protections, but also establishes that they may be held until hostilities are over. Hostilities, quite obviously, are not over in Afghanistan or Iraq. A reasonable person could argue that hostilities in Afghanistan may last for decades.
Can we keep these people in prison for decades? Without trial? Without any right of habeas corpus?
Um, yes. That’s the whole point of being a POW. You aren’t a criminal, but you will be held until the war is over. It’s also possible to be held by a neutral party (think Switzerland in WWII)—who has an obligation to inter you until the war is over.
But, you say, this war may last generations? Correct—that’s exactly what former President Bush said. It's not our fault that the enemy decided on a strategy that could take generations.
Wait, though—Bush argued that the detainees weren’t POW’s. They were “unlawful combatants.” What’s that about?
Well, the problem is that there are combatants and noncombatants. People in uniform are combatants. They have a right under international law to engage in combat, and to kill when operating under the lawful orders of their nation-state. When they kill, it isn’t a crime. (It goes back to the Treaty of Westphalia.)
Civilians are non-combatants. They have a right to be protected, and combatants must conduct themselves in a way that avoids unnecessary harm to non-combatants. But, here’s the key: non-combatants do NOT have the right to kill. They may NOT participate in combat. If they do so, not only do they forfeit their protections, but they may be considered criminals, and charged with war crimes.
The problem arises when people who wouldn’t normally have any right to be combatants decide to take up arms. The Geneva Conventions acknowledge this possibility, but they don’t really explain what to do. But, just ask the question logically—if a person with the right to engage in combat can be legally held for decades (as a POW), then why would a person with a questionable right to engage in combat get more consideration? That just doesn’t follow.
Bush tried to solve that problem with war crimes tribunals, specifically authorized by Congress, as specifically directed by the Judicial branch. The reason the tribunals don’t look exactly like US court trials is because they aren’t US court trials. Sorry to break it to the lawyers, but there is more to the US Code than Title 18. Specifically, there’s Title 10, which governs military operations. (There’s also Title 33, but we’ll talk about that next time.)
President Obama has stopped the tribunals, and is insisting that the detainees can be given trials under the US criminal system. Lots of folks have argued we should simply give them trials. Okay, then here’s my question…
What do you do when the jury finds a detainee “not guilty”? That’s the point of a trial, right? You have to consider that the accused might be “not guilty.” If you don’t seriously consider that, then you are engaged in a show trial.
If you start with the premise that the detainees are unlawful combatants, then “not guilty” simply means they had a right to engage in combat operations. They are not guilty of war crimes. That makes them POW’s. But, POW’s may still be held until hostilities are over, after which they will be repatriated. This isn’t a game; those are the rules of armed conflict. If you start with the premise that the detainees are ordinary criminals, then “not guilty” means you let them go. Immediately. Are we seriously considering that?
Suddenly Bush's argument doesn't seem so stupid, does it? It almost seems like he really thought about the problem. Maybe he shouldn't be the only one.
Friday, March 27, 2009
"A Time for Crisis"
What an interesting Freudian slip. At least, I assume it was a slip. I certainly hope it was.
At an address to the U.S. Conference of Mayors on March 20th, President Obama thanked the mayors for indicating they wanted to cooperate with his plans, and warned them that taxpayers were skeptical, particularly since federal money had been “frittered away before.” He insisted that taxpayers wanted to see their money spent “efficiently”—interesting that he chose that word, instead of “effectively.” Efficiently can imply ‘without waste,’ but it can also imply ‘without delay.’ Even the ‘without waste’ interpretation only suggests government overhead costs should be minimized. It certainly doesn’t imply spending money on the right things—but that really isn’t surprising, since at the Democrat’s Congressional retreat, the President insisted that stimulus is all about spend, spend, spend.
But, then came the interesting turn of phrase. “There’s little room for error here, especially in a time for crisis.” For? Not a time of crisis? For.
If President Obama was not so renowned an orator, I might just accept it as a misspeak. If he weren’t on a teleprompter, I could accept it as stream of consciousness. But, then there’s that nagging little phrase from Obama’s chief of staff, Rahm Emanuel, “You never want a serious crisis to go to waste.” And Obama does use a teleprompter. So, I have to wonder—what did the prepared remarks say? And regardless of that answer, what does it tell us that he called this, intentionally or not, “A time for crisis”?
I’m not a conspiracy theorist, but I can add. 2+2 usually equals 4. If it doesn’t, then there’s another number in there somewhere. A lot of commentators, on both sides of the aisle, have been calling on the President to stop being so negative, that he’s making the situation worse. Obviously, the left thinks he’s just making a newcomer’s mistake; the right thinks he’s doing it deliberately.
But, as I look at the arguments from both sides, I can’t help but wonder if, just maybe, Obama agrees with his chief of staff—and that some of this hyperbole really is part of a plan. It hasn't happened yet, but I predict this phrase will come back to bite him.
At an address to the U.S. Conference of Mayors on March 20th, President Obama thanked the mayors for indicating they wanted to cooperate with his plans, and warned them that taxpayers were skeptical, particularly since federal money had been “frittered away before.” He insisted that taxpayers wanted to see their money spent “efficiently”—interesting that he chose that word, instead of “effectively.” Efficiently can imply ‘without waste,’ but it can also imply ‘without delay.’ Even the ‘without waste’ interpretation only suggests government overhead costs should be minimized. It certainly doesn’t imply spending money on the right things—but that really isn’t surprising, since at the Democrat’s Congressional retreat, the President insisted that stimulus is all about spend, spend, spend.
But, then came the interesting turn of phrase. “There’s little room for error here, especially in a time for crisis.” For? Not a time of crisis? For.
If President Obama was not so renowned an orator, I might just accept it as a misspeak. If he weren’t on a teleprompter, I could accept it as stream of consciousness. But, then there’s that nagging little phrase from Obama’s chief of staff, Rahm Emanuel, “You never want a serious crisis to go to waste.” And Obama does use a teleprompter. So, I have to wonder—what did the prepared remarks say? And regardless of that answer, what does it tell us that he called this, intentionally or not, “A time for crisis”?
I’m not a conspiracy theorist, but I can add. 2+2 usually equals 4. If it doesn’t, then there’s another number in there somewhere. A lot of commentators, on both sides of the aisle, have been calling on the President to stop being so negative, that he’s making the situation worse. Obviously, the left thinks he’s just making a newcomer’s mistake; the right thinks he’s doing it deliberately.
But, as I look at the arguments from both sides, I can’t help but wonder if, just maybe, Obama agrees with his chief of staff—and that some of this hyperbole really is part of a plan. It hasn't happened yet, but I predict this phrase will come back to bite him.
Monday, March 9, 2009
Who Wants the President to Fail?
So, now we discover that, in August 2006, 51% of Democrats polled in a Fox News Opinion Dynamics poll wanted President Bush to fail. Let's be clear: the poll said they did not want him to succeed. That's the same thing--no mealy-mouthing here. They wanted President Bush to fail.
Now, why the mock outrage at Rush Limbaugh's statement that he wants President Obama to fail? Why the lies (see my earlier blog post) that claimed Limbaugh wanted the economy to fail? Love him or hate him, Rush has a website with transcripts of his show. It's at http://www.rushlimbaugh.com/, in case you've been living in a cave. I've checked--he was crystal clear, and anyone claiming he wanted the economy to fail...IS LYING. Not mischaracterizing, not spinning, not taking out of context. Lying. He believes the President's policies will wreck the country, so he doesn't want them to succeed. You can completely disagree with his opinion, but let's be realistic--which of President Obama's policies would you expect any conservative to support? For all the bloggers and posters saying, "You shut up! We won!" I would ask a simple question--was that really your opinion in 2004 when the Republicans won? Really? Really?
Oh, the reporters didn't actually check the transcript, they just believed the other reports? Then they are incompetent, and should be fired.
I'm serious. Fired. The First Amendment exists for a reason--because accurate reporting is critical for citizens to know what's going on with their government. As a reporter, you don't get a pass for being lazy. If I can check it out, so can you. I have a day job. If you don't have time to check it, then you don't have time to write your story.
Now, why the mock outrage at Rush Limbaugh's statement that he wants President Obama to fail? Why the lies (see my earlier blog post) that claimed Limbaugh wanted the economy to fail? Love him or hate him, Rush has a website with transcripts of his show. It's at http://www.rushlimbaugh.com/, in case you've been living in a cave. I've checked--he was crystal clear, and anyone claiming he wanted the economy to fail...IS LYING. Not mischaracterizing, not spinning, not taking out of context. Lying. He believes the President's policies will wreck the country, so he doesn't want them to succeed. You can completely disagree with his opinion, but let's be realistic--which of President Obama's policies would you expect any conservative to support? For all the bloggers and posters saying, "You shut up! We won!" I would ask a simple question--was that really your opinion in 2004 when the Republicans won? Really? Really?
Oh, the reporters didn't actually check the transcript, they just believed the other reports? Then they are incompetent, and should be fired.
I'm serious. Fired. The First Amendment exists for a reason--because accurate reporting is critical for citizens to know what's going on with their government. As a reporter, you don't get a pass for being lazy. If I can check it out, so can you. I have a day job. If you don't have time to check it, then you don't have time to write your story.
Friday, February 27, 2009
There Is Some Bad Publicity
I was watching Fox News Channel’s Glen Beck Show today, and discovered that, actually, there is such a thing as bad publicity. On this blog, I’ve picked on President Obama, majority leader Senator Reid, Speaker Pelosi, and Senator McCain, all on serious issues. Still, that’s not completely balanced, so this is too good to pass up.
It seems Senator Thad (pronounce the “th”) Cochran (R-MS)’s office didn’t want Mr. Beck to use an email they sent him, and they called up just before his show started and began yelling at one of his staff—challenging them that they better not dare call out the Senator for an earmark he inserted in the $400 billion bill just passed. (That would be the bill David Axelrod insists doesn’t count against President Obama’s “no earmarks” pledge, because it should’ve been passed under President Bush. Oh. I guess Mr. Axelrod didn’t get President Obama’s memo that a President—ANY President—doesn’t run Congress. They’re co-equal branches, Mr. Axelrod, and I seem to recall that the legislative branch was under Democrat control--with Mr. Obama as a member! You’re really going with that "It's Bush's fault" story? Really?)
Oops, back to the balance.
Senator—and let me say it explicitly, Republican Senator—are you really going to double-dog dare a member of the press just before he goes on the air? Seriously? And you think that’s going to work? You think you’ll get a result other than ridicule by the journalist? Sir, that’s why we have the First Amendment. You’ve gone from 15 seconds of mention, among NINE THOUSAND other earmarks, to a full-length segment in which you make your whole party look like hypocrites.
Sir, your phone is ringing. It’s Michael Steele.
It seems Senator Thad (pronounce the “th”) Cochran (R-MS)’s office didn’t want Mr. Beck to use an email they sent him, and they called up just before his show started and began yelling at one of his staff—challenging them that they better not dare call out the Senator for an earmark he inserted in the $400 billion bill just passed. (That would be the bill David Axelrod insists doesn’t count against President Obama’s “no earmarks” pledge, because it should’ve been passed under President Bush. Oh. I guess Mr. Axelrod didn’t get President Obama’s memo that a President—ANY President—doesn’t run Congress. They’re co-equal branches, Mr. Axelrod, and I seem to recall that the legislative branch was under Democrat control--with Mr. Obama as a member! You’re really going with that "It's Bush's fault" story? Really?)
Oops, back to the balance.
Senator—and let me say it explicitly, Republican Senator—are you really going to double-dog dare a member of the press just before he goes on the air? Seriously? And you think that’s going to work? You think you’ll get a result other than ridicule by the journalist? Sir, that’s why we have the First Amendment. You’ve gone from 15 seconds of mention, among NINE THOUSAND other earmarks, to a full-length segment in which you make your whole party look like hypocrites.
Sir, your phone is ringing. It’s Michael Steele.
Tuesday, February 24, 2009
There Is No Plan
Remember a couple weeks ago, when Timothy Geithner announced the plan to fix the economy? The day before, the President had demurred when asked to provide some details, saying he didn’t want to step on the Treasury Secretary’s toes. Huh? Okay, maybe he hadn’t been briefed yet, or didn’t want to talk about something that complicated without some notes. Only…the next day, Geithner didn’t announce a plan. He announced a plan to create a plan. The market didn’t exactly freak, but it sure dropped.
Yesterday (Feb 23), the President held a “Fiscal Responsibility Summit” at the White House, a bipartisan affair attended by over a hundred economic and political leaders. The idea was to come up with a plan--well, I thought that was the idea. The attendees split into "breakout groups" and…well, apparently, all they did was talk. President Obama facilitated a wrap-up discussion when the summit was over, asking key members of various groups to “outbrief” their team’s results. It became painfully obvious that none of the members had any idea what to do, none of them had any actual plans, and none of them seemed to even grasp the concept that they needed to come up with a plan. It was just an academic roundtable.
Memo to the President: Sir, we need a plan. We don’t need talk about creating a plan--I have now officially lost track of the number of times you’ve said, “We’re going to come up with a plan.” It usually involves a vague pronouncement that someone is going to do that.
Excellent. When?
The campaign is over. It’s been over for months. During the campaign, during the transition, and during your short time in office, you’ve kept promising us that there’s going to be a plan. I’m starting to question that. I’m starting to think Senator Reid was including you when he said, “No one knows what to do!” That really worries me, because delegating every bit of planning, and not holding your planners accountable, indicates you still think this is an academic exercise--that you're still the editor, instead of the author.
Mr. President, you’re not at Harvard any more. It’s time to start governing.
Yesterday (Feb 23), the President held a “Fiscal Responsibility Summit” at the White House, a bipartisan affair attended by over a hundred economic and political leaders. The idea was to come up with a plan--well, I thought that was the idea. The attendees split into "breakout groups" and…well, apparently, all they did was talk. President Obama facilitated a wrap-up discussion when the summit was over, asking key members of various groups to “outbrief” their team’s results. It became painfully obvious that none of the members had any idea what to do, none of them had any actual plans, and none of them seemed to even grasp the concept that they needed to come up with a plan. It was just an academic roundtable.
Memo to the President: Sir, we need a plan. We don’t need talk about creating a plan--I have now officially lost track of the number of times you’ve said, “We’re going to come up with a plan.” It usually involves a vague pronouncement that someone is going to do that.
Excellent. When?
The campaign is over. It’s been over for months. During the campaign, during the transition, and during your short time in office, you’ve kept promising us that there’s going to be a plan. I’m starting to question that. I’m starting to think Senator Reid was including you when he said, “No one knows what to do!” That really worries me, because delegating every bit of planning, and not holding your planners accountable, indicates you still think this is an academic exercise--that you're still the editor, instead of the author.
Mr. President, you’re not at Harvard any more. It’s time to start governing.
Wednesday, February 18, 2009
Fairness Doctrine RIP? Let's Hope.
Today, President Obama stated, through his press secretary, that he wasn't interested in reimposing the "fairness doctrine." He had indicated as much during the campaign, so it was good to hear him politely rebuke the Democrats who have been calling for it over the last week.
Across several bulletin boards, posters hailed this as proof that the right's worry was simply trumped up. Alas, not so fast. No less than former President Clinton stated in a radio interview this week that it should be reimposed, as did Congressman Waxman. Sorry, posters, but those two examples alone are enough to cause worry.
President Obama should go further, however. He should come out forcefully and state that the fairness doctrine is nothing more than censorship, which has no place in America. The marketplace of ideas does not need government interference, whether by blatantly insisting on "equal time" (but only on certain media) or subtly suggesting we need "local ownership."
The right should praise Mr. Obama for this statement, take him at his word, and trumpet it--not least because doing so will make it more difficult for him to walk back from it, but also because it would demonstrate that their differences are based entirely, strictly, and always on policy.
Across several bulletin boards, posters hailed this as proof that the right's worry was simply trumped up. Alas, not so fast. No less than former President Clinton stated in a radio interview this week that it should be reimposed, as did Congressman Waxman. Sorry, posters, but those two examples alone are enough to cause worry.
President Obama should go further, however. He should come out forcefully and state that the fairness doctrine is nothing more than censorship, which has no place in America. The marketplace of ideas does not need government interference, whether by blatantly insisting on "equal time" (but only on certain media) or subtly suggesting we need "local ownership."
The right should praise Mr. Obama for this statement, take him at his word, and trumpet it--not least because doing so will make it more difficult for him to walk back from it, but also because it would demonstrate that their differences are based entirely, strictly, and always on policy.
Friday, February 13, 2009
Does Congress Hate Workers?
This week, Congressman Sherman (D-CA) called on Wall Street CEO’s to sell their corporate jets in order to raise capital. Last week, when Senator Levin (D-MI) said basically the same thing, I started wondering, “Why do these guys hate workers?” Levin represents a state that practically identifies itself by its blue-collar roots (“the working man”). So, why does he want to put blue collar workers on the street?
I mean the folks who build the jets. Do you think they come from a magic jet fairy? They are built by blue collar workers. They are fixed, flown, and fueled by workers. They cost about $2000 per hour to fly. Where do you think that money goes, Senator? Congressman? It goes to pay the salaries of the people who keep them in the air. So they have jobs. Jobs our President wants to save, as I recall.
Oh, but it’s a terrible perk and sets the wrong example? Ah, like luxury boats—the kind President Clinton put a tax on? And then people realized they were putting the boat builders out of business? Selling that jet also means one less jet the workers need to build. Oops.
And let’s look at that “perk.” Let’s say your CEO earns $10 million per year—a lot less than most of them, but I think most people could agree that a successful CEO might be worth that. That works out to $5000 per hour, assuming a 40 hour work week and 50 weeks per year. (Certainly they work more, but let’s assume they just do the extra pro bono.)
By my math, if they fly commercial—or drive, like the idiots from Ford, GM, and Chrysler—then every hour, they are stealing $3000 in value from the company. They’re stealing from me, their stockholder. (The jet costs around $50 million, but it lasts 10 years and flies lots of suits at once, so let's not do more math.)
The head of my own company (which, let’s just say, is REALLY big) recently mused at a gathering that perhaps he should’ve driven down from corporate headquarters, instead of flying. It would’ve taken him 4 hours instead of 1 hour, each way. I know he was trying to be considerate, and I didn’t want to be rude, so I bit my tongue. What I really wanted to say was, “Sir, respectfully, if you don’t have something better to do with your time than spend 4 hours driving here, we have the wrong boss.”
We need to get past the idea that CEO’s fly on corporate jets because it’s fun, or fashionable, or chic. They do it because their time is really that valuable. If they screw up the company, then fire them. But that doesn’t change the fact that the company needs someone whose time is really that valuable. America is an egalitarian society, so we don’t like to think like that. But let’s get serious for a minute—that’s what we say we want in our nation’s leaders. Why would businesses want someone who’s just mediocre? Who, exactly, do we expect to end up in the cabinet?
I mean the folks who build the jets. Do you think they come from a magic jet fairy? They are built by blue collar workers. They are fixed, flown, and fueled by workers. They cost about $2000 per hour to fly. Where do you think that money goes, Senator? Congressman? It goes to pay the salaries of the people who keep them in the air. So they have jobs. Jobs our President wants to save, as I recall.
Oh, but it’s a terrible perk and sets the wrong example? Ah, like luxury boats—the kind President Clinton put a tax on? And then people realized they were putting the boat builders out of business? Selling that jet also means one less jet the workers need to build. Oops.
And let’s look at that “perk.” Let’s say your CEO earns $10 million per year—a lot less than most of them, but I think most people could agree that a successful CEO might be worth that. That works out to $5000 per hour, assuming a 40 hour work week and 50 weeks per year. (Certainly they work more, but let’s assume they just do the extra pro bono.)
By my math, if they fly commercial—or drive, like the idiots from Ford, GM, and Chrysler—then every hour, they are stealing $3000 in value from the company. They’re stealing from me, their stockholder. (The jet costs around $50 million, but it lasts 10 years and flies lots of suits at once, so let's not do more math.)
The head of my own company (which, let’s just say, is REALLY big) recently mused at a gathering that perhaps he should’ve driven down from corporate headquarters, instead of flying. It would’ve taken him 4 hours instead of 1 hour, each way. I know he was trying to be considerate, and I didn’t want to be rude, so I bit my tongue. What I really wanted to say was, “Sir, respectfully, if you don’t have something better to do with your time than spend 4 hours driving here, we have the wrong boss.”
We need to get past the idea that CEO’s fly on corporate jets because it’s fun, or fashionable, or chic. They do it because their time is really that valuable. If they screw up the company, then fire them. But that doesn’t change the fact that the company needs someone whose time is really that valuable. America is an egalitarian society, so we don’t like to think like that. But let’s get serious for a minute—that’s what we say we want in our nation’s leaders. Why would businesses want someone who’s just mediocre? Who, exactly, do we expect to end up in the cabinet?
Friday, February 6, 2009
Executive Pay--Bipartisanship, or the Issue?
President Obama has recently made the case that executives in companies that accept "bailout" money from the federal government should be restricted to salaries of $500,000. His argument is that they shouldn't be rewarded for running their companies into the ground, and the taxpayers certainly shouldn't be subsidizing the reward. An interesting argument.
It certainly has populist appeal, and liberals are obviously supporting the concept as a matter of how they see fairness. Conservatives counter on principle--that once the government starts telling these businesses how to run their affairs, what's to stop them from telling all businesses? Or all of us?
That's not a ridiculous worry--when the income tax was being debated in Congress, one member was belittled for worrying that someday, 5% of the population might be subject to it.
What's more interesting to me is the obvious counter the President could play, if he really wants a bipartisan approach. Sure, liberals like the idea because they think it's fair. But the conservative argument should be that executives and boards need to be discouraged from taking the bailout unless their companies really need it. Taking a bailout is likely to devastate the shareholders--the owners of that company. There needs to be a personal disincentive to ensure that boards act on behalf of their investors, the owners, and don't get the idea that these companies are a personal playground.
He could move on to asking Congress to figure out a way to ensure that the CEO brought in to pull a company out of the ditch doesn't have to pay that penalty (nicely assuming he now automatically wins over his opposition with the previous argument).
The downside, of course, is that requires him to acknowledge the other side really has good ideas. Since, so far, "bipartisanship" has mostly consisted of, "Come to the meeting and then vote for my plan," that could be a problem. But that begs the question--is this about bipartisanship, or the issue?
It certainly has populist appeal, and liberals are obviously supporting the concept as a matter of how they see fairness. Conservatives counter on principle--that once the government starts telling these businesses how to run their affairs, what's to stop them from telling all businesses? Or all of us?
That's not a ridiculous worry--when the income tax was being debated in Congress, one member was belittled for worrying that someday, 5% of the population might be subject to it.
What's more interesting to me is the obvious counter the President could play, if he really wants a bipartisan approach. Sure, liberals like the idea because they think it's fair. But the conservative argument should be that executives and boards need to be discouraged from taking the bailout unless their companies really need it. Taking a bailout is likely to devastate the shareholders--the owners of that company. There needs to be a personal disincentive to ensure that boards act on behalf of their investors, the owners, and don't get the idea that these companies are a personal playground.
He could move on to asking Congress to figure out a way to ensure that the CEO brought in to pull a company out of the ditch doesn't have to pay that penalty (nicely assuming he now automatically wins over his opposition with the previous argument).
The downside, of course, is that requires him to acknowledge the other side really has good ideas. Since, so far, "bipartisanship" has mostly consisted of, "Come to the meeting and then vote for my plan," that could be a problem. But that begs the question--is this about bipartisanship, or the issue?
Tuesday, February 3, 2009
Right, Wrong, and Lies
I recently watched an interview about the proposed economic stimulus plan. This one happened to be on Neil Cavuto’s “Your World” on Fox News, but I’ve seen similar ones on CNN and CNBC. Mr. Cavuto was interviewing a Congressman—I don’t recall his name, but it doesn’t matter, since I wouldn’t repeat it in this context.
Cavuto’s point was that the Congressional Budget Office had stated that of the billions of dollars proposed for the stimulus; only a few percent would actually be spent in 2009. Only a few more would be spent in 2010. So, that wouldn’t have much stimulatory effect. The Congressman stated that was wrong—that the CBO figures were inaccurate; it was more like half in 2009 and two-thirds by 2010.
And here’s the problem—he didn’t offer any support for that position. He simply stated the CBO figures were wrong. Maybe they are; maybe they aren’t—but, he didn’t offer any rationale for why his position should be considered more accurate than the CBO’s.
That left Mr. Cavuto with a quandary. He could argue with the Congressman, but that would simply devolve into “Is not/Is too!” It was an interview, and there wasn’t time to go do research. Alternately, Cavuto could accept that maybe the CBO was wrong and the Congressman was right. Or, he could call the Congressman a liar. That’s right—on nationwide TV, simply state, “Congressman, I don’t believe you, and I don’t think you believe it either. You are deliberately misrepresenting the facts, because you’re hoping I won’t dare call you out—and hoping that instead, I’ll grant your position for the sake of argument. You, sir, are a liar.” But, of course, he didn’t call him out; he did effectively accept the Congressman’s position for the duration of the interview.
Nice trick. And, more than a little outrageous.
There was a time—I think—when most people tried to make rational arguments based on what they believed to be true. At some point, somebody realized that truth is irrelevant in the interview. If you don’t mind making an obscenely dishonest case, you can get the obscenely dishonest case into the public mind. I’d like to think this is because the average journalist just can’t quite believe that anyone would simply bald-face lie to them.
But, they do.
During the 2006 Israel-Hezbollah war, Hezbollah arranged utterly fake photo ops, with live people pretending to be bodies. Photojournalist frauds sent pictures of burning garbage dumps to major US magazines (Time and Newsweek, among others), claiming they were pictures of Israeli attacks. The pictures ended up as cover stories. When the falsehood was revealed, the magazines were embarrassed, and there were back-page corrections written weeks or months later, but the press certainly didn’t run an outraged cover story condemning the practice.
Why not?
The optimist in me wants to believe that it’s just human nature—no one wants to admit they were fooled. But, the realist in me worries. Specifically, I worry about the concept of the narrative—the story that is already written, in which the journalist is simply looking for some facts to “confirm” what he has already decided to write. The alleged Duke “rape” case is a particularly egregious instance of the “narrative,” but the general trend is exactly what conservatives scream about when they claim media bias. Their “other side” makes outrageous claims that are simply not challenged—so, instead of arguing about which solution is better, the defender first has to explain that the other side’s case doesn’t even hold water.
I've seen this dirty trick tried on Rush Limbaugh, at least three times. (I'll detail them in the comments, if anyone ever asks.) Nevermind your opinion of the talk show host (or mine). In all cases, the perpetrators knew full well that what they were saying was simply untrue. Not "opinion." Not "responsible people can disagree." Not even "the scientific consensus disputes your position." I mean Un-True--as in, February comes after January each year and claims to the contrary are untrue. But, they counted on the lie being believed, and when it was challenged, they made even more outrageous claims--usually backstopped by a claim that since Limbaugh is partisan, that makes the attack acceptable. What kind of logic is that?
That’s a real problem—because while Mr. Limbaugh has a radio show to make his case, most people don't. And once a side becomes convinced it can’t get a fair hearing, it will stop trying to be reasonable. At which point, both sides are on the path to outrageous.
Cavuto’s point was that the Congressional Budget Office had stated that of the billions of dollars proposed for the stimulus; only a few percent would actually be spent in 2009. Only a few more would be spent in 2010. So, that wouldn’t have much stimulatory effect. The Congressman stated that was wrong—that the CBO figures were inaccurate; it was more like half in 2009 and two-thirds by 2010.
And here’s the problem—he didn’t offer any support for that position. He simply stated the CBO figures were wrong. Maybe they are; maybe they aren’t—but, he didn’t offer any rationale for why his position should be considered more accurate than the CBO’s.
That left Mr. Cavuto with a quandary. He could argue with the Congressman, but that would simply devolve into “Is not/Is too!” It was an interview, and there wasn’t time to go do research. Alternately, Cavuto could accept that maybe the CBO was wrong and the Congressman was right. Or, he could call the Congressman a liar. That’s right—on nationwide TV, simply state, “Congressman, I don’t believe you, and I don’t think you believe it either. You are deliberately misrepresenting the facts, because you’re hoping I won’t dare call you out—and hoping that instead, I’ll grant your position for the sake of argument. You, sir, are a liar.” But, of course, he didn’t call him out; he did effectively accept the Congressman’s position for the duration of the interview.
Nice trick. And, more than a little outrageous.
There was a time—I think—when most people tried to make rational arguments based on what they believed to be true. At some point, somebody realized that truth is irrelevant in the interview. If you don’t mind making an obscenely dishonest case, you can get the obscenely dishonest case into the public mind. I’d like to think this is because the average journalist just can’t quite believe that anyone would simply bald-face lie to them.
But, they do.
During the 2006 Israel-Hezbollah war, Hezbollah arranged utterly fake photo ops, with live people pretending to be bodies. Photojournalist frauds sent pictures of burning garbage dumps to major US magazines (Time and Newsweek, among others), claiming they were pictures of Israeli attacks. The pictures ended up as cover stories. When the falsehood was revealed, the magazines were embarrassed, and there were back-page corrections written weeks or months later, but the press certainly didn’t run an outraged cover story condemning the practice.
Why not?
The optimist in me wants to believe that it’s just human nature—no one wants to admit they were fooled. But, the realist in me worries. Specifically, I worry about the concept of the narrative—the story that is already written, in which the journalist is simply looking for some facts to “confirm” what he has already decided to write. The alleged Duke “rape” case is a particularly egregious instance of the “narrative,” but the general trend is exactly what conservatives scream about when they claim media bias. Their “other side” makes outrageous claims that are simply not challenged—so, instead of arguing about which solution is better, the defender first has to explain that the other side’s case doesn’t even hold water.
I've seen this dirty trick tried on Rush Limbaugh, at least three times. (I'll detail them in the comments, if anyone ever asks.) Nevermind your opinion of the talk show host (or mine). In all cases, the perpetrators knew full well that what they were saying was simply untrue. Not "opinion." Not "responsible people can disagree." Not even "the scientific consensus disputes your position." I mean Un-True--as in, February comes after January each year and claims to the contrary are untrue. But, they counted on the lie being believed, and when it was challenged, they made even more outrageous claims--usually backstopped by a claim that since Limbaugh is partisan, that makes the attack acceptable. What kind of logic is that?
That’s a real problem—because while Mr. Limbaugh has a radio show to make his case, most people don't. And once a side becomes convinced it can’t get a fair hearing, it will stop trying to be reasonable. At which point, both sides are on the path to outrageous.
Wednesday, January 28, 2009
Pelosi: Abort the Poor
When someone says something ridiculous, and then follows it up with, "I'm serious," my general inclination is to respond, "No, you're not. You're trying to be outrageous. And you have a reason."
Rarely, I'm willing to accept that they're just making a silly argument to support a position they genuinely hold. I think that's what's going on here.
On Sunday (Jan 25), the Speaker of the House appeared on ABC's "This Week," where she explained to the host, George Stephanopolous, how funding contraceptives and family planning would stimulate the economy. Let's be clear--responsible and honorable people hold positions on both sides of the "family planning" argument. Just because you disagree with the other person doesn't mean they're evil, and anway, that's not the point of this post.
The point is how she made the argument: that family planning would stimulate the economy by cost avoidance, because the children who would not be born would not need state aid. Last I checked, the children of the rich don't need that state aid, and generally don't qualify for it. So, did she think about what she was actually implying? Can you imagine the outraged headlines if, say, her neighbor, Republican Senator John Ensign from Nevada, had made a similar argument?
Now, I believe the Congresswoman holds her positions honestly, and I have little doubt she approves of family planning as a matter of principle. But, can we please not make ridiculous arguments to justify funding our pet philosophies? And, the next time her opposition says something that can be twisted unfairly, I hope she considers what headline could have been written about her on Jan 26. I wrote it here--but, then, not many people read this blog.
Rarely, I'm willing to accept that they're just making a silly argument to support a position they genuinely hold. I think that's what's going on here.
On Sunday (Jan 25), the Speaker of the House appeared on ABC's "This Week," where she explained to the host, George Stephanopolous, how funding contraceptives and family planning would stimulate the economy. Let's be clear--responsible and honorable people hold positions on both sides of the "family planning" argument. Just because you disagree with the other person doesn't mean they're evil, and anway, that's not the point of this post.
The point is how she made the argument: that family planning would stimulate the economy by cost avoidance, because the children who would not be born would not need state aid. Last I checked, the children of the rich don't need that state aid, and generally don't qualify for it. So, did she think about what she was actually implying? Can you imagine the outraged headlines if, say, her neighbor, Republican Senator John Ensign from Nevada, had made a similar argument?
Now, I believe the Congresswoman holds her positions honestly, and I have little doubt she approves of family planning as a matter of principle. But, can we please not make ridiculous arguments to justify funding our pet philosophies? And, the next time her opposition says something that can be twisted unfairly, I hope she considers what headline could have been written about her on Jan 26. I wrote it here--but, then, not many people read this blog.
Tuesday, January 20, 2009
Memo to the GOP: Take Obama at his Word
Over the past few weeks, Mr. Obama (President as of today) has said we must "disagree without being disagreeable." Memo to the Republican Party: that's your key, if you want to oppose him.
Seriously, make it boilerplate. Before you start any news conference, say it, and thank him for wanting to have a serious conversation, and wanting to listen to other ideas. Then offer your ideas. If he truly wants to be (or simply appear) post-partisan, you can act like he's neither Democrat nor Republican--so your ideas should be considered just as seriously as the other party's.
"Good morning ladies and gentlemen. First, we Republicans want to express support for our President's idea that we can disagree without being disagreeable. Second, we welcome President Obama's statement that he wants to listen to everyone's ideas, without any pride of authorship and regardless of source. That's the sort of post-partisan unity that we've longed for. So, here are our ideas for [fill in the blank]."
Buzzword bingo? Sure. (Don't forget to rearrange the "first" and "second" every day or so.) But, if half the battle is getting your ideas heard, then there's nothing wrong with using a little strategy.
Seriously, make it boilerplate. Before you start any news conference, say it, and thank him for wanting to have a serious conversation, and wanting to listen to other ideas. Then offer your ideas. If he truly wants to be (or simply appear) post-partisan, you can act like he's neither Democrat nor Republican--so your ideas should be considered just as seriously as the other party's.
"Good morning ladies and gentlemen. First, we Republicans want to express support for our President's idea that we can disagree without being disagreeable. Second, we welcome President Obama's statement that he wants to listen to everyone's ideas, without any pride of authorship and regardless of source. That's the sort of post-partisan unity that we've longed for. So, here are our ideas for [fill in the blank]."
Buzzword bingo? Sure. (Don't forget to rearrange the "first" and "second" every day or so.) But, if half the battle is getting your ideas heard, then there's nothing wrong with using a little strategy.
Monday, January 12, 2009
Money and More Money
I've been thinking about a conceptual approach for explaining (to myself) how a money supply can be increased to avoid deflation. I understand fractional-reserve lending, and I've visited Wikipedia, economics.about.com and other sites trying to figure out the answer to this problem.
Here's the scenario--I'll use science fiction just to keep it as a thought experiment and hopefully reduce the emotional involvement.
Suppose we have an isolated colony, far from Earth. By "far," I mean light-years, well beyond any ability to communicate real-time. Pick your reason for why it's isolated; any of a dozen books will do. This group understands the basics of market economics, and knows that money is much more efficient than a barter system--it avoids the need to find someone who has what I want and wants to trade for what I have. How would an isolated colony create more currency in order to support a growing economy and get it into the economy? Sure, they can print it or mint it--but how does it get into circulation?
The classic answer, with a central banking system, is that reserve banks obtain currency from the government by posting it against their own accounts--but that doesn't actually increase the money supply. The money supply does increase when that money is loaned, over and over. All well and good. But, what if there just aren't physically enough dollars to chase the available goods and services?
After I posted this question originally, I spent a lot of time researching, both on the web and reading economics books. I was, frankly, surprised at how poorly understood this issue was. That matters, because it also hits upon the real problem behind government borrowing affecting the money supply.
The answer, briefly, is that they would need a central bank, like the US Federal Reserve, and the reserve bank would, per the classic answer, obtain currency by posting it against their own accounts. But, its account has no limit, so it can obtain whatever amount it desires. How does it get that currency into circulation? By buying debt instruments. When the government borrows, it sells Treasury securities, which the central bank can buy. But, if there were no Treasury securities, the reserve bank would still be able to buy anything necessary to inject the currency--it could buy stock in the colony, using our current example. It could buy mortgages from the colony's commercial banks. It could simply "buy" parcels of unused land, for whatever amount seemed reasonable.
If that doesn't surprise you, you either really understand the system, or you don't understand it at all. My sense is that this is part of the disquiet people express when they argue in favor of the gold standard--you can physically control the amount of currency in that type of system, and you can physically go get more when you need it (i.e. when it makes economic sense to go mine it). When a government using a gold standard "buys" gold, it is purchasing a limited resource to get currency into the system, and the limitated nature ensures the central bank doesn't go crazy issuing money. But, in our colony, it would have to be very careful not to just buy whatever it wanted.
If it worked, that would be a very disciplined system.
Here's the scenario--I'll use science fiction just to keep it as a thought experiment and hopefully reduce the emotional involvement.
Suppose we have an isolated colony, far from Earth. By "far," I mean light-years, well beyond any ability to communicate real-time. Pick your reason for why it's isolated; any of a dozen books will do. This group understands the basics of market economics, and knows that money is much more efficient than a barter system--it avoids the need to find someone who has what I want and wants to trade for what I have. How would an isolated colony create more currency in order to support a growing economy and get it into the economy? Sure, they can print it or mint it--but how does it get into circulation?
The classic answer, with a central banking system, is that reserve banks obtain currency from the government by posting it against their own accounts--but that doesn't actually increase the money supply. The money supply does increase when that money is loaned, over and over. All well and good. But, what if there just aren't physically enough dollars to chase the available goods and services?
After I posted this question originally, I spent a lot of time researching, both on the web and reading economics books. I was, frankly, surprised at how poorly understood this issue was. That matters, because it also hits upon the real problem behind government borrowing affecting the money supply.
The answer, briefly, is that they would need a central bank, like the US Federal Reserve, and the reserve bank would, per the classic answer, obtain currency by posting it against their own accounts. But, its account has no limit, so it can obtain whatever amount it desires. How does it get that currency into circulation? By buying debt instruments. When the government borrows, it sells Treasury securities, which the central bank can buy. But, if there were no Treasury securities, the reserve bank would still be able to buy anything necessary to inject the currency--it could buy stock in the colony, using our current example. It could buy mortgages from the colony's commercial banks. It could simply "buy" parcels of unused land, for whatever amount seemed reasonable.
If that doesn't surprise you, you either really understand the system, or you don't understand it at all. My sense is that this is part of the disquiet people express when they argue in favor of the gold standard--you can physically control the amount of currency in that type of system, and you can physically go get more when you need it (i.e. when it makes economic sense to go mine it). When a government using a gold standard "buys" gold, it is purchasing a limited resource to get currency into the system, and the limitated nature ensures the central bank doesn't go crazy issuing money. But, in our colony, it would have to be very careful not to just buy whatever it wanted.
If it worked, that would be a very disciplined system.
Friday, January 2, 2009
Economics and the Factors of Production
Happy New Year.
I’ve been pondering, recently, what to believe about the economy. Sadly, there aren’t many reporters with enough grasp of economics to provide much of use, and most economists seem more interested in their pet positions to actually look at what’s really going on and what the real root causes are.
So, I’ve been rereading my economics books, checking out analytic pieces on both sides, and doing a lot of thinking. A lot of thinking. And here’s what I’ve come up with.
From “Economics Explained,” I recall that there are only a few things you can really do with money: you can spend it, you can save it, or you can invest it. (I had forgotten that saving and investing have a different effect on the GDP when you’re talking about consumer activity.)
If you spend it, your purchase contributes to the GDP: you bought a product or service, and in the process, used some of the factors of production—labor, capital, and land.
If you save it, your purchase does NOT contribute to the GDP: you chose not to buy a product or service, and in the process, you freed up labor and capital to be used elsewhere—especially by businesses, who will borrow your savings from your bank and use them to buy equipment, start a new business, etc. That’s a good thing if there’s a demand for labor and capital, because by making some available for businesses, you are helping to prevent inflation. (Otherwise, business demand has to compete with your demand by bidding up labor prices, interest rates, etc.) That’s a bad thing if there is little demand for labor and capital, such as occurs in a recession. All you’ve done is decrease consumer demand, which decreases GDP. In a recession, businesses don’t want to borrow your money.
If you invest your money, most of us are really just buying business ownership rights (or a claim on business debt) from someone else, unless you got in on an IPO. What effect that has on the economy depends on what the person who sold you the stock (or bond) does with your money.
So, it follows that government transfer payments don’t contribute to GDP, but government spending on stuff does contribute. Naturally, the recipients of transfer payments will probably spend them and contribute to GDP, but that money came from somewhere. That “somewhere” has less money to spend, so the economic question is which group would’ve made a better contribution. That’s key question #1 to ask.
The second key question is what happens when the government spends more than it takes in. Proponents of government spending to jump-start the economy argue there is unused labor, so putting it to work builds useful stuff (e.g. bridges) and puts money in the hands of folks who will spend it, thereby increasing demand for goods and thus helping GDP. In a recession, the capital necessary to put the labor to work is just sitting around unused, since businesses aren’t borrowing it. That makes sense as far as it goes, but I see a couple problems. First, the debt must be repaid, so the future interest payments will steal capital for decades, creating a drag on economic growth. Second, if the program creates an entitlement, then the need for funds will stretch to doomsday, and so will the economic drag. Third, if the capital is borrowed from other countries, they can’t put it to use in their own economies and employ their own labor. That seems like a problem, but I haven’t resolved it, yet. Finally, the implicit assumption of government spending as stimulus is that both labor and capital are unused. In the current financial crisis, a major problem seems to be that businesses can't get capital.
The third key question, in light of today’s never-ending government bailouts, is what that is doing to the economic need for creative destruction. The buggy whip industry had to die, and bailouts would’ve just delayed the inevitable. On the other hand, I recall an interview with Richard Branson in which he pointed out that the bank his airline uses nearly failed—and when he went to move his business’s money, he was advised to read the fine print; it wasn’t that kind of an account. He would have been in serious trouble through no fault of his own and despite the fact that his company was a solid going concern. That has me pondering…
I’ve been pondering, recently, what to believe about the economy. Sadly, there aren’t many reporters with enough grasp of economics to provide much of use, and most economists seem more interested in their pet positions to actually look at what’s really going on and what the real root causes are.
So, I’ve been rereading my economics books, checking out analytic pieces on both sides, and doing a lot of thinking. A lot of thinking. And here’s what I’ve come up with.
From “Economics Explained,” I recall that there are only a few things you can really do with money: you can spend it, you can save it, or you can invest it. (I had forgotten that saving and investing have a different effect on the GDP when you’re talking about consumer activity.)
If you spend it, your purchase contributes to the GDP: you bought a product or service, and in the process, used some of the factors of production—labor, capital, and land.
If you save it, your purchase does NOT contribute to the GDP: you chose not to buy a product or service, and in the process, you freed up labor and capital to be used elsewhere—especially by businesses, who will borrow your savings from your bank and use them to buy equipment, start a new business, etc. That’s a good thing if there’s a demand for labor and capital, because by making some available for businesses, you are helping to prevent inflation. (Otherwise, business demand has to compete with your demand by bidding up labor prices, interest rates, etc.) That’s a bad thing if there is little demand for labor and capital, such as occurs in a recession. All you’ve done is decrease consumer demand, which decreases GDP. In a recession, businesses don’t want to borrow your money.
If you invest your money, most of us are really just buying business ownership rights (or a claim on business debt) from someone else, unless you got in on an IPO. What effect that has on the economy depends on what the person who sold you the stock (or bond) does with your money.
So, it follows that government transfer payments don’t contribute to GDP, but government spending on stuff does contribute. Naturally, the recipients of transfer payments will probably spend them and contribute to GDP, but that money came from somewhere. That “somewhere” has less money to spend, so the economic question is which group would’ve made a better contribution. That’s key question #1 to ask.
The second key question is what happens when the government spends more than it takes in. Proponents of government spending to jump-start the economy argue there is unused labor, so putting it to work builds useful stuff (e.g. bridges) and puts money in the hands of folks who will spend it, thereby increasing demand for goods and thus helping GDP. In a recession, the capital necessary to put the labor to work is just sitting around unused, since businesses aren’t borrowing it. That makes sense as far as it goes, but I see a couple problems. First, the debt must be repaid, so the future interest payments will steal capital for decades, creating a drag on economic growth. Second, if the program creates an entitlement, then the need for funds will stretch to doomsday, and so will the economic drag. Third, if the capital is borrowed from other countries, they can’t put it to use in their own economies and employ their own labor. That seems like a problem, but I haven’t resolved it, yet. Finally, the implicit assumption of government spending as stimulus is that both labor and capital are unused. In the current financial crisis, a major problem seems to be that businesses can't get capital.
The third key question, in light of today’s never-ending government bailouts, is what that is doing to the economic need for creative destruction. The buggy whip industry had to die, and bailouts would’ve just delayed the inevitable. On the other hand, I recall an interview with Richard Branson in which he pointed out that the bank his airline uses nearly failed—and when he went to move his business’s money, he was advised to read the fine print; it wasn’t that kind of an account. He would have been in serious trouble through no fault of his own and despite the fact that his company was a solid going concern. That has me pondering…
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