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.

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.

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?

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?"

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.

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.

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.