Mugabe should read the Wall Street Journal

According to the AP, Robert Mugabe's party in Zimbabwe isn't about to bow to outside pressure. "They can't impose anything on us," they brag. Meantime, it is estimated that by early 2009, almost half the population will need food aid.

And where, pray tell, is that food going to come from? Perhaps from the people who produce a surplus beyond the food needs of their own people, many of them white. Such people are likely to get a little tired of being asked to save a people whose government denounces them incessantly for, pretty much, being white.

It's also going to become more difficult not to notice the obvious feedback loop facing anyone attempting to solve the food crisis in Zimbabwe. The reason the government is to keen in staying in power is that it is enormously profitable. There aren't a great many of them at the top, but they can extort money from anyone with hard currency who wants to help the people. This river of cash is what allows them to stay in power, oppress the people, destroy agriculture, and create the need for continued food assistance.

It's interesting to note the deep silence on Zimbabwe in the "progressive" press, compared with their concern over Darfur. In the Eugene Weekly, the acknowledged voice of the hard left in Eugene, Oregon, a Google search turns up more than 200 references to Darfur, and seven to "Mugabe," of which six refer to a local band.

It's not hard to understand their quandary. A couple of decades ago, the EW was probably full of approving comments about Robert Mugabe, a black leader, steeped in the tradition of Marxism, leading a government whose leaders called one another "comrade," and devoted to redistributing wealth so that landless blacks could get the prime farms "stolen" from them by the colonialists.

Now that the redistribution of wealth has run afoul of the related destruction of wealth, Mugabe has turned out to be a ruthless dictator, and the black-run governments of subsaharan Africa to be generally spineless, this is not a story that plays well. The Left seems to want America to jump into the mess in Darfur, with no clear idea how this is going to improve things. But not Zimbabwe, where the obvious question is going to be, why did we force Ian Smith to turn everything over to Mugabe?

Do we speak English or that one?

It appears the John McCain has angered some people by his use of "that one" during the debate. To quote from an article on the subject:

Don Hammonds of The Pittsburgh Post-Gazette also took offence.

"Regardless of intent, it showed Senator McCain to be culturally ignorant, and completely unaware of the implications of what his off-the-cuff statement meant to people of colour," he wrote.

"Whether Senator McCain meant it that way or not, if you are a person of colour, and someone trots out the 'that one' remark, you instantly take it as racist. I know that I did."

OK, I'll bite. What are the implications to a person of color? These are two extremely common English words. I had never heard of them having racial overtones. "That?" "One?" Put together as "That one?"

It wasn't perfect style. The contrast should have been "Him and me," or "That one and this one," but instead he said first, "That one" and later "me." But apparently this transcends rhetorical style and reflects, somehow, on McCain's psyche.

In fact, it says nothing about him at all. It says much more about the people who have taken offense. McCain was indeed trying to show that Obama was the "risky" candidate but not because he is black. He's the Democrat. McCain would have tried the same tactic on Hillary. It's simply politics.

The word "racist" springs immediately to the lips of many people with holier-than-thou attitudes towards anyone they consider to be less sensitive. The effect has been to trivialize the word, and by extension the reality of racism. Kathleen Parker, who wrote in the Washington Post that, "McCain supporters have tried to explain what he meant, but there's a reason it was so stunning in the moment. I'm don't think it was racist, as some have argued. But it was objectifying. "That one" isn't the same as "that man." One is an object; the other is a person. A human being. 'That one' has a dehumanizing effect and one is right to recoil."

He used a freaking pronoun. What exactly does "objectifying" mean? A "dehumanizing effect?"

Obama wants the big one. Many people don't want him to get it, and would think so if he were defined by his 50% whiteness rather than his 50% blackness. They are not obliged to give him special treatment. I rather think Obama knew this going in, although his supporters don't. If you can't take the heat, get out of the kitchen.

In an election year, it's cut taxes and spend

The Senate has decided to upstage the House with its own version of the bailout, which is going to include tax breaks. So much for the notion that the crisis was going to impose a new fiscal discipline on America.

Granted the "tax cut" is a fix to the alternative minimum tax which was flawed when it was written because it wasn't indexed to inflation. Nevertheless, it adds more to the estimates of the federal deficit. For the moment, the feds have managed to create so much anxiety that everybody wants their debt, but if that ever changes, the U.S. government is just going to be a large scale version of Lehman Brothers.

Out here on the Oregon Coast, our little local governments have to keep expenses within revenues. Probably the same in Alaska. Maybe Palin has more credentials for running the national government than I've given her credit for.

Just kidding.

EmX doesn't really cost money, cuz its federal

On Sunday, Andy Vobora, a spokesman for the Lane Transit District wrote in the Register-Guard that the cost of new EmX bus station at Gateway was only $2 million and, most importantly, none of it was local money. It was being paid for by the federal government.

It's true in the sense intended, that the local transit budget is not being drained for pay for construction. But, just as all politics is local, so are excise taxes, and the federal dollars provided for mass transit are due to some driver filling up at some gas station. Or more accurately, it's a penny each from 200 million drivers, none of whom is specifically aware of the fact.

The same newspaper editorialized earlier that the impact of RideShare, which is LTD's program to provide public transit services to people who can't ride buses, should not fall on local taxpayers, even though the disabled are Lane County residents. Since the federal government noted the problem and required a solution, the argument goes, they should pay for it.

A reasonable idea on the assumption that the feds have unlimited cash. That seems to be the popular belief. It underlies the notion that we can run a trillion dollar deficit and it won't matter. The LTD money is a little different, since it comes from a designated source, but in fact that source is rapidly running out of cash. The treasury overall is broke and borrowing madly to cover Iraq and Wall Street, stealing the money that Social Security will need in future years for current consumption.

Foreigners are not amused. Which is too bad because we need $2 billion daily from them to stay afloat. The US dollar is in decline, and it has a lot farther to fall.

Impoverishment at the highest levels

It seems that one of the sticking points in our bailout of Wall Street is how much should we pay the bankers who come asking for help. John McCain is on record that bankers who ask for our tax money to get themselves out of their pickle should not expect to earn more than the highest paid person in the federal government. That being the President, who takes in $400,000 per year.

Secretary Paulson has responded that we can't make this work if we include "punitive" provisions like this. Punitive? There are no government employees in America, outside of college athletic coaches, earning that much. Are the banks pretending they couldn't get the talent they need? That you can't make ends meet, after years of 7 and 8-figure salaries, if you're reduced for one year to $400,000? Punitive?!

It should be clear now that the people running the financial world are not amazing geniuses. They just had really large sums of other people's money to gamble and, although they often did well, they once too often have done badly. They are probably reasonably bright and some of them may be good technicians, but they are not irreplaceable.

The free market advocates are all keen on Darwinian selection in the corporate world. Let's see it work. Let's see which banks are willing to throw some of their bloated executive salaries out in order to survive. Those that aren't, won't. Sounds good to me.

A trillion here, a trillion there, and pretty soon ...

Older people will remember when Senator Everett Dirksen of Illinois said (or was supposed to have said): "A billion here, a billion there, pretty soon you're talking real money." We've moved into a new era; when we talk about government disasters, the unit is trillion rather than billion. First the Iraq War, now housing and mortgages.

The figure of 700 billion is now being used for the bailout of Wall Street, but these are always low ball at the outset. It comes on top of $200 billion for Fanny and Freddie, plus 85 further billskis for AIG, plus whatever for Bear Stearns and sundry. Detroit wanted 25 billion, but they now probably realize that such an amount is chump change in the new landscape of public subsidies.

The long term impact on America is going to be horrendous, as people with real economies decide that we are addicted to government spending without taxes and that the dollar will become, if not worthless, then greatly depreciated. This will be unfortunate, as the American economy depends on such people exchanging their own hard currencies for greenbacks still damp from the printing press, at a rate of some $2 billion daily.

In the short term, I can only predict that the Democrats will pile on, asking for more unemployment benefits and other middle-class benefits. Oh, and I think I can safely predict that no politician will suggest the anyone should actually pay for any of this with taxes.

Here's hoping Ike hits New Orleans

People are worried about Ike making landfall somewhere along the Gulf Coast. In general, this would be a bad thing but there's a possible silver lining. It might hit New Orleans and take the city out of its misery. It wouldn't need to be a direct hit, just something close enough to cause another evacuation and perhaps a minor breach of a levee.

It's not that I don't like New Orleans. On the contrary, I've been there, enjoyed myself, and look forward to a city named New Orleans, on essentially the present site, continuing long into the future. But the premises behind all reconstruction conversations I've heard are foolish.

Much of New Orleans lies below the level of the surrounding waters of the Mississippi River and Lake Pontchartrain. Until Katrina, it contained many poor people. Their homes have been devastated and now the theory seems to be that there should be some way in which New Orleans can be rebuilt so as to house a lot of poor people.

Sorry, but building a city below sea level is intrinsically expensive and nobody is going to do it on behalf of poor people. Nor should they. Many more poor people could be given decent housing elsewhere for the cost of doing so in New Orleans, assuming that the package included enough civil engineering to ensure that the new housing would not be flooded like the old.

The lowest portions of New Orleans should never be rebuilt. We should stop thinking of New Orleans in terms of the Florida Everglades and switch to Amsterdam or Venice. This is prime land for development, both residential and commercial, provided that some of it is moved up and surrounded by sturdy walls and the rest excavated to a level that would allow small craft to ply the newly created lakes and waterways.

This wouldn't be cheap, but we're the country that built the Grand Coulee Dam and this is certainly doable. And the result would be fabulously valuable. People will pay tons of money for waterfront, and New Orleans could have oodles of it.

What about the poor people? Well, what about the poor people? Is anyone building their housing today? Will they tomorrow? Let's get real, build subsidized housing somewhere on naturally-occurring dry land, and get over the sentimental attachment. Subsidence happens.

The Real Message about McCain and Palin

I don't normally pay much attention to Andrew Sullivan but his comments on Sarah Palin, coming from a conservative, are on point. It's not whether Sarah Palin actually will ever turn out to have the talent for the job. It's that nobody has any reason to believe she does. We'll skip the fact that there are reasons for a progressive, or just somebody who thinks teen pregnancy is not a desiderata, to be actively skeptical. Even those who think she may pan out must admit that she hasn't proven anything. Yet, the GOP has nominated her to be VP. For no reason except that a large portion of their followers, who vote based on litmus tests rather than ability, love the idea.

Sitting out here in Florence, on the Oregon Coast, I have come to know a number of elected city officials. We have about the same population as Wasilla AK. I like these guys, but I wouldn't nominate any of them to be President of the United States.

And governor of Alaska? That's been for 20 months. When you're an executive, you make decisions and time tells whether they were right. There hasn't been enough time. Alaska has a budget surplus and worries mostly about who to give it away to, although they are not shy about asking the lower 48 to subsidize them. Put simply, there has been nearly nothing about her resume that demonstrates her ability to handle the job she's running for.

So first, it's scary that McCain might croak and she'd replace him. Then it's scary that he might not and this is the sort of considered judgment we can expect from him. Either way, it's Obama '08.

Sarah Palin is not riveting

Writing for Newsweek, Howard Fineman suggests that Sarah Palin's performance tonight will be riveting, because we'll have a complete unknown in a situation where she will sink or swim and nobody knows what to expect.

I know what to expect. She'll be coached that she doesn't need to capture the right wing, which is hers already, so she'll use the opportunity to talk about silly things and make herself more human and appealing. None of this will have any real bearing on her ability to lead the world's largest economy, nor will it truly reflect anything that would be likely to result from her eventually becoming president. Remember the W. ran as a compassionate conservative, only to turn out in reality to be just another frothing-at-the-mouth fascist. Likewise the lovely Sarah, regardless of what sugar-coating she applies to her scanty resume in the speech.

Someone has remarked that Ms Palin is probably the first national candidate ever to know how to dress a moose. I can't speak specifically about moose, but I'll wager that some of the early 19th century candidates knew how to handle a knife to dress game. It was once an important qualification for dealing with life.

She may, however, be the first candidate for national office for whom that ability ranks high on the list of qualifications to hold the office.

Appalachia, the Ozarks, and evidently Alaska

Levi Johnston's mom, commenting on the marriage plans of the children, said that they had planned to get married all along and that the pregnancy was a "bonus."

There are certain attitudes towards life that we have come to identify, fairly or unfairly, with hillbillies. Mrs. Johnston shows that they are alive and well in Alaska. Levi, a fine strapping youth, is not evidently attending high school. His mother says she doesn't know whether he graduated. We deduce that he's not planning on college. Apart from hockey, there's no evidence of an ability to support a wife. Yet he will be trotted out in St. Paul at the convention for everyone to cheer.

The Republicans must be just busting their buttons with pride.

Sarah Palin is the .... Words fail me.

It seems that Sarah Palin's problems are all due to the liberal media. Reminds me of the line, that no girl ever got pregnant from reading a book. It seems to me that Bristol Palin didn't get pregnant from watching CNN. However, more relevantly, she may have got pregnant because in the Palin family nobody talks about how to avoid pregnancy and in schools in Alaska, if it happens, it happens against the opposition of Sarah Palin and her ilk.

I wasn't going to get involved. I was just going to write in Paris Hilton and let it go. It seemed like I could handle either candidate and with neither candidate saying anything I particularly liked with respect to war, this was going to be one that I could sit out.

Not anymore. Sarah Palin opposes everything I believe, which is that the world needs to be managed on the basis of evidence. She's George W. Bush without the deep intellect. There aren't a lot of people that I would not be happy to take over the White House after W. but given the decent statistical prospect that if we elect McCain, it will be her in less than four years, I find her frightening. What are we frightened of, the right wing asks querulously. You wouldn't understand, I reply. I'm sending a check to Obama.

Betrayal in Zimbabwe

The Voice of America reports that supporters of Mugabe's opposition in the spring elections now fear they will be betrayed in the negotiation process.

Of course, they will be betrayed. These are "negotiations" with Robert Mugabe, who only sits at the table because he waged war on his people in order to steal the election results. The people behind him need to keep control in order to continue to steal the small amount of hard currency that the economy generates. It's a small amount compared with the 12 million or so citizens (hard to say who lives there since so many have fled), but it's enough to keep a handful of powerful and ruthless men living in great personal wealth. Negotiations with them mean sharing this crime. It certainly doesn't mean bringing to Zimbabwe a government that will be sensitive to their needs and will try to restore the economy.

There is no government bureaucracy to speak of in Zimbabwe, just a kleptocracy. This will not change as a result of negotiations that include ZANU-PF.

The Edwards Affair

It appears that Senator John Edwards had an affair a couple years ago. I see three lessons from this.

One is that powerful men attract good looking women and, when temptation presents itself, are generally unable to resist. Our political system would be much better if we simply acknowledged this fact and left it between husband and wife to sort out in whatever manner they prefer. The Edwardses seems to have done so, and it's not clear why it's anyone else's business.

Two is that men will always lie (or at a minimum, prevaricate) when first confronted, hoping that the evidence will turn out to be insufficient. This means that when a man denies having had an affair, it is not newsworthy and should not be reported. If he confesses, that's unusual enough to merit attention, but denial definitely falls in the "dog bites man" category.

Third is that those who most strongly denounce the moral turpitude of philanderers are fully as likely as the rest of the crowd to be doing so already, or to do so in the future. John Edwards is just one more example. There should be a similar rule to that above. When a politician decries the immorality of another, it is meaningless and should be ignored by the press.

Of course, none of this is going to happen. Men will be caught in sex "scandals," which in mature societies would simply be ignored, and the press will hound them. They will deny everything. Eventually they will be unable to wriggle free and they will issue some mea culpa. Other prominent men will pontificate, although they are probably banging their secretaries. It's boring, really.

Ivins, Anthrax, and Guarding Tess

Everybody remembers the resourceful Secret Service agent Doug Chesnic shooting the weasly chauffeur in Guarding Tess, thereby forcing him to reveal the location where Tess was being held? It all worked out fine, but remember what the chauffeur had said a few minutes earlier? I don't remember the exact words, but the gist was, "I know how this works. You people have to pin this on somebody and that person doesn't have to be guilty."

In the movie, of course, it worked out marvelously because he was guilty. But if he hadn't been? Then agent Chesnic of the federal government would have left him unable to walk without a limp for the rest of his life. He was already in a hospital, so I'm assuming he wouldn't have died.

The real FBI is much more cautious. I doubt that any agent would risk his career to go outside policy in the defense of a third party. But it's reason to wonder, as you think about the suicide of Dr. Bruce Ivins in connection with the anthrax letters case. Not having found the guilty party in such a high profile crime was obviously a stain on the agency's reputation. Six years on and they didn't have an indictment. This guy looked like their best hope.

So they searched his place twice, his computer once, and kept him constantly under surveillance by obvious agents for a year. Let's suppose for a minute that he was everything he said he was. A faithful government employee, a church-going Christian, active in his community, devoted to science. And the FBI spends half a decade putting his existence under an unrelenting microscope. Some of us might crack.

Years ago, I had a much higher opinion of government and this line of reasoning would have seemed outrageous, but after six years, if you haven't got an indictment you have a weak case. Nevertheless, the FBI has its desired outcome. They can reveal that they were close to an indictment, which is a couple of steps from a conviction but sufficient for the popular imagination. They wanted him dead. He's dead. They didn't actually have to shoot him. Pretty neat.

There's no such thing as a free war

The Bush administration is now suggesting privately that the next fiscal year's budget will be at $490 billion. This is in the Neverland world in which the war in Iraq, which has been going on since 2003, is not a regular expense item. Add another $80 billion for that.

Then add another $180 billion of so for the Social Security surplus, which is going to be needed in another few years. If we're going to maintain that the SS Trust Fund exists, then its money is not also the general fund's. The general fund must be running a deficit of more like $750 billion. According to Wikipedia, "earmarks" are also off budget and run around $50 billion a year more.

$490 billion may be optimistic, since the administration probably expects a shallow recession, which may not be the case. I wonder how much the $490 billion depends on cheaper oil than we are now experiencing. The U.S. government is a huge consumer of petroleum products.

All of this, however, is very little compared with the rate at which the government is incurring actuarial liabilities for future retirees. It also assumes that foreigners will continue to lend America the money to fund its twin deficits while experiencing a declining greenback and low interest rates.

But why worry. It's summer. Everything's going to be just fine.

Too Big to Fail: Fannie, Freddie, Iran

If we had waited on Iraq and today faced the problem we did five years ago, I doubt we would invade. We wouldn't risk their oil production. With Iran today, it's even more important to the US economy that Iran keep pumping oil. This morning, oil prices are headed back up just because Iran didn't say nice things about their nuclear program. I'm not sure who expected them to, but oil traders get nervous just because of the perceived threat.

I'm firmly of the opinion that Iran realizes that its greatest asset is the appearance of wanting nuclear weapons. Actually having them would be futile. It would be suicidal to use them pre-emptively, probably unrealistic to expect them to be deployed if the US decided to take them out, and runs the risk of an Israeli attack. Actually, if they were known to possess them, that is probably the certainty of an Israeli attack.

On the contrary, the appearance is of great benefit. It keeps tensions high and adds to the price of their primary product. Knowing that they can't actually attack without ruining their own economies, the Western powers are offering more economic incentive to a country that is wallowing in cash already. I see no benefit to Iran in resolving the crisis, so I expect it to continue for a long time.

Too much of Fannie and Freddie debt is held outside the U.S. by people whose credit we will continue to need. The people who sold overpriced houses will keep the proceeds. The people who bought them will keep their houses. People who prudently avoided the bubble will pay for it with taxes. The music goes round and round.

Jackson, Sharpton, and the word "nigger."

When I was very young, my mother explained to me that a rhyming game I was playing, which involved the use of the word "nigger," was inappropriate (she probably used different language) and I should never use that word. So I haven't since, except within quotation marks.

There are several things that are very irritating about the current "controversy." One is that Jesse Jackson, who preaches the public avoidance of the word, uses it in semi-public. He wasn't being broadcast, but he was in a newsroom.

Next, that anyone pays attention to what Al Sharpton says about it. It's akin to listening to what Jamie Lynn Spears says about her motherhood. It irks me that such people get publicity.

Finally, that people don't know the purpose of putting a word in quotation marks. At that point, you are talking about the word as a component of English. You should be able to talk about essentially any word that way, although since there are few legitimate reasons to use George Carlin's famous seven words except to shock and offend, I can legitimately see how they should be kept out of most writing and conversation.

But the word "nigger" is completely different. It clearly does not shock and offend Black Americans, because it is used casually. We are supposed to believe that they are shocked and offended when white people use the phrase, ever, for which reason we are not allowed to put it in quotation marks. We are obliged to refer to the "N-word" as a transparent euphemism.

When some words are so offensive to certain people that they never hear them spoken and prefer that, it's legitimate to shield them with a curtain of polite speech. But when a word itself is commonly used, this doesn't apply.

That Jesse Jackson used "niggers" to refer to American blacks doesn't bother me except for the hypocrisy. If Bill O'Reilly had used the same word in the same context, I would have thought it very bad taste. However, if people are going to get upset because in a blog, discussing the word and its political importance at this time, I come right out and skip the euphemism, then it's an indication of a complete misunderstanding of legitimate words in the language.

Out of the Iraq Skillet and into the Afghanistan Fire

Did the Surge work? Right wing commentators seem to think so and to imagine that Obama is now embarrassed at missing this golden opportunity. Think back a year, however, and recall what the Surge was supposed to achieve. We were going to send some more troops to Iraq to create a security situation in which the Iraqis could negotiate a peaceful arrangement among themselves.

A more peaceful situation has resulted, but the negotiations never panned out. Yet the "fragile" peace is looking ever better. Why? Mostly because the politicians want the money that expensive oil can bring them, but they can't publicly abandon positions of supposed principle. I don't think many of them have real principles beyond profit maximization, so this shouldn't be an obstacle to their finding a modus vivendi so we can go home.

But, alas, that's not what the Surge is going to deliver. Obama actually has something of a problem here, because it appears that with the success in Iraq, we are merely freeing more troops to go to Afghanistan. To sound pro-Jingoist, he has allowed himself to say that we should have put our efforts into Afghanistan rather than Iraq because that's where (roughly) Osama Bin Laden is.

But it's hard to say we should have in the past without being stuck saying we should now, and Afghanistan is a genuine quagmire. In Iraq, the terrain is mostly flat with little vegetation and our military can prevent the build up of any significant fighting force. Not so in Afghanistan, as we are increasingly seeing. We want the Paks to jump in. Not damned likely. They know this region and they are not fools.

It's interesting that we have so much more European support for our objectives in Afghanistan than in Iraq. Maybe it's some vast Machiavellian plot through which the United States bankrupts itself and the Euro becomes the international reserve currency. It seems to be working.

Obama, tne New Yorker, and Satire

I just read a commentary in the Sun-Times about New Yorker's cover controversy. The point of the article is that "of course it's satire." One of the public commenters noted that anyone with a fifth-grade education would realize that it's satire.

Unfortunately, this race will be decided, in the end, by the opinions of the booboisie. There may be few voters who don't actually have a fifth grade eduction, but if you include those who, as adults, have no mental acuity greater than that of a well schooled fifth-grader, then you haven't sat around in a greasy spoon cafe and listened to the banter.

Presumably the readers of the New Yorker recognize that much of what is said about Obama, and everything about his Muslim connection, is nonsense, but this is certainly not true of the electorate as a whole and some people will see confirmation in that cover. I'll certainly defend their First Amendment right to publish as they see fit, but it's also my right to say that it was tasteless and showed bad judgment.

Sandra Harding -- can anything more be said?

After my last post about Obama and the Denver convention, it followed a tortuous path through cyberspace and wound up at the Wikipedia article on Sandra Harding, a feminist theorist. The article ended with the following controversial statement by Ms Harding:

One phenomenon feminist historians have focused on is the rape and torture metaphors in the writings of Sir Francis Bacon and others (e.g. Machiavelli) enthusiastic about the new scientific method. Traditional historians and philosophers have said that these metaphors are irrelevant to the real meanings and referents of scientific concepts held by those who used them and by the public for whom they wrote. But when it comes to regarding nature as a machine, they have quite a different analysis: here, we are told, the metaphor provides the interpretations of Newton's mathematical laws: it directs inquirers to fruitful ways to apply his theory and suggests the appropriate methods of inquiry and the kind of metaphyiscs the new theory supports. But if we are to believe that mechanistic metaphors were a fundamental component of the explanations the new science provided, why should we believe that the gender metaphors were not? A consistent analysis would lead to the conclusion that understanding nature as a woman indifferent to or even welcoming rape was equally fundamental to the interpretations of these new conceptions of nature and inquiry. Presumably these metaphors, too, had fruitful pragmatic, methodological, and metaphysical consequences for science. In that case, why is it not as illuminating and honest to refer to Newton's laws as "Newton's rape manual" as it is to call them "Newton's mechanics"?

This is a woman who has spent a lifetime in academia, writing books, holding important posts, evidently generating widespread if not universal respect. I ask you to consider what any freshman, at any university in America, would be told if they wrote something like this in a paper and turned it in to a professor? An "F" certainly, and perhaps a request to enroll somewhere else. But Ms Harding is in fact Sandra Harding, PhD. That means she must be taken seriously.

Wikipedia, with its usual deference to objectivity, commented:

This article or section may be inaccurate or unbalanced in favor of certain viewpoints. Please improve the article by adding information on neglected viewpoints, or discuss the issue on the talk page.

I gave it some thought, but in the end, if this is an accurate quotation, what is left to say? Apart from editorializing, as I am doing here, I don't know what could be added that would not dignify an absurdity.

Democrats still think a command economy works

First, I'm an Obama supporter. He makes me nervous, but I attribute this mostly to the pressure of running a campaign where the results will be decided by, as H L Mencken so aptly put it, the "booboisie." An honest and intelligent presidential campaign is essentially an oxymoron, so I'm giving him a lot of latitude.

However, I'm not a fan of the Democratic Party. Or the Republicans, the Greens, the Libertarians, or Socialist Labor, but it's the fact that Obama belongs to the Dems that concerns me. Witness the botched job that they are making of the upcoming Denver convention.

First, the lavish expense on office space, $100,000 plus $50,000 for rented furniture per month. The attitude appears to be, "It's not our money and we deserve this." It's not an appealing attitude and makes you wonder how they would run the country if they had the chance.

Second, there's the deal with the caterers, who are being told, probably by people who don't know a lot about catering, exactly how to construct each meal, down to the presence of fried foods (not) to the combination of colors. It's the kind of top down thinking that didn't work well in the Soviet Union and doesn't here either. The potential caterers are not showing much interest and time is running out.

I don't know why the Dems are so intent on having a "green" convention. It has nothing to do with the political imperatives. Who do they think they'll sway? The handful of people who might otherwise drive to Nader? There's no need to have a green convention. Eat hot dogs, drink beer, wave flags, cheer, vote, go home and start an exercise plan to wear off the extra calories.

There is a serious political reason, however, to appear to be competent. If the DNC runs around, tilting at politically correct windmills and failing to deliver an efficient convention within the budget, then it will reflect badly on Obama.

Kiwanis and the Internet

I recently returned from the International Convention of Kiwanis in Orlando. It was generally a stimulating and valuable experience, but as an active Kiwanian, I'm concerned that the organization is not fully incorporating the power of the Internet into its programs.

This is most glaring in its approach to membership growth. Like all the large, established service organizations in America, Kiwanis has been losing members. Those that remain are, on average, older than before. It's a bad trend since the need for the services provided, which focus on children in Kiwanis' case, has never been greater.

Yesterday, I found a site for an Oklahoma-based church, LifeChurch.tv, which has gone so far as to adopt its domain name as its DBA. In a list of past achievements, and referring to the year 2006, they say on their site:

"In April, the LifeChurch.tv Internet Campus was launched. This revolutionary campus provides live church online for people around the world with the ability to engage in genuine community, unique volunteer opportunities, online LifeGroups, and even mission opportunities on the Internet."

I have no idea whether I agree with their theology, but their technology looks right on the money. Kiwanis should be doing this as well. It's where the future will be found.

Legalize Drugs and Prostitution

It would have been almost enough to vote for Ron Paul just because he wanted to get us out of Iraq and to legalize drugs. Unfortunately, he came with enough baggage that I could never quite bring myself to seriously support him.

But as an article in the LA Times points out, the war on drugs has set us back $2.5 trillion since its inception and shows no evidence of progress. This is serious money to be spending on futile public relations.

One of the great thinkers of the nineteenth century, Lysander Spooner began his 1875 book Vices are not Crimes as follows:

Vices are those acts by which a man harms himself or his property.

Crimes are those acts by which one man harms the person or property of another.

Vices are simply the errors which a man makes in his search after his own happiness. Unlike crimes, they imply no malice toward others, and no interference with their persons or property.

In vices, the very essence of crime - that is, the design to injure the person or property of another - is wanting.

It is a maxim of the law that there can be no crime without a criminal intent; that is, without the intent to invade the person or property of another. But no one ever practises a vice with any such criminal intent. He practices his vice for his own happiness solely, and not from any malice toward others.

Unless this clear distinction between vices and crimes be made and recognized by the laws, there can be on earth no such thing as individual right, liberty, or property, and the corresponding and coequal rights of another man to the control of his own person and property.

For a government to declare a vice to be a crime, and to punish it as such, is an attempt to falsify the very nature of things. It is as absurd as it would be to declare truth to be falsehood, or falsehood truth.

The argument against drugs is that some people will fall into the habit if drugs are legal. Possible, but the fact is that we give up regulation, taxation, and provide incentives for drug pushers to promote the substances. The moral argument against prostitution is pretty weak, since there are lots of women in degrading relationships based on sex and this isn't illegal. The crime that supposedly gravitates naturally around prostitution is mostly related to drugs, so this is circular.

For a small fraction of the expense of the "war on drugs," we could offer free treatment for any addict who chooses it. We could also treat addiction as a terminal disease, when the addict is indigent and refuses treatment, and provide enough of whatever substance they want so they can over time kill themselves. They're going to do it anyway, and this would be more humane.

Oil Rules

The BBC has outlined the policy conflicts that are going on in several capitals regarding the prospect of war over the Iranian nuclear program. I am going to go out one a limb and state that cooler heads than Bush, Ahmadinejad, and the Israeli cabinet will prevail and no such attack will take place.

The reason is oil at $145/barrel. This is a precarious price and perhaps it won't stay this high, but it means that Iran's exports of oil, worth perhaps $150 million per day a year ago, are now worth $350 million. Their natural gas reserves are also much more valuable.

If they don't rock the boat too much, the average Iranian is going to get $1100/year more, which is about $3000 after considering local purchasing power. That's per capita, so figure $12,000 for the typical family. Enough to put them into the middle class by world standards. It's a lot to ask them to sacrifice this for a dispute in Palestine.

The Israelis must also understand that an attack on Iran would push oil towards $200, assuming moderately hostile response from Iran, which would in turn bring the U.S. economy to a halt. No other major power is blindly supportive of Israeli objectives, and they would risk losing their one reliable ally.

On the flip side, there's a rather Machiavellian option that the Iranians might be playing. Their nuclear program may not be doing as well as they, the Israelis, and the Bush Administration want everyone to believe. It's certainly not necessary to their wellbeing. They are being offered some incentives to dismantle it, but it might be vastly more profitable to them to have Israel bomb it. Another year of prices from $150 to $200/barrel, which they should be able to sustain with saber rattling, would bring them another $50 billion or so with no strings attached. They would push the United States into a deep recession and increase the diplomatic isolation of Israel.

I don't think Ahmadinejad is smart enough to figure this out, but he's motivated by some screwy religious concepts and there may be deeper thinkers over there who do see the possibility. Hard to know.

Meanwhile, I don't think this problem exists in Iraq. There's now just too much money available. They will settle their differences, although maybe not clearly enough that the U.S. can stop bankrupting itself with the occupation.

The Real Estate Wealth Illusion

My grandfather was a very religious man, although not in a particularly organized sense. When he sold his house in Seattle about 1953 to move to our family compound on the west side of Puget Sound, the fact that he would get more money for it than he had paid caused him some moral concern. Somewhere in the Bible it says you aren't supposed to make money without working for it. My grandmother eventually convinced him that it would be all right.

The reverse attitude was shown by the couple who bought a big house somewhere in the Riverside/San Bernardino area with the thought that having invested $1.4 million for much more housing than they needed, they could sell it in ten years for $5 million and retire on the gain.

There have been a few lucky people who have cashed out as a result of the real estate bubble, but I don't know how anyone ever thought it would work for the United States collectively. If we, the boomers, want to retire some day, we'll need to leave behind us highways, airports, factories, dams, bridges, and lots of other things with which our children will be able to produce goods and services, enough for themselves and us as well. Building excessive houses and living in them isn't going to lay the groundwork for a prosperous future for the country.

Don't short the USD, buy Pinot Noir

There's a growing concern that the production of pinot noir grapes in Oregon has put the industry in the state on track for a price crash in a few years. I don't think so.

Just consider the competitive situation. A large amount of wine consumed in this country comes from places like Europe and Australia, where the USD has fallen dramatically in the past two years. Buying patterns don't shift immediately and we can expect foreign governments to take actions to protect their domestic wine industries, but the principle of import substitution is going to rule.

Fortunately for the rest of the country, the Pacific Northwest produces great wine and Americans should be happy to buy Oregon and Washington wines instead of French. Good thing, because when the Euro reaches $2, they won't be able to afford their old habits.

Oil and dollar -- Are we in a feedback loop?

A year ago, the State of Oregon produced its official tax revenue estimate and commented that although there were some dark clouds on the horizon, one positive possibility was that the cost of oil would go down. The state economist figures that at $60/barrel, it was somehow inflated above its natural price level.

Now, with oil prices almost 150% higher than that, I'm starting to wonder if there isn't a financial feedback loop at work here. Gasoline is a highly price-inelastic commodity. If you need it, you buy it, and cut your expenses elsewhere. Over a period of time, people will come to own more efficient vehicles and perhaps live closer to where they work, but in the short run, this isn't much of an effect. Gas has doubled and consumption is down in single digits.

The problem is that so much of our consumption comes from foreign sources. As the price goes up in USD, the trade balance worsens and the USD drops relative to other currencies. Other countries find it easier to compete with the United States to buy the oil, raising the cost of oil in USD, driving down the dollar, etc.

Obviously, it can't go on forever, but it may explain why we've reached levels that nobody would have seriously even speculated on a year ago.

Mugabe and Ian Smith

A number of people seem to be having trouble with the logic of Ian Smith's rebellion against the wishes of other people that he turn his country over to black majority rule back in the 1960's when everyone else was doing it. OK, everyone except South Africa. One such article notes that "Few could argue with the logic of redistribution when some 5,000 white commercial farmers owned two-thirds of the best arable land in a country of millions of blacks."

I'm not sure why this is so difficult to argue against. First, prior to white settlement, there weren't millions of blacks. There were fewer than one million, because without white farms, the country did not produce enough food to feed that many people. Second, there simply isn't any evidence that the black farm workers were ready to run the farms, let alone the entire country. They have been in charge for 30 years now. They now have most of the land, and they are producing less and less. They are on track to starve by the millions.

Much has been made of the 30,000 people who died in the bush war, mostly black insurgents. That was over a period of 15 years. Mugabe, not long after coming to power, killed 20,000 Ndebele civilians in one year. The loss of life, when you consider the collapse of the life expectancy, has been in the millions under Mugabe.

It's really hard to make a good argument that Zimbabwe, under any plausible scenario, would have been better had Ian Smith conceded in 1965 that black majority rule was inevitable.

No help from China on oil prices

Wall Street was thrilled today by the news that China is raising the domestic price of gasoline and diesel for its consumers. This, we hope will reduce demand for petroleum products in China and lead to a decline in the price of oil.

This is dreaming. If there's one thing that experience should have taught us by now, it's that gasoline is largely price inelastic, particularly in the short term. In this country, prices are up around 35% over the past year and demand has dropped about 3%. The Chinese are upping price by 18%. Should we expect more than a 2% drop in demand? They represent only about 10% of world consumption, although the fastest growing component. A 2% drop in a 10% segment means an overall reduction of .2%. Hardly a ripple in the supply stream.

We're going to $5 gasoline. Thanks to China's move to increase prices, that day will probably be postponed by a week.

Save AgriVino! Abolish OLCC!

It has just been reported that Agrivino is going to close its doors in early July, due to the narrow interpretation of certain liquor control laws that the Oregon Liquor Control Commission has adopted. They are saying that AgriVino's high-tech Enomatic system is illegally allowing "self-pour" by customers.

AgriVino was planning to provide a very high-tech system for dispensing tastes. Economatic is "state-of-the-art wine dispensing and preserving system," which allows the dispensing of single tastes from wine bottles without exposing the wine to air. Instead, carefully measured one-ounce quantities are pushed out by argon, a noble gas that does not react chemically with wine, into the customer's waiting wine glass.

The problem is that the customer was supposed to pay at the front desk, receive a card, and use the card to sip wine until the money ran out. However, the cashier did not physically handle each pour; the computerized system did this. No can do, says OLCC.

This despite the fact that the central computer was keeping track of the number of pours for each person and would stop delivering when it felt that the customer was drinking too fast. At the price of a sip, this strikes me as a pretty academic concern, but they made the effort. In the real world, this would be among the best regulated and least excessive environments for drinking wine in Oregon.

OLCC wants us to believe that they are forced into this position by ORS 471.360(b), which they say prohibits "self pour" by customers. If you read the statute, you'll see that it says:

(b) No licensee of the commission shall permit any person to mix, sell or serve any alcoholic liquor for consumption on licensed premises unless such person has a valid service permit issued by the commission.

Notice that the statute forbids any unpermitted person to serve liquor. It does not say that, at every step, a permitted person must be taking part. In restaurants, the waiter does not pour every glass of wine. In a tavern, the waitress will almost never pour from the pitcher of beer.

Clearly, OLCC does not require a permitted person to physically take part every time an alcoholic beverage flows from a container into a glass, but they are insisting that AgriVino do this, even though it would destroy the efficiency that makes it possible for them to offer the public such wonderful wines at reasonable prices.

This is not over.

The Way out of Iraq -- Money

From the start of the Iraq war, I was plagued by the sense that there was simply no peaceful solution through which the U.S. could exit. It now seems that combat deaths are setting new lows and although there hasn't been much tangible political progress, the rhetoric doesn't seem to be all that strident.

I have never claimed to understand the Iraqi mind, so I never tried to say for sure how far they would go with their antipathies towards one another. Pretty clearly, the Kurds despised the Arabs, probably with more fervor and more justification than the Sunni/Shiite split within the Arab community. I have felt all along that the Kurds would not give up their share of oil, about 40% compared with their 20% representation in the population. This meant that the remaining 60% of oil revenue would perforce be divided among the 80% of Iraqis who are Arabs. I was pretty sure that the economic conflict would form on sectarian lines and would be bloody.

But the economic conflict may be unnecessary. At $30/barrel, there wasn't enough cash there to make everyone happy. Even the $30 wasn't clear profit, as the Iraqi infrastructure would have absorbed a lot of it. But $120 is a whole new ballgame. Just on the back of an envelope, it looks like Iraq would have enough money to bring all the Shiites into the middle class and let the formerly prosperous Sunni administrative and professional class be prosperous again. Subtract the economic imperative, and there may not be enough enmity left for a civil war.

Arabs are historically very good at math (think "Al Gebra") and the thought may have occurred to them as well. They need to stop killing one another in order to get rid of the occupation and cash in. There is so much cash available that the corrupt political class (essentially a redundant phrase) can become spectacularly rich without depriving their less privileged supporters.

I'm going to now predict that a combination of fatigue and greed will lead to a modus vivendi in Iraq among the factions. One of the conditions will be that Americans leave. The super embassy in Baghdad may become an issue. But the violence will decline and we'll eventually stop spending our resources there, so we can devote them to the consequences of food riots elsewhere.

Run, run! The oceans are becoming acidic!

Plagiarism in the Digital World

In my previous post on Clergygate, I remarked that ideas should not be held responsible for their supporters. It wasn't an original idea. In fact, it may have been almost the same wording that someone else used earlier, although that person in turn may have borrowed the phrase. I could try to track it down, since search engines make the job so much easier now, but it's not worth the effort.

I will simply admit that I don't invent every phrase I use. It would be almost impossible to track down everything we know we're borrowing, let alone the many phrases that our subconscious minds allow us to think are original but which came largely intact from some previous source.

Surely, it shouldn't matter when political candidates borrow freely. In February, Obama was accused by the Clinton campaign of plagiarism in a speech. Who cares? We don't elect people to office with the idea that their platforms are original. Why should it matter if they language in support that closely mimics some prior speech by someone else?

Especially since almost no words that come out of a candidates mouth are his own anyway. They are produced by speechwriters. Does anyone think that George W. Bush actually composes his thoughts in the language you hear from him in formal situations? Not likely. But no one accuses him of plagiarizing his own speechwriter. If we're going to demand originality, let's be consistent.

Being responsible for supporters

I recall several years ago when I formed an organization known as OLL -- Oregonians to Limit Lawyers. It was a small organization, consisting of precisely myself and my mimeograph machine. OK, it wasn't technically a mimeograph, but the I like to recall it that way as a more colorful story. As an organization, however, it was definitely just me.

Our platform, using "our" in the imperial form now, was that there were already too many lawyers in Oregon and the private law schools at Willamette and Lewis & Clark were sufficient. The University of Oregon should close its. I sent out a memo to all the candidates for the state legislature, asking for their position. It was a campaign year and indeed, a few responded. Most ignored me.

I actually got a little publicity out of it and people sent me letters. One guy even sent a check, which helped cover my printing and mailing costs. Unfortunately, they seemed generally to be nut cases. I felt then, and feel now, that we have too many lawyers and the state should get out of the business of producing more of what taxpayers want less of. But it became clear that this position attracted an undesirable number of wackos, so I dropped the campaign.

I remember this situation as I watch the current presidential campaign unfold, with candidates now busily trying to explain their relationships with clergymen whose views on public matters make my anti-lawyer adherents look statesmanlike.

This is sad. Ideas should not be regarded as responsible for their supporters. No one (except perhaps some talk show host somewhere) has ever suggested that Barack Obama planned to take advise from Jeremiah Wright should he be elected, or that McCain shares Hagee's views on Hitler. As a practical matter, their support should not matter to the voter.

It's actually a bit more disturbing that although McCain now condemns Hagee's theoretical views, he hasn't moved an inch from the mindless pro-Israeli policies that Hagee's theology led him to. Obama is at least separate from Wright as regards practical impact. McCain seems like a nice guy, but when you consider that he thinks not only the Iraq War but, in retrospect, the Vietnam War as well have been good ideas, it worries me.

The Problem of the Median Home Buyer is Nonsense

I have a keen ear for statistical nonsense. Once again, I hear that it's a
great crisis in this country that a person with the median income cannot afford the cost of the median home in his area. This is not only not a crisis, it's something close to a mathematical certainty.

Not quite, because it's not certain that the average person will pay as much for a house as he can afford. Some will buy homes that are well within their abilities, although it is now clear that some others were spending above that level. But for the sake of argument, let's suppose that builders will build enough home at every price level that everyone can find a home at the highest price they can afford, which is not true but good enough to make this point.

However, not everyone will buy a home. Even though in America, there is a very high level of home ownership, there is still a segment of the population that will be unable for economic reasons to own a home. Usually, this is a question of income.

About 31% of housing units are occupied by non-owners. Add to that the number of people who don't occupy any housing, i.e. the homeless, deduct the number who are simply happy renting. For the sake of argument, let's call it 20% who would buy a home if they could but haven't got enough income.

Then the class of Americans who would be buying and selling homes is about 80%. The median among them would buy the median home, which is what they can afford (see assumption above). That would be the median of the top 80%, or the 60th percentile overall.

Consequently, people with the median income among all Americans would be around the 38th percentile of home buyers and would NOT be able to afford the type of home which someone at the 50th percentile of home buyers could afford.

This does not say that there isn't a housing price problem. One of our greatest problems is that when we're in our working years, we think we can "save" for our retirement by buying oversized houses which we expect to sell at still higher rates to the next generation so we can live off the capital gain. It's a national "greater fool" theory.

We need to be living more modestly, perhaps renting more often, and putting our money collectively into roads, bridges, and the like, and individually into productive parts of the economy. We can then leave a legacy to the next generation which will allow them to support themselves and us as well. Creating national wealth by building houses is foolishness.

Not so quick, Wall Street

Things seem to be looking up in the financial markets. optimism has returned, it seems.

This is a little premature. Remember that although 1929 had the Great Crash in October, November was a pretty good month. Overall, 1929 wasn't a bad year. 1930 was a bad year. As was 1931, 1932, ...

The usual cycle involves things getting good, people getting too optimistic and overexpanding, then pulling back at the same time. Eventually, demand is unmet and expansion begins again.

This cycle was different. We drove consumption upwards while manufacturing migrated overseas. The engine was, as economists and journalists kept telling us, the housing market, which remained robust even as the trade deficit rose.

The housing market is bust and it isn't going to be fixed. We'll of course need some housing, but not on the same scale. Manufacturing will also not rebound. We haven't had plants cutting overtime, they've just been closing down. They aren't there anymore. And because we aren't really into engineering in this country, the likelihood that the next generation of world class manufacturing will take place in America is slight.

Jobs growth in April came in unsustainable areas -- education, health, government. These are things we do for ourselves. If we want to continue to import what we need and/or want, we need to have something to barter with.

What we produce that the world wants, in exchange for the oil to which we are addicted, isn't a lot. Food, certainly. Some raw materials. A handful of manufactured goods where we're still near the top, like commercial aircraft and software. We also have tourism and higher education, but they aren't significant in the big trade picture. The dollar will fall further and we'll be required to consume less, as foreigners lose interest in funding our consumption. This recession is going to continue for a long time.

Five uncomfortable truths

I'm not usually much of a fan of Thomas Friedman but his editorial this morning was one of his better efforts. "Who will tell the people?" he wants to know. They want to hear the truth, he believes. They want to know what it would take to make America great again. I doubt it, since any politician who tries is successfully beaten down by idiocy, over and over, everywhere, all the time. However, since he brought the subject up, here are five truths to tell the American people.

First, our medical system is atrociously inefficient. We spend more than any other industrialized country with nothing on balance to show for it. We have spectacular abilities in certain specialized areas and we lead in research, but we are crushing our manufacturing sector with costs that other nations do not have.

Second, we have too many lawyers and accountants. Other countries have fewer of these and more engineers. Our children enter the fields where the money is, and as long as we reward people for gaming the system more than engineers who contribute to productivity, we're going to misdirect our best minds.

Third, we use too much oil and we must reduce our use whatever it takes. The first thing it should take is increased cost. Simultaneously, in fact with the tax money that drives up the cost, we should engage in massive research to make our energy use more efficient in general, and less dependent on oil in particular. Drilling in Alaska isn't going to do anything but postpone the inevitable by a year.

Fourth, not all teachers are created equal. I have nothing but respect for people who teach first grade or art, but their skills are not as difficult to find in the market as those of a high school physics teacher. Teachers with real world experience are more valuable than those who have done nothing since college outside of classrooms. The NEA mantras on these subjects are debilitating to education.

Fifth, we can't win the war on drugs. Some people are going to abuse drugs. Not a lot, but some. Let 'em go. Offer free treatment to those who want to get off drug dependency, offer cheap drugs to the addicts so they will stop burglarizing homes to pay for their habits. This is an enormously expensive undertaking with almost nothing to show for it.

None of these positions are politically possible. Even the modest idea of HMOs has been torpedoed by Americans' wish to have no constraints on their use of the highest cost treatment conceivable. The lawyers represent an enormously powerful lobby and for some reason, their argument that they help the little guy is hard to counter. Higher gas prices mean short term discomfort, which nobody will support. The NEA has successfully equated support for teacher unionism with support for education. And no politician can be seen as "soft on drugs."

I'm certainly not the first to identify any of these issues. However, they come up against the sacred cows of both left and right. It's not that Americans don't hear the truth. They don't want to listen.

Gas Tax Folly, the Endless Circle

John McCain is at least consistent, in his notion that we should get relief from the federal gas tax for a few months and just add it to the tab. Hillary Clinton thinks we should have it and pay with an excess profits tax. If for no other reason, I think I'd support Barack Obama for calling this the folly that it is.

We are not in this situation because of greed. Everyone is greedy and always has been, yet five years ago, petroleum fetched about a third of what it does now. The change has been supply and demand, notably the rapid rise of Chinese consumption.

What we need is not a drop in the tax, but a $1 increase. The intent would be to deliberately reduce U.S. demand, which would lead to lower prices for the product. The net effect would be less than $1 for Americans. In the longer term, we could reduce demand by advancing our technology, and we should but we can't do this overnight.

Any demagogic proposal to cut the tax this summer, when supply pressure is already likely to be at its worst, should be denounced. Obama wins this one.

American Generosity Courtesy of China

The Bush Administration has proposed an increase in the level of food assistance provided by the United States. We should all feel proud of this latest example of American generosity.

Except, of course, that we're not paying for it. If George W. Bush had said to the American people, "There are folks starving all around the world. I want each of you to dig into your pockets and come up with $2 to help them," he would have received about almost nothing. If he had asked Congress to institute a new tax that would generate $770 million to cover the aid, he would have been denounced by his own party.

Instead, it's another appropriation with no funding, which means more public debt. Just doing back of an envelope work, it's looking like half a trillion annually to cover the never-ending rise in the monthly cost of Iraq/Afghanistan, the economic stimulus, and slowing revenues due to the recession.

I remember when half a trillion would have been serious money, enough to get people talking, political candidates posturing, and headlines blaring. Not anymore.

Less Good News than Meets the Eye

Wall Street is delighted that the April jobs report shows fewer jobs lost than anticipated and fewer than previous months. On closer inspection, though, we see the usual pattern of earlier months being adjusted downward. The revised figures show more than a quarter million jobs lost in the first four months of the year. There's a good chance that April will be worse than 20,000 when the dust settles in another 60 days.

Worse than that is that the nearly neutral effect of April was achieved by offsetting huge loses in manufacturing and construction with gains in services and government. Generally, a service job is probably worth half one of the first two, so from an economic standpoint, this wasn't neutral at all.

And government jobs are rising. One wonders how this could be. Except for the feds, who simply print whatever amount of money they need, governments are limited roughly by tax receipts, which are falling short of expectations. Apparently they haven't yet adjusted payrolls but it's just a matter of time.

Here in Oregon, the process will be distressing. The annual budget cycle for most less-than-statewide units is intense in May. The figures everyone is using assumes that whatever money has been coming from the state, which is most important for schools and community colleges, will stay at the level promised a year ago. A new state tax projection should be coming out within a few days. When it shows another sharp decline, a lot of those budgets, and hence hiring expectations, are going to need revisions.

The Miley Cyrus Crisis

I would make some superior comments about the stench of hypocrisy, but it doesn't even rise to that level. This is just froth. Miley Cyrus, aka Hannah Montana, has showed that at 15, she has the beginnings of a woman's body and this has shocked the world. A large number of people think she should apologize for the photos Annie Leibovitz took for Vanity Fair.

Miley and her family are retroactively upset. Disney is wildly upset. Parents are furious. Bill O'Reilly is incensed.

And from all of this ...

Vanity Fair will sell more magazines. Annie Leibovitz will get higher fees. Disney will not cancel the show and will continue to reap huge profits. Parents will say nothing to their daughters, or they'd need to explain why showing less skin than is evident on any day at the beach is cause for alarm. The daughters will remain fans because either (a) they don't understand, or (b) they do. An increased number of teenage boys will become fans. Bill O'Reilly will return his attention to Rev. Wright.

And if this turns out to be the wildest moment that a girl who has been earning millions of dollars in the entertainment industry indulges in before she turns 16, then Billy Ray deserves Father of the Year. Nobody needs to apologize to Annie, who has seen all this before.

Stimulus? More like gasoline compensation

The United States consumes about 150 billion gallons of gasoline per year. Prices are higher by about $1 in the last year. That means that the entire benefit of the federal "stimulus" payments to American taxpayers will be enough to offset the increase in gas costs.

If the increase went to American producers, then it would at least recycle to some degree, but all the increase is due to the rise in oil prices. More than half of that now goes to foreigners.

What little stays home is going to large oil companies. Do you think that transferring billions of dollars of federal government money to them will offset the catastrophe in housing? I doubt it.

Education spending priorities

The SMART program in Oregon, which uses volunteers to assist students with reading, is being cut. The paid coordinators, numbering about 200, are getting axed in order to save about a million dollars. This despite the fact that taking part in SMART boosts a child's chance of passing the state reading standards by about 60%.

Put this in perspective. Statewide, public spending on K-12 education runs about $4 billion a year. Some 200 coordinators, costing $8 to $11/hour, make SMART happen, along with other private sector contributions. Why are the schools letting this happen?

First, I suppose, because the coordinators would be unionized and with benefits, vacations, etc. would cost twice as much as now. More importantly, volunteers are never embraced by the public schools because they constitute such a danger to the chief argument for high teacher pay. Which is that public teachers are highly educated in their specialties and are consequently much better at teaching.

I'm not questioning that some academic specialties, such as teaching calculus and physics in high school, can't be replaced by ordinary volunteers. Nor do I doubt that there are dedicated and effective teachers who are worth everything they're paid and more. I do doubt that the ownership of a masters degree in education has much to do with it, or even more than a tiny amount of "teach ed" classes for undergrads.

An intelligently organized system of education will use all the assets available to the maximum possible, in order to get the best results for the money. There may be times when you need specialists. On the other hand, without much apparent effect, we taxpayers employ specialists in bi-lingual education to attempt to bring Hispanic children up to fluency in English.

The low-cost alternative is to locate the Hispanic children at age five and figuratively plunk them down in sandboxes with a greater number of English-speaking five-year-olds for a few months. Not only are five-year-olds more effective at this than highly educated adults, they will do it for free. All we need to do is build the sandboxes and employ some adult to keep little Johnny from hitting Maria with his shovel.

The great myth is that the optimum strategy is to employ the most skilled possible people to perform every function, even if you then cannot do enough. This was the issue when I ran for the Lane Community College Board (three times, unsuccessfully). It has not been resolved there either.

The China/Zimbabwe crisis

Some people are taking the isssue of Chinese ship carrying arms to Zimbabwe as posing a problem for China. I doubt it. It should pose an ethical problem for the United States, but I also doubt that it will be recognized as such.

The idea is supposed to be that the Chinese will be discomfited by the prospect of supplying arms to Mugabe after his regime has effectively been voted out of power. This ignores the simple fact that China has never had a problem dealing with Mugabe because there is nothing that Mugabe does to Zimbabweans that the Chinese government doesn't do to its own citizens. In spades. There isn't really even a pretense of democracy in China, so why should they be upset that Mugabe indulges in the pretense and then abrogates it.

This should be a problem for the United States. China is a world power today because we have decided to buy everything they can manufacture, which is most everything we consume. They have no political ethics that we would recognize. Thugs like Mugabe will stay in power because of our obsession with having our consumers goods at the least apparent cost. The situation would be a wakeup call. I'm not holding my breath.

Suffering under Rhodesian colonialism

An AP story describes Mugabe's initial reputation for reconciliation, mentioning that he had offered concessions to whites in 1980. It also states that black africans had suffered under white rule for decades before that.

What exactly does that mean? Prior to white colonists, the population was 710,000. It then grew above 10 million. Life expectancy rose. Literacy, previously zero, became fairly high. Intertribal wars vanished.

Without any question, the whites did not see any likelihood that they could or should turn over the management or ownership of the large farms they had created, and which had produced the excess food that made the population growth possible, to blacks. The general opinion of the outside world at the time of Mugabe's guerrila war was that the whites were just narrow bigots.

Black majority rule has been in place for almost 30 years. Life expectancy is plummeting, and certainly not just due to AIDS. Education is declining. Unemployment is 80%. Inflation is in six figures. Exercising your democratic rights can cost you your life. The seized white farms, formerly productive, are now running at subsistence level or less.

Exactly what did Ian Smith get wrong?

Iraq isn't Germany

Once again, I read in the newspaper this morning that there are parallels between Germany in 1945 and Iraq now. Would that this were so. But isn't.

Starting at the top, George W. Bush isn't a reincarnation of FDR and Bremner was not Marshall. This was managed badly. But it must be remembered that the project was sold to the American people on two premises. First, that Saddam had WMD of which he must be deprived. Second, that the process would be brief and relatively inexpensive.

It would simply have been impossible to go into Iraq with the public knowing that they were looking at a trillion dollar cost stretching over a decade. It was a few tens of millions and we would be out of there in a matter of months. After WW II, we knew what we had to do in Germany, which was to make sure that we didn't do it again. The Germans were thoroughly beaten and knew it. They and everyone else accepted that they had started the war and however the Allies dealt with them, they had no moral cause for complaint.

The Iraqis could be, and generally were, grateful for the overthrow of Saddam, but they then wanted to run their own affairs. By our standards, they would have done so badly, but if ensuring that people have functioning democracies is an imperative, why haven't we invaded Burma or Zimbabwe?

When we leave Iraq, which can't be a moment too soon, we will leave a mess. Whenever we leave, and it's not likely to get any better. The world is full of messes. True, we exacerbated this one, but it's time to cut our losses.

The Zimbabwe Civil War

The odds are increasing that Zimbabwe will descend into civil war as Mugabe has figured out that his neighbors won't do anything about him. He'll play the anti-colonial card to the end. That will continue to work with his core supporters, who don't understand economic reality at all, but the millions who will starve may develop a working hypothesis that Mugabe is the root cause.

At some point, a large number of blacks will form a working partnership with the white farmers. We will then see whether the Western democracies, which were so keen on booting out Ian Smith and "liberating" the country thirty years ago, will have the stomach to stay with him this time. I'm guessing they won't.

Whither Zimbabwe

A hundred years ago, the population of what is now Zimbabwe was perhaps 6% of what it is now. It was possible to feed and house the former population with the attitudes toward social and economic organization that then prevailed. However, the current population is unsustainable without white farmers.

Life expectancy has fallen by about a quarter century since Robert Mugabe "liberated" his countrymen from the oppression of white people. Nevertheless, total population continues to rise. There is simply no way to sustain the population without persuading some of the diaspora to return, but instead, the regime is intent on driving away the few who remain.

Death, as someone once said, is nature's way of telling you to slow down. It's also nature's way of balancing resources and requirements in a population. I doubt that Mugabe's new cleansed Zimbabwe will be able to feed more than three or four million, and with food suddenly no longer in surplus worldwide, it would take an act of serious altruism for donor nations to make up the difference.

The future of Zimbabwe is death on an unprecedented scale. There's little to be done to prevent it. The politics of race in Africa is such that those who have some influence, such as the rulers of South Africa, will not act because to do would be to admit that Robert Mugabe did not produce an improvement in the lives of black Africans and that maybe Ian Smith was not evil.

Instead, they will prevaricate while many, eventually millions of, Zimbabweans die. I wish I could feel more empathy, but when a people collectively commit suicide with their eyes wide open, I figure it's their choice. Not a wise choice, but not one that we are required to overturn.

Gluttony is an Economic Sin, too

I've never been quite sure why the church views gluttony as a sin. Makes you unhealthy and unattractive, but it seems mostly a personal failing. On the other hand, it might be viewed as a sign when the consequence of one person's gluttony is his neighbor's hunger.

We may be moving away from that into a new era, where gluttony is an economic sin as well. We've known for a long time that the American eating habits could not be sustained worldwide without some incredible, and probably physically impossible, increase in food production. This was not a problem as long as the rest of the world was sufficiently poor that they couldn't compete economically for the foodstuffs.

Unfortunately for Americans, the rest of the world is getting rapidly more prosperous and they are developing a taste for more, better, and less efficient (e.g. meat) diets. In addition, there have been some droughts and stuff, but mostly it's demand rather than supply.

If Americans had a lot of self-discipline, this would be an opportunity. We could cut down on our excess consumption of calories and increase our exports, thereby paying for the manufactured goods we love and don't manufacture anymore. More likely, we'll continue to overeat and drive up the cost of our food.

It's time to put food and energy back into the "core" inflation rate. There were taken out, years ago, in order to have a number that changed less month-to-month, but this only works if the fluctuations in food and energy average out. They aren't doing this. Oil going from $30 to $115 is not a fluctuation, it's a sea change.

Has the Surge Worked?

It seems clear to Paul Greenberg that it's working. Has restored his faith, it has. Glory be!

What we seem to have actually proved is that with virtually every available American serviceman on the ground there, we can hold down the death squads. We've been able to reduce suicide bombers.

Meanwhile, with oil revenues estimated at up to $57 billion for 2008, Iraq has become one of the most corrupt countries on the planet and one of the least able to translate its wealth into meeting the needs of its citizens. Perhaps more effective than Nigeria, but definitely near the bottom. I'm a bit of a cynic. I think some of the political good will now being seen, what little there is, results from politicians recognizing that there is so much money that they can divide it up among themselves and all get rich. It will be necessary to provide some cover story for the masses, who will not do as well, but that's always possible, as George Orwell told us decades ago.

However, I'm dubious that the factions will ever trust one another enough that the U.S. can leave. The kleptocracy probably appreciates that degree of stability that having the U.S. Army constantly around the corner provides. For the U.S. taxpayer, the situation is pretty grim. It will get much worse if McCain wins in November.

Long ago, I figured the worst case for Iraq was 500 billion. How naive I was! We are now in a situation where the armed factions will agree not plunder the country rather than massacre one another if we kick in a quarter trillion a year forever. A trillion dollars is still a lot of money.

Elliott Waves -- The Delphic Oracle Approach to Investing

I am amused by the interest in Elliott Waves, particularly with respect to foreign exchange rates. The adherents of this nonsense are enamored with the possibility of discovering trends through systematic waves in charts of essentially anything. The arguments against are the same as rational people use in many circumstances. For example,

1) If true, this analysis would be self-defeating once discovered. If everybody could make money following the pattern, everybody would anticipate the pattern, destroying the pattern.

2) If true, then the practitioners would not be blogging about it. They would be sitting on the beach in the Bahamas, soaking up the sun. The exchange rate between the Euro and the US Dollar (known as EURUSD to the cognoscenti) has jumped so much in six months that anyone who could use Elliott Waves to predict the trend would now be rich. Many of these people appear not to be rich.

3) If true, there would be no reason, discarding the possibility of altruism, for anyone to spread the word for peanuts. You would not have people selling books or DVDs for $19.95, for Elliott Waves any more than making money from home for a small price, available at the address on your TV screen.

4) Correlation is not causation. It's a common error to try to fit a straight line through a graph of two variables and then discover a causal relationship. It is less often done with respect to wavy patterns, because they are so much more difficult to quantify. But mathematicians know that you can approximate any regular pattern with a series based on sine waves. If you allow enough slop, you can do this with a modest number of them.

History examines the past and offers explanations. It's interesting, but won't make you rich. Science examines the past through experiments and predicts future behavior. The Elliott Wave folks think they have science, but they just have history. Maybe not bunk, but close.

Oregonians are Math Challenged

It's not difficult. If you need a certain amount of money every year, which equals what you expect the long term average to be, then you can't discard the surplus in those years that exceed the average, because mathematically, there will be years below the average.

We didn't see it coming with PERS, and consequently told public employees when we had good years that they could keep the excess for their pensions and that the taxpayers would make it up during the bad years, i.e. when earnings dipped below 8%. The legislature passed the rules in the early 1990's when the money was relatively small and apparently just didn't work out the consequences.

Neither have they figured out the implications of having an almost entirely income-tax based general fund and no serious reserves. In the previous recession, the state was flushing out its treasury with "kicker" checks just as the projections for tax revenues were going south. We ended up with some schools becoming the butt of Doonesbury jokes.

Here we are again. We've sent out record kicker checks in the fall and now in winter, the handwriting on the wall is becoming evident again. The first decline in the revenue forecast was under $200 million. It was, however, enough to essentially eliminate the unappropriated amount in the state's ending fund balances. There are still some reserves, but those will be mostly wiped out with the next estimate.

This may just be the Republicans' blunt tool to achieve control of total government spending, but since it is likely to seriously impact schools, community colleges, universities, highways, and law enforcement, you'd think they would devise something more targeted.

Where is John Maynard Keynes when we need him?

The prevailing political view on economics up until 1932 was that discipline and hard work would cure all that might ail us. After Roosevelt came to power, he changed his mind and adopted the Keynesian view that the economy needs discipline in good times and largesse during recessions and depressions.

We have a new theory, as wacky as the earlier views, which is that profligacy is the key to prosperity. We are now on the verge of recession and the politicians are simply recommending more hair of the dog that bit us. We're here because we didn't want to consider either that running a war would involve some domestic sacrifices, or that running out of petroleum would require us to change out consumption patterns. The consequence is that we are caught unprepared by oil at $105/barrel and the fact that foreigners regard U.S. debt as increasingly problematic.

We need to raise, not lower taxes, and spend the money where needed. We need to invest in infrastructure to employ some of those who were formerly building too many too large houses. We need to invest in research to develop energy-saving technologies. We need to hire bands of shiftless teenagers to accost people at Interstate rest stops and offer to check their tire pressure.

We do not need to write checks to people who are frightened for their futures. Those people, and by May that's going to be most people, will just put the money in the bank or use it to pay down credit cards. There will be a large transfer of debt from the private sector to the public, but there will be no surge in spending. Keynes advocated spending by government, not transfer to individuals who might not spend. This is nuts.

Fortunately there are political minor leagues

It's unfortunate that Obama has lost an advisor who may have had good intentions and perhaps talents, but just wasn't ready for the discipline of actual power. It's bad enough for him that she was unable to curb her tongue during the campaign. How much worse would it have been if she'd stayed out of sight until January and then somehow became a high government official!

Maybe there is a benefit from long campaigns, because it exposes both the candidate and a lot of potential advisors to a lot of inconsequential scrutiny. Whether some Obama campaigner said something indiscreet to a Canadian official is a tempest in a teacup now. Rather like the Eugene Emeralds losing a baseball game. Not a big deal in itself and it serves to weed out those who don't have what it takes.

I'm actually not that distressed to see Obama ditch Samantha Powers since she seems to come from the "moral obligation to fix the world" school of international relations. That's what got us into Iraq and Afghanistan. We don't need to do it again in Darfur.

I accept the idea that bad outcomes are often inevitable and it isn't admirable to spend time and treasure vainly attempting to delay that fact. The people of Afghanistan are not going to have happy lives because there are 25 million of them, squatting in the middle of a stinking desert, with no export product to speak of apart from heroin. Iraqis might, since they have wealth, if we left them alone but it can't be forced on them.

Instead, we have intervened. A half decade later, they are less happy, we are less safe, and we're a trillion dollars poorer (including deferred costs). Knowing this, there are those who want us to save Darfur, militarily since there are no other options. Just goes to show that a fancy university education isn't always enough.

The Archbishop of Canterubury and Sharia Law

He has shown that the only thing less relevant in Britain than the monarchy is the C of E. Apparently, he said in an interview that the incorporation of some aspects of sharia law into the laws of Britain was "inevitable." I assume he was just trying to be tolerant. At some point you need to stop being tolerant, particularly if you're the head of a Christian church, in a country where the development of laws unlike sharia over the past eight centuries has led to a system that guarantees the rights of minorities, against the majority and against troglodyte elements of their own minority. I think the man is simply daft, and since that evidently doesn't disqualify him from heading his church, it reflects on them as well.

Will the federal economic stimulus work? Ask Oregon.

The feds are planning a huge rebate plan to stimulate the economy. Before counting on it to restore growth, they should consider Oregon's experience. Due to its unique "kicker" program, through which Oregon rebates to taxpayers everything above its estimated revenues whenever that excess is more than 2% for the biennium, the Oregon economy was stimulated late in 2007 by the infusion of some $1.1 billion from the state treasury. In early 2008, we should be seeing the results.

In fact, when the governor first noticed that there was some potential for declining state revenues two weeks ago, he figured it would be in the "low tens of millions" for the biennium. One of the Republican leaders in the state legislature, where Republican support for the kicker is institutionalized, knew why:

Senate Republican Leader Ted Ferrioli of John Day said the $1 billion in “kicker” rebate checks sent out by Oregon late last year probably served as stimulus to the regional economy, offsetting some of the downturn hitting other states.

Two weeks later, the actual revenue forecast that the governor had been hinting at was released and, behold, rather than low tens of millions, it was $183 million. The cash vanished into the pockets of taxpayers with hardly a ripple on the overall economy.

This is roughly what Keynes would have predicted. His point was that when people get nervous, they stop spending. They don't become significantly less nervous when they are given modest amounts of money, so they won't change their spending habits much. If you want stimulus, have the government borrow and spend.

Pretty much nobody is Keynesian these days, although a few claim to be. One economist remarked that ""From an economic stimulus perspective, it will have the short-term effect of increasing spending and there will be the Keynesian multiplier effect." But this isn't a Keynesian multiplier, which results from increased government spending. It's just a multiplier.

The Bush theory has been to never stimulate with spending, only tax reduction. Democrats like the idea of spending, but they ignore the other half of Keynes' strategy, which was to cut back spending when times were good. At the bottom, this is a strategy to make economic gains by consuming without working for the money. It plays well in an election year, but it's lousy economics.

Oregon Budget Crisis -- 2008 meets 2002

Tom Potiowsky, the official Oregon state economist whose "Chinese water torture" method of estimating the declining state revenues six years ago were a staple feature of that crisis, is at it again. Tom is probably a good husband and kind to animals, but his inability to see the big picture meant that the legislature didn't grasp the magnitude of the previous crisis until it was upon them, and that the low-ball estimate of revenues led to a great flushing out of the state's coffers last fall (due to Oregon's kicker law, for those of you from out-of-state). Just as the country was starting to head downhill.

Oregon's economist is required to make public estimates of revenues every couple months or so. As the housing crisis was unfolding, Tom figured late last year that the effect on Oregon would be essentially nothing, despite the large role that forest products plays in the state economy. Now he's estimating that the state will take in $183 million (1.2%)less than expected between now and the end of the biennium on June 30, 2009.

State tax revenues in Oregon are overwhelmingly dependent on income taxes, which in turn are quite volatile. Property taxes are quite stable, sales taxes fairly stable, but income taxes depend on growth in a more leveraged fashion. The current estimate seems in line with the national consensus drop in estimates of GDP. Since income tax receipts are going to be much more volatile than that, this projection is probably still optimistic.

Here's my prediction. In six months, the estimate will be for a 3% fall in the 2007-2009 biennium. There will be some modest belt-tightening but tax receipts had a good head of steam at the outset and the shortfall will be manageable in this biennium.

I don't know when the estimate for 2009-2011 will be first released, but I'm going to guess it will be 5% below what the legislature had pencilled in at the end of the last session. The state's reserves, having been rebuilt modestly since the last recession, will have been wiped out by the shortfall in 2007-2009, and the legislature will again have the job of making serious cuts in services.

Of course, I'm the same guy who said the Republicans would have a contested convention in Minneapolis. I haven't given up hope, but it's a lot less likely than it was two weeks ago. So maybe I'm wrong again.

McCain's Premature Celebration

The news of the death of the Republican nominating process, which has dwindled from four serious candidates plus Ron Paul to two serious candidates plus Ron Paul, may have been premature. After being anointed the nominee-apparent with the withdrawal of Mitt Romney, John McCain now needs to note that he subsequently lost two primaries to Mike Huckabee. This can't be good.

McCain has not been reaching 50% in primaries; in fact, apart from 48% in his home state of Arizona, the 42% in California seems to be about his high point, though I haven't seen a chart of all of them. This is not exactly a dominating performance.

In the end, McCain needs to get more than half the votes in primaries with only one other candidate, and he hasn't been doing that. Until now, voting for Romney meant voting for Romney. Now voting for Romney may mean casting your ballot for Huckabee and keeping the thing open. There's no way Huckabee is going to get the nomination, but if he can get enough to stall McCain, remember that Romney did not withdraw. He "suspended" his campaign.

At this point, the best hope for a convention battle seems to be on the Democratic side, however. Obama and Clinton are coming so close to splitting the elected delegates that the super delegates may have the final say. That would be fun to watch.

I notice Chelsea Clinton popping up from time to time. In many parts of the world, the principal progeny of the leaders would be primed for eventual succession to the mantle of leadership. That's how it would be done in India or Pakistan. Or Massachusetts.