WG's Observations

Here is a thought

2012-02-10T19:12:00.001-05:00

It appears that the US has little more leverage left in the Iran situation. It occurs to me that perhaps an out-of-the-box idea may be our best bet.

Suppose the US announced that if and when Iran develops a nuclear weapon, the US will immediately supply our allies in the Middle East with working nuclear weapons (not the technology to make them - just finished, working weapons). Sounds crazy?

Consider, if Shia Iran knew that the day it masters nuclear weapons all of its Sunni neighbors would also have them, courtesy of the USA, thereby immediately neutralizing any advantage Iran might think they would gain, they might reconsider their efforts to get to nuclear weapons. They might consider themselves safer (as the lone Persian Shia nation surrounded by Sunni Arab nations that don't like them) if no one in the Middle East (including themselves) had nuclear weapons.

Consider, if Russia thought Iran's acquisition of nuclear weapons would immediately put a fully nuclear-armed Middle East on its borders, it might suddenly find it prudent to be more helpful in pressuring Iran to give up its nuclear ambitions.

Consider, if we don't give Turkey and Saudi Arabia and other allies in the region nuclear weapons, they are going to develop them on their own in any case if they face a nuclear-armed Iran. If we give them working weapons, but not the technology to make them, we still control proliferation better than if all these nations develop their own internal nuclear capabilities.

Yes, it is certainly a startling proposal. but offering it might give us the leverage with Iran (and Russia) that we currently lack.

The Iran dilemma

2012-02-09T11:53:00.000-05:00

There has been a lot of saber-rattling recently from both Israel and the US on the one hand, and the Iranian leadership on the other hand. Israel and the US say that allowing Iran to acquire working nuclear weapons is unacceptable. Iran says it will not stop its nuclear work, though of course it still insists it is only for “peaceful” purposes, a claim which is at variance with the uranium enrichment facilities it has build and even occasionally shown off to Western observers.

We made the same claims about North Korea, but when push came to shove we never did anything effective about stopping the North Korean effort, and eventually they developed a working nuclear weapon. But the consequences of a North Korean nuclear weapon are much different from the consequences of Iran getting a nuclear capacity. For one thing, North Korea is highly pragmatic – the power structure is only interested in surviving, not in annihilating one of its neighbors.

The Iranian leadership, on the other hand, appears to be bent on an apocalyptic religious vision, which includes eliminating Israel, initiating a second holocaust (and by the way, eliminating the USA as well). Just last week Iran’s supreme leader, Ayatollah Ali Khamenei, again called Israel a "cancerous tumor that should be cut and will be cut", a remark he has made more than once in the past. Whether this language is just for domestic consumption or not, it is worrying.

Beyond the threat to Israel, a nuclear-armed Iran will almost certainly incite other countries in the Middle East to develop their own nuclear capability as quickly as possible. Remember that Shia Iran is thoroughly distrusted by all the Sunni nations around it. We already have a dangerous tinderbox with nuclear-armed Pakistan and India facing each other. A nuclear-armed Middle East, with all the sectarian hatreds in play there, would be a real nightmare.

Then there is the question of a possible Israeli attack on Iran to slow their nuclear program. Such an attack wouldn’t eliminate the threat, just slow its approach, and perhaps not by that much. But it would certainly cause a worldwide crisis, and quite possibly bring the US into the war whether we want to or not. If the Iranian response included disrupting oil traffic in the Gulf, and/or increasing attacks on US troops in Iraq, it is hard to see how we could avoid getting involved. And of course if Iran really did fire nuclear missiles at Israel, I don’t think the US public would be willing to see Jews once again subject to a holocaust without a very strong US response.

And then there is the rest of the world. Russia is unlikely to be of any help to us in this issue. It would suit their purposes quite well to have us tied up in yet another Middle Eastern quagmire. Europe is not culturally or politically inclined to be of much help, and in any case has little effective military force that it could contribute even if it wanted to. The UN would be as impotent as it usually is, especially with the veto power Russia and China have in the Security Council.

This is indeed a thorny problem. I don’t envy the administration. There are no good options – just bad ones and worse ones. But certainly it is not a time for appeasement. We have very little leverage in this situation, but what little we do have would evaporate immediately if we appear to waver in our support for Israel in this matter. If we are seen to waver even a little, our other Middle Eastern allies will read our weakness and it will reinforce their belief that the US cannot be trusted as an ally in the crunch. That will have serious and long-term consequences for us that will be very unpleasant.

Recommended: Truth, lies and Afghanistan

2012-02-08T19:30:00.001-05:00

Lt. Col. Daniel Davis has written a piece in the Armed forces Journal: Truth, lies and Afghanistan. It is worth reading. He just finished touring Afghanistan for the past year. Fundamentally he reports that, despite the rosy and optimistic views of administration spokesmen, Afghanistan is a disaster and getting worse every day.

We already know that the Bush administration mislead us (or deliberately lied to us) about our supposed success in Afghanistan. Apparently the Obama administration has done the same. I'm not surprised, but I am disgusted.

Recommended: Government Cannot Create Sustainable Jobs

2012-02-08T18:33:00.002-05:00

In the Opinion Europe section of the Feb 3, 2012 Wall Street Journal, Arnold King has written an interesting piece entitled Government Cannot Create Sustainable Jobs. King argues that the only kind of jobs that can really revitalize the economy in the long run are jobs that are sustained by market forces. Jobs that are created by government subsidies are, by definition, not sustainable by market forces (if they were, subsidies wouldn't be necessary). He argues that the Keynesian view that in times of depression the government should replace the demand that is missing in the marketplace is an erroneous approach, because the jobs aren't sustainable once the government subsidies are withdrawn, as they must be eventually. And the expensive government policy has done nothing to create more truly sustainable jobs in the economy.

This argument is especially relevant in view of the recent bankruptcies of several "green" initiatives subsidized by the Obama administration, and of the anemic recovery produced by the massive stimulus package. His views are worth thinking about.

Beyond Blue Part Three: The Power of Infostructure

2012-02-07T19:23:00.000-05:00

Part three of Walter Russell Mead's series described in the previous post is now available: Beyond Blue Part Three: The Power of Infostructure

Recommended: Beyond Blue

2012-02-05T22:53:00.000-05:00

Walter Russel Mead has a fascinating pair of postings on his American Interest blog. They are Beyond Blue Part One: The Crisis of the American Dream, and Beyond Blue Part Two: Recasting The Dream. They are well worth reading and pondering.

Mead argues that the current liberal social model is simply obsolete - the world has simply changed too much for it to be realistic any more (he explains exactly why this is the case in part one). Part two then begins to explore what a new liberal social model might look like if it were tailored to today's world. It is a fascination pair of articles.

Recommended: Thank God For Humanitarian Bombs?

2012-01-27T20:16:00.001-05:00

Walter Russel Mead has an interesting, and somewhat unsettling, take on President Obama's Libyan "humanitarian intervention" last year, in his National Interest piece Thank God For Humanitarian Bombs?. It may have seemed reasonable, and moral, at the time, but in hindsight the results have been less than one might have hoped for, and the "unintended consequences" may prove to be profoundly worse.

Once again, it seems to me, American politicians in their profound ignorance of geopolitics, history, and other cultures, have made poor choices. This isn't a Republican vs Democrat thing, nor a liberal vs conservative thing -- this has to do with the insular, somewhat self-righteous, narrow-minded views of our ruling elites.

Recommended: Civilization in Reverse

2012-01-27T19:20:00.002-05:00

Victor David Hanson has published another of his insightful pieces: Civilization in Reverse. As he points out, there is no natural law that says once a civilization is established, it will "automatically" continue and improve. Civilizations are a product of human endeavor, and when the humans stop "endeavoring" the civilization rots way, as have innumerable previous civilizations in the world (think Persia, Rome, Byzantium, the Ottoman Empire, the French Empire, the British Empire.......).

The current Greek fiscal crisis, he points out, is a warning to the rest of us. Life is not as nice in Greece as it was a decade ago. If we don't pull up our socks and get to work here in America, the America of a decade from now may not be nearly as pleasant as it was a decade ago, or even as it is now. That certainly is the case in California, which has already declined from the "Golden State" to an increasingly troubled and backward place.

Recommended: Piercing the Fog of War

2012-01-27T00:25:00.000-05:00

Brian Steed's 2009 book Piercing the Fog of War: Recognizing Change on the Battlefield: Lessons from Military History, 216 BC Through Today is a fascinating and very important book in today's world.

Steed examines in some detail six "aberrational" battles in history, from Hannibal's victory at Cannae (216 BC) to the Russian's debacle in Grozny (1994-95),and examines how each involved one side "thinking out of the box" to defeat the other side. He discusses the importance of initiative and maneuver and isolation and other tactical concepts, but he emphasizes especially the importance of understanding the opponent, of understanding how the opponent sees things and expects to operate, of empathizing to the point of being able to see out of the opponent's eyes and walk in his shoes and understand his thinking, both tactically and strategically.

This is an area in which America has been seriously deficient for many decades. We didn't understand the Chinese in Korea, nor the North Vietnamese in Vietnam, nor the Iraqis nor the Afghans in recent history. Our leadership, both military and political, but especially our political leaders, have been woefully ignorant of the cultures and world views of other influential nations around the world, and we have made stupid, avoidable and expensive mistakes repeatedly because of this ignorance.

This is not a light read, but it is a profoundly important book.

Defense Cuts

2012-01-26T18:21:00.002-05:00

The new Pentagon proposal for defense cuts has been posted here. It seems quite well reasoned, and apparently has the support of military leaders. Of course members of Congress will fight to keep every job in their districts, whether it is needed or not, so I expect a good deal of political pushback. But if this proposal survives relatively intact, it will be a reasonable first step toward cutting the defense budget.

Recommended: What the Left/Right Gets Right

2012-01-25T14:55:00.000-05:00

Thomas Edsall has written two consecutive pieces on the New York Times Op Ed pages in recent weeks that are worth reading: What the Right Gets Right (Jan 15), and What the Left Gets Right (Jan 22).

In the first case he asked some prominent liberal thinkers what they thought the conservatives had gotten right, and in the second case he asked prominent conservatives what they thought liberals had gotten right. The results are quite instructive.

Recommended: A Supreme Obamacare test

2012-01-21T18:49:00.000-05:00

George Will has a good opinion piece today in the Washington Post entitled A Supreme Obamacare test. He lays out what is at stake in the Supreme Court challenge to ObamaCare.

The real issue of importance isn't about health care, though that is the substance of this law. The real issue is about how far Congress's power extends. As one lower court judge asked, if Congress can compel citizens to buy health insurance because it is good for us, can Congress also compel us to eat broccoli on the same basis?

And there is a financial issue here as well. Obamacare, as currently written, can COMPEL states to spend most of their budgets on Medicare. Should Congress have the power to compel states to do that, even if it puts them into bankruptcy?

I agree with George Will. This is probably the most significant constitutional issue to come before the Supreme Court in decades, and goes far beyond the liberal-conservative disagreement about solving health care, though that is what will probably get most of the play in the press.

Recommended: No End in Sight

2012-01-18T23:29:00.000-05:00

I strongly recommend the documentary movie No End In Sight: Iraq's Descent into Chaos (2007), by Charles Ferguson. This will not be entertainment; it will not be easy to watch, but it is important. It deals with the Iraq War, and in particular with the massive US failure to plan for or execute anything like a post-war reconstruction effort, despite the advice of junior staffers who knew at the time that the decisions their superiors were making were disastrous, and tried to tell them so.

The arrogance and ideology-driven blindness of the main players (Secretary Rumsfeld, Vice President Cheney, Deputy Secretary Wolfowitz, Paul Bremmer, etc, etc) is exceeded only by their abysmal ignorance of Iraq, of the realities of warfare, and of the Arab world. President Bush is simply missing in action -- he apparently didn't even bother to keep up with what his advisers were doing. This movie takes Iraq up to about 2006, and now in hindsight we can see just how terrible their mistakes were. Indeed, as of today, Iraq appears to once again be descending into chaos and sectarian war.

The point is not to bash the Bush administration yet again - we have done that enough now. They are history. The point is to learn from these mistakes, because otherwise current and future politicians are and will make them again and again.

Rumsfeld's replacement as Secretary of Defense, Robert Gates, was much wiser and much more realistic and pragmatic, and his replacement, Leon Penetta, appears thus far to be pretty good. But the Obama administration hasn't yet shown itself to be any more competent in Iraq than the Bush administration was. It's true we are now (mostly) out of Iraq, but only because the Iraqis threw us out, not because we were smart enough to get out.

The main message is that the Washington power elites are too often completely out of touch with the realities on the ground - in Iraq then as they are with the economy now. That ought to worry the voters a lot more than it seems to.

Recommended: The Father of US All

2012-01-15T14:32:00.001-05:00

Victor Davis Hanson's 2010 book (see book list in sidebar for details) The Father of Us All: War and History, continues Hanson's attempts to get the American public, and the American leadership, to pay attention to the lessons of history.

We in America are cursed, as have been civilizations all through history, with those unrealistic idealists who think war can be eliminated if only reasonable men would talk, and those equally unrealistic idealists who think war is an ideal way to solve disagreements between nations. Neither group understands history very well, according to Hanson. He argues that war is an inextricable part of human experience, and (to quote George Santayana) "those who will not study history are condemned to repeat it". This book is a collection of various essays he has written, most of them expanded for the book. They are very good, and his views are worth thinking about.

Recommended: Civilization: The West and the Rest

2012-01-15T14:12:00.001-05:00

Another great, insightful, provocative and readable book from Niall Ferguson: Civilization: The West and the Rest.

In 1500 “the West” was ignorant, backward, and fragmented. Anyone betting in those days about which civilizations would emerge 500 years later as the world’s leaders wouldn’t have bet on the West; they would have bet on the Islamic world or China, both of whom were far more advanced. Yet 500 years later, the West has been the driver in new advances, and the Islamic world and China have been left far behind. Why, Ferguson asks, did this happen? His answer is fascinating.

He argues that six "killer apps" (to use the current jargon) were adopted by Western civilizations that made all the difference: competition, science, property rights, medicine, the consumer society, and the work ethic. Ferguson discusses other influences that have been suggested, especially those like colonialism and unfortunate geography, that might have held other civilizations back, but as he points out, there are frequently cultures right next door, subject to the same influences, that have prospered anyway if they adopted most or all of these six attributes.

He also discusses how America can stay ahead, even as the rest of the world begins to catch up. All in all a fascinating book.

More on our military

2012-01-07T13:37:00.002-05:00

Continuing my thoughts from the last post, it occurs to me that if one steps way, way back and looks at the big picture, a few things become clear:

1. Whether or not it offends liberal sensitivities to say so, America is an empire, a commercial empire in our case, as opposed to a colonial empire, but an empire nonetheless. As with any empire, it has its good points and its bad points. But on balance, the America empire has done better by the world than the empires that would have liked to replace it in recent decades. A world dominated by Hitler’s Reich or a Soviet empire would not have been as pleasant or safe a place to live, nor would it have been as prosperous.

But no empire in history has survived without occasional military challenges, and we will be no exception. The world is not unlike the streets of a gang-ridden city. The way to be safe and not have to fight is to be, AND TO BE SEEN TO BE, “the biggest, baddest dude around”, so that potential aggressors see no possible gain to their cause from attacking us. So adequate (not excessive, but adequate) military power is essential, unless we want to quietly drift down to second- or third-tier status in the world and let other empires determine our fate. Indeed, the best (and most economical) use of military power is as a deterrent. Those who think military deterrence is expensive should look at how much more expensive the failure of deterrence (war) is to the nation.

2. Military power depends, fundamentally, on national wealth. Modern armies are exorbitantly expensive to field, train, equip and maintain. We have as large a military as we do because we are wealthy enough to afford it. North Korea or Iran or China or Russia would have just as large and sophisticated a military if they could afford it, but they can’t. Their national wealth isn’t sufficient.

So from that perspective, the single most important thing to do to support our military preparedness is to do whatever needs to be done to keep the US wealthy and prosperous, so the nation can afford a military appropriate to the potential threats. As Dennis Blair, Obama's director of national intelligence, recently observed, our faltering economy is indeed a serious national security issue.

3. Projecting effective military power depends upon adequate logistic support. This has been clear all through history. Tacticians study tactics, strategists study logistics. The ability to rapidly produce replacements, food and munitions and move them quickly to the battlefront is essential to military success. High-tech front line weapons systems get all the press, but the unglamorous logistics systems – cargo ships and planes, warehouses, pre-positioned stocks, etc., are probably at least as important, if not more so, and ought to be attended to, upgraded, improved and funded just as aggressively as the front line weapons systems.

4. Good intelligence is probably even more important than good soldiers and good weapons. This has been evident as far back as the time of Sun Tzu (c. 300 B.C.), and the lesson has been repeated innumerable times throughout history (for those few who will read and learn from history) since then. In fact, good intelligence can often avoid war, and can certainly shorten it, reduce its cost, and markedly improve the odds of winning. We have invested heavily in technology for “external” intelligence (what is where), but not nearly enough in human capital for “internal” intelligence (how does the opponent think). In fact, our political class over the past few decades (both parties) have been remarkably uneducated, uniformed and naïve about our foreign advisories and their naïveté has cost us dearly in American lives and money.

5. Military power is subject to the “predator-prey” evolutionary race. Each advance in weapons or technique immediately begins to breed a response that nullifies much or all of the advance. History is full of examples of military powers that didn’t keep up and paid for their negligence – the Maginot line effect. (for readers too young to remember World War II, the Maginot line was the "impregnable" line of fortifications that the French built and that the Germans bypassed in a matter of days). That means that supporting innovation – educating our young in science and engineering and in fields that support good intelligence (languages, history, cultural studies), subsidizing basic research – is critical to our long-term military preparedness.

6. Shorn of sentiment, the drive to reduce human casualties is critically important as our military becomes increasingly high-tech. There is the obvious political problem in today’s American democracy that the public has little stomach for high casualty rates, and therefore public support quickly erodes for any extended military action. But there is also the issue of training costs. In today’s high-tech military, training many of the specialists is very expensive and takes many years, so their loss is expensive and they are hard to replace quickly. It can cost several million dollars and take many years to train and maintain the proficiency of a fighter pilot. Even a lowly foot soldier in today’s army can cost as much as $50,000 to train, and as much as $1 million/year to equip and maintain in the field of battle.

So moves to reduce casualties by using precision stand-off weapons, unmanned aircraft and the like are important not only for economic and political reasons, but also for logistical reasons because such casualties cannot be easily or quickly replaced, unlike soldiers in lower-tech armies.

Military cuts

2012-01-06T19:01:00.002-05:00

President Obama has announced substantial cuts in US military spending, beginning in the 2013 budget, with additional cuts in prospect from the "sequester" occurring automatically after the failure of the budget commission to agree. Of course, in reality his proposal isn't really "cutting" military spending at all - just slowing it's growth. This is more of the political "smoke and mirrors" we get from Washington politicians.

As I have noted before, we could probably cut the US military budget in half and still have the most powerful military in the world, IF (and it is a big IF) the cuts were made wisely. We currently spend as much annually (about $740 billion) as the next 10 nations put together - including China ($90 billion), Russia ($53 billion), India ($32 billion) and the UK ($64 billion). That certainly seems like overkill to me.

The danger, of course, is that we will not make wise cuts. That we will save or cut weapons programs based on how powerful a few key members of Congress are in defending jobs in their districts. That we will save or cut weapons programs based on the relative influence of key large defense contractors and their lobbyists. That we will adjust the sizes of the various services based on how powerful their Congressional allies are. That we will skimp on pay, pensions and medical care for our service men and women to keep feeding the defense contractors. Or that Republican hawks will prevail and we simply won't cut anything significant, continuing to drive the US economy into the dirt.

Wise cuts would be based instead on a strategic view of our potential future conflicts and enemies. Such considerations as:

1. Control of the oceans remains as important today as it has been for the past few centuries. Something like 80% of world trade moves across oceans, include critical gas and oil energy supplies. The US has an unmatched geopolitical and geographic advantage, fronting on the world's two major oceans. But to exploit that advantage, we need to maintain a powerful navy. Ships aren't as "sexy" as high speed aircraft, but in the end they are probably more important.

Moreover, our ability to rapidly project military power to other parts of the world depends heavily on unchallenged control of the seas. Modern high-tech armed forces require massive logistics support (for example, a typical armored division may use approximately 600,000 gallons of fuel per day), far more than can be delivered simply by airlift, so continuing logistics support by sea is critical, and that means control of the seas.

That said, we probably need to seriously rethink our naval strategy. Current naval strategy is based around carrier groups - one aircraft carrier protected by dozens of smaller ships and submarines. Carrier groups do give us an airfield anywhere in the world, but they are exhorbitently expensive targets, vulnerable to relatively inexpensive anti-ship missiles or torpedoes. It is not clear what would be a better alternative, but at this point in their evolution, most of the enormous acquisition and operating cost of a carrier group goes to protect the vulnerable carrier, while the effective bomb load that can be delivered from the carrier deck hasn't increased than much since World War II.

2. We are more likely to face low-intensity asymmetric conflicts than major wars, and Iraq and Afghanistan have both shown how much a relatively primitive insurgent force can bleed a high-tech army in urban warfare. As the Israelis learned in their last excursion into Gaza in Dec 2008-Jan 2009, high-tech and expensive armor is highly vulnerable to inexpensive anti-tank missiles in urban conflicts. The M1 Abrams tank is a wonderfully advanced weapon system, but at $5+ million each it is a very expensive toy to lose to an inexpensive shoulder-launched anti-tank missile. In the desert in Iraq the tanks were great against Saddam's inexperienced and under-trained armored forces, but we are unlikely to have a turkey-shoot like that again any time soon. It is possible that the massed tank formations envisioned in a Cold War European conflict are out of date in most of today's likely conflicts.

3. Precision guided munition have made a massive difference in our ability to destroy targets effectively. One precision guided munition in Desert Storm could accomplish what took 170 bombs in Vietnam, or 9000 bombs in World War II. In a 1982 Army wargame that matched 30 Abrams tanks against 30 dune buggies with precision guided anti-tank weapons, 27 of the tanks were put out of action immediately, at the loss of only 3 dune buggies. It seems clear that continued investment in advances in this field will pay off handsomely, especially because it massively reduces the required logistic load -- not only are less munitions required, but more significantly, less sorties are required to deliver them, so less fuel is needed, less maintenance and spare parts are needed, less support infrastructure has to be provided, etc. etc..

4. Unmanned aerial vehicles have proven their worth over the past few years. In fact, much as air force types love to fly planes, the manned fighter is probably doomed, and the manned bomber as well. Unmanned airplanes can maneuver through far higher g-forces than a human can stand, and in air combat high-g turns are what wins the battles, especially against increasingly effective air-to-air and ground-to-air missiles. Historically, air bombardment has never proved as effective as its proponents have claimed. And with the advent of long-range cruise missiles with precision guidance, the manned airplane as a weapon delivery platform is probably on the way out. The one exception may be the slow, not-very-sexy, sturdy ground attack plane, like the old A-10 Warthog, useful in low-intensity conflicts, easy to maintain and hard to bring down.

5. I worry about our over-reliance on GPS guidance, and on satellite communications and imagery in general. If I were an enemy force about to face US military power, I would disable these assets any way I could. Many (perhaps most) are probably vulnerable to the powerful EMP (electromagnetic pulse) of an stratospheric nuclear blast. It seems to me we should address this issue more thoroughly than we appear to have done (though perhaps more has been done to harden them than the public knows - one can hope!).

6. Finally, it seems to me we need to massively improve our intelligence capability. Our military is so enamored of its high-tech weapons systems that it has neglected to invest heavily in understanding its opponents. And we have paid heavily for that neglect, repeatedly misreading our opponents from Korea and Vietnam to Afghanistan and Iraq. I would like to see a lot more money put into language and cultural training all the way from senior State Department officials and politicians to the lowest soldier.

If cuts are made from strategic consideration like these, we will still have an effective military. If the cuts are made by the usual Washington political horse-trading, they may seriously compromise our military forces, saddling us with expensive gold-plated weapons systems ill-suited to future conflicts and neglecting important investments that might make our military more effective and less expensive.

Quotes of the week

2011-12-31T11:40:00.000-05:00

From Edward Teller:

Life improves slowly and goes wrong fast, and only catastrophe is clearly visible.

A fact is a simple statement that everyone believes. It is innocent, unless found guilty. A hypothesis is a novel suggestion that no one wants to believe. It is guilty, until found effective.

(attributed to Teller, but I'm not sure...)

In every foolproof system there is a fool.

Very Highly Recommended: Inside Job

2011-12-21T22:58:00.003-05:00

I have just watched Charles Furgeson's Oscar-nominated documentary movie Inside Job, an exploration of the causes and consequences of the current financial crisis. This documentary is not comfortable to watch - in fact it made me absolutely furious! One can watch one prominent figure after another lie through their teeth or weasle-word evasions to the questions (though of course many of the main culprits simply refused to be interviewed).

Not only did the people who caused this crisis escape any consequences - most of them made obscene amounts of money even while their companies were being bailed out by the government, and in fact in the end we the taxpayers paid much of their obscene bonuses. Not only that, the system is thoroughly corrupted, from members of Congress to key government agency heads to government regulators to the rating agencies to the academic economists who advise them. Presidents Reagen, Clinton, Bush and and Obama have all contributed to the mess, as have key members of Congress from both parties. The ruling elites in Washington, on Wall Street, and in academia are getting fabulously wealthy while the rest of the nation continues to suffer.

This movie will not make you happy, but it is important to watch it anyway. If we the American voters are stupid enough to continue to elect people who do this to us, we get exactly what we deserve!!

50 startling facts about the US economy

2011-12-20T10:43:00.003-05:00

The site The Economic Collapse has an interesting list of 50 fairly startling and uncomfortable facts about the US economy (reproduced below). Personally, I found #49 to be the most startling figure of all, and #2 and #11 to be the most worrying. The site seems to me a little too pessimistic in tone, but the facts listed are worth thinking about:

#1 A staggering 48 percent of all Americans are either considered to be "low income" or are living in poverty.

#2 Approximately 57 percent of all children in the United States are living in homes that are either considered to be "low income" or impoverished.

#3 If the number of Americans that "wanted jobs" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.

#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.

#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006. Today, that number has shrunk to 14.5 million.

#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.

#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.

#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job. In July, only 81.2 percent of men in that age group had a job.

#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#16 As the economy has slowed down, so has the number of marriages. According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married. Back in 1960, 72 percent of all U.S. adults were married.

#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.

#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.

#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

#20 If you can believe it, the median price of a home in Detroit is now just $6000.

#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant. That figure is 63 percent larger than it was just ten years ago.

#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.

#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.

#24 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.

#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

#27 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

#30 The retirement crisis in the United States just continues to get worse. According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#31 Today, one out of every six elderly Americans lives below the federal poverty line.

#32 According to a study that was just released, CEO pay at America's biggest companies rose by 36.5% in just one recent 12 month period.

#33 Today, the "too big to fail" banks are larger than ever. The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#34 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.

#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#40 Sadly, child poverty is absolutely exploding all over America. According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#42 In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for more than 18 percent of all income.

#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.

#44 Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.

#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars. That was the third year in a row that our budget deficit has topped one trillion dollars.

#46 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars. When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Congress does it again....

2011-12-15T09:18:00.001-05:00

Polls show public approval of Congress at an all-time low, and a recent 60 Minutes piece that pointed out that members of Congress are exempt from insider-trading rules, and some are apparently profiting handsomely from that exemption, doesn't help. So the Senate promptly passed a bill (finally) outlawing insider trading by members of Congress, but House Republicans are stalling about passing the same bill, hoping, I suppose, to stall until the public forgets about it entirely.

This is by no means the only example of Congress exempting itself from rules it imposes on everyone else. I noted last year that the Obamacare legislation contained language, tucked deep into the 2000+ pages of the bill, that exempted some key Democratic members of Congress and the their staffs from the bill.

It pretty clear we need a substantial overhaul of Congress, but it is by no means clear what mechanism can drive that overhaul. Congress certainly doesn't seem inclined to do it themselves.

Recommended: A Nightmare of a Dream Team

2011-12-11T11:56:00.000-05:00

Andrew Ferguson has an interesting piece in this week's Weekly Standard: A Nightmare of a Dream Team. He deals with President Obama's team of economic advisers, all of who are apparently proponents of the current fad in economics, "behavioral economics". As he points out, their theories don't seem to actually work well in practice. All in all an interesting discussion.

The EU treaty and the US

2011-12-09T19:01:00.000-05:00

The new European Union treaty just negotiated today (and still not ratified by the 26 nations - Britain abstained) would impose a cap on the annual structural deficit (eg - the amount any member country can increase its sovereign debt in a year) of 0.5% of that nation's GDP.

If the US were to follow that guideline, with a 2010 GDP of about $14.58 Trillion, we would be limited to increasing the federal debt by no more than about $730 billion per year. The projected US 2011 deficit is about $1,300 billion, so to meet the proposed EU standard, we would need to cut expenditures by AT LEAST $570 billion per year. With this president and this Congress..... lots of luck!

Recommended: HALLELUJAH CORPORATIONS

2011-12-09T14:01:00.000-05:00

On the same topic, I heartily recommend the YouTube video Hallelujah Corporations. We all need a good sense of humor to weather these difficult days.

Recommended: Obama’s Campaign for Class Resentment

2011-12-09T13:50:00.001-05:00

Charles Krauthammer has another one of his pungent but accurate pieces on National Review On-line: Obama’s Campaign for Class Resentment. His point is that, faced with a myriad of national problems, many stemming from liberal overindulgence (entitlement programs that are bankrupting us, ballooning size of the federal government, an "affordable housing" scheme that was financially unsupportable), all President Obama can find to blame is "the rich", and his only solution is to soak the rich some more.

President Obama is a smart man, smart enough to know that if he confiscated everything the richest 1% had, it would make hardly any difference in the federal deficit. So, since he surely knows that, he can only be playing the class warfare card for political gain, to keep his liberal base happy, not because he really believes it would solve the problem. I am certainly not thrilled with the potential Republican nominees, but I do have to wonder if we the voters would be better off without a president who simply refuses to address the real national problems.

Recommended: The Ancient Virtues and Modern Sins

2011-12-08T17:06:00.000-05:00

Victor David Hanson is a bit of a curmudgeon, as I have noted before. But he is SMART and PERCEPTIVE, and it is often worth the time to wander through his ramblings for the gems he produces. Along these lines I recommend his Dec 4 article The Ancient Virtues and Modern Sins. It rambles a bit, but his points are valid.

Recommended: God is not One

2011-12-08T16:33:00.004-05:00

Stephen Prothero's book God Is Not One: The Eight Rival Religions That Run the World - and Why It Matters (2010 - see book list on sidebar for details) is a useful introduction to the eight largest religions in the world. In particular, he makes the point that despite ecumenical attempts to argue that all religions are simply different paths to the same God, the eight major religions differ at a fundamental level - they see different problems in the world and seek different solutions to their different problems. Christians, for example, worry about sin and seek salvation, while Buddhists worry about suffering and seek nirvana (many without any god required) and Hindus worry about getting off the wheel of reincarnation.

I appreciate the motives for trying to see commonality among religions, given how bloodily divisive these religious differences have been throughout history, and even to this day. But I do notice that most of those who argue all religions are just different paths to the same god all seem to assume (tacitly, at least) that that god is in fact their own god.

Any book about religion is of course going to be contentious, but I think this is a useful approach to understanding the core of each of these major religions -- what they see as the problem in the world and how they try to address that problem.

Fact checking sites

2011-11-27T19:47:00.000-05:00

Now that an election is coming up the lies and half-truths and distortions are flying thick and fast from both parties. For those who haven't already found them, I recommend the sites Politifact and FactCheck.org. Both attempt to establish the truth or falsity of political claims being made by candidates and members of the government. Both are politically neutral.

Recommended: The New Tammany Hall

2011-11-27T10:44:00.000-05:00

Matthew Kaminski has a perceptive article in today's Wall Street Journal: The New Tammany Hall. He deals with the distorting effects of increasingly powerful public unions, who use the required dues of their members for extensive political lobbying, always pushing for bigger government and higher pay and benefits for their workers, until many localities are now facing bankruptcy. It is worth thinking about his arguments.

Highly recommended: The Age of Absurdity: Why Modern Life Makes it Hard to Be Happy

2011-11-25T23:04:00.007-05:00

Michale Foley, a British academic with a wry sense of very British humor, but an impressive span of intellectual resources, has written a book every American should read (but almost none will, because it actually requires some intellectual effort): The Age of Absurdity: Why Modern Life Makes it Hard to Be Happy (2010). I believe he has correctly identified the fatal flaws in our collective Western world cultural psyche. The very flaws that seem to be making it impossible for us to pull ourselves out of the mess are the same flaws have put us into the mess. I cannot write as good a review as has already been written by Phil Hogan of The Guardian in his piece The Age of Absurdity: Why Modern Life Makes It Hard to Be Happy by Michael Foley, and so I refer you to that review.

By all means get this book and read it. The writing is witty, but the message is profound.

Interest rates

2011-11-25T15:32:00.000-05:00

I have always thought it was better, and far less painful, to learn from other people’s mistakes than to make the same mistakes myself. That thought might be relevant in light of today’s news that in Italy’s last bond sale this week the interest rate they had to offer jumped from 4.628% to 7.814% on two-year bonds, and jumped from 3.53.% to 6.504% on six month bonds. (today’s news is that their three-year bonds just jumped to 8.13%)

US Treasury notes currently sell for about 2.70% interest rates. At that rate, the US government pays about $454 billion per year in interest payments. Were the bond market to decide that our debt was as risky as Italy’s (for example, because our government is perceived to be incompetent and unable to reduce it’s debt), and require an 8% interest rate to refinance our debt as it became due, US interest payments would rise to around $2 TRILLION per year, half a trillion more than we currently borrow each year.

How bad does it have to get before the voters force Congress and the President to do something effective about this problem?

Recommended: Republicans And Democrats Dicker While The Deficit Yawns And Rome Burns

2011-11-25T11:56:00.000-05:00

There is a very good piece on the Forbes website: Republicans And Democrats Dicker While The Deficit Yawns And Rome Burns. I agree completely with the author's claim that both Republicans and Democrats are lying through their teeth, and both are playing petty political power games (and many getting rich while they do it) while the nation goes ever deeper into debt and economic woes.

And I agree with his prescription - fire them all and put term limits on their replacements, and give them defined-benefits pensions like the rest of us, rather than lifetime sinecures.

Recommended: SEAL Target Geronimo: The Inside Story of the Mission to Kill Osama bin Laden

2011-11-23T17:25:00.003-05:00

There have been a number of conflicting stories about the mission that killed Osama bin Laden. There were politicians who spun the story to make themselves look good. There were agencies who spun the story to inflate their part (if any) in the mission. There were sensationalist news stories geared mostly just to make news and increase ratings. There were stories by people with anti-war agendas to try and make it look inhuman. All in all it is hard to figure out what the real story was.

Chuck Pfarrer's book SEAL Target Geronimo (2011) is likely to be the closest to the real story that one is going to find. Pfarrer himself is a former assault element commander of SEAL Team Six, which means that he knows the system from the inside. He also had access to many of the key players in the mission, including some of the SEAL team members themselves.

The story is fascinating, though it doesn't reflect well on the politicians (who made much of the intelligence gathered from Bin Laden's hideout useless by promptly announcing that they had it), nor on agencies like the CIA or the FBI, who were in many cases more a hindrance than a help. The administration's politically-motivated need to crow about the mission meant that a number of Pakistanis who had helped were promptly identified, arrested, beaten and imprisoned for their efforts. And of course a number of people and agencies tried to prevent the book from being published, and are still trying to debunk it, because it contradicted the spin they were trying to put out.

One will come away from this story proud of American special forces, and disgusted with the self-serving politicians and Washington establishment. So what else is new?

Supercommittee autopsy

2011-11-23T10:23:00.003-05:00

Well, to no one’s surprise the Congressional “subcommittee” failed to come to an agreement last week. Democrats insisted on tax hikes, and Republicans insisted on spending cuts, and so no agreement was possible.

So what are we to make of this? Well, as I noted a few days ago, it hardly matters. If the supercommittee had actually achieved their goal of finding $1.2 trillion in cuts over the next ten years, and if those cuts had been real cuts and not the smoke and mirrors accounting tricks Congress has been producing in recent decades, it still would have made almost no difference to the ballooning federal debt. Nor will the $1.2 trillion over ten years in automatic cuts (“sequesters”) that are now supposed to kick in make any real difference, even if Congress actually allows them to occur (unlikely).

A new poll by Quinnipiac University claims that 44 percent of Americans blame Republicans for the supercommittee's failure, whereas 38 percent blame Democrats. This, notwithstanding the fact that the same poll shows, by a 49-39 percent margin, Americans prefer closing the deficit with spending cuts only. Well, we already know voters are neither consistent nor very smart. If they were smarter they wouldn’t have elected these clowns to office in the first place!

The Democrats wanted to tax “millionaires” another $1 trillion, but couple it with a new $447 billion spending bill, which kind of misses the point of a “deficit reduction” committee. Republicans, on the other hand, adamantly refused to agree to any new taxes, though they were willing to look at simplifying the tax code and getting some extra revenue that way. They probably hold this position for the wrong reasons (party ideology), but I think the position is correct anyway.

In fact, we do need to raise taxes – we simply can’t afford our current government services at our current tax rates, which is why we are borrowing almost half of the federal budget each year and going deeper and deeper into debt. The problem is that Congress, under both parties, tends to use new revenue for new programs rather than for debt reduction, and that would probably have been true in this case as well had the committee agreed to raise taxes. (and in fact the Democrats already had announced what new programs they wanted to spend it on).

Reality is that we need to cut federal spending and/or raise taxes by about $1.5 trillion EACH YEAR just to stop borrowing and halt the growth in the federal debt, let alone pay it back. The only member of Congress who has been admitting that is Rep Paul Ryan (R – Wi), and no one is listening to him.

In the end, of course, we the voters are ultimately responsible for this. These people are only in Washington because we believe their TV ads and insincere promises, or because we blindly vote for our party’s candidate, even if they are incompetent.

Recommended: The Two Moons

2011-11-22T16:04:00.002-05:00

David Brooks once again has an incisive piece in the New York Times: The Two Moons. He argues that we are now in a phase when neither major party is in the majority, and both are locked into an inward-turning cycle of trying to "stay ideologically pure". It is an interesting concept, and is persuasive.

We are coming up to an election with an incumbent Democratic president who, while personally likable, is clearly not up to the job, and a number of Republican opponents none of whom seem likely to be any better at the job. Democrats are simply unwilling or unable face reality about the huge deficits our entitlement programs are producing, and Republicans are lost in a right-wing never-never land.

Our choice in the upcoming election seems to be between:

(a) an incumbent who hasn't succeeded at any of the major tasks he promised to undertake -- changing Washington's political culture, closing Guantanamo, resetting the relationship with Russia, restoring the economy, reducing unemployment, resetting the relationship with the Muslim world, getting us out of Iraq (well, we will get out of Iraq now that the Iraq government has kicked us out, but he wanted to stay) and Afghanistan, reducing the size of the massive "black" intelligence world, etc. etc.

What he has done in his first three years in office is lumber us with a hugely expensive (CBO etimated appx $1 trillion) new health care bill, Spend about $1 trillion to save Wall Street firms and the bonuses of their CEOs, and to save the jobs of auto unions and public sector unions, increase the size of the federal payroll by 7.7% (from his Jan 2009 inauguration) despite a recession (see chart below),

and increase the federal debt by about $4.5 trillion (The debt was $10.626 trillion on the day Mr. Obama took office. Three years later it has just passed $15 trillion).

or (b) one of a series of pigmy Republican challengers who either don't accept the overwhelming scientific consensus on evolution and/or global warming (Gingrich, Perry, Cain, Ron Paul, Romney), or thinks God talks to them and told them to run (Perry), or is in favor of torture (Cain, Bachmann), or can't keep their Middle East nations straight (Cain). And none of whom has proposed a viable plan for reducing the federal debt, reducing unemployment, making America more competitive in the world market, fixing our education problems, solving our energy dependence on the Middle East, solving the entitlement problem, or any of the other major issues facing the nation.

A dismal choice!

Recommended: The Loss of American Manufacturing Jobs

2011-11-18T10:08:00.000-05:00

The Global Economic Intersection site has an interesting post entitled The Loss of American Manufacturing Jobs: The Reasons are not just "Unfair Labor Practices Abroad". We certainly have been losing manufacturing jobs to foreign countries for years now. This chart, from the article, makes the point:

But the article also makes the point, as the title suggests, that lower wages elsewhere is not the only reason manufacturing jobs have been lost in America. It is a more nuanced vierw of the problem.

Recommended: Obama Unbound

2011-11-17T22:43:00.000-05:00

Victor David Hanson makes some interesting points in his Nov 14 posting Obama Unbound. In this surrealistic world of political double-think, a Constitutional lawyer (Obama) can flout the constitution and hardly cause a ripple, as in the case of military action in Libya. As Hanson says:

In other words, right-wing presidents can sometimes act left-wing, and left-wing presidents can act right-wing — to the embarrassed silence of their respective bases, but to the private delight of their greenlighting opponents.

We have no better examples of that irony than our two most recent presidents. George W. Bush was still damned as an uncaring reactionary by the Left even as he pushed for big-government programs such as No Child Left Behind and unfunded entitlements such as Medicare prescription-drug coverage. Barack Obama was alleged to be squishy about hunting down terrorists, even as he increased targeted assassinations tenfold and found plenty of opportunistic former legal critics of Bush’s national-security protocols to write justifications for them.

Does Supercommittee agreement really matter?

2011-11-17T12:03:00.000-05:00

The Congressional "Supercommittee" is supposed to come up with at least $1.2 trillion in federal spending reduction over the next ten years by Thanksgiving or a series of automatic across-the-board cuts ("sequesters") will occur. Of course, the cuts don't come until 2013, and Congress is perfectly capable of voting not to do the cuts anyway, and probably would if it came to that. For example, there are supposed to have been automatic cuts in doctor's fees in Medicare for years now (that was a large part of the assumptions Democrats used to "prove" that Obamacare was not going to cost us any more), but each year Congress votes not to let the automatic cuts occur, so one can see how the political system works - a real "bait-and-switch".

But in typical Washington fashion, we have been hearing all sorts of alarmist reports of how bad things will be for this or that agency if the cuts occur -- unpaid soldiers and starving homeless and all the rest of the emotional tearjerkers have been rolled out. But does it really matter?

The Mercatus Center at George Mason University has put out an enlightening posting entitled Federal Spending Without & With Sequester Cuts. The relevant chart is this one:

As one can see from the chart, this is all smoke and mirrors -- even with the sequester cuts federal spending still increases, and the sequester cuts make almost no difference at all!! Considering the magnitude of our debt problem (we just reached $15 TRILLION in federal debt this week!), this whole Supercommittee exercise is just political theater, just rearranging the deck chairs on the Titanic.........

Recommended: Europe's Crisis - Beyond Finance

2011-11-15T10:48:00.000-05:00

George Freidman, CEO of STRATFOR, has written a fascinating piece Europe's Crisis: Beyond Finance. In it he argues that Europe's current financial crises are not just about banks and debts, but also about European elites against the general European public. He has a whole new perspective on what is going on, and it is well worth reading his piece.

And of course it makes one think of America, where in similar fashion the current ruling elites are trying to muddle through the current crisis at minimal cost to themselves, thereby maximizing the cost to everyone else.

Is concern justified?

2011-11-15T10:08:00.002-05:00

I have had several friends mention to me that my posts have taken a notably pessimistic tone in the past couple of years. Whereas I have been known by some in the past as a "malignant optimist", I seem now to be perennially pessimistic. Is this really warranted, or am I just getting crotchety in my old age?

Well, all I can say in reply is that it seems to me our nation is in greater danger now than at any time in my life, including even the Cold War years when we lived under the threat of nuclear annihilation. I truly fear for the quality of life, and even the very livelihood, of my children and grandchildren over the coming decades. As I pointed out in yesterday's posts, the fiscal and unemployment issues that consume our focus these days are, in fact, fairly trivial compared to the much larger and more difficult-to-address structural issues the nation faces.

And it seems to me that neither the public at large nor our leadership, political or intellectual, are facing up to the magnitude of our problems or doing much of anything effective to even begin to explore possible responses. There are a few voices here and there, like Fareed Zakaria's CNN series "Restoring the American Dream", that are trying to raise public awareness about the looming issues, but there is remarkably little real public discussion about these problems. The right is consumed with it's ideological and religious purity and the left is locked in a failed liberal social model from the last century. If there was ever a time for a new voice, a new political philosophy, and new cultural norms adapted to today's changed world, it is now. But where are they?

It's not so much that we as a nation are in deep trouble that makes me pessimistic. It is that we as a nation seem to be largely unaware we are in such deep trouble, and unwilling to face up to the difficult choices we need to make and the difficult sacrifices that will be required and the hard work those sacrifices will entail. We as a nation seem to be prepared to continue shopping at the mall with our iPod earbuds in our ears even as the tsunami approaches! That is what really drives my pessimism.

Recommended: Storm Clouds Ahead: Why Conflict with Public Unions Will Continue

2011-11-15T09:47:00.000-05:00

The Manhattan Institute has put out an interesting issue paper, Storm Clouds Ahead: Why Conflict with Public Unions Will Continue. The author argues that faced with public union pension costs that have grown so large that they are crowding out everything else in the state budgets, states really have only three viable options: (1) change and restrict the union's bargaining power, (2) austerity by reducing services and laying off people, or (3) concessions (give in to the unions) and raise taxes.

Ohio citizens just overturned Ohio's attempt to try route (1), but there is no free lunch, so they will now be faced with austerity and reduced services and/or higher taxes. There just isn't any other option available. Of course neither austerity and layoffs, nor higher taxes will be popular, nor will they do anything to make Ohio more competitive in the world markets.

Public unions, of course, have every incentive to keep fighting for more for their members, even if it eventually wipes out their jobs, as has already happened in many private industries (think American steel plants, or American shipbuilding), or bankrupts their states (think California and New York). But it is suicidal in the long term, both for the union members and for the states.

The real dangers

2011-11-14T19:55:00.001-05:00

The problem with crises is that they tend to produce tunnel vision. The near-term problems tend to divert attention from the long term problems, even though the long-term problems may be far more serious and dangerous. That, I think, is what is happening here in America. The nation, and the political system, is all focused on the immediate problems of the current financial crisis, with the growing federal debt and high unemployment, and politicians have been looking for short-term solutions, like extending unemployment insurance and raising taxes.

Far more dangerous, however, are some long term structural problems in America. Yes, we have high unemployment at the moment, but the real problem is that many of those lost jobs will never come back, whatever Washington tries to do. Yes, we have too much federal debt at the moment, but the real problem is that without major readjustments America will never again have the rate of growth that can pay back those debts.

In a nutshell, America is losing manufacturing to other nations with lower wage rates, we are losing our lead in innovation to other nations with better-educated, more highly motivated engineers and scientists, we are losing new businesses to entrepreneurs on other countries with more favorable tax rates and larger skilled labor pools who are willing to work harder for lower wages.

For decades now places like Silicon Valley have been filled with bright foreign engineers, programmers, scientists, and entrepreneurs who came to America because they could do better here than in their home country. Now many are migrating back to their home countries to start their own competing companies, creating jobs back in their home countries rather than here in America..

The playing field is changing for America, and we no longer have such a clear advantage. If we don’t adapt, and quickly, we will almost certainly follow the British Empire into second-rate status over the coming decades.

This is a hard problem, and it will take a serious and extended national debate with our best minds to figure out how to adapt effectively. Certainly we need to rethink our educational system from the ground up, free it from the political constraints of teacher’s unions and the ideological constraints of local school boards, reverse the widespread trend to “dumb down” courses to make kids “feel better about themselves” and reverse the trend of colleges to put money-making ahead of academic rigor.

Certainly we need to invest heavily in our crumbling infrastructure, and in fields like basic science, which is what underlies and provides the feedstock for technological innovation.

More difficult are the cultural adjustments we need to make to wean ourselves as a nation from the comfortable indolence we have adopted over the decades when America had little real competition, and return to some of the work ethics we had as a nation in earlier, more difficult times – work ethics which our serious competition in places like India and China still have. This is not a matter of spending money – this is a matter of rethinking and readjusting our core values as a culture, and the values we teach our children in the home.

The real problem at the moment is that our national leaders are still playing petty short-term political power games with each other to see who can promise more to the voters, when what we really need is an all-out, all-hands-on-deck, wartime crisis sort of unified national attack on these long term structural problems.

The Supercommittee's "Savings"

2011-11-12T09:48:00.000-05:00

Unbelievable! The so-called "Supercommittee" is supposed to find at least $1.2 trillion in savings over the next ten years by Thanksgiving. Of course, this is a ridiculously low target. The government currently has to borrow almost $1.5 trillion EACH YEAR, so cutting $1.2 trillion out of the budget over the next 10 years is a pittance -- less than 10% of what would be required just to keep us from going further into debt.

But, according to TheHill.com, Democrats on the committee are now proposing to use the "savings" from not being in Iraq any more to fund a new stimulus plan. In other words, they are proposing to use money we weren't going to spend anyway to actually INCREASE government spending! Unbelievable! The very committee that is supposed to find at least token budget cuts is now trying to spend more!

How much longer will we the taxpayers let these jokers in Washington, Republican and Democrat alike, play these stupid political games in the face of a real and extremely dangerous national crisis? How much longer before it will spark an "American spring" in the streets?

Whose is the election to lose?

2011-11-10T18:27:00.000-05:00

A month or so ago I said that President Obama was so vulnerable that the election was the Republican’s to lose – though they might just be stupid enough to nominate such a far right candidate that they would lose it anyway.

Today I would say the election is President Obama’s to lose. Not that he looks any better on his record or in the polls than he did a month or so ago, but the Republicans seem bent on self-destruction and may hand the election to him.

The announcement that a group of influential conservatives have launched a campaign to deny Mitt Romney the nomination because he isn’t conservative enough is the final straw. Apparently the Republicans aren’t willing to consider anyone who isn’t ideologically “pure”, meaning that they are against abortion, don’t believe in either global warming or evolution, and are stuck in the fantasy that cutting taxes will solve all our fiscal problems. It now looks like the Republicans are going to do Obama’s work for him, and destroy any potentially electable nominee (meaning moderate enough to get significant independent votes) before they even reach the general election.

Well, if they are that ideologically rigid, that politically naïve, and that out of touch with reality, I guess I don’t want them in control of the government anyway. Not that I relish another four years of liberal denial and spending either.

The Emperor’s clothes

2011-11-10T10:40:00.003-05:00

It has always seemed interesting to me that the world accepts paper money, even though it is no longer backed by anything of value. Once, of course, a paper bank note could be exchanged at any time for an equivalent value in silver or gold, so the paper money was really just a promissory note. But most nations have abandoned that practice by now, and so the whole system now runs on faith. That works as long as everyone agrees to pretend that the paper notes (or now, their electronic equivalents) really have value, and in fact the system has worked well for decades now in that manner – though it does encourage governments to “cheat” by just printing more banknotes to cover their debts (the euphemism for this is “quantitative easing”, and the US just did that).

This comes to mind this morning as I think about the world financial crisis – or more accurately, the debt crisis. Europe is teetering along, having bailed out Ireland, and Portugal, and now Greece (for the second time), but in fact the measures taken thus far are clearly too little. Even with a 50% “haircut” on Greek bonds, the Greek debt is still about 120% of GDP, far more than the nation can ever pay off with its current economy. And now Italy is looking shaky as well. Greece, Portugal and Ireland were relatively small nations, but the Italian economy is simply too large to bail out.

So in fact a large number of European banks (and probably a few big US banks as well) are actually insolvent, since they hold bonds from various EU nations that will never be paid back in full, if at all. No one wants to admit this out loud, because it would cause the banks to immediately fail, and precipitate a major banking crisis around the world. But it is true nonetheless.

And we are playing the same game here in the US. The Federal government currently has financial obligations that far exceed any revenue it could ever possibly collect. I’m not just talking about the $14 trillion in national debt – I’m also talking about the estimated $70-100 trillion in future obligations for federal pensions, Medicare and Medicaid, and Social Security. Not to mention the estimated $5 trillion that Fannie Mae and Freddie Mac are short from bad mortgages. Not to mention the estimated $3 trillion in unfunded pension liabilities at the state and local level. (Notice we are in trillions here -- billions are small change in this conversation!)

So far American politicians have been pretending that the Emperor still has clothes. They have been pretending that minor adjustment here and there (cut $1.5 trillion over 10 years from the federal budget, tax millionaires, etc) will solve the problem. And so far the financial world has agreed to this fiction, because to admit out loud how bad things really are would precipitate a crisis.

In fact, it is not unreasonable to pretend things are OK for a while to buy time to fix the real problem. That would be quite a reasonable strategy. Unfortunately that is not what is happening, either in Europe or in the US. Nothing effective at all is being done to address the underlying problem – all the effort is on “patching things up” month by month to maintain the fiction and avert the crisis.

At some point, no doubt, the world will realize that the Emperor has no clothes, and then things could get very bad indeed.

Pew poll references

2011-11-09T10:05:00.000-05:00

I tracked down the original Pew Research Center studies referred to in the previous post.

For the May 2009 public perception of evolution and climate change, a summary can be found at http://www.people-press.org/2009/07/09/section-5-evolution-climate-change-and-other-issues/. That summary has links to the complete report and to the questionnaire.

An additional fact I found interesting is that public perception of whether there is a consensus among scientists on these issues is at variance with reality. The relevant section of the report reads:

Despite the overwhelming agreement among scientists about evolution and climate change, substantial minorities of Americans think there is no scientific consensus on these issues. While a 60% majority of the public says that scientists generally agree that humans have evolved over time, nearly three-in-ten (28%) say that scientists do not generally agree.

A comparable majority (56%) says that scientists generally agree that the earth is warming because of human activity. However, more than a third (35%) says that scientists do not generally agree.

In both cases, people’s perceptions of a scientific consensus are strongly correlated with their own views on the issue. Fully 79% of those who say life has evolved due to natural selection say there is a scientific consensus on this issue. Fewer than half (43%) of those who say life was created in its current form see such a consensus.

This pattern is even more pronounced when it comes to views about whether there is a scientific consensus over climate change. About three-quarters of people (76%) who say human activity is driving global warming think that most scientists agree on this point. Fewer than half (41%) of those who say warming is mostly due to atmospheric changes think there is a scientific consensus on the issue. Among the small share of the public (11%) that says there is no solid evidence of global warming, just 22% say there is scientific agreement that human activity is causing global warming, while 68% think there is no agreement among scientists on the issue.

The US religious knowledge report was issued in September, 2010, and a summary can be found at http://pewforum.org/Other-Beliefs-and-Practices/U-S-Religious-Knowledge-Survey.aspx. The section specifically devoted to what people know about the Bible can be found at http://pewforum.org/U-S-Religious-Knowledge-Survey-Who-Knows-What-About-Religion.aspx.

Recommended: The Age of American Unreason

2011-11-08T23:38:00.000-05:00

Susan Jacoby, who also authored Freethinkers: A History of American Secularism (2004) examines the cultural history of the past 40 or so years that has led America to its current anti-intellectualism, in which even supposedly well-educated politicians don't believe in evolution and climate change, despite an overwhelming scientific consensus worldwide on these issues. Recent Pew polls show an astounding level of ignorance about science among Americans (one in five still believe the sun revolves around the earth!!), and an almost complete lack of knowledge about history.

Some of this anti--intellectualism is driven by the fundamentalist religious right, but even in their own chosen area of expertise, the Bible, this group is amazingly ignorant. According to the Pew survey about half think the Golden Rule is one of the ten commandments, and only 45% can name the four Gospels.

This is a disturbing book to read -- one fears for the future of the nation. But it is important, nevertheless, to understand the roots of this problem, and the effect it is having on our children.

The dangers of inequality

2011-10-26T17:30:00.003-05:00

As a matter of human nature, the ruling elites always arrange to take care of themselves first. Even in a democracy, "we are all equal, but some are more equal than others" (from George Orwell's Animal Farm). This certainly seems to fit the overpaid CEOs and Hedge Fund managers we have been hearing about.

But as a matter of self-interest, those at the top need to be sure the inequality doesn't get too bad, or the natives will revolt, as has happened repeatedly throughout history, including recently in the Middle East. And when the natives revolt, things usually aren't very pretty.

So the rising anger we are seeing in our own country, with the Wall Street protests as just one visible symptom, is a warning to those at the top of the heap that the pyramid of inequality has gotten close to the point where things become unstable. If they were wise they would pay attention to this.

Recommended: Biden’s Fourth-Grade Economics

2011-10-23T18:20:00.000-05:00

Mark Steyn has a wonderful piece in today's National Review Online: Biden's Fourth-Grade Economics. Vice-President Biden apparently gave an impromptu economics lesson to some fourth-graders on York, Pennsylvania recently. What he said would be hilarious and worthy of a Monty Python satire if it weren't that liberals like him, who unfortunately currently lead the country, really believe the fictions -- either that or they are telling us outright lies.

Dilemmas and unintended consequences

2011-10-23T08:46:00.000-05:00

Whoever occupies the White House after the next election will face a difficult dilemma. On the one hand, there is absolutely no way the government can continue to spend almost twice as much as it takes in, borrowing the rest. On the other hand, to reduce the government back to a size that matches its income will involve putting millions of people out of work. And these won't just be government bureaucrats who are "declared redundant". It will probably involve an even larger number of people in the private sector -- all the people who clean their offices, run their cafeterias, maintain their buildings, provide their office supplies, service their fleet cars, etc, etc etc. Not to mention the millions of private sector contractors who will have to be laid off when their government contracts disappear.

So this "small government" movement has some difficult unintended consequences.

The same is true of the plan to reduce our defense expenditures. Clearly we spend way too much on defense - about as much this year as the whole rest of the world put together. We could spend half of what we currently spend and still have the most formidable military on the planet (if we spent the remainder wisely). BUT reducing defense spending by half would put millions more people out of work. And again, it wouldn't just be military people, it would include an even larger number of contractors and suppliers from the private sector.

So once again, reducing federal spending is a two-edge sword, especially in these times of already-high unemployment.

Enlightened Self-Interest

2011-10-22T21:07:00.001-05:00

It is no surprise that the wealthy and powerful work hard to keep themselves at the top of the pyramid, and to maintain their wealth and the privileges that go with it. In fact, it is simply human nature. So we see this same theme everywhere in the world and all through history, in nations ruled by oligarchies or dictators and in nations like ours that are supposedly "democratic". In good times it is not so apparent, because everyone feels they are doing well. But in bad times like these it is painfully obvious that the ruling elite takes care of its own first.

What ought to be obvious to the ruling elite, but apparently isn't, is that their continued wealth and prosperity depends upon a strong and healthy economy, with lots of well-off consumers who can buy the products that their companies make and provide the profits that feed their wealth. Henry Ford was wise enough to see that he had to pay his workers well enough that they could buy the cars he was making.

This is an elementary observation about economics. Even slave owners know that one needs to keep feeding the slaves so they can keep working. But apparently today's ruling elite hasn't yet understood this simple principle, or they would be a lot more worried that they appear to be about the precipitous decline of consumer purchasing power and the high unemployment rate.

Recommended: The Ugliness Started With Bork

2011-10-22T20:48:00.001-05:00

Joe Nocera makes a point in today's New York Times that I have made often: The Ugliness Started With Bork. It was the bitterness, and essential unfairness, of the liberal battle to prevent Robert Bork from being appointed to the Supreme Court in 1964 that started the civil war between the Democrats and the Republicans in Congress.

As Nocera says:

I bring up Bork not only because Sunday is a convenient anniversary. His nomination battle is also a reminder that our poisoned politics is not just about Republicans behaving badly, as many Democrats and their liberal allies have convinced themselves. Democrats can be — and have been — every bit as obstructionist, mean-spirited and unfair.

I’ll take it one step further. The Bork fight, in some ways, was the beginning of the end of civil discourse in politics. For years afterward, conservatives seethed at the “systematic demonization” of Bork, recalls Clint Bolick, a longtime conservative legal activist. The Atlanta Journal-Constitution coined the angry verb “to bork,” which meant to destroy a nominee by whatever means necessary. When Republicans borked the Democratic House Speaker Jim Wright less than two years later, there wasn’t a trace of remorse, not after what the Democrats had done to Bork. The anger between Democrats and Republicans, the unwillingness to work together, the profound mistrust — the line from Bork to today’s ugly politics is a straight one.

It is not that the liberals opposed his nomination - that was understandable. It was that they were willing to use any means available, fair or unfair, truthful or not, to destroy him. So they should not be surprised that the same tactics are now used against themselves.

Recommended: The World As It Is: Dispatches on the Myth of Human Progress

2011-10-22T20:29:00.003-05:00

Chris Hedges was a foreign correspondent for the New York Times for over twenty years, covering most of the major and minor wars of that period. He is also a Pulitzer Prize winner. His experiences, especially close-up and personal in wars, have given him a distinctly non-mainstream view of the world. A committed socialist and follower of people like Noam Chomsky, who have been railing against “the system” for years, he is outraged about American policy, and deeply worried about the future of America.

I have generally found the ranting of people like Chomsky neither convincing nor interesting, but I have to say that Hedges makes a persuasive argument in this collection of articles that our problems in America are far more fundamental, and far more dangerous, than most of us have assumed. It is worth reading this book and pondering whether our ”mainstream” views are really incorrect, and whether perhaps we really have been brainwashed by the media and the political elite, and whether perhaps the emperor really doesn’t have any clothes.

Certainly watching politicians in both America and Europe try to cope with the financial crisis, one is struck by how they seem to be taking care of the ruling elite first (Wall Street, the senior management of big corporations, powerful unions, other in-group politicians, and all the media hangers-on).

This is not a comfortable book to read, It challenges a lot of our "conventional wisdom" and common world views. For that reason alone it is important. We should never cease to listen to, and seriously consider, other views that challenge our own comfort zones.

The Israeli trade

2011-10-17T12:11:00.000-05:00

I don't understand why people never seem to learn that paying ransoms just encourages more kidnapping! Israel just agreed to release 1000 Palistinain prisoners -- many mass murderers and terrorists - to get back one kidnapped Israeli soldier. Can you think of any action more likely to encourage more kidnapping by Hamas? What will they trade for the next kidnapped Israeli?

Recommended: Congress, Governors Nix Obama's High-Speed Trains

2011-10-14T03:43:00.000-05:00

Sometimes sanity does eventually prevail, even in Washington. As I have noted in previous posts, high-speed passenger trains are not economically viable in America. Actually, they are not economically viable in most places, any more than the supersonic Concord was ever economically viable. But among some of the Washington elite, who may be politically savvy but are naive about the realities of engineering and economics, high speed rail has had a persistent appeal.

As Michael Barone notes in his piece today Congress, Governors Nix Obama's High-Speed Trains, most Governors have been smart enough to see that accepting federal grants to begin to build high-speed rail lines would encumber their states with huge long-term subsidies, and Congress has finally cooled on the idea of wasting any more money down this rat hole.

Recommended: The Way Forward

2011-10-14T03:29:00.001-05:00

Nouriel Roubini, known as Dr Doom before the recession because he kept predicting (accurately) the coming crisis, has co-authored a new paper by the new America Foundation: "The Way Forward: Moving from the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness."

The authors argue that nothing proposed thus far by either the Democrats or the Republicans is adequate to deal with the current fiscal crisis, and propose the sort of long-term massive infrastructure rebuilding program that might be needed to restore the nation's economic health. And by the way, they don't believe deficit reduction at this point makes any sense either.

This paper is somewhat academic in tone, but very important and well worth reading anyway. The nation is clearly in a serious financial crisis, and we need our best minds to help us figure out how to get out of it. These three authors are among our best minds on this topic.

Taxing miilionaires

2011-10-10T05:34:00.001-05:00

President Obama would like to levy a tax on millionaires to pay for his jobs bill. It certainly sounds reasonable, considering all the Wall Street types and CEOs who have been taking home obscene salaries and bonuses even while their companies fail and their actions bring on a recession.

Still, I do have to wonder why he insists on looking for new revenue instead of cutting government spending to find the money for his bill. Nothing has changed recently -- we still borrow almost half the money the government spends each year and a tax on the rich will make almost no difference to that situation. We still need to cut something like $1.5 TRILLION per year from the government budget just to balance the budget, let alone begin to pay back our debts. Some $450 billion in millionaires taxes is a drop in the bucket compared to the $1.5 TRILLION that needs to be cut.

But then, it has been obvious for some time now that this president has no intention of tackling that problem, any more than his proposed job bill does much of anything effective for the current high unemployment figures.

More on the Jobs Bill

2011-10-05T09:56:00.000-05:00

As a follow -on to the last post, note this news item:

Senate Democrats buck Obama on jobs proposal by changing 'pay-fors'
By Alexander Bolton - The Hill, 10/04/11 08:35 PM ET

Senate Majority Leader Harry Reid (Nev.) on Tuesday further distanced his Democratic Conference from President Obama by nixing a major component of the White House’s jobs plan.

Reid said he would revise parts of the proposal that some Senate Democrats have found unpalatable. The Nevada Democrat announced his new strategy on the same day he blocked a Republican effort to force a vote on Obama’s jobs bill.

-------------------------

Reid told his Democratic colleagues Tuesday that he would put together a new plan to pay for the package after rank-and-file colleagues balked at proposals to limit tax deductions for the wealthy and raise taxes on oil and gas companies.

So it's not just the Republicans who won't support the president's jobs bill.

Political theater

2011-10-04T17:53:00.000-05:00

An amusing, if pathetic, little piece of political theater this afternoon revealed just how meaningless are President Obama's repeated attempts over the past few weeks to paint the Republicans as the obstacle to a workable job bill. Minority Leader Mitch McConnell (R-Ky.) attempted this afternoon call up President Obama’s jobs plan for an immediate vote in the Senate. The attempt was blocked procedurally by Senate Majority Leader Harry Reid (D-Nev.)

McConnell admits the move was made just to embarrass the Democrats, because what McConnell and Raid both know is that there are not enough Democratic votes in the Senate to pass the President's bill, even though the Democrats have a majority in the Senate. It is not just the Republicans who won't support higher taxes; it is also a lot of Democratic Senators who are up for re-election next year and want no part of being associated with President' Obama's higher-taxes plan.

So the dirty little secret exposed by this political theater is that it is not just Republican opposition that is blocking his plan -- it is strong opposition from his own party. More than that, President Obama is perfectly well aware that his plan is a non-starter with his own party; moreover he was aware of this even before he proposed the plan, because the Congressional leadership of his own party told him so in no uncertain terms.

That means that he never expected his plan to pass, so pushing it is nothing more than a pre-election maneuver, not a serious attempt to deal with the unemployment problem. For this descent into Chicago-style political gamesmanship in the face of such a serious national problem he has now finally lost my vote for good, whomever the Republicans nominate.

Recommended: Making Movies

2011-10-03T14:28:00.000-05:00

Sidney Lumet, director of such successful movies as Serpico (1973) Dog Day Afternoon (1975) and Q & A (1990) , has written a wonderful insiders book about movie –making., This is not an exposé of the lives of famous actors, but rather a discussion of what goes into the making of a movie from the director’s point of view. Fascination for those of us who have watched movie-making from the outside.

See the book list in the sidebar for details. This book was published in 1996, and so will be found among the 1996 books in that list.

Recommended: Packing for Mars: The Curious Science of Life in the Void

2011-10-03T14:16:00.000-05:00

Surviving in space for long periods, as will be required for a trip to Mars, is difficult. But we have already been preparing with our near-earth space station, the shuttle flights, and the Apollo moon flights. And it isn’t all that glamorous, seen up close. Mary Roach, whose previous books are Stiff: The Curious Lives of Human Cadavers, Spook: Science Tackles the Afterlife, and Bonk: The Curious Coupling of Science and Sex, has a wonderful talent for entering a field and describing it with wit and humor, as she does in this book. Ever think about the problem of defecating in zero gravity? Ever wonder what the astronauts eat (and whether they like it)? Ever wonder why airline passengers don’t have parachutes? This is the book that will explain it. A wonderful, entertaining but highly educational read.

Recommended: Finally, The Cognoscenti Ask: What Could We Be Thinking?

2011-10-01T10:10:00.000-05:00

Mark Steyn isn't one of President Obama's supporters, but having said that, his new piece on Investors.com: Finally, The Cognoscenti Ask: What Could We Be Thinking? is worth reading.

Lots of us drank the Cool-Aid in the last presidential election (myself included) and bought the "New Hope" and "Change in Washington" message. As Mark says:

You handed a multitrillion-dollar economy to a community organizer and you're surprised that it led to more taxes, more bureaucracy, more regulation, more barnacles on an already rusting hulk?

Well, the results aren't impressive. Nancy Pelosi kept Congressional politics at its usual civil-war, let's-screw-the-other-party-while-we-can level (and the Republicans are reciprocating now). The economy is going nowhere (except perhaps into a second dip), the federal deficit continues to climb with no plan or proposal from the President to do anything effective about the problem.

Perhaps we, the voters, should have been a little more savvy than to expect a junior Senator who never ran a business, never met a payroll, never governed a state to be able to run a nation the size of ours, especially during a recession. It would be a difficult job even for an experienced governor or legislator; we were naive to think an inexperienced person could do the job. Eloquence (which Obama certainty does have) is no substitute for experience.

In the end, as Aristotle said: "Every country gets the government it deserves". We wanted Obama, so we got him. Now we have to live with the consequences of our decision.

Recommended: Obama's Dilemma: U.S. Foreign Policy and Electoral Realities

2011-09-20T14:31:00.001-05:00

George Friedman, the director of STRATFOR, the world's larges private intelligence agency, has a very good piece on the STRATFOR site: Obama's Dilemma: U.S. Foreign Policy and Electoral Realities. It is a concise appraisal of just where President Obama stands today, and the forces that constrain his possibles avenues of action until the election.

It is well worth reading.

Recommended: The great schools revolution

2011-09-19T13:44:00.000-05:00

The Economist has an interesting article in this month's issue: Reforming education - The great schools revolution. While the USA has been spending more and more money on education, our ranking has fallen further and further behind the rest of the developed world. We now spend more per student than almost any other country, yet our 15 year olds rank between 17th (reading) and 25th (math) among the developed countries of the world.

As the article notes:

"Above all, though, there has been a change in the quality of the debate. In particular, what might be called “the three great excuses” for bad schools have receded in importance. Teachers’ unions have long maintained that failures in Western education could be blamed on skimpy government spending, social class and cultures that did not value education. All these make a difference, but they do not determine outcomes by themselves."

and:

"So what are the secrets of success? Though there is no one template, four important themes emerge: decentralisation (handing power back to schools); a focus on underachieving pupils; a choice of different sorts of schools; and high standards for teachers."

Recommended: The Social-Democratic Illusion

2011-09-19T08:51:00.001-05:00

One of the persistent dangers of political discourse is falling into the "group mind" trap -- of beginning to believe that all the solutions are somewhere within the range of political views commonly discussed. In our case that means the political narratives of the two major parties - Republicans and Democrats. But a study of history will reveal many occasions in which neither the ruling elite nor their "loyal opposition" understood the current circumstances correctly , and in which the political consensus was completely wrong. One suspects we are at such a point right now.

In that context, it pays to begin to cast further afield for new ideas and different perspectives. Immanuel Wallerstein has always been outside the mainstream of political thinking, viewing circumstances from a different perspective, and for that reason I pay attention to his occasional writings. His Sept 15 posting
The Social-Democratic Illusion is a case in point.

Wallerstein argues that the "Social-Democratic" view (which in America corresponds roughly to the neo-liberal view) of an expansive welfare state was sustainable through the decades following World War 2 because of two factors: the incredible expansion of the world economy, and the stabilizing influence of America. However, both of those have lost their force now, so the social-democratic welfare state system is tottering, both here in America and especially in Europe. His argument has some force, since in both America and Europe the current economic crisis seems to be driven largely by the huge debt governments have built up, largely trying to sustain entitlement programs.

It is an article well worth reading.

Recommended: A Ponzi scheme that should be fixed

2011-09-18T18:36:00.003-05:00

Charles Krauthammer, in the Sept 15 The Washington Post, has a piece: A Ponzi Scheme that should be fixed. He makes much the same points I did in my post a few days ago about Governor Perry's claim that Social Security is a Ponzi scheme -- yes, of course it is, but it can be fixed and it should be fixed. Burt he has a few interesting twists to his arguments, and I recommend it.

Recommended: They Gave a Recovery and Nobody Came

2011-09-18T18:04:00.000-05:00

There is a very interesting posting over on Reason.com by Tim Cavanaugh: They Gave a Recovery and Nobody Came. He argues that the economic figures show that as far as Keynesian economic models are concerned, the recovery has already happened. Despite the repeated claims by Keynesians that the problem with the economy is that consumption is down, the government's own figures show that both personal and government consumption is now higher than it was before the recession, so there is no aggregate-demand gap at the moment. But of course the disastrously-high unemployment figures have hardly moved, so clearly the Keynesian model of what needs fixing is simply wrong.

Cavanaugh argues that Keynesian economics has no way to deal with high indebtendess -- its models are essentially blind to that condition -- but that it is just the high indebtedness of companies that is keeping unemployment high, along with all the uncertainty over future taxes, future regulations, and future employee health care costs. It is, he argues, just too uncertain a future for companies to hire lots of new workers.

All in all an interesting alternative view of our problems. And since the current Keynesian view of what is wrong and how we ought to fix it is by now clearly wrong, we need fresh ideas like this.

A Real Dilemma

2011-09-14T18:59:00.003-05:00

The upcoming 2012 presidential election (and the accompanying House and Senate elections as well, for that matter) present a real dilemma – two alternatives neither of which is particularly attractive.

On the Democratic side we have President Obama with his lackluster first term. Actually, I don’t fault him for not solving the recession problem – it is clear that no one really knows how to resolve this issue, and the high-powered academic economists can’t even agree among themselves as to the proper course.

But I do fault him for not trying harder – for wasting his first three years in office saving the bonuses of Wall Street executives and CEOs, and subsidizing the jobs of union members who make up his base, and pushing through his heath care bill while all across the nation ordinary people’s homes were being foreclosed and jobs were being lost and small businesses were being forced out of business.

And I fault him, and especially Nancy Pelosi, for ramming through a messy and expensive (and perhaps even unconstitutional) health care bill while cutting Republicans completely out of the negotiations. It caused such bitterness among Republicans that it has been full-scale civil war between the parties in Congress ever since, and resulted in putting some 70+ intransigent Tea Party freshmen onto the House that even Republican Speaker John Boehner has difficulty controlling.

And finally I fault him for not putting in place a medium-term plan for cutting the ballooning federal debt. One might reasonably argue that the middle of a recession is not the time to cut the federal budget, but that argument only holds water if accompanied by a credible plan to cut the deficit in the medium term. He has presented no such plan, and such “budget cutting” he has finally agreed to (forced to it kicking and screaming by the Tea Party members) has largely been smoke and mirrors, and far too little to make any real difference.

All-in–all this Democratic administration has clearly been over its depth both domestically and in foreign policy. Remember the Russian “reset” and the “open hand” offered to the Arab world? – not much came of either of those initiatives.

But on the Republican side we have what appears to be equal incompetence. None of the current candidates look particularly promising, and while at this point the presidential election is the Republican’s to lose, they do seem quite capable of nominating some right-wing extremist and losing it.

The Republican fixation with cutting taxes, while there is indeed some logic behind it, appears to be held as an unthinking non-negotiable ideological position, not a logical one. More than that, there is little evidence from their performance in the previous Republican administration that they are any less feckless about the debt problem than the Democrats. It is true that this Democratic administration managed to add as much to the nation’s debt in three years as Bush did in eight years, but that isn’t saying much good about the Bush administration either.

Finally, despite all the hype and talking points, I have yet to hear from any Republican candidate a better idea for getting the economy moving again.

So we have a real dilemma – I may again want to vote “none of the above” in this next election.

Recommended: Obama's Crony Capitalism

2011-09-10T09:37:00.000-05:00

Over on Reason.com A. Barton Hinkle has written an article entitled Obama's Crony Capitalism that summaries the issues with the recently bankrupt Solyndra solar cell company that the administration poured so much money into and touted as such a big deal. As he notes, aside from the Chicago-style politics involved (one of the biggest investors was also one of Obama's biggest money men in the last campaign), it is a case study in why the government ought not to try to pick winners and losers in the marketplace. It is worth reading.

Is Social Security a Ponzi Scheme?

2011-09-09T20:02:00.008-05:00

Governor Perry has made quite a splash with his repeated claim that Social Security is simply a Ponzi scheme. The liberal press has had a field day with this, and even some of his Republican opponents have attacked him on this.

But is he right? Well, a Ponzi scheme, like the one run by Bernie Madoff, works by taking the money from people who invest later and using some of it to pay "dividends" to people who join earlier, and then diverting the rest of the "investment" to the crook's own use. It works fine until there are no more new people joining and investing new money, after which the whole scheme collapses and the latecomers all discover that they are going to get nothing back for their investments.

That sure sounds like Social Security. We older folks put our money in, and theoretically it went into a "lockbox" (the Social Security Trust Fund) not to be used for anything but eventually paying monthly checks out to us. But in fact the money didn't go into a "lockbox" -- it went back out to Congress as fast as it came in to pay for all sorts of pet Congressional programs, replaced by paper IOUs (Treasury Bonds). So all that is really in the "lockbox" is paper IOUs, no "real" money. So where does Social Security get the money to pay out the monthly Social Security checks? It can't get it from the "lockbox" because there is no real money there, just paper (actually electronic) IOUs. So it gets it from the people paying in the month before.

This system works fine until there aren't enough new people paying in each month to cover the amount that Social Security needs to pay out, and we are just about at the point, as our population ages and we have an increasing number of older people collecting Social Security against a smaller number of workers paying in each month.

But what about the Treasury Bonds in the "lockbox"? Isn't that real money? Fancy as it sounds, a Treasury Bond is nothing more than an IOU that promises to pay back the capital and a little interest at some future date. These days when a Treasury Bond comes due, the government just sells another Treasury Bond to get the money to pay out the first bond, "rolling over" the debt rather than really paying it back (something the government and banks frown on individuals doing, but seems for some reason to be OK if you are the US Treasury....) . That works fine so long as someone will buy the new Treasury Bond. The day there are no new buyers the whole scheme falls apart.

If you or I tried to run a scheme like this, we would be quite properly arrested, tried, convicted and jailed, as was Bernie Madoff. But when the government does it.............

So it may be offensive to liberals to call Social Security a Ponzi scheme, but if it walks like a duck and looks like a duck and quacks like a duck..........

-------------------------

Added thought: To say it is a Ponzi scheme now (which it is) is not to say it couldn't be repaired and "un-Ponzied". In fact, it could with some relatively simple changes, such as slowing raising the eligability age, taking the cap off of earnings taxed for Social Security, and changing the over-generous inflation adjustment to make it track core inflation rather than wages. The problems with Social Security are much smaller, and much easier to repair, than those for Medicare/Medicaid.

Obama's Proposals

2011-09-09T10:11:00.004-05:00

Finally, three years into his term and three years into a devastating recession, President Obama took on the jobs issue for real. It is what he should have done at the beginning of his term, instead of wasting time and political capital on the healthcare issue.

As usual, President Obama was eloquent in his speech last night. But as usual, it offered nothing new. It was clearly a re-election speech, designed to maneuver Republicans into damaging positions ahead of the upcoming election, rather than a problem-solving speech aimed at really solving the nation's problems.

As usual, his solution was to throw more (borrowed) money at the problem rather than address any of the underlying structural problems. The word "stimulus" was assiduously avoided, but that is in fact what he proposed. Since a "stimulus" twice that big had almost no measurable effect except to dramatically increase the national debt, it is not clear how one half that size can be expected to have much effect. He proposed tax cuts, but since he didn't propose cutting federal spending at all the reduced revenue just increases the deficit.

I didn't really expect anything new from the president's team, and I see most pundits didn't expect much either. The coverage of the speech this morning is remarkably sparse, even from the pundits who usually think he walks on water.

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PS - I see that the world's stock markets have taken a steep nose dive in the wake of President Obama's speech (the Dow is down 338 points as I write this). Last time he gave a speech the stock market dropped a hundred points even as he was speaking. One might think this was a message...............

What the government should (or can) do (Part 1 – what we know)

2011-09-08T17:54:00.001-05:00

There is no question that the roots of our current economic mess are very complex indeed. The crisis stems from a long accumulation of natural circumstances, shifts in technology, demographic changes, short-sighted corporate and government policies, poor consumer choices, and improvident government by both political parties, among other factors. Decades or centuries from now, with ample perspective, historians may be able to untangle the threads enough to identify the major contributing factors, but in the present day we can only go from what we know or understand now.

So what do we know right now? Well, we know that Keynesian “pump priming” by the government with its last massive stimulus package didn’t work very well. Nick Gillespie yesterday had an interesting piece on Reason.com, One Reason Why Keynesian Stimuli Aren't Working: They Aren't Keynesian, that argues that Keynes himself would have been appalled at how his theory is being applied (or rather, misapplied) today.

We also know that the current academic economic models don’t fit the real world very well. We have had the nation’s leading academic economists using their models over the past two decades to project the results of various policies, and more often than not these models have failed. As I noted in a post a few days ago, these models didn’t predict the current recession (in fact most of them projected continued strong growth through this period), they didn’t correctly predict the result (or lack of result) of the first stimulus package, they didn’t correctly predict the real risks in all the fancy new risk derivatives swamping Wall Street, they didn’t predict the 2006-2007 housing bubble, nor for that matter the 1999-2000 “dot.com” bubble.

We also know that increasingly the American workforce is not adequately prepared for the jobs of tomorrow. We still have an infrastructure and educational system and regulatory environment suited to the agricultural and manufacturing nation we were decades ago, but blue-collar manufacturing (and to a certain extent agriculture as well) provide less and less US jobs every year, while the growing number of high-tech technical, engineering and innovation jobs in the US are increasingly filled with bright foreigners because there are not enough American citizens trained to take those jobs. The three-yearly OECD Program for International Student Assessment (PISA) report, which compares the knowledge and skills of 15-year-olds in 70 countries around the world, ranked the United States 14th out of 34 OECD countries for reading skills, 17th for science and a below-average 25th for mathematics.

We know that the federal government, in the form of Congress and the Presidency, have become thoroughly dysfunctional, so polarized ideologically as to be hardly able to function at all. For example, this administration has been funding the government for over two years now on continuing resolutions, because it can’t get a budget passed at all, let alone by the end of the preceding fiscal year. This sharply limits what can reasonably be expected from federal government action. Nor is this likely to change as long as both parties have gerrymandered their House districts to make them safe seats for one party or the other – which has produced the undesirable side effect of eliminating moderates of either party from the House.

We know that the current federal government funding, in which we borrow almost half the federal budget every year, is unsustainable, and that major entitlement programs like Social Security and Medicare will have to sharply curtail their benefits soon, because there simply won’t be enough money to cover these obligations in the near future as they are currently constituted. Economist Lawrence Kotlikoff has recently estimated the total unfunded liabilities of current federal programs, largely Social Security, Medicare and Medicaid, at $70 trillion.

We know that we have too many regulations in this nation, promulgated by too many federal agencies which often have overlapping authority and conflicting agendas. Certainly regulations are necessary in a large nation like ours, but like the Sorcerer’s Apprentice, things have long since gotten way out of hand in the regulatory sphere. Of course, this is to be expected – once an agency is established and given some authority, it will naturally work to perpetuate itself and expand and defend its area of authority, its legitimate “tuft”. That is simply human nature – or at least the nature of bureaucracy.

Regulations are estimated to cost US businesses somewhere between $2 trillion and $2.8 trillion per year. According to the Office of the Federal Register, in 2007, the Code of Federal Regulations (CFR), the official listing of all regulations in effect, contained a total of 145,816 pages that claimed 21 feet of shelf space. In 2011 alone, 50,000 pages of new regulations have been added thus far to the Federal Register. Clearly something is wildly amiss.

We know that the federal tax code has become unwieldy and ineffective. The Federal Tax Code weighs in at 71,684 pages as of 2010! We have one of the highest corporate tax rates in the world (and then double tax the dividends as well), but offset it with trillions of dollars of special interest exemptions and rebates, so that some US companies that report billions in profits pay no federal tax at all.

We also know that we have put off maintenance and improvement of our national infrastructure too long. Bridges, roads, rail lines, power transmission lines, power plants, dams, etc etc are all aging and in need of repairs or replacement, but we haven’t been doing it at either the federal or the local government level, preferring to put funds into social programs, entitlements, public employee pension funds, and unfunded wars in the Middle East. We are the inventors of the internet, yet US average internet service speed, at 4.8mbps, ranks 15^th in the world (Japan, at 61mbps, is the leader, with South Korea close behind).

This is what we know. Part 2 will deal with what, if anything, the government could do about these issues.

Recommended: Obama's Economic Trifecta

2011-09-08T12:25:00.002-05:00

Joel Kotkin has an interesting piece over on the Forbes website this morning: Obama's Economic Trifecta: How The President Helped Kill Progressivism, Capitalism And Moderation. It is not very flattering to the administration, as is obvious from the title, but on balance I think his charges are pretty accurate. Of course, he is not particularly kind to the Republicans either, and again I think his criticisms are accurate.

What has been notable about this administration's attempts to deal with the recession is that despite all the rhetoric, the measures actually taken have been aimed largely at preserving jobs on Wall Street, in large corporations like the auto companies, and among union members, with little or no effective action to help main street small businesses, homeowners facing foreclosure, or the jobless. It is hard not to come to the conclusion that despite being a Democrat (supposedly representatives of the common working person), Obama is actually more concerned with shoring up the in-group wealthy establishment and his union political base than helping the nation as a whole.

He will apparently propose yet another expensive stimulus plan tonight, even though his last, much larger stimulus plan didn't seem to do much to help the situation. There is a legitimate question, of course, about just how much the government can do in any case to "create" jobs.

Government policy can certainly make it harder for companies to function, but I think there is relatively little the government can do to actually create more productive jobs (as oppose to simply more bureaucratic jobs). Only private businesses can create jobs that actually add to the national wealth, and the administration's efforts to push high speed rail and green technology companies as new sources of jobs has been pretty naive at best, and look more like pandering to his supporters than actually trying to do anything effective.

It will be interesting to see exactly what he does propose tonight, and whether it is any departure from Washington's usual solution of just throwing more (borrowed) money at a problem.

President Perry?

2011-09-06T15:52:00.004-05:00

As President Obama's numbers plummet along with the stock market and the nation's economic growth numbers, and Governor Perry's poll numbers continue to rise, now well past his only serious opponent, Governor Romney, the possibility that Perry might become our next president is increasing. One cannot discount the fact that Texas, under his stewardship for the past twelve years, is booming economically and has produced about half of the new jobs in the nation over this recession.

Still, he has some extreme views that worry me. But Russ Smith in his piece Is Barack Obama Dumb? (he argues he isn't) makes this point:

As I’ve written before in this space, Perry’s adherence to creationism, apparent fear of homosexuals, abortion opposition, constant invocations of God and dismissal of global warming make me queasy, but in next year’s election those extreme right-wing positions won’t really matter. The only issue is the dreadful economy, which shows no sign of improving before voters pass down their verdict, and while you can scoff at Texas’ remarkable job creation in the past several years—the general liberal reckoning is that all those jobs are at minimum-wage fast food joints—it’s not as if Obama can make any boasts about his own record on that score.

I think he is right. President Obama has said all the right things (from my point of view, at least) about gays, global warming, and abortion, but he has failed miserably at getting the economy going again and dealing with the joblessness. I could tolerate some extreme views on these subjects (especially since the President can't really put many of them into practice without the full support of Congress) if it came along with some effective and hard-nosed approaches to things like the economy and the debt.

Still, Republicans would be wise to listen to Mike Huckabee's recent advice:

Republicans have to nominate someone better than the person they want to defeat. If they get so adamant that they will only support a candidate that believes everything on their checklist, they will re-elect Obama.

Recommended: Economyths

2011-09-04T21:49:00.002-05:00

If there is one thing that is painfully obvious these days, it is that the grand economic models that have won some economists fame, fortune, and even Nobel Prizes, are shams. All those fancy models didn't accurately model the risks in the derivatives market. All those fancy models didn't forecast the current global financial crisis. The stimulus steps those models predicted would stem the recession and limit unemployment well below 8% have failed, and failed miserably. Economists are quick to explain away these failings in all sorts of ways, but the test of a scientific principle is that it works, and their models clearly don't work.

Of course there have been people telling us all along that the emperor had no clothes, among them Nassim Taleb (author of The White Swan), Warren Buffet (the immensely successful investment manager) and economist Nouriel Roubini (known as "Dr Doom" before his predictions of imminent market failure all turned out to be highly accurate). But the academic economists and their highly-paid brethren in the financial industry ignored these voices, naively content that their elaborate models accurately modeled the world.

Oxford mathematician David Orrell argues in his book Economyths: Ten Ways That Economics Gets it Wrong (2010) that the fundamental assumptions underlying current economic dogma (or ideology, as he terms it) are false, and explores the roots of these myths in the history of civilization. This is a serious book, despite being only a 250 page paperback (proof that size, cost, and abstruseness of an economics book is no reliable indicator of its worth). This book is well worth reading, and a good follow-on to my previous recommendation, Economics Without Illusions.

On choosing colleges

2011-09-02T10:05:00.002-05:00

I have been involved a great deal lately in helping to find colleges for my grandchildren. In the course of this I have done a good bit of research and a lot of thinking. The results of this research and thinking will not please – and indeed may well offend – those who work in colleges, but I offer it for consideration by others facing the same daunting task.

College is certainly an important part of growing up middle- or upper-class in America, though of course for 7 out of 10 American youngsters college isn't even an option they are interested in. But let’s put some realistic perspective on it.

1. College is not highly correlated with success in life. For example, a number of billionaires, beginning with Bill Gates (who created Microsoft), and including Steve Jobs (who created Apple computing) and Steven Spielberg (who doesn’t know who he is?), never finished college and many more successful people never even started college. But of course, a lot of hamburger-flippers are also college dropouts, so dropping out isn't a predictor of high wealth either!

2. Colleges, for obvious marketing reasons, like to quote the correlation between college education and higher earnings through life. The correlation is real, and substantial, but it does not logically follow that college is the cause of those higher earnings. People who go to college in the first place are (a) brighter than average, (b) more motivated than average, (c) more disciplined than average, (d) usually come from a more intellectual home than average, (e) and generally come from relatively well-off families who start them off with more financial support, better education, and better health. Those factors alone would correlate highly with more work success and higher earnings, even absent college.

3. Nonetheless, it is true that having a college degree substantially increases job opportunities, and is a pre-requisite for many jobs. But only in a very few fields does it matter what college granted the undergraduate degree, or even what one’s major field was. That is even true for those going on to graduate school. While it is true that colleges offer specialized undergraduate preparation for some fields, like pre-med or pre-engineering, in fact I have known a number of people who went on to graduate school in fields completely unrelated to their undergraduate major, and did just fine.

4. College does not really educate people (yes, I know this will be a controversial claim) . Most of what they will teach (though perhaps less so in math and some sciences) is, if not outright wrong, at least heavily biased by the narrow academic outlook and/or oversimplifed and dumbed-down to the level of the mediocre student -- after all, professors who flunked almost all their students wouldn't last long.

Unlike trade schools, where electricians learn to do real wiring and welders learn to actually weld and accountants learn to actually keep real books and doctors learn to actually treat real sick people (yes, medical school is a trade school too), undergraduate college teaches very few practical skills of use in the job market. Good expository writing may be one of the few exceptions here, and since the majority of graduates don't even learn that very well, colleges can hardly take much credit. In general, companies train their new employees in what they need to know, because their college degree didn't teach them that.

5. College these days is exorbitantly expensive for what one gets from it. As one parent put it, “putting your child through college is like driving a brand new $60,000 Maserati luxury sports car to the college every year, leaving it parked unlocked with the keys in it, and taking a bus back home”. College prices have gone up much faster than inflation for years now, as colleges grew from modest educational institutions into big businesses. But is college really worth that much?

Bright Asian students all over India and China are training themselves to be top-flight engineers and scientists and programmers and entrepreneurs for free over the internet and from used, dog-eared textbooks without spending $200,000 for an undergraduate degree. It is true they don't by this method get exposure to an anal-retentive analysis of American short stories, an abbreviated and biased survey of European history, or the economic fallacies and useless oversimplifications taught in Economics 101, but one would be hard pressed to argue that is worth hundreds of thousands of dollars to anyone except the college faculty members who teach these courses.

6. College rankings are largely meaningless. Read Malcolm Gladwell’s New Yorker article The Order of Things. Of course, if status is important, than going to a “high-status” school does matter, whatever it costs.

7. The average college curriculum, and for that matter the college entrance requirements as well, have emerged from a complex mix of historical precedence (the so-called "liberal" education of 19th century rich and privileged young men), marketing requirements (to keep up with other colleges), and bitter faculty infighting (about the amount of funding for each department). It has very little to do with what students really require to prepare them for today's world or today's job market.

8. In that regard, it is worth noting that European universities, following the Bologna Process, which aims to standardize university-level education across Europe, offer undergraduate programs that last only three years (6 semesters of 13 weeks each). And students can complete their undergraduate studies in two years if they participate in two intensive summer semesters. American undergraduate schools bulk that out to 4 years or more with “distribution” requirements to force students to take courses in fields that don’t even interest them. This is rationalized as “broadening their education”, but in reality has more to do with assuring that every academic department gets enough enrollments to survive and prosper. Of course it also costs students and their parents 25-30% more in money and time.

The objective, I have decided, is to find a college where one’s children or grandchildren can earn an undergraduate degree without (a) bankrupting the family or (b) leaving the child with a massive student loan debt at the end of college, and where (c) they can get some reasonable contact with good teachers. There are colleges that fit these requirements, but one has to look

College is important in today's America, but it is not all-important, whatever college recruiting materials like to say.

Wisdom

2011-09-02T08:40:00.001-05:00

I have decided that true wisdom is an acute awareness of how much one doesn't know, together with an intense suspicion of the validity of everything one thinks one does know.

I have attained that state.

While reading Heath's provocative book Economics Without Illusions, cited in my last post below (and listed in my book list in the sidebar) I realized that I subscribed firmly to two or three each of the economic fallacies of the left and of the right (I am politically a moderate in the center, so can be deluded equally by either side). I am now having to rethink those positions as a result of Heath's arguments. I can take some comfort in the fact that many prominent economists, politicians, and even a few Nobel prize winners have been and still are deluded by the same logical fallacies, and since I have no political or academic reputation to defend in the field, I have the luxury of simply admitting I was wrong and changing my views.

Recommended: Economics Without Illusions: Debunking the Myths of Modern Capitalism

2011-08-29T19:02:00.001-05:00

Joseph Heath, author of Economics Without Illusions, is not an economist, as he readily admits. He is a philosophy professor at the University of Toronto. He approaches economics from the point of view of understanding whether the common arguments made by economists and those who supposedly interpret economists (like politicians and journalists) are logically valid or sustainable. Heath is an equal-opportunity critic. The book is divided into two parts of about equal length: the fallacies of the right and the fallacies of the left. And there are a lot of each. This is an important book to read, because a lot of these fallacies are driving the agendas of the conservatives and liberals today, to the great detriment of the nation.

Recommended: Special Providence

2011-08-24T14:18:00.000-05:00

I just read and highly recommend Walter Russell Mead's 2001 book Special Providence: American Foreign Policy and How it Changed the World

Mead’s central argument in this book, well supported by his historical review, is that despite the conventional wisdom that America didn’t even have a foreign policy until World War II, and has been largely inept ever since, actually America has had an active foreign policy since its inception, and in general our foreign policy has been far wiser and far more effective that most other nations, from following our “Manifest Destiny” to sweep across the continent and unite the whole land into one nation (think how much less powerful we would be if what is now America were still divided up into separate Spanish and French and English and American nations) to our maneuvering in World War II that left us a superpower. As Mead argues, America’s foreign policy has shaped today’s world, and in general it has shaped it better than competing nations would have shaped it.

Recommended: Jobs Program? Here Are 3 Essential Ingredients

2011-08-19T14:51:00.000-05:00

Jonathan Cohn in The New Republic has a piece Jobs Program? Here Are 3 Essential Ingredients that is worth reading. His three points -- make it big enough, do it soon enough, and be smart about how we do it -- make sense to me. Whether our polarized, ideology-driven (both Republican and Democrat) political machine in Washington can manage to do any of those three things is a real question, though.

A naïve administration

2011-08-18T10:24:00.001-05:00

We are now in the fifth month of supporting the rebels in Libya, and the fighting and bombing continues with no end in sight. Recall that on March 18 President Obama assured Congress that American involvement in Libya would be a matter of "days, not weeks", yet five months later we are still supplying substantial and expensive support (fuel, munitions, logistics, intelligence, air refueling, etc) to NATO forces.

Recall also that then-Secretary Gates and several of his top generals warned the administration in public that this would not be so easy, but were pointedly ignored by the White House. That "days, not weeks" estimate by Obama looks pretty naïve now.

Recommended; Obama’s Best Hope for Reelection

2011-08-17T12:14:00.000-05:00

There is an interesting post over on The Daily Beast by Michael Tomasky, Obama's Best Hope for Reelection. Tomasky, a liberal, notes that the constitutionality of the individual mandate in ObamaCare will no doubt be resolved by the Supreme Court just before the next election. He certainly hopes the Supreme Court upholds ObamaCare and doesn't declare it unconstitutional, and he acknowledges that if it is overturned, it would reflect poorly on Obama just before the election.

But he ponders what the effect will be if the Supreme Court upholds the law. He wonders whether that wouldn't infuriate and energize the conservative movement so much that it would assure Obama's defeat. This is an interesting speculation. Obama in particular and Democrats in general may do better in the next election if the law isn't upheld than if it is.

Recommended: Rick Perry and Texas Job Numbers

2011-08-17T10:35:00.002-05:00

Governor Perry has entered the presidential primary race, and considering that Texas has produced half of all the new jobs created since this recession started, he has a bit of credibility among fiscal conservatives. The rest of the nation is still depressed, and Texas is booming!

Naturally enough, all sorts of pundits, especially liberal ones, are trying to spin this fact in some way which makes their own side look better, and as a result there have been a lot of unsubstantiated claims that these numbers aren't really so impressive.

To the rescue comes the site PoliticalMath with a well-researched piece Rick Perry and Texas Job Numbers, with a refreshingly original approach -- LET'S LOOK AT THE DATA!

I'm not enamored of Governor Perry for president for other reasons, but it seems to me one has to take seriously the success of Texas's small-government, low-taxes, minimal-regulation approach. It is working, and whatever we are doing in the rest of the nation isn't.

On Day 938 of his presidency, Obama says he'll have a jobs plan in a month or so

2011-08-17T10:19:00.000-05:00

Andrew Malcolm has a piece in today's Los Angeles Times whose title says it all: On Day 938 of his presidency, Obama says he'll have a jobs plan in a month or so The piece is worth reading, but in fact the main point is in the title, and it is right on!

President Obama's major tactical error thus far has been to waste time and political capital on ideological issues dear to liberal hearts (like universal health care), rather than focus from day one on restoring the economy and getting people back to work.

Conventional Wisdom is Wrong Again

2011-08-13T19:10:00.001-05:00

It is amazing how many things that we Americans believe turn out not to be true. For example, everyone "knows" that stuff made in China is taking over the marketplace, presumably destroying American businesses and jobs. So read the article today in the Los Angeles Times entitled Sticker shock: 'Made in China' ranks only 2.7% of U.S. spending

Yup, according to a recent government survey, only about 2.7% of US personal consumption spending went to "made in China" products. And even for those items that were made in China, perhaps half or more of what a consumer paid went to US services (trucking costs, merchandising costs, advertising, etc.).

So much for "conventional wisdom". I wonder how many other things we all believe are also wrong...........

Reality

2011-08-13T13:18:00.003-05:00

Here is the fundamental reality that dooms liberal's long-term chances of turning America into a European-style socialist democracy, however hard they try, whomever they manage to elect as President, whichever parts of Congress they may temporarily control:

As this long-term trend from the Gallup Poll shows, the nation is overwhelmingly center-right (40% conservative and 35% moderate) and has been for as long as they have asked the question. In the face of this, left-wing socialist plans are always going to meet stiff opposition, as they have with this administration.

Liberal pundits and politicians can talk about conservative "extremists" and "neanderthals" and "terrorists" all they like, and it won't change the underlying political preferences of the nation. Some moderately "socialist" policies have been successfully established, like Social Security and Medicare, and the nation has tolerated, even supported those as long as times were good and money was easy. Now that the crunch is coming, however, the underlying political nature of the country will almost certainly prevail. It is an unpleasant reality for liberals, but it is the reality.

The ObamaCare Appeals Court ruling

2011-08-13T12:37:00.005-05:00

The 11th Circuit Court of Appeals issued an important decision yesterday in the case originally brought by 26 states against the ObamaCare bill. They ruled 2-1 that the “individual mandate” was unconstitutional. That is the part of President Obama’s health care bill that REQUIRES everyone in the nation to buy health insurance. Lower courts have split on this issue, and this is the first case to reach the appeals courts.

This is an important ruling because the majority argued the mandate is a new power, not Constitutionally based, that Congress has arrogated to itself by trying to stretch the “regulation of interstate commerce” clause of the Constitution to cover health care, arguing that it is a form of interstate commerce even if the insurance company and the buyer are all in the same state. As the state’s attorneys argued, if Congress can force everyone to buy private health insurance under this clause, is there ANYTHING Congress can’t force people to do? By the same argument, we could all be forced by federal law to enroll in a gym or eat broccoli if the majority in some future Congress thought it would be good for us.

The appeals court ruling makes it certain this case will now move on the Supreme Court, and although it is never certain how the Supreme Court will view a case, and how the individual justices will vote, I think the odds are that they will uphold the appellate court ruling.

If the Supreme Court upholds the appellate court’s decision it will bring up an interesting question. Congress in its haste to ram through the bill neglected to include a standard “severance” clause – legal language that says if any part of the law is invalidated by the courts the rest of the law still stands. Without this clause, it can be argued that invalidating any part of the law invalidates all of it.

Moreover, it is not clear that the law can work as intended without the individual mandate. If participation is voluntary, many young healthy people will elect not to buy insurance, as they do now. That means the pool of people covered will have a disproportionate number of chronically ill people, which will push the costs up sharply. Since Medicare is already on the way to bankrupting the nation, these added costs are simply unsustainable.

It will be interesting to see how this all comes out. And of course if in the end ObamaCare is ruled unconstitutional (as I think it probably should be, however noble its intentions), it will probably be a major blow to President Obama’s re-election chances.

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Correction: this is not the first ObamaCare challenge to reach the appeal level. At the end of July a three judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati ruled on another ObamaCare challenge, and essentially supported the constitutionality of the law, but with many disagreements among the three judges. In addition, somewhat different issues were raised in this case. In essence the court is this case ruled that the Constitution does not forbid regulation of “inactivity”, which seems to me a bit of a stretch.

Recommended: The System Works

2011-08-12T10:55:00.000-05:00

Charles Krauthammer has a thought-provoking piece today in the National Review Online site: The System Works. While the talking heads all bemoan how dysfunctional the government seems to be, he argues it is working just the way a democracy should work. Yes, it is noisy and messy and slow, but, he argues, the creators of our government system meant it to be slow to change, so that it wouldn't be constantly buffeted by the fads of the day.

He views the issue from a right-wing perspective, of course, but nonetheless I think he has a valid point. Beginning to attack the debt and deficit problem in the debt ceiling debate was driven, not by an extremist few, as the liberals keep claiming, but by a widespread consensus in the nation that we are too much in debt. But, as he points out, the Republicans shouldn't have won a massive cut in that negotiation, because the nation hasn't yet entrusted them with the whole Congress.

Massive change in our government policies, he argues, SHOULD be slow and subject to intense national debate. So when the Obama administration sought to make a massive change in ObamaCare, it SHOULD have been debated loudly and widely, and it was and still is. Messy, yes, but far better than an autocratic imposition of change without debate.

An interesting set of charts

2011-08-09T17:08:00.001-05:00

Here are an interesting set of charts from the New York Times and Boston Globe. As they show, Obama certainly hasn't helped the debt, but he isn't the cause of most of it:

Recommended: When a Cut is not a Cut

2011-08-09T15:26:00.000-05:00

Representative Ron Paul (R-Texas) is considered a crazy man by the liberals, because he actually believes the government ought to live within its means (imagine that!), and not spend more than it takes in, and not continue to push the national debt up into the default zone -- among liberals in Washington this is apparently just plain outrageous!!! He has written a piece in The Hill which is pretty clear and simple: When a Cut is Not a Cut.

As he points out, nobody cut anything in this latest debt ceiling deal -- all they did was agree to slow the GROWTH in government spending by an imperceptible amount. As the chart below shows, under the Obama administration annual government spending has risen sharply to almost a quarter of the entire nation's GDP.

Funny, I don't find Ryan's position outrageous; it seems to me just plain common sense. What I do find outrageous is the administration's position that we should just keep increasing spending, irrespective of the debt or the looming fiscal crisis from entitlements.

Recommended: The Real Budget Deal

2011-08-09T09:59:00.000-05:00

Robert Samuelson has an interesting article over on the RealClearPolitics site: The Real Budget Deal. He argues (a) that the deal will make hardly any difference to either the economy or the debt, and (b) that although the Republicans won (for the moment) on the "no new taxes" issue, the liberals actually won far more by protecting their entitlement programs from any cuts. Of course, if one removes the entitlements from the equation, all the cuts have to come from defense and discretionary spending, which is all that is left. It is an interesting perspective, and more thoughtful than most of what has been written on either side of the political divide in the past few days.

Obama hates the Tea Party – but he created it!

2011-08-08T21:42:00.001-05:00

Humans seem to have a very short memory, for which politicians must give thanks every day. President Obama, and the liberal elite who follow him, are furious at the Tea Party movement because those “terrorists” and “extortionists” have dared to oppose his policies.

Strange, the Tea Party never existed until the Obama administration came to power, with majorities in both houses of Congress, and began to do things like ram ObamaCare through Congress, and bail out feckless Wall Street banks and their wealthy CEOs with taxpayer money.

The Tea Party started with a widely-publicized rant in February 2009 on the stock exchange floor by CNBC reporter Rick Santelli, who was furious that the Obama administration proposed to “subsidize the losers” in the mortgage market with the taxes of the rest of us, who had been more prudent. That rant apparently fired up a lot of people who were seething just as Santelli was, and who subsequently formed Tea Party groups all over the nation and eventually elected a number of new members to the House.

Obama’s two major mistakes to date have been (a) to waste time and political capital on ramming the health care bill through when he should have been focused exclusively on jobs and the economy, and (b) to fail to understand that while he personally may be one of the liberal elite, the majority of the nation is center-right and can only be pushed so far to the left before they will revolt.

In effect, the Tea Party exists simply as a reaction to Obama’s own policies. A wise politician, like Bill Clinton, would have read the tea leaves (no pun intended) and known that it was time to tack to the center a bit and try to co-opt the Republican’s issues. But Obama apparently isn’t as smart as Clinton was.

Now, as the stock market crashes and the economy teeters on the edge of a double-dip recession, what President Obama needs to do is something he has failed to do thus far – show some leadership. Today’s speech, blaming the ratings agencies and castigating the Tea Party but proposing nothing to deal with the real problems, wasn’t leadership.

This may be the defining moment for Obama’s presidency. If he doesn’t come out forcefully as a leader in the next few days, if he doesn’t propose some dramatic steps to deal with the crisis, if he just keeps trying to score political points by blaming others and ignoring the underlying issues, he is probably about to become a one-term president in the Jimmy Carter mold.

This will be his test.

Some perspective

2011-08-08T15:37:00.002-05:00

This is not an easy time. The stock market is plummeting today, partly because of the credit downrating, but probably more because investors see no light at the end of the tunnel for either the US fiscal problems or the European fiscal crisis, and because the US economy is showing almost no growth.

Congress is on vacation, just when they ought to be hard at work. The administration is busy trying to shoot the messenger (the rating agencies) instead of dealing with the issue. The liberal pundits and columnists are blaming the whole mess on the Tea Party (as if they were the whole cause of the $14 trillion debt), while the conservative pundits and columnists are blaming the Democrats (as if it was they who launched expensive wars in Iraq and Afghanistan without raising taxes to pay for them). Everyone is pointing fingers and trying desperately to spin the situation to their political advantage – nobody in power that I see seems to be trying to figure out how to improve the situation.

On the other hand, despite all these problems, the USA remains the world’s sole superpower. Our treasury notes are still, even today, where investors put their money when they need safety. American values and culture still pervade the entire world and are the most influential forces around, from the Arab spring to the hinterlands of China. American innovation still drives the world’s markets, and overwhelming American military power assures that no other nation is a real threat to us. Americans still have a higher standard of living, better education, and more consumer choices than almost anywhere else in the world.

So it isn’t really a time for gloom and pessimism, but it is time for some sensible heads to begin to figure out what fundamental things have to change to get us out of this mess.

It seems to me that a sensible solution might look something like this:

1) Fix Congress. The Senate, in particular, is almost non-functional.

I suggest first of all term limits for both House and Senate. Something like a maximum of two terms (12 years) in the Senate (whether consecutive or not) and five terms (10 years) in the House (whether consecutive or not). That would shake things up and get rid of those politicians who have comfortably ensconced themselves in a lifetime job.

Second, get rid of gerrymandering districts, so that neither party has “safe” House seats. Do what a few states have already done – assign the task of redrawing Congressional districts to non-partisan citizens groups, rather than to the political party that happens to be in power.

2) Shift budget priorities. Put less toward supporting the improvident and irresponsible and more toward supporting our best and brightest. The future of this nation lies with the best and brightest of our children, not with the aged (including me), infirm, irresponsible and poor. It may seem morally right (and politically expedient) to help the less able now, but it is irresponsible and downright stupid to jeopardize the nation’s future by neglecting the bright young people who will be the innovators, producers, entrepreneurs and leaders of tomorrow.

Reduce the money spent on entitlements (yes, yes, it will be a fight, but it needs to be done), and shift some of that money to investments that make the economy more productive in the future (things like infrastructure, research and development, innovation, and education).

Find every bright young person in the country and ensure that they get as much education and training as they want and can absorb, regardless of their means.

Support affordable on-line colleges and universities and training and certification programs, so that anyone in the country can train themselves in a useful occupation, mostly at home, without it costing a fortune. It is outrageous that students have to accumulate tens or hundreds of thousands of dollars in student loans just to get a college degree that (may possibly) get them a good job.

Rethink the whole military system. We would be smart to keep an overwhelming military force, but that doesn’t mean we have to buy every gold-plated weapons system offered. Invest in efficient future systems, not old Cold- War systems. For example, replace manned fighters (the new F-35 costs about $75 million each) with unmanned drone fighters (about $2-3 million each), which can withstand g-forces in a turn that no human pilot could withstand. Competent experts (who are not in the employ of defense contractors) estimate that we could trim $1 trillion out of the military budget over the next 10 years without affecting the quality of our military.

3) Reform and simplify the tax code. It is currently 3,458 pages long, and costs individuals and companies billion of dollars in accountants and tax lawyers just to comply (or evade). It also has billions of dollars a year in tax exemptions and tax credits for special interests.

Eliminate ALL tax exemptions (include home mortgage exemptions) for individuals and corporations.

Reduce tax rates (which are now real rates, since all the exemptions are gone) to be competitive with the rest of the world.

4) Forbid public unions. There was, and may still be, a valid argument for workers in private firms to unionize and bargain collectively, so that greedy corporations won’t exploit their workers. There is no such argument for public workers to unionize because they don’t work for profit-making corporations, but for the taxpayers. Public unions inevitably get into incestuous relationships with the politicians who set their pay and benefits, in return for union support.

This is my starting list. The reader can probably think of additional items to add. But it will take some fundamental changes like these to get us out of this mess, not just tinkering around the edges like Congress and the administration have been doing to date.

Recommended: Getting Bin Laden

2011-08-07T19:43:00.001-05:00

There is a fascinating article in this month's New Yorker Magazine by Nicholas Schmidle, entitled Getting Bin Laden. It is well worth reading.

Is this a Democratic setup?

2011-08-06T22:01:00.001-05:00

I have been puzzling for days about why the Democrats seem to be in complete denial about the federal deficit and debt. Democratic politicians are smart people. Even though most are lawyers, they must by now have read and understood some of the hundreds of studies that have detailed the looming fiscal crisis from entitlements and the soaring debt. I can't believe they don't see the handwriting on the wall just as well as the rest of us. But they have yet to produce even a draft plan or proposal for tackling this problem.

But it has just occurred to me that perhaps there is a shrewd political reason for this.

Any credible plan to reduce the deficit and deal with the entitlement crisis is going to require drastic cuts in services, and is going to be highly unpopular with the public. The public are all for cutting the deficit, as long as all the cuts are to other people's entitlements and contracts and jobs and none of their own entitlements or contracts or jobs are touched!

Eventually (perhaps as early as the next election) Republicans will be back in the majority and will hold the Presidency. Why not just kick the can down the road some more and try to be sure the Republicans are in power when the government is finally forced to make the unpopular cuts? That way the Republicans will get the blame, and even perhaps be forced out of power for an extended period as a result.

This would be lousy, even irresponsible, statesmanship. But it might be smart politics.

Perhaps I am seeing too much of a conspiracy here. Perhaps I am attributing too much shrewdness and foresight to the Democrats. But I do wonder..... what other explanation can there be for their apparent total denial of the problem?

There are jobs and then there are JOBS.

2011-08-06T21:38:00.001-05:00

One issue that seems to be completely overlooked in the current debate about jobs is that all jobs are not alike. In particular, there are jobs that add wealth to the economy and jobs that don't add wealth to the economy. Both kinds of jobs give people wages, and therefor increase demand, which is healthy for the economy in the short term. But only some kinds of jobs actually add wealth to the economy.

In particular, jobs which actually produce something tangible or produce innovations that in the end produce something tangible add wealth to the economy. This includes farmers, production line workers, designers, writers, scientists and engineers, innovators, entrepreneurs, etc. These are people who actually produce something tangible that can be sold and/or exported at a profit. And their activities often produce yet more jobs in the economy.

Then there is a second tier of people who support these primary producers. They may not produce anything themselves, but their activities enable the primary producers to produce. This includes medical staff, educators at all levels, people who handle logistics, car mechanics, people who run restaurants or or supermarkets or other essential services, utility workers, truck drivers, etc.

Finally there is a third tier of people whose activities may be essential to the operation of the system, but who actually represent a cost (even if a necessary cost) rather than a source of wealth to the economy. This includes managers at all levels, lawyers, accountants, bankers, politicians and government bureaucrats. None of these people produce anything that actually increases the economy's wealth (though their activities may enrich themselves). The economy actually needs the services of these people (for the most part), but one wants as few of them as possible, because they represent a cost of production rather than a source of revenue.

Finally there is a fourth tier who contribution to the economy (as opposed to their own pockets) is highly questionable. This includes overpaid CEOs and senior managers, financial traders and bankers who deal only in paper wealth, and of course the Berny Mardoffs of the world.

Now what the economy badly needs is far more of the first tier, some more of the second tier, as few as possible of the third tier, and none of the four tier. Unfortunately, we seem to have just the reverse -- fewer people actually producing something tangible and salable and lots of people spending their lives making fortunes for themselves trading intangibles like default swaps among themselves, or sitting in a government office somewhere shuffling paper.

Now the question is, just what kind of jobs can government "stimulus" produce? My guess is that, at least under current political approaches, it produces far too few of the first tier jobs, and far too many of the third and fourth tier jobs.

The Rabid Left

2011-08-06T10:20:00.003-05:00

Neither the liberals nor the conservatives have been particularly civil to each other during the past few years (recall Nancy Pelosi calling the Republicans "Irrelevant" during the push to get the ObamacCare bill through), but the language of the left in the past few days over the Debt Ceiling bill has turned positively pathological. Several commentators have noted that the liberal elites are apoplectic that they have "lost", and simply can't come to terms with the fact that the whole nation doesn't agree with their obviously superior thinking.

For example, Robert Tracinski very effectively dissects Paul Krugman's latest outburst in his piece The Peculiar Madness of Paul Krugman. Charles Lane in the August 3 Washington Post has a piece, Liberals in Denial About Their Own Incivility, which notes that, although they are quick to call the Tea Party on any "uncivil" language, they seem blind to their own incivility.

A review of the posts from the major liberal pundits and "talking heads" over the past few days reveals a torrent of invective toward Republicans and especially the Tea Party caucus (terrorists, extortionists, jihadists, madmen, Satan sandwich, crap sandwich, irresponsible, stupid, unpatriotic, etc, etc) and not a single serious suggestion about how better to deal with the debt problem.

It is not an attitude likely to win over an independent voter like myself.

As Predicted - the Credit Downgrade

2011-08-06T09:44:00.001-05:00

From the New York Times today:

WASHINGTON — Standard & Poor’s removed the United States government from its list of risk-free borrowers for the first time on Friday night, a downgrade that is freighted with symbolic significance but carries few clear financial implications.

The company, one of three major agencies that offer advice to investors in debt securities, said it was cutting its rating of long-term federal debt to AA+, one notch below the top grade of AAA. It described the decision as a judgment about the nation’s leaders, writing that “the gulf between the political parties” had reduced its confidence in the government’s ability to manage its finances.

This was inevitable, of course, since the government has STILL not made much progress in cutting our massive federal deficit each year. The debt ceiling agreement made little difference (an after-the-fact analysis earlier this week showed that a large part of the so-called "cuts" were just accounting tricks), and the administration has yet to present even a draft plan for reducing the long term deficit. The Republicans produced a plan (the Ryan plan) many months ago, and although liberals attacked it savagely, they have yet to produce any plan of their own in response. The President's own commission (National Commission on Fiscal Responsibility and Reform, sometimes called the Simpson-Bowles commission) produced a plan months ago, and the President has pointedly ignored all of its recommendations.

So I agree with S&P - the US debt deserves to be downgraded unless and until the administration comes up with a viable plan to reduce the deficit and the debt.

A Picture of the Next Election

2011-08-05T21:19:00.000-05:00

The following graph, from the Calculated Risk Blog today, summaries quite clearly the main, perhaps the only, factor in the upcoming Presidential election:

It shows the unemployment figures for all the recessions since World War II ended. The red line is the current recession, and the message is simple - years after the start of the recession, jobs still aren't coming back. This will be the dominant issue in the upcoming elections -- not debt, not foreign policy, not even the Middle East wars - but jobs, jobs, jobs.