Coyote Blog

I love the convenience of having my photos online and share-able, and especially having them backed up automatically as I take them, but the problem is that all the major sites seem to have a dream of being the last internet site standing, and want to keep all your photos in their little universe.  Shutterfly, Facebook, Google, Flickr -- they tend to only allow sharing within their little universe (though I am hoping for good things from Google peeling photos out of Google Plus).

Basically, sending your photos to these sites is a bit like sending someone to North Korea - they go in but never come out.  Someone just shared a shutterfly album with me and God forbid you want to actually save some of the full-resolution images rather than just buy prints from them.  At best these sites have some kludgy way to download full resolution photos one at a time, but it is never, ever easy and none have, as far as I have been able to see, a batch download function.  Flickr is the best in several ways due to its API that lets me automatically share albums and photos pretty easily in WordPress, but its core interface is now so ugly with the revamp a few years ago that I can barely stand to open it (and they tend to change names for the same damn thing - set, album, collection, etc - depending on which menu or context you find it).

I know I have been warning about a Chinese recession/depression for a while, but it takes a while (and still will take some time) for this disaster to play out.  But the warning signs are all there.  This article today in the WSJ is a great example.  

A little over a year ago, a Chinese credit agency downgraded a government-owned financing company in this dusty industrial city. Default—nearly unheard-of in China on government bonds—was a possibility, it said.

But during discussions with lenders, city officials made sure Wuhan Urban Construction Investment & Development Corp. could keep borrowing, officials with knowledge of the matter say. The city during those discussions said it backed the finance firm, essentially guaranteeing the debt, and helped the company restructure its assets to entice investors to lend more.

Borrowing by firms like Wuhan Urban is a big reason China’s debt load is expanding. The International Monetary Fund says China’s debt is growing more rapidly than debt in Japan, South Korea and the U.S. did before they tumbled into deep recessions. Local-government borrowing is responsible for one-fourth of the buildup in China’s overall domestic debt since 2008....

Even before its latest step, Beijing had put forward plans to slow local-borrowing growth. But China’s local governments have a surprising ability to resist policies. Another central-government priority—reducing excess production in steel, cement and other industries—has foundered due to local opposition.

“The guys running local government financing operations won’t roll over and die,” says Fraser Howie, co-author of “Red Capitalism,” a study of China’s financial system. “These companies take on a life of their own.”

Perhaps we should call this the looming Thomas Friedman recession, as China goes bankrupt doing exactly what Friedman admires - building more and more infrastructure and then taking out debt and building even more.

There is absolutely no reason to believe, as folks like Friedman do, that this investment in infrastructure automatically has a positive return, and in fact there are a lot of reasons to think it does not (ie gluts of housing and basic materials).  As I have written before, like light rail spending in the US, these infrastructure investments pay their benefits mostly in prestige to local government officials and rents for politically connected contractors and government workers and not in real returns to future economic growth.

I tend to accept the Austrian theory of recessions, which I would simplify (perhaps inaccurately) as mis-allocation of capital and labor investments leading to economic downturns as the economy restructures.  The longer the reckoning is put off, the worse the recession.   These mis-allocations can sometimes be due to private causes (e.g. over-euphoric investments in early Internet companies in the late 1990's) but they often have public causes (e.g. artificially low interest rates or government programs to promote investment in a single industry like, say, housing).

I am convinced this is what brought down Japan -- after years of admiration for Japan, inc. and MITI economic management, it turns out the government had directed all capital into a few export manufacturing industries, while continuing to protect retail and agriculture locally from any real change or competition.  Which is why 25 years of government directed deficit spending has not fixed the recession -- it just doubles down on the original cause.  For those of you too young to remember, the Friedman-types of the world were all praising Japan to the hilt in the late 80's as the model we should all be following.  People like this don't admit error, they simply shut up about Japan and started praising the same behaviors in China.

The same reckoning is coming to China.  Probably not this year or the next, but within the next 5 years almost for sure.  It is 1928 in China.

Postscript:  By 1928, I mean a year of apparent prosperity before the Great Depression in 1929.  I am not referring to the nominal reunification of China or start of the "republic" under Chiang Kai-shek.

I have little tolerance for enforced patriotism of any sort.  In fact, having loyalty oaths and singing songs and genuflecting to flags all seem more consistent with totalitarianism than the values of liberty that patriots are nominally trying to promote.  If I were rotting in a crappy Phoenix jail for being caught with marijuana or busted for driving while Mexican, I would be even less patriotic

Dozens of Arizona inmates will eat nothing but bread and water for at least seven days in the latest punishment by one of America's toughest sheriffs.

Maricopa County Sheriff Joe Arpaio handed down the sentence after inmates defaced American flags hung in each jail cell. He says the men tore the flags, wrote or stepped on them and threw them in the toilet.

The flags are part of a push for patriotism in county jail cells. Arpaio has ordered thatGod Bless America and the national anthem be played daily in every jail facility.

This isn't Arpaio's first controversial move. He made headlines for keeping thousands of inmates outdoors in repurposed military tents in weather that was hotter than 117 degrees. He also made male inmates wear pink underwear.

He banned smoking, coffee and movies in all jails. And he's even put his stamp on mealtime. Inmates are fed only twice a day, and he stopped serving salt and pepper – all to save taxpayers money, he says.

The American Studies Association has voted to initiate an academic boycott of Israel ostensibly to protest its denial of civil rights to Palestinians in the occupied territories.   Forgetting for a moment Israel's unique security concerns (what would the US do if Mexico routinely lobbed rockets and artillery shells into US border towns), the implication is that the Palestinians in Israels have it worse than any other group in the world, since this is the first and only such boycott the ASA has ever entered into.  Is it really worse to be a Palestinian in Israel than, say, a woman anywhere in the Arab world** or about anyone in North Korea?  Do academics in Cuba have more ability to write honestly than they do in Israel?  I doubt it.

The only statement the ASA makes on the subject that I can find is in their FAQ on the boycott

7) Does the boycott resolution unfairly single out Israel? After all there are many unjust states in the world.

The boycott resolution responds to a request from the Palestinian people, including Palestinian academics and students, to act in solidarity. Because the U.S. contributes materially to the Israeli occupation, through significant financial and military aid - and, as such, is an important ally of the Israeli state - and because the occupation daily confiscates Palestinian land and devastates Palestinian lives, it is urgent to act now.

A couple of thoughts.  First, I am not sure why US material aid is relevant to choosing a boycott target.  I suppose the implication is that this boycott is aimed more at the US than at Israel itself.  But the question still stands as to why countries like Saudi Arabia, which receives a lot of US material aid as well, get a pass.  Second, the fact that Palestinian academics can seek international help tends to disprove that their situation is really the worst in the world.  I don't think the fact that the ASA is not hearing cries for help from liberal-minded academics in North Korea means that there is less of a problem in North Korea.  It means there is more of a problem.

I am not a student of anti-semitism, so I can't comment on how much it may explain this decision.  However, I think it is perfectly possible to explain the ASA's actions without resorting to anti-semitism as an explanation.  As background, remember that it is important for their social standing and prestige for liberal academics to take public positions to help the downtrodden in other countries.  This is fine -- not a bad incentive system to feel social pressure to speak out against injustice.  But the problem is that most sources of injustice are all either a) Leftish regimes the Left hesitates to criticize for ideological reasons or b) Islamic countries that the left hesitates to criticize because they have invested so much in calling conservatives Islamophobic.

So these leftish academics have a need to criticize, but feel constrained to only strongly criticizing center-right or right regimes.  The problem is that most of these are gone.  Allende, the Shah, Franco, South Africa -- all gone or changed.  All that's left is Israel (which is odd because it is actually fairly socialist but for some reason never treated as such by the Left).  So if we consider the universe of appropriate targets -- countries with civil rights and minority rights issues that are not leftish or socialist governments and not Islamic, then the ASA has been perfectly consistent, targeting every single country in that universe.

** To this day I am amazed how little heat the gender apartheid in the Arab world generates in the West in comparison to race apartheid in South Africa.  I am not an expert on either, but from what I have read I believe it is a true statement to say that blacks in apartheid South Africa had more freedom than women have today in Saudi Arabia.  Thoughts?

Update:  I twice emailed the ASA for a list of other countries or groups they have boycotted and twice got a blurb justifying why Israel was selected but with no direct answer to my question.  I guess I will take that as confirmation this is the first and only country they have ever targeted.  They did want to emphasize that the reason Israel was selected (I presume vs. other countries but they did not word it thus) had a lot to do with he fact that Israel was the number one recipient of US aid money (mostly military) and that it was this American connection given they represent American studies professors that made the difference.  Why Pakistan or Afghanistan, who treat their women far worse than Israel treats Palestinians, and which receive a lot of US aid, were not selected or considered or mentioned is not explained.  Basically, I would explain it thus:  "all the cool kids are doing it, and we determined that to remain among the cool kids we needed to do it too".  This is a prestige and signalling exercise, and it makes a lot more sense in that context, because then one can ask about the preferences of those to whom they are signalling, rather than try to figure out why Israel is somehow the worst human rights offender in the world.

By the way, by the ASA logic, it should be perfectly reasonable, even necessary, for European academic institutions to boycott US academic institutions because the US government gives aid to such a bad country like Israel.  This seems like it would be unfair to US academics who may even disagree with US policy, but no more unfair than to Israeli academics who are being punished for their government's policies.   I wonder how US academics would feel about being boycotted from European events and scholarship over US government policy?

I am not sure the exact date it started, but our embargo on Cuba is over fifty years old.  At what point do we declare failure?

Sure, the communists and Castro and Che Guevara all suck.  But how much longer are we going to punish Cuba's leaders by making their citizens miserable?  History has shown that communist countries become less communist by interacting with the (quasi) capitalist democracies.  The most stable dictatorships (think North Korea) are those who are the most obsessive in masking alternatives from their citizens.  How much longer are we going to continue doing the Castros' work for them?

Open up our relations with Cuba, not because they have somehow gotten better or deserve our respect but because this is the only way they are going to get better.

I had thought that post-9/11 and with the very visible object lesson of TSA security theater that this would have already been understood, but I will repeat it:  There are no security steps that we are willing to tolerate as a free society that would make it impossible, or even substantially more difficult, for a motivated deranged person to shoot up an elementary school.

Promises by politicians up to and including the President to take "steps" to improve safety are illusory.  What we will get, if anything, will be incremental steps that will hassle law-abiding citizens (think: taking your shoes off at the airport and not using your iPad during takeoffs) without doing anything to deter actual criminals.  In particular, any honest and knowledgeable security person will tell you that there is no realistic way, short perhaps of turning ourselves into North Korea, of stopping a killer who is determined to die as part of his crime.

After several more days and locations (Florence, Cinqueterre via Portovenere) I am left with one question:  Why is it that even supposedly elegant European hotels charging many hundreds of Euros a night for a room are oblivious to the quality of their beds?  I am getting tired of paying tons of cash for rooms with bed linens whose quality is measured in "grit" rather than "threadcount."  The beds are uncomfortable and the pillows are awful.   The blankets are sick polyester jokes that Motel 6 would be embarrassed to offer.  For the price of just one night's room rent I could go to IKEA and outfit the rooms better.  It's not like I am some spoiled princess-and-the-pea sleeper -- I stay in a lot of cheap hotels and I tent camp, for god sakes.  My camping equipment is more comfortable than these beds.  I routinely stay in $70 hotels in the US and never get beds or linens this bad.  Do they not care, or is this what Europeans all sleep on at home?

OK, rant over.  Florence was as great as it always is.  There is way too much stuff to do there ever to get bored, all within just a few minutes walking.   Unlike past visits, we entirely skipped the Uffizi and hit a lot of historic buildings we had missed before (e.g. Medici Palace).  I enjoyed it but if you are on your first visit, the Uffizi is a must.  Also saw a bit of above-average engineering, like this:

Seriously, I wonder if I could have -- without a)  any kind of materials strength data base; b) no structural steel or modern concrete; c) no CAD facility -- designed and built such a thing in the 1400s, even with the Pantheon as a go-by to copy.  Really remarkable.

In Florence, there is a famous bridge called the Ponte Vecchio which is actually covered in buildings:

You can't tell from this picture, but the bridge (open only to pedestrian traffic) is lined with at least 40 jewelry stores.  Seriously, each storefront has bout 6 feet of space, and every one had a window with zillions of gold trinkets.  It got me thinking about the paradox of choice.  It's not hard to buy into the economic theory that too much choice may inhibit purchase while walking along this bridge, though I am told most of these folks do very well (I have never bought into the paradox of choice as social theory -- the one that says people would be happier with fewer choices.  If this were true, we would all be emigrating to North Korea).

Speaking of pedestrian streets, one important takeaway from Italy has been that one should never assume a road is too narrow, even if it is no wider than your pantry door, for a vehicle to come racing through any second.  The other day I was in a really narrow alley I thought was foot-traffic-only when a bus(!) came screaming down the lane like a piston through a cylinder.  Only a well-located doorway got me out of the way, and even then the bus's mirror clipped my arm.

The last few days we have been staying at the port town of Portovenere on the Italian Riviera.

The town itself is attractive with a fair amount to explore for its size.  I experimented some with night photography from my room

I have some other exposures that I want to try with HDR software to try to bring out a bit more of the buildings.   The town was kind of fun on a Saturday night -- in addition to a couple of rowdy weddings, there were also a lot of BIG boats that came in for dinner in the evening.  Very nice (except for my bed).

Portovenere is a convenient gateway to the Cinqueterre, five absurdly picturesque downs laid down in about 1100 AD by Walt Disney to attract American tourists.  You may have not heard their names, but you have likely seen one or all of them the last time you were at an art fair in one of the photo exhibits -- here is one example (though they had the patience to wait for a time of day where the lighting was better, presumably in the early morning).

More than the towns, I enjoyed the walking trail in between, which is an attraction in and of itself.  It winds through wilderness and vineyards along the coast.  All through the vineyards I kept seeing what looked like a guide rail for some sort of gear-driven device.  The rail wound up and down the hills and through the vineyards.  I had assumed that it was some sort of irrigation system where the sprinkler moved along the rail (though I could not figure out how the water supply would work).  Then I found this absolutely awesome piece of steampunk-style tech:

It is hard to tell, but its a little one-person monorail that rides on the rail and pulls a couple of carts behind the "engine."  This is why I could not find any roads or really many trails in the vineyards -- they use these cool things to move about, do maintenance, and bring in the crop presumably.  And the rail does not run on the ground, but 4-5 feet in the air, so one can see over all the vines and brush.  Totally awesome.  And not a seatbelt to be found on it, which made me love it all the more.   I loved it so much, here is another shot head-on (sorry it is overexposed, I don't have the energy to edit it right now).

Of all the foreign policy analysts in the world, I am probably in the bottom quartile.  Or decile.  So take this for what its worth.

We have heard rumors for months, even years, that the internal situation in North Korea is desperate, or more accurately even more FUBAR'd than usual.  There have even been hints of open popular opposition to the government, definitely an unusual occurrence.  I look at the attack on the South Korean ship in the context of domestic problems.  This was Kim's "wag the dog" response.  The classic totalitarian response to domestic problems is to seek out distracting foreign adventures.  I think what we may be learning is that the domestic situation is even worse than has been supposed.

Discuss.

A number of folks, including myself but more prominently Megan McArdle, have argued that a big problem with nationalized health care schemes is that these plans threaten drug innovation in the US  (which is really the last remaining source of drug innovation in the whole world).

The argument is that nationalization schemes will likely hammer drug prices through price controls down to marginal cost, eliminating any profit motive for expensive drug development.  Further, new drugs will be hampered by having to convince government health care czars that the drug should be allowed under proposed proscriptive, top-down systems of allowed medical procedures.  Risk-adverse beauracrats faced with inevitable budget overruns are unlikely to take the chances with new procedures that the private world takes every day.  (And if you don't believe that budgets will be immediately overrun, look at cash-for clunkers, where 5 months of funds were used up in 5 days -- people may not like the government, but they will take free money and services in near infinite amounts).

Well, I had thought that the response to this argument from health care "reform" supporters would have been something like "private incentives to develop drugs will still exist because of X or Y."   But apparently, they have given up on that argument and jumped all the way to the argument that even without any private drug companies, Dr. Robert Stadler and the State Science Institute will do all the drug development we need.

Megan McArdle responds in depth here.  I think there is a simpler argument.  Look at something like computers or machine tools.  Innovation in these free markets occurs all over the world, and new inventions and products are as likely to come from Korea or Japan or Germany than from the US.  But in the world of pharmaceuticals and new medical devices, a wildly disproportionate share come in the US, the last semi-free health care market in the world.  And even those new products developped in other countries are funded and capitalized based on their profit potential in the US.

Though I would not want to trade my income taxes with those paid by Europeans, there is at least one area where the US has the worst tax regime in the world.  The specific area is the double standard the US applied on eligibility of income when other countries are involved.  For citizens of other countries, the US applies the standard that taxation is based on where one earns their income, so citizens of, say, France that are working in the US must pay US taxes.  However, for citizens of the US, the government reverses its standard.  In this case, the US applies the standard that taxation is based on citizenship, so US citizens must pay taxes on their income, even if it is all earned living in a foreign country.  Since most countries of the world apply the first standard  (which is also the standard individual states in the US apply), US expats find their income double taxed between the US and the country they are living in.

But now, it is just getting worse:

Queues of frustrated foreigners crowd many an American
consulate around the world hoping to get into the United States. Less
noticed are the heavily taxed American expatriates wanting to get out "”
by renouncing their citizenship. In Hong Kong just now, they cannot.
"Please note that this office cannot accept renunciation applications
at this time," the consulate's website states. Apart from sounding like
East Germany before the fall of the Berlin Wall, the closure is
unfortunately timed. Because of pending legislation on President Bush's
desk that is expected to become law by June 16th, any American who
wants to surrender his passport has only a few days to do so before
facing an enormous penalty.

"¦Congress has turned on expats, especially those who, since new tax
laws in 2006, have become increasingly eager to give up their
citizenship to escape the taxman. Under the proposed legislation,
expatriates surrendering their citizenship with a net worth of $2m or
more, or a high income, will have to act as if they have sold all their
worldwide assets at a fair market price.

"¦That expats want to leave at all is evidence of America's odd tax
system. Along with citizens of North Korea and a few other countries,
Americans are taxed based on their citizenship, rather than where they
live. So they usually pay twice "” to their host country and the
Internal Revenue Service. As this makes citizenship less palatable,
Congress has erected large barriers to stop them jumping ship. "¦[I]t
may have the opposite effect. Under the new structure, it would make
financial sense for any young American working overseas with a
promising career to renounce his citizenship as early as possible,
before his assets accumulate.

This is simply awful, and is another example of fascism in the name of egalitarianism (the fear is that a few rich people will move to tax havens to avoid US taxes).  Add up your net worth - equity in your house, retirement savings, etc - and imagine having to pay 35% of that as a big bribe tax to the US government to let you leave the country. 

I thought it was kind of interesting that upon reading this McKinsey & Co study (currently the top one in the list) on education, Kevin Drum and a number of other left 'o center blogs pulled out this one chart to highlight.  It shows starting teacher pay  (i.e. out of college) as a percent of the economy's average)

The author's of the study argue that the countries higher on this list also have better student results.  Now, I will confess that this is a pretty interesting finding in the study -- that starting teacher pay is more important than teacher pay in later years, because the key is to attract talented people right out of college away from other professions.  Interesting. 

But here is the quite fascinating selection bias by the lefty blogs:  I have read the whole report, and this is absolutely the only chart in the whole study that in any way, shape, or form might be interpreted as a call for higher government education spending.  Even more interesting is what these bloggers left out.  This is the other half of the starting teacher pay analysis Drum et. al. chose note to include, and makes clear that even this chart is not a call for more total spending:

South Korea and Singapore employ fewer teachers than other systems; in effect, this ensures that they can spend more money on each teacher at an equivalent funding level.  Both countries recognize that while class size has relatively little impact on the quality of student outcomes (see above), teacher quality does.  South Korea's student-to-teacher ration is 30:1, compared to an OECD average of 17.1, enabling it in effect to double teacher salaries while maintaining the same overall funding level as other OECD countries....

Singapore has pursued a similar strategy but has also front-loaded compensation.  THis combination allows it to spend less on primary education than almost any other OECD and yet still be able to attract strong candidates into the teaching profession.  In addition, because Singapore and South Korea need fewer teachers,  they are also in a position to be more selective about who becomes a teacher.  This, in turn, increases the status of teaching, making the profession even more attractive.

Whoops!  Don't want our friends at the NEA to see that!  Most of the study turns on McKinsey's finding that teacher quality drives student results, way ahead of any other factor, from class size to socioeconomic background:

Well, now the NEA might be getting really nervous.  Something like this might cause parents to do something rash, like demand that low-performing teachers get fired.  Gasp.

Anyway, to get back to the cherry-picking and selection bias issue, the study is pretty clear that it thinks that "more spending" is a failed strategy for improving public education

If school choice is off the table, then I would be very supportive of a program to increase starting teacher pay, funded by larger class sizes and substantial reductions in useless administrators and assistant principals.  Anyway, it is kind of an interesting study, though you may find the pdf file format really irritating to try to read.  Lots of funny formatting. 

Cuba, Castro, Che Guevara, etc all suck.  It is ridiculous to even have to keep making this point against folks who are trying to sanctify them.

That being said, it is way past time to open up Cuba to US trade.  When will we learn that we are doing the Castros work for them?

• If the US did not go out of its way to limit contact with Cuba, the Castros would have to try to do it.  We are just playing into their hands.  Totalitarian governments have a very dicey time in this era of free communications.  China interacts with the west, and is improving.  North Korea blocks all contact and is not.
• The economic boycott gives the Castros a fig leaf to hide behind as their entire population wallows in poverty.  Yes, they are poor, and they are poor because of communism, but the Castros are able to blame the failure of their country on the US embargo.

But they have free health care!  They get all the leeches they want.

James Pethokoukis argues that we might have spent a lot of the $1.3 trillion cost of the Iraq war on containment of Iraq had we fought the war.

I will admit I have not seen the studies, but I declare right now that there is NO WAY.  If we really would have spent $150 billion a year containing Iraq in absence of a war, we should be spending similar magnitudes today on other similar regimes on which we have chosen not to declare war, like Iran, North Korea, Venezuela, etc.  But demonstrably we are not.  One might argue that oil prices would be lower, I guess, but one could also argue that the post-9/11 recession would not have been as deep without a war.  I am sure there is a broken window fallacy in here somewhere.  This reminds me nothing so much as the tortured economic studies that purport to show a gullible populace that it makes sense to build a billion dollar stadium for the hapless Arizona Cardinals because the city will make it all back in future revenues.  Sure.

I am not going to argue the justifications for the Iraq war here.  What I will say is that folks who have enthusiastically supported the war should understand that the war is going to have the following consequences:

1. In 2009 we will have a Democratic Congress and President for the first time since 1994.
2. The next President will use the deficits from the $1.3 trillion in Iraq war spending to justify a lot of new taxes
3. These new taxes, once the war spending is over, will not be used for deficit reduction but for new programs that, once established, will be nearly impossible to eliminate
4. No matter what the next president promises to the electorate, they are not going to reverse precedents for presidential power and secrecy that GWB has established.  Politicians never give up power voluntarily.  [if the next president is Hillary, she is likely to push the envelope even further].  Republicans are not going to like these things as much when someone of the other party is using them.

I don't even pretend to be very knowledgeable about foreign policy so I seldom write about it.  But the dialog around Turkey honestly has me confused.  Nancy Pelosi argues that we need to call out Turkey right now in order "to restore America's moral authority around the world."  So I get the moral dimension of calling out bad people for bad actions.  But it was my understanding that this was what Democrats found facile in Bush's foreign policy, that Bush called out countries like North Korea and pre-invasion Iraq for being part of an axis of evil.  Is it then Pelosi's position that morality in foreign policy consists of pointing out evil actions committed by our allies eighty years ago, but avoiding calling out current evil actions by our enemies?

Apparently leading technocrat and Mussolini-style-economic-dictator Robert Reich is at it again, arguing the path to freedom requires more government coercion.  Ronald Bailey reminds us that Reich was the one who advocated the US adopt Japanese MITI-style economic management, just before the American economy took off for 25 years and Japan's spiraled into stagnation.  Now, he is arguing that capitalism is the enemy of democracy:

As Freedom House points out the number of countries that qualify as free rose from just 44 in 1972 to 89 in 2005,
even as capitalism expanded around the globe. It has been hypothesized
that as incomes increase in a country (rise of a middle class), the
demand for democratic governance becomes irresistible. This seems to
have been the pattern in South Korea, Chile, and Taiwan. Will the same
thing happen in China? As a negative leading indicator---whatever Reich
predicts, the opposite occurs-don't be surprised if China becomes a
democracy in the next decade.

Don Boudreaux responds to UAW President Ron Gettelfinger's complaint that the US has a trade imbalance in autos with South Korea:

Well, duh - that's an
inevitable consequence of specialization...

General Motors, Ford, and Chrysler each have huge trade imbalances --
to be precise, huge and growing trade deficits -- with their workers:
these companies buy far more from their workers than their workers buy
from them.  Perhaps auto makers should hire workers only on the
condition that the trade in each case is "balanced": each and every
worker must agree to spend his or her entire salary on products made by
the auto maker.  For example, a G.M. worker whose total compensation in
2007 is $60,000 must spend $60,000 on G.M. products in 2007.  Any
worker who fails to do so will be fired because of the resulting
imbalance.

Update:  Sorry, forgot the link.  Added it.

Like many libertarians, I lose interest quickly in politics, watching partisans of the Coke party argue why they are so much different than the Pepsi party.  You don't have to watch the whole farce for very long as a neutral observer before you see the same people taking the opposite tack on an issue than they did a few years earlier, only because their guy is in office, so now its more OK than when the other party's guy was doing it.

But I do read a few political blogs from both sides, just to keep abreast of what is going on.  This weekend, both sides managed to irritate me over the same issue.  First, Kevin Drum, from the left, railed on what he called "the GOP economy," complaining that the economy has grown without increasing median wages (note he carefully avoids "total compensation," which has gone up.)  Then Captains Quarters wrote from the right that "The economy continues its growth under the stewardship of the Bush administration."

George Bush does not run the economy.  George Bush does not even make day-to-day decisions that affect the economy.  He has made a few major moves that have economic consequences, with the positive effects of tax cuts probably mostly offset by unrestrained deficit spending, random protectionist acts and new bloated government services.  Bill Clinton, while we have to credit him for NAFTA (see below), was not responsible for the incredible economic expansion of the 90's.  In fact, neither Bill Clinton nor his wife have ever held a job where they produced anything. 

All of which is fine - I am not accusing president's of somehow falling down on the job.  I am merely stating what I thought was obvious.  Wealth is created by the actions and the minds of hundreds of millions of people, to whom the occupant of the White House is largely irrelevant except insofar as the President  substantially increases or reduces the artificial burden of efficiency-sucking government mandates, reporting, and taxes.

I will go into more depth on this in my annual tax day post, but I am increasingly confident of my theory of wealth creation.  Wealth is increased as two things happen:

• More individuals are more free to (and more likely to) question established beliefs, either scientific (e.g. the earth-centric universe), social (e.g. racial prejudice) or business (e.g. primacy of mainframe computing).
• More Individuals are more free to act in their own self-interest to pursue the results of their insights and to keep for themselves the proceeds of their efforts.

Since the 1970's, we have seen an explosion in the global economy, which has greatly increased the number of people working on any given economic problem.  For example, instead of just people in Detroit and Germany thinking about how to design and produce cars, we have folks in Japan and South Korea and even China and Brazil questioning the established wisdom from Detroit.  This has resulted not just in better, more affordable cars, but in production and supply chain management techniques that have made nearly every industry you can name more productive. 

Whenever such a change occurs, there are conservative (lower-c) forces that try to halt them.  The Church used its power for a time to resist the heliocentric view of the solar system.  Southern states used Jim Crow laws to resist post Civil War racial and social reforms.  And any number of groups wanted (and still want) to slam the door on the global economy.  Many countries in Europe went down this path.  What has saved the US from the same low-growth fate they have in Europe (and Japan) is that the government, and Bill Clinton in particular, at a critical time resisted the technocratic urge to have the government "do something" about the economic changes flowing from globalization.  Some wanted protectionism, while some wanted a more active hand by the government in "choosing winners" in the economy, like it was perceived that Japan had.  Bill Clinton resisted resisted these voices, most of whom were powerful in his own party, and in fact doubled down on globalization by pushing NAFTA.  For this act of vision, Clinton should be credited, but I still wouldn't call it "his" economy. 

One of the problems with us libertarians is that we all sound like a bunch of academic dweebs when we talk.  Well, thanks to YouTube and Human Advancement, I saw Mike Lee, who I found unpolished but curiously entertaining as a defender of individual rights (though he's bit hawkish internationally for my tastes).  Anyone who can, in about 2 minutes, shift from Duke Lacrosse to North Korea to jury nullifaction has got to be interesting to listen to.

By the way, it is increasingly clear that Google and YouTube don't really want to be a free speech outlet, as they seem to be banning stuff as fast as it can be posted.  They are private concerns, and so can do whatever they like, and I can understand from their perspective why they want to avoid controversy  (though if they ban everything the RIAA wants banned and political groups of every stripe want banned and end up with just home videos of pet tricks, I am not sure it will remain as popular).  This in turn got me thinking about Neal Stephenson  (and I accused Mike Lee of rambling?)

In Cryptonomicon, one of the plot lines is a group of guys trying to create an offshore data haven free from threats by government censors, tax inspectors, and, I presume, copyright enforcers from the RIAA and the NFL.  While such a comprehensive haven may be out of reach, I do think there could be a great role for an offshore blogging/podcasting/video haven that would protect identities and be immune or out of reach from third party censorship.  The problem is that as an officer of such an endeavor, you would likely be subject to immediate arrest in many countries once you landed there.  Oh, that would never happen in a free country like the US would it?  Yeah, right.

From our American point of view, we usually think of the attack by the Japanese at Pearl Harbor fifty-five 65 years ago as the main Japanese objective at the time.  In fact, the attack on Pearl Harbor was merely a screening move, an attempt by the Japanese to limit the US's ability to respond to its main objective -- seizure of resource-rich targets in Indonesia and Southeast Asia. 

The Japanese in 1941 shared many of the beliefs that are disturbingly common today.   They believed that their country had to be "self-sufficient" in key industries and resources.  And, they had a huge distrust of foreigners and international trade.  Lou Dobbs would have been very comfortable with them.  The end result of believing in self-sufficiency was that Japan eschewed peaceful trade as a way to gain resources in favor of colonialism and military intervention.  To some extent, the European colonialism of the 19th and early 20th centuries stemmed from the same beliefs.

As an island nation, Japan had developed a rich and complex social
structure. It resisted westernization by sealing itself off from
contact with the outside world, particularly Europe and the United
States. By the early twentieth century, though, Japan's efforts to
achieve self-sufficiency were failing, for the nation lacked its own
raw materials and other resources. Some members of the ruling class
argued that Japan could grow and prosper only by modernizing and
adopting Western technology. Japanese nationalists, though, advocated a
different path: the establishment of an empire that would not only
elevate Japan's stature in the eyes of the world but also guarantee
access to the resources the nation needed. Moreover, many members of
the nation's traditional warrior class"”the Samurai"”were embittered by
the aftermath of World War I. Japan had backed the victorious Allies,
but the Samurai believed that in the peace negotiations following the
war the United States and Great Britain had treated Japan as a
second-class nation. They, too, longed to assert Japan's place in world
affairs.   [answers.com]

After WWII, the Japanese gave up colonialism and military intervention in favor of arms-length trade.  And, as a result, grew through peaceful exchange into being the wealthy world power that militarism and "self-sufficiency" could never achieve.

Postscript: Some might argue that the Japanese were forced to give up on trade in favor of militarism by the US embargoes.  This is a particularly popular explanation among the "America-is-the-source-of-all-evil" academics, that the Japanese would have peacefully traded for all their needs if only we had let them.  This viewpoint is silly, and completely ignorant of the goals and philosophies of those running Japan.

The Japanese desire to be resource self-sufficient is always there, and the embargoes were a result of previous military adventures by the Japanese to gain colonies by force in Korea and China, as well as Japanese threats to invade southeast Asia.  Japanese militarism to achieve "imperial self-sufficiency" predated western embargoes by many, many years.  The western embargoes may have forced the Japanese hand to move quicker than they might have, but their moves into resource-rich Indonesia were probably coming soon anyway, just as similar moves in Korea and China had been going on for a decade.

To be fair, today's self-sufficiency advocates are passive and xenophobic rather than aggressive and xenophobic, as the Japanese were.  This is at least a small improvement, and means that they prefer to quietly sink into squalor rather than going out with a bang (two bangs?) as the Japanese did.

Update:  Memories of the Pearl Harbor attack.  And the Arizona Republic comes through with a good series on the death of the USS Arizona.

This week, the US took a step to normalize relations with Libya:

The United States restored
full diplomatic ties with Libya on Monday, rewarding the
longtime pariah nation for scrapping its weapons of mass
destruction programs and signaling incentives for Iran and
North Korea if they do the same

The logic was that Libya still is a sucky dictatorship, but it has taken some important steps forward into the light which we want to reward.  Perhaps more importantly, the administration acknowledges that increasing intercourse with the western democracies tends to have liberalizing effects in countries in this world of open communications (see: China).  Its a difficult trade-off, but I am fine with this.  Certainly we are no virgin in terms of having diplomatic relations with bad governments.

My question is:  Why doesn't this same logic apply to Cuba?  I think it is pretty clear that embargo and shunning over the past 40+ years have had as much effect as they are going to have.  Why not try engagement?  I think this particularly makes sense well before the chaos that may ensue after Castro's death.  If anything, just by reading the behavior of Cuban expats, Cubans remind be of the Chinese in terms of their entrepreneurship, and I certainly think engagement has worked better than shunning in China. 

Of course I already know the answer to my question:  Because Cuban expats make up a large voting block in the most critical presidential election swing state and no candidate wants to be soft on Castro.  But this seems to make it even more of an opportunity for a second-term president who doesn't have to contest Florida again.

Update:  Yes, I did indeed spell it "Lybia" at first.  Seems vaguely Feudian.  Excuse 1:  Blogging is a real time function.  Excuse 2:  Its just a hobby.  Excuse 3:  I was a mechanical engineer in school

Today, on the final day of their 2006 term, the Supreme Court ruled in the Olek vs. New London case:

Washington --  The Supreme Court on Thursday ruled that
local governments may seize people's advertising space -- even
against their will -- for alternate advertisers who promote economic development or higher taxes

It
was a decision fraught with huge implications for a country with many
areas, particularly the rapidly growing urban and suburban areas,
facing countervailing pressures of government budget deficits and free speech
rights.

The 5-4 ruling represented a defeat for some Connecticut
residents whose advertisements in the local paper against recent property tax hikes were rejected by the city council in favor of ads for several pro-taxation groups.

As a result, cities have wide power to replace advertising that might favor lower taxes or oppose certain community projects with messages more in the public interest.

Local officials, not federal judges, know best in
deciding whether speech will benefit the community,
justices said.

"The city has carefully formulated an economic
development that it believes will provide appreciable benefits to the
community, including -- but by no means limited to -- new jobs and
increased tax revenue," Justice John Paul Stevens wrote for the
majority.  "We established in Kelo that local governments have broad power to seize property when that seizure serves to maximize taxation, and certainly this applies equally well to unwanted advertising that might work against maximizing tax revenues."

He was joined by Justice Anthony Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

At
issue was the scope of the Fifth Amendment, which allows governments to
take private property through eminent domain if the property is for "public
use."  The majority observed that using advertising space in favor, rather than against, public policy certainly qualified as "public use".

Fred Olek and several other homeowners in a
working-class neighborhood in New London, Connecticut, filed suit after
city officials announced plans to remove their newspaper advertisements opposing the upcoming ballot initiative to raise property taxes.

New London officials countered
that the tax initiative served a public purpose of boosting
economic growth that outweighed the homeowners' speech rights, even
if the area wasn't located in North Korea or Cuba.

Justice Sandra Day O'Connor, who has
been a key swing vote on many cases before the court, issued a stinging
dissent. She argued that "This makes me so mad, I could, I could... aw, forget it.  I'm retiring this year to a Pacific island anyway, so y'all are free to screw up this country as much as you want".

Justice Scalia wrote a separate dissent, making the argument that "I have no problem with government limitations on speech per se, but given the fact that 3 readers of this paper lived out of state, such powers per Raich reside with Federal and not local authorities"

Local authorities were careful to point out that Olek was fully compensated at market rates for the removed advertising.  Olek shot back that he was in no way compensated for his loss of free speech rights or participation in the democratic process.  Justices in the majority were unpersuaded by Olek's argument, however, pointing out that in Kelo, the homeowners were in no way compensated for their emotional attachment to their homes nor for their loss of the right to dispose of their property as they wished, "so there".

After a number of posts on global warming, several of my friends and family have sent me various links and tracts and articles, apparently concerned about me as a Kyoto "unbeliever".  It reminds me a lot of my neighbor giving my wife religious pamphlets when she found out we didn't go to church on Sunday.  Jerry Pournelle has a good series of posts about getting roughly the same reaction. 

So here is a bit of advice:  First, keep sending me anything thing that has science in it, I always enjoy reading it.  Second, if you are going to send me climate science, make sure you understand where my agnosticism lies:  I don't need more articles saying "see, the world has warmed, therefore we need the Kyoto treaty" or "look at the CO2 rise at Hilo station".  In my mind, there are five logic steps you need to make to justify Kyoto-type emissions limitations.   Everyone sends me proof of the first two steps, but I seldom see science on the last three, which are the most problematic.  Here they are, and where my current thinking is on each:

1.   Is the world warming?  The answer is yes, though ground-based measurements influenced by urban heat islands may be over-estimating the rise, despite corrections.  Also, one needs to remember that some of the warming occurred in the early parts of the century, where man-made CO2 is unlikely to be to blame. 

By the way, be very careful of advocates' graphs - often the time scale is "managed".  Someone sent me this link, of rising temperatures in Central Park.  Unfortunately, the graph is carefully selected, and here is the graph with all the data (same data source) shown.  I have seen the same game played with this chart several times, showing only the data since 1965, which obviously would tell a very different story.  All that being said, I am still convinced the earth is warming some, but what does it tell you when organizations play such exaggeration games with the data - are they being objective scientists or advocates? 

2.  Is the warming due to man-made CO2?  The answer is partially, though perhaps not as much as global-warming activists want to believe.  Yes, man-made CO2 has almost certainly increased CO2 concentrations in the atmosphere, but solar activity has also been at a cyclical peak in this century, and many point to this activity as another contributor to warming.  Also, something other than man-made CO2 drove a half-degree warming early in the century, so whatever caused that warming may well be contributing to warming in the second half of the century (unless you want to take the dangerously untenable position that whatever drove early century warming stopped at the same time that CO2 started having an effect).  Finally, there are still arguments about the quality of the statistical analysis in looking at long term climate trends.

3.  How much will man-made CO2 raise temperatures in the future?  My answer is some, but not nearly as much as models predict.  First, recognize that funding levels for climate research today tend to rise in proportion to how dire the forecast is, so organizations have a financial incentive to over-predict.  Second, when current models are applied to history, they over-predict temperature rise.  This leads me to worry that they may be over-predicting for the future as well.   Yes, they claim to have "corrected" this problem, but in fact they just added fudge factors -- whole fortunes have been lost on Wall Street this way.  Third, and the one thing I can confirm from my own knowledge and analysis, climate models GROSSLY over-estimate man-made CO2 production in the future due to enormously flawed economic models.  I spend a lot more time disecting these mistakes here, but to summarize, the models take the most inefficient nations, assume little efficiency improvements, then grow their economies like crazy:

Because of this economic error, the IPCC scenarios of the future also suggest that relatively poor developing countries such as Algeria, Argentina, Libya, Turkey, and North Korea will all surpass the United States [in terms of GNP]

4.  What is the net cost to the world of global warming?  This is where climate science really begins to break down.  The answer is that, scientifically, we don't know.  We don't even know if it is net bad - warming may be net beneficial.  The "bad things" claims have tended to have a "day after tomorrow" sloppiness to them, but the main bad things cited are rising sea levels and increases in violent weather patterns.  Note that the second is entirely unproven, and, no matter what any media article says, we have not yet seen any increase in violent weather recently -- the data so far does not support it.  As to rising sea levels, there is more science behind the claim but again, we have not yet seen any evidence of it.  Most climate scientists will admit that the majority of the warming will occur on winter nights in the coldest regions (e.g. lots of warming of Siberian winters).  But arctic ice melt in sea level rise scenarios mainly occurs during summer days.  How can this be reconciled?  In fact, NASA data shows little or no warming to date in Antarctica or in the Arctic, despite the fact that models say that it should show the most (and therefore the most melting ice).

Beyond the lack of proof is the fact that most global warming activists don't consider or don't want to admit that there are positive effects.  For example, warming would lengthen growing seasons in most areas, potentially increasing food production.  For example, the Cato Institute reported:

The weather can, of course, be too warm, but that is unlikely to become a major problem if the globe warms. Even though it is far from certain that the temperature will rise, the Intergovernmental Panel on Climate Change (the U.N. body that has been studying this possibility for more than a decade) has forecast that, by the end of the next century, the world's climate will be about 3.6° Fahrenheit warmer than today and that precipitation worldwide will increase by about 7 percent. The scientists who make up this body also predict that most of the warming will occur at night and during the winter. In fact, records show that, over this century, summer highs have actually declined while winter lows have gone up. In addition, temperatures are expected to increase the most towards the poles. Thus Minneapolis should enjoy more warming than Dallas; but even the Twin Cities should find that most of their temperature increase will occur during their coldest season, making their climate more livable.

5.  What is the Cost-Benefit trade-offs of mandated CO2 limitations?  Again, no one knows and if there is any good science on this, I have not seen it.  You can guess that if we have not even figured out if warming is net-bad or net-good, we probably don't have a good handle on cost-benefit trade-offs of treaties like Kyoto.  Even without this trade-off analysis, though, we can come to a few conclusions about Kyoto:

• Even global warming activists admit that Kyoto will at best reduce temperatures 50 years from now by something like a tenth of a degree.
• Whatever the benefit of reducing CO2 is, Kyoto takes one of the highest cost approaches (see study here).  The main reason is fairly obvious based on the laws of diminishing returns:  The cheapest place to reduce emissions is in the most inefficient countries, and vice versa.  But Kyoto focuses all its reductions on the most efficient industrialized countries, so it is seeking reductions in the highest possible cost locations.
• Kyoto is mainly a slam-America treaty.  The way it was constructed, with its 1990 reference date, was cleverly chosen to put most of the burden on the US.  The US has experienced fabulous growth since 1990, while Japan and European nations have experienced slow growth as well as structural changes that make the target artificially easy to reach for them (see more here).   Fast growth developing countries are excluded from the treaty entirely.

So here is my point -- it is possible to believe in the theory of man-made CO2 driving temperature increases and still be skeptical of government action on emissions.  Jerry Pournelle has a good series of posts on the same topic. 

For other reading, probably the first place to look is the Skeptical Environmentalist by Bjorn Lomborg. Lomborg in this book has probably the best counter-case to the enviro-disaster stories filling the media. He has become an object of absolute hatred among the anti-growth anti globalization fanatics who have latched onto climate change as the key to advancing their anti-technology and anti-capitalist political agenda. The attacks on him have become nearly as edifying about what drives the environmental movement as his book itself. The Economist has a nice article about his book and about the wild-eyed furious reaction of environmental activists to it. The Economist also editorializes here, and you can follow all the criticism and response here on Lomborg's site.

Other sources: This paper is a good roundup of all the issues I have addressed. Cato has a lot of other material here as does the Heartland Institute and at The Commons.

UPDATE:

A great post from Silflay Hraka that is much more eloquent (and concise) than I am is linked here