2008 March 30 Sunday
Muslims On The Rise In Russia

Writing in a blog on the Foreign Policy web site Henry Bowles sees the rising Muslim population more in terms of bad nationalists getting mad about it rather than Russians getting shafted by a growing hostile and culturally and religiously incompatible population.

Ready for Russia's very own Oriana Fallacis and Jean LePens? If population trends continue at the current rate, Muslims could outnumber ethnic Russians in 30 years, al-Jazeera reports. More Russians are dying each year than being born, due in large measure to the popularity of abortion (Russian women had almost 13 abortions for every 10 live births in 2003), alcohol, and suicide.

It matters less to Bowles that Russians might end up living as Dhimmis subservient to Muslim rule under Sharia law. No, what is important to Bowles is to pose as morally superior to Oriana Fallaci and Jean LePen. This is very white of him. An opportunity to signal one's higher status vis a vis other whites presents itself. Gotta jump at that chance and look down on the white red necks.

If Russians want to prevent becoming a minority under Muslim rule then Bowles thinks they are engaging in hysteria and sees Russian nationalists as "the usual suspects".

Predictably, the usual suspects are speaking up:

Many ethnic Russians are terrified at the prospect of becoming a minority in their own country. Alexander Belov, from the Movement Against Illegal Immigration, said: "History is a fight between races and religions. "It's the law of nature ... people are used to being with people like themselves, speaking the language their mothers taught them.”

We’ve recently seen domestic politics polarized by nativist hysteria in France, Denmark, the Netherlands, and elsewhere in Western Europe. But at least this is occurring within democratic systems with moderate political parties and strong protections for minority rights, where the extreme right can only do so much damage. It won't be that way in increasingly autocratic Russia, however, where there aren't established moderating forces in civil society.

The reactions of European and American elites to the problems posed by Muslim immigration demonstrate one reason why we can't allow that immigration to happen in the first place. The elites will see the resulting problems as caused by the ignorance and lack of submission of the existing inferior lower classes. You get blamed. You get searched in airports. You get blamed. You get forced to make accommodations. You get blamed. You get condescended to.

Update: One point that Foreign Policy might want to address if they wanted to be serious about Russia's demographic problems: How would the security of the United States be harmed the large Russian nuclear weapons arsenal came under Muslim control 50 years from now?

Update II: I say that we can't trust our elites. Some might think I'm being a fringe kook to talk like that. But Dutch businesses are threatening to sue Geert Wilders for damages should Muslim nations boycott the Netherlands in response to this film.

Dutch businesses Saturday threatened to sue far-right lawmaker Geert Wilders if his anti-Islam film led to a commercial boycott, as several more Muslim countries condemned it.

"I don't know if Wilders is rich, or well-insured, but in the case of a boycott, we would look to see if we could make him bear responsibility," Bernard Wientjes, chairman of the Dutch employers' organisation VNO-NCW, told the newspaper Het Financieel Dagblad.

So they see their profits as more important than our right to free speech. You get forced to make accommodations to immigrants who don't want you to be free. If you don't do this and sales suffer then you get blamed.

By Randall Parker 2008 March 30 05:27 PM  Civilizations Clash Of
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Omar Bakri: Fitna Looks Like Mujahideen Film

While the Muslim countries protest Dutch politician Geert Wilders' film Fitna one Muslim radical cleric points out that Fitna interprets the Koran in a way that agrees with his understanding of that text. (scroll down to watch Fitna)

Iran called the film part of a "vendetta" against Islam. Several hundred people took to the street in Pakistan and the government summoned the Dutch ambassador. Muslim Bangladesh said the film could have "grave consequences", while the Indonesian government called it "racist" and "an insult to Islam", yet called for calm.

Omar Bakri, the Libyan-based radical Muslim cleric who is barred from Britain, did not think the film was very offensive. "On the contrary, if we leave out the first images and the sound of the page being torn, it could be a film by the [Islamist] Mujahideen," he said. [...]

Says Robert Spencer At Jihad Watch:

The formerly UK-based jihadist hits the nail on the head: for all the rage from Muslims about how Fitna "links Islam with violence," that link has already been made by the jihadists, who never aroused any significant rage among their peaceful brethren. The jihadists quote Qur'an to justify their actions -- it wasn't Geert Wilders who had to go hunting in the Qur'an for verses that matched those actions.

The offense then is that a non-Muslim drew the connection between the words in the Koran and what Muslims do today. For the Jihadists and their tens of millions (at least) Muslim fans and supporters the connection that Geert Wilders draws between the Koran's text and the terrorists is already obvious. Yet the operators of LiveLeak.com received so many death threats from Muslims they dropped Wilders' film from their site. The reason for the threats about Fitna is simple enough: The film is a call to action aimed at non-Muslims. Whereas the Jihadists want the non-Muslims to meekly submit to dhimmitude as second class citizens under Muslim rule. Some European politicians are eager to comply. As Steve Sailer points out, the severe criticism that the European elite aimed at Pym Fortuyn got Fortuyn killed by a leftist sympathizer of Muslims.

That also reminds me that, unlike all the respectable voices, I've always been even more upset by the murder of Pym Fortuyn, a potential Prime Minister of the Netherlands, in 2002 than by the murder of Theo van Gogh in 2004. The van Gogh murder was the obvious result of letting a whole bunch of Muslims into the country, a problem that can be solved (granted, at vast expense) by paying them to leave and other sensible reforms. The only solution to the West's Muslim problem is to disconnect.

But Fortuyn's assassination was carried out by a well-educated Dutch-born white leftist the day after the climax of the "Two-Week Hate" against immigration-restrictionists that swept Europe when Le Pen won a spot in the French Presidential final. When Fortuyn was murdered, respectable voices across Europe opined that Fortuyn more or less had it coming. The European Establishment excused themselves from any responsibility by blaming it all on animal rights craziness.

Here is the 10 minute movie Submission that got Theo van Gogh killed and forced Ayaan Hirsi Ali into hiding.

Many members of Europe's elite want to silence the critics of Islam.

Following the assassination of van Gogh, the Minister of Justice of the Netherlands, Piet-Hein Donner, proposed to reinstate blasphemy as a criminal offence. In the United Kingdom Islamophilia runs amok. The July 7 bombings, which killed 55 people, seem to have reinforced the taboo on criticism of Islam. The London police chief, Ian Blair (Tony’s parrot, though unrelated), said the bombings could not be qualified as “islamic terror” because “Islam and terrorism do not go together.” Politicians and opinion makers assure us that Islam does not condone terror and that we must support the “beleaguered” Muslim community. With every act of terrorism the press becomes more friendly towards Islam. The Guardian has virtually become al-Guardian.

Here is part1 of the Fitna movie by Geert Wilders:

Here is part 2 of the Fitna movie by Geert Wilders:

A buy-out option to pay Muslims to leave Europe would enable people like Geert Wilders to once again walk the streets of Amsterdam.

By Randall Parker 2008 March 30 01:13 PM  Civilizations Clash Of
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2008 March 29 Saturday
Geert Wilders Fitna Movie On YouTube

Lots of people have posted the Geert Wilders Fitna Movie about Islam on YouTube. Here it is in 2 parts.

Here is the second part of Fitna.

Here is the first part of an interview of Wilders.

Here is the second part of the Wilders interview.

Some people claim that since only a very small fraction of Muslims are terrorists that Wilders and other severe critics of Islam are unfair. But this defense of Islam by non-Muslims is based on the false assumption that the only Muslim threat comes in the form of terrorism. In Western nations where Muslim minorities have become substantial the Muslims show an increasing desire to force non-Muslims to live according to Muslim laws and customs.

The poll of 1,000 Muslims, weighted to represent the population across the UK, found that a growing minority of youngsters felt they had less in common with non-Muslims than their parents did.

While only 17 per cent of over-55s said they would prefer to live under Sharia law, that increased to 37 per cent of those aged 16 to 24.

Muslims create parallel societies and attempt to force other Muslims and non-Muslims to live according to Muslim rules. The support for Sharia law is incompatible with a free society.

The survey of more than 1,000 Muslims from different age groups in the UK, found:

  • 71% of over-55s compared with 62% of 16 to 24-year-olds feel they have as much, if not more, in common with non-Muslims in Britain than with Muslims abroad
  • 19% of over-55s compared with 37% of 16 to 24-year-olds would prefer to send their children to Islamic state schools
  • 17% of over-55s compared with 37% of 16 to 24-year-olds would prefer living under Sharia law than British law
  • 28% of over-55s compared with 74% of 16 to 24-year-olds prefer Muslim women to choose to wear the hijab
  • 3% of over-55s compared with 13% of 16 to 24-year-olds admire organisations like al-Qaeda that are prepared to fight the West

A fifth of British Muslims have sympathy with the London 7/7 bombers that killed many on buses and a train.

Four out of 10 British Muslims want sharia law introduced into parts of the country, a survey reveals today.

The ICM opinion poll also indicates that a fifth have sympathy with the "feelings and motives" of the suicide bombers who attacked London last July 7, killing 52 people, although 99 per cent thought the bombers were wrong to carry out the atrocity.

The Muslim doctors arrested for the UK airport bombing attack show that education and status are not an assurance that Muslims will refrain from terrorism. In fact, the Muslim terrorists tend to be more educated and from more affluent families.

Wikileaks has the Fitna movie too.

By Randall Parker 2008 March 29 02:42 PM  Civilizations Clash Of
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2008 March 28 Friday
Medicare Goes Into Deficit In 2008

The tallest female econ blogger (and smart and charming in person) Megan McArdle is appalled about Medicare spending.

Our nation's lack of action on Social Security is appalling. Not because it is going to bust the budget--it is going to become a very large, but still supportable, drain on resources. No, the reason it is appalling is that the structural incentives built into Social Security substantially depress labor force participation in a way that makes it harder to pay for Social Security, and especially health care.

But if Social Security appalls, Medicare quite stops the heart. We've seen this moment coming for twenty years and done nothing. Now it's here, folks: Medicare goes into deficit this year. For the first time, the general fund will be sending money to the entitlement programs, not the other way around. And that deficit will keep growing, and growing, and growing . . .

Megan is upset that George W. Bush has done so little about the approaching financial catastrophe. But if we'd had a Democrat in the White House the last 7 years I doubt the outcome would have been any better. The Democrats don't want to admit to the size of the problem because to do so brings up the possibility of scaling back the entitlements commitment. Well, the Democratic Party defines itself as the defender of necessary and justified and just totally beneficial entitlements spending. Megan acknowledges the assortment of forces that come together to cause this clusterfrack. Click thru and read about it.

The fact of the matter is that the currently old oppose reforms because they don't want to see their benefits cut or taxes raised. They figure they can get what they want and leave the bill for latter generations. Their voting power has been strong enough for enough years to assure that they get to shift huge costs onto later generations.

But I think the outlook for the entitlements programs is worse than most of the serious analysts believe. Rising energy costs could hold back economic growth for much of the next 10-15 years. The entitlements costs will then become a larger percentage of the overall pie as the absolute pie slices for Social Security and Medicare grow while the pie size stays the same.

By Randall Parker 2008 March 28 11:48 PM  Economics Demographic
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Educational Levels Declining In America

Clive Crook points to a study that shows average educational levels in America have peaked and are declining.

For the first time in decades, and probably ever, workers retiring from the US labor force will be better-educated on average (according to one measure anyway) than their much younger counterparts. Some 12 per cent of 60-64 year olds have a master's degree or better; less than 10 per cent of 30-34 year olds do. More generally, the decades-long rise in the educational quality of the labor force is coming to an end. This is important, because that rise has been one of the principal forces driving American economic growth.

These findings are from a new study by Jacob Funk Kirkegaard of the Peterson Institute for International Economics: "The Accelerating Decline in America's High-Skilled Workforce: Implications for Immigration Policy". If you are interested in the prospects for American competitiveness and continued economic leadership, Jacob's study is mandatory reading.

The demographic change is a reason to be very bearish on the US economy. We can't grow if we don't have enough brains to do all the intellectually difficult jobs. Our immigration policy for the last few decades has dumbed down the population. That dumbing down will weigh down the economy in coming decades.

Crook and Kirkegaard favor letting in more skilled immigrants. But what we really need to do is to stop letting in all but the highly skilled. It is the ratio of skilled to unskilled (which is a proxy for the ratio of smart to dumb) that determines living standards more than any other factor. Verbal IQ is most important in determining the wealth of nations.

By Randall Parker 2008 March 28 11:47 PM  Economics Demographic
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American Officials Disappointed About Basra Fighthing

The news from Saigon: ARVN is not doing well fighting on its own.

The Iraqi military push into the southern city of Basra is not going as well as American officials had hoped, despite President Bush's high praise for the operation, several U.S. officials said Friday.

A closely held U.S. military intelligence analysis of the fighting in Basra shows that Iraqi security forces control less than a quarter of the city, according to officials in both the United States and Iraq, and Basra's police units are deeply infiltrated by members of radical Shiite cleric Muqtada al-Sadr's Mehdi Army.

The Shiites who fight for the government in Baghdad are less enthused than the Shiites who fight for control of their neighborhoods in Basra.

What did LBJ say in a TV speech? "The eyes of the world are on Khe Sanh"? Something like that. Bush sees a similar "defining moment".

WASHINGTON — President Bush strongly defended Iraq’s prime minister on Friday at what he called a “defining moment” for the Baghdad government, saying the United States supported its offensive against a Shiite militia and would provide any military assistance that was sought.

But what is this battle defining? Greg Bruno of the Council on Foreign Relations reports the battle for Basra is really a battle between rival Shiite clerics rather than between the central government and a militia that challenges it.

Whether Maliki and his beleaguered government have the clout to quell the strife is far from certain. On March 26, the prime minister gave gunmen seventy-two hours to put down their arms (al-Jazeera) and renounce violence; a spokesman for Sadr says the cleric responded by calling for Maliki and Iraqi forces to leave Basra (AP) immediately. Dozens were killed and hundreds wounded in the initial outbreak of fighting. In the end, though, Maliki may prove a powerless mediator. Angry Shiite demonstrators in Baghdad protested the government's crackdown (NYT). CFR Adjunct Senior Fellow Vali R. Nasr tells CFR.org the true players in the dispute are rival Shiite clerics Abdul Aziz al-Hakim and Sadr. Both control powerful militias, and both command important political blocs in Iraq's evolving power structure. "Maliki is completely irrelevant" in the dispute in the south, Nasr says.

Our leaders would have us believe we are fighting for freedom and against terrorism and tyranny.

Bush thinks the militias in Basra are outlaws.

He told a White House news conference: "Any government that presumes to represent the majority of people must confront criminal elements or people who think they can live outside the law - and that's what's taking place in Basra."

US JDAM smart bombs might allow the glorious heroic nominal representatives of Iraq's central government to win.

US-led forces joined the battle for the first time in the early hours of Friday, with air strikes in Basra and Baghdad.

A US military spokesman in Baghdad, Maj Mark Cheadle, told AP news agency: "As you know, we've been getting attacked and going after the enemy all day."

I think the US and other Western governments should place a higher priority on keeping Muslims out of the West rather than imagine we can successfully back a more Westernized faction in Iraq.

George W. Bush says the outcome in Iraq will merit the sacrifice.

As the American military death toll in Iraq reached 4,000, President Bush conferred yesterday with top U.S. officials in Washington and in Baghdad and vowed in a public statement that the outcome of the war "will merit the sacrifice."

Think about that. Imagine that within a year all the militias stopped fighting and surrendered to the central government in Baghdad. That outcome would not merit the sacrifice. We have lost thousands of soldiers with at least tens of thousands and maybe hundreds of thousands permanently damaged. We will pay a few trillion dollars for it. There's nothing we can gain from it to pay for all that. Iraq was a bad investment.

By Randall Parker 2008 March 28 09:24 PM  MidEast Iraq New Regime Failures
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2008 March 27 Thursday
Geert Wilders Movie Fitna About Koran Released

Dutch movie maker and critic of Islam has ignored the Muslim death threats and pressure from appeasers in the Netherlands government and has released his new 15 minute move about Islam. Time to watch it. (update: this address now shows a video explaining how the LiveLeak.com people are afraid to keep the video on their site)

Islam is not compatible with free Western societies. Islam's beliefs clash with and can not be reconciled with our beliefs. We can best protect ourselves from Islam by keeping Muslims out of the West.

Update: As you can see if you click on that link above, LiveLeak.com chickened out about showing this movie due to many death threats from extremely intolerant Muslims.

So I went looking for other sources of this movie. The fitnathemovie.info site no longer responds. The site reports

This site has been suspended while Network Solutions is investigating whether the site's content is in violation of the Network Solutions Acceptable Use Policy. Network Solutions has received a number of complaints regarding this site that are under investigation. For more information about Network Solutions Acceptable Use Policy visit the following URL: http://www.networksolutions.com/legal/aup.jsp

Investigating? They chickened out too.

Here is the Geert Wilders Fitna movie on Google (and let me know if it ceases to work):

Post in the comments if you find places where it can be watched. The number of sites that have chickened out about this movie should serve as a warning of a threat that we face. Wake up. Appreciate the Muslim threat to your freedoms.

The reactions of so many web hosting sites to this movie brings to mind Patrick Henry's Give me Liberty, or give me Death! speech of March 23, 1775 to the Virginia House of Burgesses. I've long though that he should have uttered "Give me Liberty or I'll kill you" as it captures a more useful and productive reaction. But the mood of our times seems to be more along the lines of "Give me liberty. But if you are a non-European fanatic then as a European I am morally inferior and want to appease you".

Another way to find Fitna: Here is a YouTube search on Geert Wilders.

By Randall Parker 2008 March 27 09:50 PM  Civilizations Clash Of
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60% Of US Military Officers See US Weaker Than 5 Years Ago

Foreign Policy and the Center for a New American Security did a survey of active and retired officers and found most see the US weakened by the war in Iraq.

In all, more than 3,400 officers holding the rank of major or lieutenant commander and above were surveyed from across the services, active duty and retired, general officers and field-grade officers. About 35 percent of the participants hailed from the Army, 33 percent from the Air Force, 23 percent from the Navy, and 8 percent from the Marine Corps. Several hundred are flag officers, elite generals and admirals who have served at the highest levels of command. Approximately one third are colonels or captains—officers commanding thousands of soldiers, sailors, airmen, and Marines—and 37 percent hold the rank of lieutenant colonel or commander. Eighty-one percent have more than 20 years of service in the military. Twelve percent graduated from one of America’s exclusive military academies. And more than two thirds have combat experience, with roughly 10 percent having served in Iraq, Afghanistan, or both.

We've certainly worn out a lot of equipment, built up huge future costs (e.g. taking care of permanently injured soldiers), and distracted ourselves from more important issues.

The US military can afford to fight in Iraq only because it doesn't have something really important on the table. The drain that is Iraq weakens the US military and leaves it less able to act in other theaters should the need arise.

These officers see a military apparatus severely strained by the grinding demands of war. Sixty percent say the U.S. military is weaker today than it was five years ago. Asked why, more than half cite the wars in Iraq and Afghanistan, and the pace of troop deployments those conflicts require. More than half the officers say the military is weaker than it was either 10 or 15 years ago. But asked whether “the demands of the war in Iraq have broken the U.S. military,” 56 percent of the officers say they disagree. That is not to say, however, that they are without concern. Nearly 90 percent say that they believe the demands of the war in Iraq have “stretched the U.S. military dangerously thin.”

The war in Iraq also contributes nothing to US security while costing a few trillion dollars in the long run. If we wanted to reduce our risk for terrorism the best thing to do is to reduce the number of Muslims in the United States. We could make visas hard to get for Muslims and do much better border and interior enforcement of immigration laws. Doing that would cost a small fraction of the cost of the Iraq war.

The active duty officers who responded weren't as pessimistic as the retired officers.

In presenting survey results at a public event on February 19, we noted several areas where retired and active duty officers surveyed seemed to have significant differences. For example, 44 percent of active duty officers and those retired for a year or less believed the military was weaker than it was five years ago, compared to 60 percent of respondents overall. On the other hand, for many questions, the results for officers who were either active duty or retired within the last year were similar to those of the overall group surveyed.

That 44% of active duty officers who see the US weakened is still a quite substantial number of the total.

By Randall Parker 2008 March 27 08:34 PM  Mideast Iraq Costs
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2008 March 26 Wednesday
Food Price Riots Popping Up Around The World

Are rising food prices going to cause governments to go unstable and fall?

Bangkok, Thailand - - Rice farmers here are staying awake in shifts at night to guard their fields from thieves. In Peru, shortages of wheat flour are prompting the military to make bread with potato flour, a native crop. In Egypt, Cameroon, and Burkina Faso food riots have broken out in the past week.

Around the world, governments and aid groups are grappling with the escalating cost of basic grains. In December, 37 countries faced a food crisis, reports the UN Food and Agricultural Organization (FAO), and 20 nations had imposed some form of food-price controls.

In Asia, where rice is on every plate, prices are shooting up almost daily. Premium Thai fragrant rice now costs $900 per ton, a nearly 30 percent rise from a month ago.

Exporters say the price could eclipse $1,000 per ton by June. Similarly, prices of white rice have climbed about 50 percent since January to $600 per ton and are projected to jump another 40 percent to $800 per ton in April.

High food prices have several causes. Population growth is one cause that is going to keep happening for many years to come. Industrialization of Asia has increased buying power for meat and therefore shifted more grain toward livestock feeding. A shift of grains toward biomass energy has reduced the amount of grain available for eating. Some droughts have contributed as well. Aside from the drought most of these causes are going to keep putting upward pressure on food prices.

If you are a middle class American the cost of food is a small enough percentage of our income that there's no need to panic. But in an extremely poor place like Haiti rises in commodities prices cause hunger.

"It's not likely that prices will go back to as low as we're used to," said Abdolreza Abbassian, economist and secretary of the Intergovernmental Group for Grains for the U.N. Food and Agriculture Organization (FAO). "Currently if you're in Haiti, unless the government is subsidizing consumers, consumers have no choice but to cut consumption. It's a very brutal scenario, but that's what it is."

No one knows that better than Eugene Thermilon, 30, a Haitian day laborer who can no longer afford pasta to feed his wife and four children since the price nearly doubled to the local equivalent of US$0.57 (€.37) a bag. Their only meal on a recent day was two cans of corn grits.

"Their stomachs were not even full," Thermilon said, walking toward his pink concrete house on the precipice of a garbage-filled ravine. By noon the next day, he still had nothing to feed them for dinner.

Modest proposal: Use US foreign aid to offer free contraceptives and family planning classes for all the people in Haiti.

Prices for basic dietary staples are up sharply in El Salvador.

Protesters beat on pots and pan at El Salvador's Central Bank denouncing prices for staples such as maize and rice. Retail price for beans has risen 68% since January 2007; 56.2% for rice and 37.5% for maize.

Last year Mexico City was the scene of tortilla riots.

The troubles erupted early last year. First, there were the tortilla riots in Mexico City: 75,000 angry demonstrators, mostly poor, taking to the streets to protest the surging price of a food staple. Then in Italy, merchants from Milan began clamoring about the cost of pasta. By year's end, protests had broken out in at least a dozen countries: in India over onions, in Indonesia over soybeans, and, last month, in the small African country of Burkina Faso, where hundreds of looters burned government buildings to protest soaring grain prices.

You can imagine that immigration advocates will point to instability in Mexico as a reason to let in poor starving Mexicans. Not so fast. Poor starving Mexico is now the second fattest nation in the world.

MEXICO CITY – Fueled by the rising popularity of soft drinks and fast food restaurants, Mexico has become the second-fattest nation in the world. Mexican health officials say it could surpass the United States as the most obese country within 10 years if trends continue.

More than 71 percent of Mexican women and 66 percent of Mexican men are overweight, according to the latest national surveys.

People judge how they are doing versus how they were doing in the past. Younger fat Mexicans will become upset and express their anger long before they get really hungry. So even the fatter nations can be destabilized by rising food prices. America should deal with potential instability on its southern border by building a border barrier that will insulate us from some of the consequences of higher food prices.

By Randall Parker 2008 March 26 08:51 PM  Economics Agriculture
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2008 March 25 Tuesday
Mahdi Army Ending Iraq Ceasefire?

Sadr's Shiite Mahdi militia has been obeying a ceasefire he imposed several months ago. But Sadr shows signs of ending that ceasefire in response to a Baghdad central government launched offensive to seize Basra from the Mahdi and other militias.

BAGHDAD — A cease-fire critical to the improved security situation in Iraq appeared to unravel Monday when a militia loyal to radical Shiite Muslim cleric Muqtada al Sadr began shutting down neighborhoods in west Baghdad and issuing demands of the central government.

Simultaneously, in the strategic southern port city of Basra, where Sadr's Mahdi militia is in control, the Iraqi government launched a crackdown in the face of warnings by Sadr's followers that they'll fight government forces if any Sadrists are detained. By 1 a.m. Arab satellite news channels reported clashes between the Mahdi Army and police in Basra.

The Iraqi military is trying to take control of the southern Iraqi city of Basra and the Madhis don't want to surrender to the Baghdad government. Prime Minister Maliki and Sadr are in something of a game of chicken. Will one of them blink?

The Madhi fighters have spent the ceasefire period modernizing and stocking up on supplies from Iran.

The Mahdi Army, believed to number up to 60,000 fighters, was battered by U.S. troops in a series of battles in 2004. But the militia appears to have regrouped and, according to commanders, is ready to respond to "provocations."

According to the three commanders, the militia has received fresh supplies of weapons from Iran — contradicting repeated Iranian denials that it is supporting Iraqi militias.

The weapons, the commanders said, included rockets, armor-piercing roadside bombs and anti-aircraft guns that could be effective against low-flying helicopters.

Additionally, they said an infusion of cash from Iran has been spent on new communication centers equipped with computers with Internet connections, fax machines and mobile satellite telephones.

How fast is their broadband access? Do they stream live feeds of cars getting blown up?

The US government claims the latest violence from Madhis comes from rogue members. Does the US believe this or is this posturing in order to give Sadr room to get back on the plantation?

"The cease-fire is over; we have been told to fight the Americans," said one Mahdi Army militiaman, who was reached by telephone in Sadr City. This same man, when interviewed in January, had stated that he was abiding by the cease-fire and that he was keeping busy running his cellular phone store.

Ilan Goldenberg argues that out of the 4 major factors that contributed to a decline in Iraqi violence the most important was the Mahdi Army ceasefire.

The drop in violence in Iraq has generally been attributed to four elements 1) More American forces and the change in tactics to counterinsurgency; 2) The Awakening movement; 3) The Sadr ceasefire; and 4) The ethnic cleansing and physical separation of the various sides.

It's hard to say for sure, which of these factors was the most important. The Bush administration will tell you it's all about the troop levels. I've tended to believe it's more of a mix and was most inclined towards the Anbar Awakening and the sectarian cleansing as the important factors. But when you look at the data it really seems to indicate that the Sadr ceasefire may have been the key.

He shows a graph where the biggest decline occurred in early 2007 - too early for the surge to be responsible. Another later big drop came around August 28 when Sadr told his forces to stop fighting.

In his article "The Myth of the Surge" Nir Rosen argued in The Rolling Stone that "The Awakening" movement of Sunnis to work as security forces under US supervision came in large part because the US bribed Sunnis to stop fighting American forces.

Now, in the midst of the surge, the Bush administration has done an about-face. Having lost the civil war, many Sunnis were suddenly desperate to switch sides — and Gen. David Petraeus was eager to oblige. The U.S. has not only added 30,000 more troops in Iraq — it has essentially bribed the opposition, arming the very Sunni militants who only months ago were waging deadly assaults on American forces. To engineer a fragile peace, the U.S. military has created and backed dozens of new Sunni militias, which now operate beyond the control of Iraq's central government. The Americans call the units by a variety of euphemisms: Iraqi Security Volunteers (ISVs), neighborhood watch groups, Concerned Local Citizens, Critical Infrastructure Security. The militias prefer a simpler and more dramatic name: They call themselves Sahwa, or "the Awakening."

At least 80,000 men across Iraq are now employed by the Americans as ISVs. Nearly all are Sunnis, with the exception of a few thousand Shiites.

Can the US keep the Sunnis bribed and in approved militias? Will Sadr treat the US withdrawal and attacks in the central government forces as reasons to resume fighting? How much has the ethnic cleansing reduced the number of flash points? I expect the factions to resume fighting eventually.

By Randall Parker 2008 March 25 09:50 PM  Mideast Iraq Insurgency
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2008 March 23 Sunday
Rising Medical Benefits Costs Depressing Wages

One of the reasons median incomes aren't rising is that more employer labor costs are going to medical insurance.

Recent history has not been kind to working-class Americans, who were down on the economy long before the word recession was uttered.

The main reason: spiraling health-care costs have been whacking away at their wages. Even though workers are producing more, inflation-adjusted median family income has dipped 2.6 percent -- or nearly $1,000 annually since 2000.

This isn't new news. But is it a good or bad trend?

Employees and employers are getting squeezed by the price of health care. The struggle to control health costs is viewed as crucial to improving wages and living standards for working Americans. Employers are paying more for health care and other benefits, leaving less money for pay increases. Benefits now devour 30.2 percent of employers' compensation costs, with the remaining money going to wages, the Labor Department reported this month. That is up from 27.4 percent in 2000.

But if total compensation was rising more rapidly then the rising cost of medical benefits would not so easily swamp the effects of rising output.

Poor people don't buy medical insurance. But even over $15 an hour the rate of getting health insurance is quite high.

While about three out of four full-time workers who earn $15 an hour or less have access to health-care coverage on the job, just over half buy it, according to a report by the Bureau of Labor Statistics. Many analysts say that the cost -- lower-wage workers pay about a third of the plan premiums with employers picking up the rest -- discourages many from having coverage. By comparison, nine out of 10 full-time workers making more than $15 an hour have health coverage available, and overall almost three in four are covered by their jobs.

The huge flood of low skilled Hispanic immigrants (both legal and illegal) is expanding the ranks of the poor and disproportionately boosting the number who do not have medical insurance.

Among people under age 65, minorities were substantially more likely than whites to lack health insurance. For all Hispanics under 65, 37.7 percent were uninsured, compared to 20.2 percent of black non-Hispanics and 14.9 percent of white non-Hispanics (Figure 2). Although 68.4 percent of non-elderly Americans were white non-Hispanics, they accounted for only 54.3 percent of uninsured persons (Figure 3). Among males under age 65 (Figure 4), being uninsured was more likely among Hispanics (39.9 percent) than among black non-Hispanics (21.3 percent) or white non-Hispanics (15.7 percent). Similarly, among females under 65, being uninsured was more likely among Hispanics (35.5 percent) than among black non-Hispanics (19.2 percent) or white non-Hispanics (14.2 percent).

This results in more government spending on medical care. Immigration expands the welfare state. Immigrants who have low productivity make society as a whole worse off.

By Randall Parker 2008 March 23 09:59 PM  Economics Living Standards
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US Iraq Death Toll Hits 4000

The war began a little over 5 years ago on March 19, 2003. We've now reached 4000 US soldiers dead and a few hundred more Brits and other allied soldiers. What a tragic waste. 5 years is a long time to fight a war in such a small country.

Bush originally argued for an invasion based on a supposed program to develop nuclear and other dangerous weapons. That justification has been discredited and the Bush Administration moved on to terrorism as the reason for the invasion. Bush continues to inaccurately link the Iraq war with the fight against terrorists.

Speaking at the Pentagon, Mr Bush said "removing Saddam Hussein from power was the right decision". He also said that fighting Islamic militants in Iraq helped to prevent attacks on targets in the United States.

"The terrorists who murder the innocent in the streets of Baghdad want to murder the innocent in the streets of American cities," he said.

The best way to reduce the terrorist threat is to keep Muslims from visiting the United States. The people trying to blow up US soldiers in Iraq are mostly Iraqis who do not want us there. The idea that we are going to create a peaceful and non-aggressive democratic example in the rest of the Middle East to follow is looking pretty dubious. The country is split into religious, ethnic, and tribal factions who each place more importance on holding power than on democracy or respect for individual rights.

Christians in Iraq were accorded far more rights under Saddam Hussein than they are today. Shiite and Sunni Arabs are locked in a fight because the Sunnis know that democracy means Shia rule and Sunni submission. We've managed to bribe some of the Sunni fighters into becoming legal paramilitary forces under limited US control. But that is just allowing the Sunnis to build up forces they need to fight the Shias and the Shias resent our empowering the Sunnis. I do not see how this ends well. I do not see the point of spending billions of dollars per week to try to make it end well.

By Randall Parker 2008 March 23 09:03 PM  Mideast Iraq Costs
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Frequent Job Switching Can Lower Salaries

Don't switch jobs too often.

Workers who frequently change employers risk negative consequences to their paychecks, according to new research published in the February issue of the American Sociological Review, the flagship journal of the American Sociological Association.

Note that while the lady conducting this research is at a Canadian university the dataset she is using was collected on Americans. So these results are relevant to people in the American labor market.

To determine the impact of career mobility on worker’s wages, sociologist Sylvia Fuller of the University of British Columbia examined data from the 1979 National Longitudinal Survey of Youth, tracking nearly 6,000 workers during their first 12 years in the labor market.

Despite the frequent job moves made by young Americans today, Fuller’s research suggests that workers who frequently change jobs generally end up earning less than their more stable counterparts.

“The past 30 years have seen the erosion of long-term employment, and young people are increasingly told to expect ongoing employer changes throughout their careers,” said Fuller. “However, this research examines the cumulative changes workers make, or are forced to make, and demonstrates that these career moves may not always result in higher earnings.”

Hopping around helps more in the early stages of a career.

By and large any benefits of job mobility accrue mainly in a worker’s early career. Fuller finds that both men and women typically experience substantial mobility during their early careers, although women change employers slightly less frequently than men.

Fuller’s research indicates that mobility can be a wage asset when it is concentrated in the early years of employment and not coupled with layoffs, discharges, employment gaps or family-related leave. In this case, moderate or even high levels of mobility can lead to equal or better wage outcomes than stability.

Stay in a job at least 5 years if you can.

Aside from this exception, Fuller finds that wage outcomes deteriorate as mobility rises.

One reason for lower wage trajectories among high-mobility workers is their failure to accumulate valuable early tenure associated with staying up to five years with an employer. In the first five years of a job, each year of tenure is associated with approximately 2.4 percent higher wages for men and 2.9 percent higher wages for women. However, after five years with an employer, women’s gains from tenure plateau and men’s begin to erode.

Think about this intuitively. If you stay in a job longer you can get to know more people and how to work across teams and layers of a particular company. Suppose you are a high performer. Your odds of impressing someone who can eventually reward you goes up with time. You can have a bad manager but eventually get transferred to a different manager who has noticed your performance or who knows someone else who has made notice of your capabilities.

By Randall Parker 2008 March 23 07:39 PM  Economics Labor
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2008 March 22 Saturday
US Government Close To Illegal Alien Employment Crack Down

The best way to stop and reverse the influx of illegal aliens is to enforce immigration laws against hiring of illegal aliens. Under pressure from a large and vocal movement against illegal aliens the Bush Administration has made some moves to cut down on the illegal influx. But the Bush Administration is trying to get a federal judge to allow the crack-down.

The Bush administration yesterday renewed its drive to crack down on U.S. companies that hire illegal immigrants by slightly altering an earlier initiative stalled by a federal judge since last September.

If the new proposal satisfies the court, the government could begin warning 140,000 employers in writing as early as June about suspect Social Security numbers used by their employees and force businesses to resolve questions about their identities or fire them within 90 days.

Assorted enemies such as the ACLU and the US Chamber of Commerce are fighting this regulation in court because, well, it will make it harder for employers to pretend that their illegal aliens really have US citizenship or a green card.

Employers are going to lose semi-plausible deniability if the US government starts sending them letters about bogus Social Security numbers.

In the past, employers have been able to comply with the law by obtaining identification documents from new workers. After that, the government notifies employers if the Social Security number on an employee's W-2 tax form doesn't match the number in the Social Security database. That worker may not have earnings credited for Social Security benefits, but no action is taken against the employer.

Under the new rule, employers who get no-match letters would have 90 days to resolve the discrepancy and an additional three days for an employee to submit a new, valid Social Security number. After that, an employer who failed to fire the worker would be subject to civil fines or criminal prosecution.

That the Bush Administration has gotten this far trying to implement this procedure demonstrates the power and influence of the immigration restrictionist movement.

By Randall Parker 2008 March 22 11:44 PM  Immigration Law Enforcement
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Chilean Diplomat Describes US Pressure Over Iraq

How not to make friends.

UNITED NATIONS -- In the months leading up to the U.S.-led invasion of Iraq, the Bush administration threatened trade reprisals against friendly countries who withheld their support, spied on its allies, and pressed for the recall of U.N. envoys that resisted U.S. pressure to endorse the war, according to an upcoming book by a top Chilean diplomat.

The rough-and-tumble diplomatic strategy has generated lasting "bitterness" and "deep mistrust" in Washington's relations with allies in Europe, Latin America and elsewhere, wrote Heraldo Muñoz, Chile's ambassador to the United Nations, in his book "A Solitary War: A Diplomat's Chronicle of the Iraq War and Its Lessons," set for publication next month.

"In the aftermath of the invasion, allies loyal to the United States were rejected, mocked and even punished" for their refusal to back a U.N. resolution authorizing military action against Saddam Hussein's government, Muñoz wrote.

The US "spending" on the Iraq war far exceeds the $3 billion budgeted to get burnt in Iraq each week. We also spent influence. We also burned friends. We also sent about 4000 Americans and a few hundred Brits and other coalition ally soldiers to their deaths so far. Plus, we now have tens of thousands of permanently maimed and brain damaged soldiers coming back from the war. They will require care and produce less and cost more for decades to come. The real cost of the Iraq war runs into the trillions of dollars.

Since vital US interests are not at stake in Iraq these costs are all net costs.

Update: Nobel Prize-winning economist Joseph Stiglitz says our total long term costs of Iraq tally up to $25 billion per month.

Granted, the cost estimates are squishy and controversial, partly because the $12.5 billion a month that we’re now paying for Iraq is only a down payment. We’ll still be making disability payments to Iraq war veterans 50 years from now. Professor Stiglitz calculates in a new book, written with Linda Bilmes of Harvard University, that the total costs, including the long-term bills we’re incurring, amount to about $25 billion a month. That’s $330 a month for a family of four.

But far too many on the Right can't admit the war is a mistake because they do not want to admit that their ideological enemies could ever be right.

Tyler Cowen argues that the US government's poor handling of the war should have been expected.

Henry at Crooked Timber challenges me to provide more background on why the fiasco in Iraq is another instance of government failure.  I do so in the comments to his post and expand somewhat here.

Government founders on problems of incentives and information.  On incentives: Should we be surprised that delays, errors and incompetence are more prevalent at the INS than at bureaucracies which must deal with citizens or which face competition from the private sector?

Of course not - but then what incentives does our government have to prevent abuse of foreign citizens? Democracy in this case provides no checks and balances because of anti-foreign bias, the ease with which the public can ignore the deaths of innocents abroad, and the fact that foreigners lack representation in our legislatures or the courts.  Thus, Abu Ghraib and the routine shooting of innocents is no surprise - this is what happens when government is unconstrained. 

What about the incentives to start wars? Government is bad enough when we all have access to information. What are we going to do when the major source of information is the government itself and they ask us to trust but not verify? 

He goes on from there. All worth a read.

By Randall Parker 2008 March 22 01:01 PM  Mideast Iraq Costs
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2008 March 18 Tuesday
Will Federal Reserve Tame The Financial Panic?

Are you all aware of how monumental the recent events in financial markets have become? MIT economist Paul Krugman thinks the total losses in housing might range between $6 trillion and $7 trillion. That's equal to about half a year's GDP of the United States.

Fortune: By year-end, 15 million Americans could have mortgages worth more than the value of their homes. What happens then?

Krugman: Actually, I think home prices will fall enough for us to produce about 20 million people with negative equity. That's almost a quarter of U.S. homes. If home prices are rising, or if there's positive equity, you can refinance or sell. But if you have negative equity, you can end up being foreclosed on, and then some people will just find it to their advantage to walk away. We're probably heading for $6 trillion or $7 trillion in capital losses in housing. Some fraction of that will fall on owners of mortgages. I still think the estimates people are putting out there - $400 billion or $500 billion in losses - are too low. I think there'll be $1 trillion of losses on mortgage-backed securities showing up somewhere.

Such a large drop in housing prices will, if it comes to pass, cause an extended recession as people spend less in response to feeling poorer. I think the Fed is ill placed to prevent it without causing general price inflation. Currently the Fed is putting prevention of financial panic ahead of stopping inflation. But I do not think prevention of financial panic alone will stop a big drop in housing prices.

Alan Greenspan says our current economic crisis is going to be the worst one since the Great Depression. (and notice how he used WWII rather than the obvious Great Depression as the time end-point)

The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.

Home price stabilisation will restore much-needed clarity to the marketplace because losses will be realised rather than prospective. The major source of contagion will be removed. Financial institutions will then recapitalise or go out of business. Trust in the solvency of remaining counterparties will be gradually restored and issuance of loans and securities will slowly return to normal. Although inventories of vacant single-family homes – those belonging to builders and investors – have recently peaked, until liquidation of these inventories proceeds in earnest, the level at which home prices will stabilise remains problematic.

Nouriel Roubini says conventional Federal Reserve monetary policy has become useless to stop the panic.

Since the onset of the liquidity and credit crunch last summer this column has been arguing that monetary policy would be impotent to address such a crunch because, in part, of the existence of a non-bank “shadow financial system”. This system is composed of conduits, SIVs, investment banks/broker dealers, money market funds, hedge funds and other non bank financial institutions.

The Fed has responded by becoming a massive lender and even to non-bank financial institutions.

The response of the Fed to this run has been radical and in the form of the extension of the lender of last resort support to non bank financial institutions. Specifically, the new $200 bn term facility allows primary dealers – many of which are non banks – to swap their toxic mortgage backed securities for US Treasuries; second, the Fed provided emergency support to Bear Stearns and following the purchase of Bear Stearns by JPMorgan, is now providing a $30 bn plus support to JPMorgan to help the rescue of Bear Stearns; finally, now the Fed is allowing primary dealers to access the Fed discount window at the same terms as banks.

Yet long term interest rates are going up and the Fed is fighting against a market that fears it will generate inflation on top of the commodity-driven inflation.

Gotta say the Fed decided to set new precedents and made radical departures from past practices without first waiting for a new economic depression to break out. The big $200 billion Fed loan to security dealers in exchange for dubious financial instruments amounts to an attempt by the Fed to counter the credit tightening effects of a flight to quality. Ben Bernanke is a student of the Great Depression and doesn't want another one on his watch.

These bold departures from past practice have not ended the fear in high finance. The "TED Spread" is still too large as of this writing. TED spread stands for Treasury Euro Dollar interbank loan interest rate difference or spread. The bigger that spread the more fear that banks have about loaning to other banks.

In his excellent essay "The $1.4 Trillion Question" in The Atlantic James Fallows explores the massive trade deficit of the United States and the massive trade surplus of China and says this imbalance has to end somehow and it might end in a panic.

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China. Like so many imbalances in economics, this one can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.

Any economist will say that Americans have been living better than they should—which is by definition the case when a nation’s total consumption is greater than its total production, as America’s now is. Economists will also point out that, despite the glitter of China’s big cities and the rise of its billionaire class, China’s people have been living far worse than they could. That’s what it means when a nation consumes only half of what it produces, as China does.

I see one big problem looming on the horizon that might outweigh all this financial engineering: Peak Oil. The US Federal Reserve and its equivalents in Canada, Britain, and the Euro zone can't financially engineer their way around declining supplies of energy.

Update: If we are facing only a liquidity problem then the Fed can handle it. But if we are facing an insolvency problem (i.e. lots of asset holders have greater liabilities than they have market value in their assets) then the Fed can't stop what is happening. The Fed can try to inflate away debts by expanding the money supply. But either the Fed causes a huge inflation or lots of financial firms and other firms go under. Some analysts think we are near a liquidity trap. But if insolvency is our real problem then the fear of a liquidity trap is, strangely enough, an optimistic interpretation.

By Randall Parker 2008 March 18 10:22 PM  Economics Business Cycle
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2008 March 16 Sunday
Eliot Spitzer Paid Too Much For Sex

First off, if Spitzer had just dealt purely in cash he never would have created bank transactions that led to an investigation of his patronage of Ashley Alexandra Dupré . Why couldn't he see this? As someone pointed out in the comments of a previous post, Spitzer got 1590 on his SATs and that probably converts to an IQ of nearly 160. So he has the brains and the experience as a prosecutor to think through less risky ways to satisfy his desires. Even worse, vice detectives think Spitzer overpaid.

Spitzer, 48, was allegedly caught on a federal wiretap arranging for the woman, identified as "Kristen," to meet him in a Washington hotel room on the night of Feb. 13. Court documents say "Client-9," whom a source familiar with the investigation identified as the Democratic first-term New York governor, forked over $4,300. Spitzer testified on the Hill the next day, Valentine's Day, about the state of the bond industry. The documents do not say how much this client paid per hour, since the sum allegedly included a down payment on future services. But, since his time with the prostitute apparently lasted less than three hours, experts on the Washington area sex industry said, Client-9 appears to have paid far more than the local going rate. "Even the high-end escort services are anywhere between $300 and $500 per hour," said Detective Mark Gilkey, a D.C. police investigator who has worked prostitution cases in the city for 26 years. Detective Steven Schwalm of the D.C. police department's prostitution enforcement unit said some call girls charge $10,000 for an evening that lasts three or four hours -- and $250,000 for a weekend getaway where the woman provides "sex on demand." He added, though, that he knows of no arrests in this exclusive tier: "We don't have enough in our confidential funds to order up a high-priced call girl like that."

So the police can't afford to catch high priced call girls and Spitzer was operating in a market where the risks of getting caught are very low. Yet Spitzer got popped. How'd that happen? Political enemies trying to bring him down? Nope. The governor went out of his way to draw his bank's attention to his financial transactions to pay for sex.

MELVILLE, N.Y. - New York Gov. Eliot Spitzer ended up as the subject of an investigation into a prostitution ring because his bank branch in Manhattan turned him in to the Internal Revenue Service as someone who might be engaged in suspicious currency transactions, according to sources familiar with the investigation. After the governor transferred $10,000 by breaking it into smaller amounts, he then called the bank asking that his name be removed from the transactions, the sources said.

Spitzer shows a lack of common sense and good judgment in other areas. Spitzer is an opponent of strict enforcement of immigration laws and sought unsuccessfully to legalize the granting of drivers licenses to illegal aliens in New York state. But the criminal investigation of Spitzer draws law enforcement resources away from criminals who pose real threats to public safety. For ages 18-19 1 per 107 whites are imprisoned. But for blacks it is 1 in 19 and for Hispanics 1 in 47. So the Hispanic incarceration rate is over double the white rate. Prosecutor and investigator efforts expended on Spitzer would be better spent on prosecuting Hispanic immigrants and deporting them. Also, prosecutors and investigators should go after the employers of illegal immigrants and we should put an end to chain migration of relatives.

By Randall Parker 2008 March 16 10:45 AM  Economics Crime
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2008 March 15 Saturday
United States Created Socialist Regime In Iraq

Blogger Audacious Epigone has posted a chart showing government expenditure as a percentage of GDP for 160 countries. Which country has the highest percentage of GDP as government expenditure? Cuba is in second place with 81.4%. Slovakia is in third place at 66.2%. So which country is the ultimate socialist regime? Iraq at 87.3% of GDP as government expenditure. That's an amazing figure.

I wonder if that figure includes the Sunni irregular military forces that the US military bankrolls to buy them off and keep them from attacking American and Shia targets. See my previous post about Nir Rosen's piece "The Myth of the Surge". We are buying off factions in Iraq to reduce the violence. That buying off process is part of what boosts government expenditures to such a high percentage of GDP.

You might think such a high percentage of GDP as government expenditure isn't possible. Surely someone has to produce whatever the Iraqi government buys. But the Iraqi government can use oil revenues to pay employees and the government and its many employees can buy goods shipped in and trucked in from other countries.

By Randall Parker 2008 March 15 09:10 PM  Mideast Iraq Economics
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Boeing Furor Over Outsourcing National Security

If we outsource steel production, silicon chip production, flat panel display production, car production, software development, chip design, energy production (which is more important than the airplane that dispenses the fuel IMO), and thousands of other things and our elites acquiesce to this state of affairs while we run monstrous deficits and go into hock to the world why do our elites expect us to take them seriously when some of them try to draw the line at aerial refueling tankers?

But the hot rhetoric could sound overly nationalistic, and even hypocritical, once the real implications for jobs and national security become clear. Boeing, for example, would have made many of its own tanker parts overseas, and some experts say that claims of job losses to a foreign company seem exaggerated.

For now, though, the pro-Boeing, pro-America talk is showing no signs of letting up.

“We really have to wake up the country,” said Senator Patty Murray, Democrat of Washington State, where Boeing is a significant employer. “We are at risk of losing a major part of our aerospace industry to the Europeans forever.”

Representative Todd Tiahrt, Republican of Kansas, said: “It’s outsourcing our national security. An American tanker should be built by an American company with American workers.” Boeing would have done some of its tanker assembly in Kansas.

I'm just asking.

Our elites are willing to fritter away a far larger competitive advantage and source of national security than the ability to do refueling tanker design in the United States (and EADS and Northrup Grumman will do tanker construction in Alabama anyway). We ought to try to hang onto more important advantages like sound finances and a smart populace. We do have one important advantage over East Asia that we ought to try to enhance rather than ruin.

By Randall Parker 2008 March 15 10:22 AM  Politics Grand Strategy
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2008 March 12 Wednesday
Ashley Alexandra Dupré, Eliot Spitzer, And Inattention About Iraq

Ashley Alexandra Dupré has been fingered by the press as "Kristen", the hooker (or high priced courtesan) that former New York Governor Eliot "Huggy Bear" Spitzer was getting squeezed by. Why am mentioning this? I'm putting the US soldiers killed and maimed in Iraq close to what people really care about so they'll notice real facts about Iraq.

Twenty-eight percent of the public is aware that nearly 4,000 U.S. personnel have died in Iraq over the past five years, while nearly half thinks the death tally is 3,000 or fewer and 23 percent think it is higher, according to an opinion survey released yesterday.

The survey, by the Pew Research Center for the People and the Press, found that public awareness of developments in the Iraq war has dropped precipitously since last summer, as the news media have paid less attention to the conflict. In earlier surveys, about half of those asked about the death tally responded correctly.

"Kristen" has a nice rack. But we are throwing away trillions of dollars and thousands of lives in Iraq in a pointless war. You can check out what she looks like. But really, do you want US forces to stay in Iraq 100 years?

The Iraqi government is now functioning?

Eliot Spitzer is a loser because he had to pay for sex from a prostitute rather than getting it legally for free from an intern. Americans are losers because they can't pay enough attention to demand a US withdrawal from Iraq. While we've been pouring money down the Iraq rat hole the price of oil has skyrocketed to over $110 per barrel. We could have taken that over a trillion dollars wasted on Iraq and funded better insulation, energy research, hybrid vehicles, and other measures that would have saved us money on oil. Trillions of dollars wasted are a lot more than $4300 spent to have "Kristen" provide her services in a DC hotel room. We should be more upset about the trillions of dollars than a few thousand.

By Randall Parker 2008 March 12 10:20 PM  Mideast Iraq Exit Debate
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2008 March 11 Tuesday
China Air Pollution Obstacle For Olympic Athletes

When pondering business and vacation trips to China be sure to consider the damage to your health. The world record holder for the marathon refuses to run the marathon in Beijing's polluted air.

The world's fastest long-distance runner said yesterday he will not compete in the marathon at the Beijing Olympic Games because of the city's choking air pollution, a move that is prompting runners of all levels to reassess the net health benefits of going for a jog in the smog.

"The pollution in China is a threat to my health and it would be difficult for me to run 42 kilometres in my current condition," Haile Gebrselassie, the 34-year-old Ethiopian who many enthusiasts call the best distance runner of all time, told Reuters.

Gebrselassie is still going to race the 10000 meter. He has asthma and figures a marathon in Beijing's polluted air could do permanent damage to his sensitive lungs.

A friend who went to China told me that at one point she had to pull over the car she was driving to throw up because the air was so bad it had made her sick to her stomach. But of course Chinese officials paint a rosier picture.

"I believe the air quality will only become better and better in Beijing," Foreign Minister Yang Jiechi said when asked about running eat Haile Gebrselassie's plans to skip the Olympic marathon because of pollution worries.

An Olympic tennis player might drop out too.

Justine Henin, the world’s top-ranked women’s tennis player and the 2004 Olympic gold medalist, said she was considering not competing in the Olympics because of air-quality concerns.

The International Olympic Committee made a serious mistake when it chose Beijing for the Olympics.

China's environmental protection agency is very small.

Environmentalists applauded the move to give the relatively small and weak environmental agency more clout, but noted that it is unclear how much additional budget allocation or staffing it will receive. The current State Environmental Protection Administration has about 300 employees, not including affiliated institutions. By comparison, the U.S. Environmental Protection Agency has about 18,000 employees and an annual budget of about $7 billion.

So many people in China are very poor that the trade off between pollution control and economic growth in China is really not the same as in Western countries. Unfortunately the rest of the world part of what China dumps into the air and water.

By Randall Parker 2008 March 11 11:08 PM  China
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2008 March 10 Monday
Universities See Brain Shortage Upcoming

They will of course continue to deny that genetic potentials have anything to do with their looming shortage of smart young minds.

Colleges and universities are anxiously taking steps to address a projected drop in the number of high school graduates in much of the nation starting next year and a dramatic change in the racial and ethnic makeup of the student population, a phenomenon expected to transform the country's higher education landscape, educators and analysts said.

I doubt the increase in smarter Asians will offset the effects of more Hispanics.

The United States can't maintain its position in the world with a decaying demographic situation. Most of all we need brains and lots of them to keep the economy growing and to stay on the technological edge.

Colleges and universities, much like American corporations, will increase their drive to reach a global marketplace of prospective customers. They will of course pretend not to notice their need to go abroad to get the brains as they trumpet the glories of diversity.

By Randall Parker 2008 March 10 11:27 PM  Education
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2008 March 09 Sunday
Douglas Feith Blames Others For Iraq War Failures

Will Paul Wolfowitz also write a book blaming others for debacle of the Iraq war he did so much to promote?

Douglas J. Feith, in a massive score-settling work, portrays an intelligence community and a State Department that repeatedly undermined plans he developed as undersecretary of defense for policy and conspired to undercut President Bush's policies.

So it wasn't Feith's fault and if only more had shared his faith in the rightness of his vision then the Iraq invasion have turned out well. Does he really believe this?

Bush didn't care about weapons inspection results. He had already made up his mind about the invasion December 2002 (and probably much sooner than that).

Among the disclosures made by Feith in "War and Decision," scheduled for release next month by HarperCollins, is Bush's declaration, at a Dec. 18, 2002, National Security Council meeting, that "war is inevitable." The statement came weeks before U.N. weapons inspectors reported their initial findings on Iraq and months before Bush delivered an ultimatum to Iraqi leader Saddam Hussein. Feith, who says he took notes at the meeting, registered it as a "momentous comment."

Look at it this way: We can't expect a high level of competence in government. Intelligence agencies will miss evidence that goes against what their masters want to hear. War planners do not know how to rule over foreign hostile cultures and religions. The lesson from Iraq is a traditional conservative lesson on the limits to the wise use of power.

Given that the Pentagon had the bulk of the assets going into Iraq and given that the military is responsible for battlefield intelligence Feith's attempts to shift the blame elsewhere are not credible.

Although he acknowledges "serious errors" in intelligence, policy and operational plans surrounding the invasion, Feith blames them on others outside the Pentagon and notes that "even the best planning" cannot avoid all problems in wartime. While he says the decision to invade was correct, he judges that the task of creating a viable and stable Iraqi government was poorly executed and remains "grimly incomplete."

Way back in 1996 Jewish neoconservatives with US citizenship intent on protecting Israel wrote a document for Israeli Prime Minister Binyamin Netanyahu calling for Israel to overthrow Saddam Hussein's regime. Among the signers of that document, A Clean Break: A New Strategy for Securing the Realm, was Douglas Feith along with other future Bush Administration members Richard Perle, David Wurmser (who holds dual US and Swiss citizenship and advised Dick Cheney), and others. These guys have been promoting bad ideas for a long time.

By Randall Parker 2008 March 09 07:26 PM  Mideast Iraq Blame Game
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Silicon Valley Tech Workers Flee To Safer Jobs

Just as there is an investor flight to safety with Treasury bills so there is an engineer and software developer flight to safety in high tech.

Mr. Kher is part of a new flight to safety among tech-industry workers as the economy struggles. In growing numbers, these workers are gravitating to larger companies that they hope can better weather a downturn. Ian Arcuri, an engineer in Research Triangle Park, N.C., left a local tech start-up to join giant Cisco Systems Inc. in October. "If I have to live through an economic downturn for three years, then I'd like to be at a company with a big war chest," he says.

There's no data on these job shifts, and recruiters and companies say the trend is nascent. Start-ups certainly aren't being abandoned en masse. But early signs of a mind-set shift are unmistakable, evoking memories of previous migrations to stabler jobs. During the dot-com bust that began in the year 2000, dozens of Silicon Valley start-ups withered or disappeared, while many large tech firms survived. Sure, big tech companies eventually began firing as well, but engineers who leaped to safety early were more likely to survive cutbacks.

The full article is worth reading if you do tech work.

Over 7 years from starting to hitting an IPO for start-ups today. I didn't expect that.

The dream of nearly every start-up -- IPO riches -- is taking longer to materialize, when it happens at all. Tech start-ups today take an average of just over seven years to get to an initial public offering, up from about three years in 2000, according to research firm VentureOne. And the number of tech IPOs remains far off the peak of the dot-com boom: Last year, just 34 tech start-ups went public, down from 105 in 2000, according to VentureOne.

Think about your job and decide whether you need to do your own personal flight to quality. Another alternative: work harder to boost your perceived value to your employers. Also, if you are in a position to make a difference in sales then try hard to win new business that will keep your company busy during the next couple of years of hard times.

By Randall Parker 2008 March 09 02:37 PM  Economics Labor
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2008 March 08 Saturday
US Wages Never Returned To Late 1990s Peak

The US economy is entering a recession. So how did we do during the period of economic gowth since the last recession that started in 2000? Most American households have yet to regain the level of income they achieved before the last recession.

And if the good times have really ended, they were never that good to begin with. Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account. Since the Census Bureau began keeping records in the 1960s, a prolonged expansion has never ended without household income having set a new record.

David Leonhardt of the NY Times thinks a whole decade will go by before most Americans receive a raise. I think he's being optimistic.

The median household earned $48,201 in 2006, down from $49,244 in 1999, according to the Census Bureau. It now looks as if a full decade may pass before most Americans receive a raise.

The 1999 high point might persist for a long time. We are in a period of a bumpy oil production plateau while Asian oil demand is rising and internal demand by oil exporters is preventing increased production from translating into increased oil exports. At the end of the production plateau comes the fall. To put it mildly, I expect that to be most unpleasant.

We can no longer afford to party like its 1999.

Median family income in the United States has decreased about $1,000 since peaking in 2000. The income decline came after more than a quarter-century of slow growth. Between 1973 and 2000, incomes increased at just a third the rate of worker productivity, a sharp break from the previous generation when family incomes and productivity both doubled, fueling an unprecedented expansion of the middle class.

The wage stagnation experienced by many Americans has been accompanied by a sharp growth in income inequality. After-tax family income for the nation's middle tier of wage earners increased 21 percent between 1979 and 2005, to $50,200. Incomes of the top 1 percent of wage earners, meanwhile, tripled, to just over $1 million, even as the after-tax income of the bottom fifth of income earners grew just 6.3 percent, to $15,300.

Rose says that if total compensation -- which includes the increasing cost of health and other benefits -- is included, American workers have done better than census numbers would indicate.

Yes, costs of non-wage benefits have gone up faster than salaries. Rising medical insurance costs are the major reason why. How much of that rise in medical costs is due to newer and better yet more costly treatments?

But some economists think we really are doing better since people own more gadgets and live in bigger houses.

Items once considered luxuries -- dishwashers, central air conditioning, video cameras -- are now common. The average size of new homes has increased 40 percent in the past generation. And as many consumer items cost less, Americans are shopping more. In 1991 the average American bought 33.7 pieces of apparel; by 2002 he or she bought 48 items, according to Boston College sociologist Juliet Schor. In 2005, she said, Americans were projected to discard more than 63 million computers.

I wonder how much of that improvement came before 2000.

The big China export engine drove down costs of lots of products as factories closed in the US and opened in China. But that way to lower product costs came with drops in wages of those who used to get paid to make things in the United States. Now that the US dollar is dropping and inflation is heating up in the US and China the foreign sourcing of products isn't going to be a source of lower prices any more.

I see a few things coming together to cause at best a stagnation of US living standards. First off, we live in what Warren Buffett calls Squanderville where we run up debts to the world and our government destroys wealth in a pointless war while signing itself up for more unfunded liabilities for old folks. Plus, our demographic picture looks grim between the retirement of the more skilled Baby Boomers and the swelling ranks of low skilled Hispanics. On top of all that comes Peak Oil. We aren't going to build new capital equipment to generate energy from non-oil sources fast enough to make up for the decline in oil production.

By Randall Parker 2008 March 08 05:35 PM  Economics Living Standards
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America To Reurbanize?

Writing in The Atlantic Christopher Leinberger argues the move to McMansions has peaked and affluent Americans want to move back into urban zones.

Arthur C. Nelson, director of the Metropolitan Institute at Virginia Tech, has looked carefully at trends in American demographics, construction, house prices, and consumer preferences. In 2006, using recent consumer research, housing supply data, and population growth rates, he modeled future demand for various types of housing. The results were bracing: Nelson forecasts a likely surplus of 22 million large-lot homes (houses built on a sixth of an acre or more) by 2025—that’s roughly 40 percent of the large-lot homes in existence today.

The retirement of the Baby Boomers will reduce the number of people in their households. On the other hand, immigration is pushing up the general demand for housing. However, poor and low skilled Mexican immigrants can't afford big suburban houses.

Leinberger points to relative prices to show the greater desirability of more densely populated and walkable neighborhoods.

Pent-up demand for urban living is evident in housing prices. Twenty years ago, urban housing was a bargain in most central cities. Today, it carries an enormous price premium. Per square foot, urban residential neighborhood space goes for 40 percent to 200 percent more than traditional suburban space in areas as diverse as New York City; Portland, Oregon; Seattle; and Washington, D.C.

It’s crucial to note that these premiums have arisen not only in central cities, but also in suburban towns that have walkable urban centers offering a mix of residential and commercial development. For instance, luxury single-family homes in suburban Westchester County, just north of New York City, sell for $375 a square foot. A luxury condo in downtown White Plains, the county’s biggest suburban city, can cost you $750 a square foot. This same pattern can be seen in the suburbs of Detroit, or outside Seattle. People are being drawn to the convenience and culture of walkable urban neighborhoods across the country—even when those neighborhoods are small.

Leinberger mentions energy efficiency as one of the advantages of urban living. People can walk rather than drive or drive shorter distances. Also, multi-unit dwellings share walls which reduce heat loss. If, as I expect, Peak Oil is upon us the energy efficiency advantage is about to become far more compelling. The need to reduce energy usage might become the biggest reason people shift back to high density living. Walkable neighborhoods could become all the rage.

Leinberger also fails to mention racial differences in crime rates. This topic is one of liberal America's many taboos and so his omission is not surprising. But to understand future American demographic changes one must pay attention to race and crime. White fear of black criminals, while only spoken about honestly by few writers, is the elephant in the room. Black-on-white crime causes whites (including liberal whites who deny this) to segregate themselves into white suburbs far from black urban areas. The white flight from crime was one of the reasons the suburbs grew after World War II in the first place. In areas with fewer blacks the whites can more easily urbanize without fear they'll become frequent targets of criminals.

White America has spent decades trying to make urban areas safe again by setting a world record for the rate of incarceration of criminals.

Washington, DC - 02/28/2008 - For the first time in history more than one in every 100 adults in America are in jail or prison—a fact that significantly impacts state budgets without delivering a clear return on public safety. According to a new report released today by the Pew Center on the States’ Public Safety Performance Project, at the start of 2008, 2,319,258 adults were held in American prisons or jails, or one in every 99.1 men and women, according to the study. During 2007, the prison population rose by more than 25,000 inmates. In addition to detailing state and regional prison growth rates, Pew’s report, One in 100: Behind Bars in America 2008, identifies how corrections spending compares to other state investments, why it has increased, and what some states are doing to limit growth in both prison populations and costs while maintaining public safety.

One in nine black males between the ages of 20 and 34 is behind bars.

A close examination of the most recent U.S. Department of Justice data (2006) found that while one in 30 men between the ages of 20 and 34 is behind bars, the figure is one in nine for black males in that age group. Men are still roughly 13 times more likely to be incarcerated, but the female population is expanding at a far brisker pace. For black women in their mid- to late-30s, the incarceration rate also has hit the one-in-100 mark. In addition, one in every 53 adults in their 20s is behind bars; the rate for those over 55 is one in 837.

From 1987 to 2007 America's prison population tripled and the US imprisons about 8 times as many people per 100,000 as Germany does. Curiously, prison spending by states in inflation adjusted terms grew by less than a tripling in this 20 year period from $19.38 billion to $44.06 billion.

Among men 18 and older the breakdown is 1 in 106 whites, 1 in 36 Hispanics, and 1 in 15 blacks. The middle figure poses the biggest problem for the promoters of reurbanization. Hispanics are a growing portion of the US population and their higher level of criminality will raise the cost of the imprisonment. Even adjusted for age Hispanic imprisonment rates are much higher than white rates (see table A-6, page 34 at the next link). For ages 18-19 1 per 107 whites are imprisoned. But for blacks it is 1 in 19 and for Hispanics 1 in 47. So the Hispanic incarceration rate is over double the white rate.

Will the ability to finance all these prisons put a limit on crime control measures and thereby limit the move back into cities? California so far has not backed off on imprisonment even during a severe budget crisis.

The economic picture is so dire in California, where a budget deficit of $14.5 billion is predicted for the coming fiscal year, that the Republican governor has proposed releasing more than 22,100 inmates before their terms are up. Eligibility would be limited to nonviolent, nonserious offenders, and the plan excludes sex offenders and those convicted of 25 other specific crimes. Governor Schwarzenegger says the state would save $1.1 billion through his proposal, but so far it has received a cool reception from both parties in the legislature.

Perhaps the biggest question about the future of crime control by imprisonment comes from the changing demographics of American voters. Will Hispanic voters show themselves as willing as white voters to lock up large numbers of criminals? Prisons are cheaper than paying for increasingly expensive gasoline to commute to distant safer suburbs. That $44 billion spent on incarceration saves far larger sums in transportation costs and in costs for guards on gated communities.

Urban spaces can also be made safer using other measures such as smarter methods of choosing who to parole, whose parole to revoke on violations, how to monitor and track parolees (e.g. drug testing and electronic tracking), and lots of cameras and other electronic sensors in public places. I am expecting the coming decline in oil production to increase the pressures on governments to make more densely populated areas safer as more demanding and influential higher class people move back toward higher density neighborhoods.

Update: 1 in 4 prisoners in the world are in US jails.

Susan Urahn, a senior Pew researcher, said the US now held one in four of the world’s prisoners. China was second, with 1.5m people behind bars. There are 82,000 people in jail in England and Wales, or roughly one in 500 adults. The proportion is similar in Scotland and Northern Ireland.

Why is this? I can see a few reasons. Some poor countries have ineffective police systems and can not afford to imprison a large number of people. Also, affluence tempts people to steal more since there's more to steal. Also, countries with only low crime ethnic groups (e.g. Japan and Finland) have populations disinclined to commit crimes.

By Randall Parker 2008 March 08 10:47 AM  Economics Housing
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2008 March 06 Thursday
Average Home Equity Less Than Half Amount Owed

Warren Buffett, once more richest man in the world, refers to America as Squanderville because we are going deeper and deeper in debt to other parts of the world (Thriftville). In another sign of our road to Squanderville Americans now own less than half the market value of their houses.

Homeowners' percentage of equity slipped to a revised lower 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter – the third straight quarter it was under 50 percent. That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

Total equity in American houses equals less than 1 year of GDP. I'm surprised by this. I would have expected a much larger figure for housing worth as compared to GDP.

The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.

Blogger Calculated Risk points out that since almost a third of all homes have no mortgage the remaining homes probably have about 29.7% equity on average.

According to the Census Bureau, 31.8% of all U.S. owner occupied homes had no mortgage in 2006 (most recent data).


Assuming 74.2% of total assets is for households with mortgages ($14,954.8 billion), and since all of the mortgage debt ($10,508.8 billion) is from the households with mortgages, these homes have an average of 29.7% equity.

Why does this matter? It tells us how far housing prices would have to fall before most mortgaged houses become worth less than the money owed on them.

Providence Equity Partners chief executive Jonathan Nelson says another 5% decline in housing prices will put 30% of homeowners owing more on their houses than their houses are worth.

"In real estate, house prices fell 7pc in 2007 so 13pc of mortgage holders were underwater. 2008 has already seen those falls rise to 10pc and if it falls a further 5pc, which is not impossible, 30pc of homeowners in the US are under water and have negative equity. So it's hard to see how the third pillar - confidence - can hold up."

Even if you are not a home owner or a holder of a mortgage security you could end up paying for some of these losses via taxes used to bail out failed banks.

Personal worths are declining as housing prices and stock prices fall.

Based on the current pattern of stock market losses and falling home values, household net worth is estimated to have declined by about $1 trillion in the fourth quarter and about $1.5 trillion to $2 trillion this quarter, depending on where stock prices settle. That would be the largest drop since the tech bubble burst in 2000.

How long will the recession last and how deep will it get?

Home prices are falling steeply. Adjusted for inflation the declines would be even larger.

U.S. home values in 2007 posted the first yearly decline in 16 years, according to two home-price indexes released Tuesday, and analysts said more price drops are still in the offing.

Home prices fell 8.9% in 2007, the largest decline in the Case-Shiller home price index in at least 20 years, Standard & Poor's reported Tuesday.

Ben Bernanke, the chairman of the Fed, sees a serious problem in the negative equity positions in mortgages.

"The current housing difficulties differ from those in the past, largely because of the pervasiveness of negative equity positions," Mr. Bernanke told the Independent Community Bankers of America in Orlando yesterday. With negative equity, which means a home is worth less than its mortgage, "a stressed borrower has less ability…and less financial incentive to try to remain in the home. In this environment, principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure than reducing the interest rate."

But for wannabe house buyers a big collapse in housing prices would provide great buying opportunities - at least for those who manage to avoid unemployment.

People are losing their houses even before their mortgages reset.

About 40 percent of all foreclosures are homeowners with prime or subprime loans who couldn't make their payments before the reset, Brinkmann estimated in an interview. Another 23 percent are borrowers who received some form of loan modification, typically a freezing or a reduction of their rate, and then default, he said

The foreclosure rate has hit a 36+ year record.

Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report's quarterly, 36-year history.

America needs to stop running a huge trade deficit and Americans need to produce goods rather than try to get rich using debt to purchase unproductive assets. The bursting of this housing bubble ought to serve as a wake-up that pyramid schemes are not the road to greater wealth for entire societies.

By Randall Parker 2008 March 06 09:57 PM  Economics Housing
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2008 March 03 Monday
Examining Russian Economic Growth Under Putin

We've had recent debates in the comments of posts here at ParaPundit on the question of the quality of Vladimir Putin's rule in Russia. Stanford University political scientist Michael McFaul says Vladimir Putin's successes with Russia's economy have been exaggerated.

While Russia can claim that wages have risen, its economy is expanding and poverty rates have been cut, there have been real setbacks in health care, public safety and corruption.

The state has undergone a massive expansion under Mr. Putin, with the number of state employees doubling to 1.5 million, Prof. McFaul said. The murder rate has increased and alcoholism and mortality rates remain high. Public health spending, meanwhile, has not increased in the past decade.

He also argued that Russia was well on the road to economic recovery as early as 1998, after the crashing ruble forced federal officials to control government spending and reduce the state's role in the economy.

But since then, its growth rate has stalled; in 2000, Russia's economy was the second fastest growing among former Soviet countries. Today, it is 13th, Prof. McFaul noted in an article he co-authored in Foreign Affairs, an international relations journal.

Edward Lucas, author of The New Cold War: How The Kremlin Menaces Both Russia And The West, says the level of corruption in Russia today will prevent full economic development.

Oil-fuelled crony capitalism does not bring lasting prosperity.

The real route to lasting progress is in solid, honest public institutions: courts, efficient bureaucrats, a good education system, strong anti-monopoly laws.

Russia not only lacks these, it has the opposite. Whereas the courts used to be merely bribable, they are now a branch of government. The education system is plagued by corruption.

Meanwhile, state bureaucrats shamelessly indulge in what they call "velvet reprivatisation": a euphemism for arbitrarily bankrupting companies and buying them at bargain prices for themselves.

By far the most likely explanation for Mr Medvedev's sudden elevation to the top job is that having smeared opponents as dangerous extremists and used oil wealth to muffle public protest, Russia's rulers have snapped up the lion's share of the country's assets to the tune of tens of billions of dollars.

Their priority now is to squirrel the proceeds away abroad.

That arbitrary bankrupting of companies is especially worrisome. Capitalists can pay a predictable rate of taxes and a predictable rate of extorted bribes. But the loss of everything doesn't just deprive the capitalist of incentive to work and invest. The bureaucrats who take over companies are not likely to run them well.

But Jim Heintz says the economy in Russia is growing quite rapidly.

The ruble is stable and even being touted as a potential reserve currency. The economy grew 8.1 percent last year, and the middle class has grown dramatically. Russia stands 79th on the World Bank's ranking by gross national income per capita at $5,780 — behind Mexico but ahead of EU members Romania and Bulgaria.

The single most important factor in this stunning transformation has been skyrocketing prices for oil and gas. Oil was about $20 a barrel when Putin took office, roughly a fifth of current prices. Russia has earned about $1 trillion in oil and gas revenues during Putin's years, according to calculations by Moscow's UralSib bank.

"There's no doubt about it, they got extremely lucky with the oil price," said UralSib research head Chris Weafer. But "they did a couple of positive things as well, such as reforming the tax system from what was a real upturned plate of spaghetti in terms of all the various options and routes and exceptions that were in the system."

The Economist does an especially good job at examining the recent economic history of Russia. Putin was lucky to come to power at a point when Russia was already on the rebound.

In fact, Mr Putin came to power at an unusually benign moment. The debt crisis and devaluation of 1998 had flushed out the financial system, removed constraints on the rouble and enforced fiscal discipline. With much of the economy in private hands and most prices liberalised, recovery inevitably took off. By the end of 1999 Russia was already growing by more than 6% a year. In 2000 growth accelerated to 10%, a rate still not matched eight years later. Symbolically, four days before Mr Putin was officially elected as president, the first IKEA store opened in Moscow.

To be fair, at first Mr Putin worked hard to consolidate growth. His government simplified and cut taxes. Budget reform brought clarity and stopped the government making unrealistic pledges on spending. Mr Putin not only chose a liberal economist, Andrei Illarionov, as his economic adviser, but also listened to him. For the most part Russia used its oil windfall prudently, repaying debt, building up reserves and filling its stabilisation fund. Many of the reforms conceived in the 1990s were passed at last, including legislation to improve the judicial system and allow a free market in land. The benefits of Mr Putin's early efforts are still felt today.

Mr. Putin didn't cause the huge run-up in oil prices that made oil and natural gas into almost a third of Russia's economy.

The share of oil and gas in Russia's GDP has increased, according to the Institute of Economic Analysis, from 12.7% in 1999 to 31.6% in 2007. Natural resources account for 80% of exports. Like a powerful drug, oil money has masked the pain caused to the Russian economy by the Kremlin. But the disease remains.

That is an astoundingly large percentage of GDP just from fossil fuels.

Transparency International finds no drop in corruption under Putin.

According to Transparency International, a watchdog group based in Berlin, corruption has increased slightly in Russia since 1999 and the country is now ranked 143rd among 179 countries profiled. Its national business environment ranking – compiled by the World Economic Forum's Global Competitiveness Report – has also fallen since 2001, from 56th to 70th, though most of that is due to the addition of new countries. In addition to corruption, the report cites tax regulations, bureaucracy, and inflation as some top concerns.

The top leaders in Russia are now former KGB. They've probably created a more orderly system of bribery. The KGB turned into the FSB and now companies all have to hire FSB agents into top positions.

Current and former FSB officers work in large private companies as well. Another former FSB official said the Kremlin wanted the officers to make sure the companies do not act against Russia's interests.

"Big companies in Russia consult with the Kremlin before striking any big deal. The officers working for those companies are there to make sure that things are done properly or the way the Kremlin wants," the official said.

The companies, who pay generous salaries to the officers, feel they get their money's worth. The officers make sure they do not have problems with the Kremlin.

"All big companies have to put people from the security services on the board of directors," said a banker with a large private bank. "Many are appointed as directors or deputy directors. They are called 'active reserve agents,' and we know that when Lubyanka calls, they have to answer them."

These arrangements place severe limits on the extent of competition based on price and quality of service. Russia can't grow up to its potential as long as companies act like extensions of the state and corruption serves as an additional tax.

By Randall Parker 2008 March 03 10:15 PM  Russia
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2008 March 02 Sunday
Marc Sageman On Terrorism And Welfare

If you get a chance watch the C-SPAN segment of Marc Sageman speaking at the New America Foundation about terrorists. Sageman studies them as a social scientist and has made many useful observations about terrorists. His most recent work focuses on Muslims who live in the West. At one point he put up a slide showing that while 60 people have been arrested as Muslim terrorists in the United States by contrast 2400 have been arrested in Europe. He also says the 60 in the US were not hard core guys for the most part (can you say "entrapment"? sure). Why the difference? Europe has more Muslims. But also, and more importantly, the European welfare state gives young Muslims lots of time to sit around bored and grumbling. As my grandmother used to say "Idle hands are the devil's workshop".

Sageman says that the biggest state sponsors of terrorism are therefore the Western European welfare states. They pay most of the incomes for most of the terrorists active in the West.

There's an obvious conclusion here: We need to invade the European Union and overthrow all the welfare states. We could take over Europe and make it a colony. We could hire British former Hong Kong administrators and tell them to run Europe just as they ran Hong Kong: Low taxes and little in the way of welfare programs. Make everyone work like mad. That'll greatly reduce the terrorist threat.

Our occupation administration could also rid Europe of Muslim terrorists by deporting the Muslims. That would greatly reduce the terrorist threat from Western countries. We could even tell the Europeans that once we deported all the Muslims we'd allow them to restart their welfare states and then we'd withdraw.

If we did all that we'd still face one problem: Canada. What to do about Canada?

I'm thinking it might be time to force the break-up of Canada. In order to dilute the power of the Anglophone whites the French in Quebec have supported the multiculturalist claptrap that has made possible the large scale immigration of many Muslims to the Canadian welfare state. So the French north of our border are a root cause of the Muslim terrorist threat.

By Randall Parker 2008 March 02 07:56 PM  Terrorists Western Response
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Recession Recoveries Slower Than In Past

A good article in the New York Times looks at changing patterns in the US labor market.

In 1994, 30 million people were hired into new and existing private-sector jobs, according to the Labor Department. By 2000, the number of hires had expanded to 34 million. A year later, in the midst of the recession, hiring slackened to 31.6 million, while layoffs winnowed the work force.

In 2003, with the economy again growing, layoffs slowed, but the private sector hired only 29.8 million — a figure that has nudged up only a little in the years since.

Rather than hire and risk having to fire in another downturn, companies added hours for those already on the payroll and relied more on temporary workers, said Mr. McKelvey, the Goldman Sachs economist. Manufacturing companies continued to automate, to squeeze more production out of the same number of workers, while shifting jobs to lower-cost countries like China and Mexico. For lower-skilled workers, that intensifies the competition for the jobs that remain.

Fewer low skilled jobs remain. Yet our elites relentlessly tell us there are plenty of jobs Americans won't do and that we need millions of people to come up from south of the border to do these jobs. The remaining manual labor jobs have lower salaries. Yet, as the article shows, plenty of poor Americans are desperate to get these jobs.

Some of the jobs are getting automated out of existence. Other jobs go to illegal immigrants and their children. Still other jobs move abroad to Mexico and Central America. An even larger number of jobs moving abroad go to China, India, and southeast Asia.

Economic recoveries are slowing down in their rates of lost jobs recovery. The ranks of the long term unemployed have grown.

Before 1990, it took an average of 21 months for the economy to add back the jobs shed during a recession, according to an analysis by the Economic Policy Institute and the National Employment Law Project, a worker advocacy group. Yet in the last two recessions, in 1990 and 2001, it took 31 months and 46 months, respectively, for employment levels to recover fully.

In the recessions of the early 1980s and the early 1990s, the ranks of the so-called long-term unemployed — those out of work for 27 weeks or more — jumped to well above 20 percent of all unemployed people. But in both cases, that share eventually settled back to close to 10 percent of the unemployed.

After the 2001 recession, however, the long-term share stayed above 20 percent from the fall of 2002 until the spring of 2005. In the months since, it has never dipped below 16 percent. In January, 18 percent of those unemployed had been without work for at least 27 weeks, according to the Labor Department.

The decline in the labor market participation rates for black men is especially worrisome. I do not see how it is going to recover. As my grandmother used to say "Idle hands are the devil's workshop."

Steve Sailer points to a Wall Street Journal article about how our political elites have decided to bail out the real estate speculators and try to prevent a full price correction in the real estate market.

Any debate about a housing bailout can be put aside -- the bailout is underway, even in advance of specific plans being shopped around Washington by Bank of America to prop up home prices with direct subsidies to homeowners whose debt exceeds the value of their houses. No, the perverse effect won't be a replay of the '30s, or even Japan's decade of stagnation in the '90s, but the latter is your model, with a little inflation thrown in. The goal: avoid foreclosures and slow the fall of home prices to market-clearing levels.

Notice that today's bailout will be the opposite of the misnamed S&L bailout of the '80s. Then, only depositors, whose money was guaranteed under federal law, were bailed out. The federal government closed down thrifts, wiped out their shareholders, seized loan collateral and dumped it back on the market, even at firesale prices.

But this time, the liquidationist school has been routed -- so named for Herbert Hoover's Treasury secretary, Andrew Mellon, who said: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. . . . It will purge the rottenness out of the system."

We are not going to purge the rottenness out of the system. What does this mean? Well, the Japanese took the same approach after their late 1980s bubble when they prevented a big series of corporate bankruptcies, bank failures, and larger scale real estate foreclosures. The result: The Japanese economy stayed in one long recession for the entire 1990s and into the 21st century.

Think about that. We've got a weak labor market with a flood of immigrants and outsources of work abroad. Plus, our political elites want to prevent the sort of market correction that will purge all the accumulated debt and bad investments. On top of that, the price of oil is going up even during a recession. We've got inflationary pressures due to dwindling oil reserves and rapidly growing Asian demand for commodities. This is not the time to stretch out a bubble.

The decision by our fearless leaders to prop up housing prices poses practical problems for would-be homeowners. You might like the convenience of owning your own home. But if you live in one of the areas where there has been a big housing bubble then home buying is unwise. The prices of houses will eventually correct. But Congress and the President have decided you are not allowed to buy at the market price. This decision of theirs will reduce labor mobility and also push more people into rentals. It will also lengthen the recession we are entering and slow the economic recovery. Work hard and try to hold on to your job.

By Randall Parker 2008 March 02 08:23 AM  Economics Labor
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2008 March 01 Saturday
Smaller Classes Help Smarter Kids More

The left-liberal standard social science model leaves its believers continually baffled by easily explainable observations.

EVANSTON, Ill. --- A Northwestern University study investigating the effects of class size on the achievement gap between high and low academic achievers suggests that high achievers benefit more from small classes than low achievers, especially at the kindergarten and first grade levels.

The faithful believers in the supremacy of current environment (as compared to past selective pressures and genetic differences) think that somehow or other they can change environment and make the lower performers into higher performers. But if we just accept the overwhelming evidence that some kids are smarter than others then suddenly the world becomes so much easier to understand. High achievers are smarter, on average, than lower achievers.

Possessed with the obvious truth that some are smarter than others we can explain this reported result. Smaller classes reduce the disruptive effects of hyperactive and poorly behaving kids (fewer kids mean fewer interruptions). So more hours in the classroom get used for teaching. Well, smart kids absorb more per unit of teaching. So smarter kids become knowledgeable more rapidly than mentally slower kids given the same number of hours spent receiving instruction.

Yet another hope for how to close the achievement gap fails.

“While decreasing class size may increase achievement on average for all types of students, it does not appear to reduce the achievement gap within a class,” said Spyros Konstantopoulos, assistant professor at Northwestern’s School of Education and Social Policy.

Konstantopoulos’ study, which appears in the March issue of Elementary School Journal, questions commonly held assumptions about class size and the academic achievement gap -- one of the most debated and perplexing issues in education today.

The academic achievement gap is perplexing? Really? Professors of education and social policy are perplexed by easily understood phenomena? How long will the standard social science model survive? When will academics embrace reality about the human mind and genes? We differ greatly in our intellectual abilities due to genetic differences. Accept this obvious truth and the world becomes such a more comprehensible place.

Update: Steve Sailer points to a WSJ article where experts can't figure out why Finns do so well on international scholastic tests. Says Steve:

Gosh, I wonder what the reason could be. I'm totally baffled. It's not like Minnesota kids usually score near the top of the NAEP tests in America.

Oh, wait, they do…

Steve, why compare to Finland to Minnesota? I'm like totally baffled. They are on different continents in different cultures and all right thinking (er, left thinking) people know that only culture and not genetics matters,.

By Randall Parker 2008 March 01 10:25 PM  Education
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US Criminal Deportation Rises

The amount by which deportation of criminals has risen is a measure of just how many criminal aliens have been allowed to stay in the past.

U.S. Immigration and Customs Enforcement said that in the 12-month period that ended Sept. 30, it placed 164,000 criminals in deportation proceedings, a sharp increase from the 64,000 the agency said it identified and placed in proceedings the year before. The agency estimates that the number will rise to 200,000 this year.

The elites were willing to allow hundreds of thousands (millions?) of criminal aliens to remain in the country before popular discontent with immigration policy forced them to crack down. We are still paying a big and avoidable price for that past laxness. How many rapes, murders, bank robbers, assaults, and other crimes do Americans suffer daily because the Democrats want more poor Democrat voters and because the upper classes like cheap labor?

Okay, if they tried to deport 164,000 in 2007 but only managed to deport 91,000 then what happened with the other 73,000? Still in the pipeline or managed to avoid deportation?

Two groups of people are now more likely to be placed in deportation proceedings: illegal immigrants who might once have been criminally prosecuted without coming to the attention of immigration authorities, and legal immigrants whose visas and residency permits are being revoked because of criminal convictions.

The number of deported immigrants with criminal convictions has increased steadily this decade, from about 73,000 in 2001 to more than 91,000 in 2007, according to ICE.

I'm pleased to see that legal aliens are getting their residency permits and visas revoked as a consequence of their criminal activity. But I'd like to see efforts to round up criminals who have already been released from prison. We could deport hundreds of thousands of criminals who are out on the streets. We'd benefit from lower crime and lower costs for prisons, courts, and police.

By Randall Parker 2008 March 01 02:17 PM  Immigration Law Enforcement
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Virtual Border Fence Fails In Pilot Project Phase

We need a formidable multi-layer physical barrier along the entire US-Mexico border. But the Bush administration is trying to build something cheaper and less effective. The first attempt to build a sensor and surveillance system in lieu of a physical barrier worked very poorly and pushes out the virtual fence at least 3 years.

The Bush administration has scaled back plans to quickly build a "virtual fence" along the U.S.-Mexico border, delaying completion of the first phase of the project by at least three years and shifting away from a network of tower-mounted sensors and surveillance gear, federal officials said yesterday.

Technical problems discovered in a 28-mile pilot project south of Tucson prompted the change in plans, Department of Homeland Security officials and congressional auditors told a House subcommittee.

They can't even begin to try to appease conservative critics of lax border enforcement for another 3 years. I bet some of the amnesty and open border proponents in the Bush administration are pleased to know they've bought at least 3 more years of their preferred policy.

But officials said yesterday that they now expect to complete the first phase of the virtual fence's deployment -- roughly 100 miles near Tucson and Yuma, Ariz., and El Paso, Tex. -- by the end of 2011, instead of by the end of 2008. That target falls outside Boeing's initial contract, which will end in September 2009 but can be extended.

The excuse of "we've got years more engineering development to do before we can control the border" is unacceptable. We can seal the border using methods the Israelis developed years ago to seal off Gaza from Israel. We do not see many Palestinians sneaking across that border. That's why the Palestinians have had to resort to use of Qassem short range missiles to try to hit targets in Israel. They can't send physical terrorists across the border to do the job

By Randall Parker 2008 March 01 10:54 AM  Immigration Border Control
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