2011 September 29 Thursday
Bookstores Safe From Rioters

Granted, bookstores are hard to find any more. But if you happen to spot a bookstore when a riot is starting around you then run into the bookstore and go back into the shelves. In Clapham Junction London only the bookstore emerged untouched by rioters.

On the worst night of London rioting almost every shop in Clapham Junction was ransacked - except one. The bookshop.

In one of the most telling images of the summer, looters stole TVs, hair products and iPods, but the Waterstone's branch was left untouched.

The rioters are not angry intellectuals. The rioters are not students. The rioters are anti-intellectual or, more likely, indifferent to all things intellectual.

What the governments of London cities ought to do: Buy up large quantities of handcuffs and recruit law-abiding citizens who will help the police in event of a riot. Then when the riot starts use all police to tackle and handcuff rioters as fast as possible. Then use volunteers to put the handcuffed (and more thoroughly shackled if necessary) rioters onto trucks or buses. Then have barbed wire fenced-in fields set up where the rioters would then get driven in large numbers. The goal should be to build up the capability to arrest many tens of thousands of rioters per night. Then leave them

Soldiers could also be brought in to work with the police. Each police officer could get a soldier assistant assigned to help bring down rioters and shackle them.

By Randall Parker 2011 September 29 09:04 PM  Civilizations Order Maintenance
Entry Permalink | Comments(10)
2011 September 25 Sunday
Greece Looks Set To Default In 6 Weeks

European governments are trying to prevent widespread bank failures due to bank losses on the Greek sovereign debt they hold.

European Union governments will spend the next six weeks building a financial firewall to protect their fragile banking systems against what is now seen as an inevitable Greek default.

G20 sources said that up to 50% was likely to be wiped from the face value of Greece's €350bn debt – but not until Europe had put into place a war chest to prevent the contagion spreading.

If the contagion spreads then you might want to read up on how to sell apples at street corners or perhaps effective techniques for begging. Plus, get to know where the food banks are located.

France denies it needs to prop up its banks.

France rejected speculation that it was preparing to put up to €15bn (£13bn) into its banking sector despite fears about the impact of losses from Greek debt might have on some of the country's banks – and others across the eurozone.

Maybe the French think the European Central Bank can bail out French banks.

In the absence of other structures, a consensus is emerging that the European Central Bank will have to monetise debt by buying large quantities of Greek bonds to keep banks, especially in France, afloat.

The Mandarins in Brussels think they can pull off a default without dominoes falling elsewhere.

For the past two months, Eurocrats have been talking increasingly confidently about an 'orderly' default within the euro. While the markets might refuse to lend to welshers, the EU could supply the shortfall. In the mean time, Brussels would bail out the banks which had foolishly bought Greek bonds.

Watch interest rates on Italian, Spanish, Portuguese, and Irish bonds if you want to find out whether the markets believe the firewall will work. If interest rates on Italian or Spanish debt go over 6% and stay there then much bigger dominoes are going to fall.

A poll in Greece shows two-thirds want to remain in the Euro zone rather than revert to using the drachma. Will they get their wish?

By Randall Parker 2011 September 25 01:39 PM  Economics Sovereign Crises
Entry Permalink | Comments(4)
2011 September 24 Saturday
Amazon.com Hot Warehouse Sends Many To Hospital


Workers in an Amazon.com warehouse were routinely sent to the emergency room because of sweltering, suffocating heat that sometimes exceeded 110 degrees — and because Amazon refused to open warehouse doors, fearing theft, according to a devastating exposé in the Allentown, Pennsylvania Morning Call. After workers, an E.R. doctor and a security guard complained, federal regulators investigated the warehouse and recommended changes. Amazon responded with popsicles, bandanas and finger pointing.

This isn't just immoral. It is stupid too. I mean, imagine you had a really hot work place and people were dropping and getting carted off to a hospital. Wouldn't you do something about it given that this is not the 19th century? Is it really that hard to cheaply prevent heat strokes from happening?

This past summer, at least 15 were set to the hospital by ambulance, with another 20 to 30 treated by paramedics on site.

What does it say about the marginal value of manual laborers in America in 2011 that a major company would treat its workers like this? Some of you are too young to have first hand experience, but rising living standards and better work conditions used to be considered normal. In the post-WWII well until the 1970s every year living standards went up. Dangerous workplaces were expected to eventually disappear except where the work was inherently dangerous such as with Alaska deep water fishing or being a cop. But Amazon in 2011 has managed to make fairly simple warehouse labor dangerous.

Some really cheap things could have been done to cut the incidence of heat-caused collapses:

  • Icy drinks delivered around regularly.
  • Wearable jackets of ice cold liquids.
  • Hats containing ice cold liquids.

Then then there's the warehouse:

  • Fans blowing heavily on the workers.
  • Dehumidifier to speed up skin sweat evaporation.
  • Even partial air conditioning to lower the temperature below whatever level needed to stop the ambulance trips.
  • A cold room for breaks. Someone who worked for Aramco in Saudi back in the late 1970s told me they used heavily cooled mobile homes for this purpose.

But in the minds of Amazon management these warehouse workers do not rate for any of that.

America has much farther to fall. Manual laborers will continue to experience declining living standards. In America the median household income peaked in 1999 and is now down 7% from that peak. 12 years of rising productivity? Big benefits from Moore's Law, faster fiber optic cables, denser hard drives, smart phones, and the internet? Nope.

Let me underscore this point: compared to its peak in 1999, median household income is down down $3,800 (2010 dollars), more than 7%. The decline is even more dramatic for non-elderly households, those headed by someone less than 65 years old. That value peaked in 2000, and rose only 1 year since then. It’s down $6,300, or 10% since then, including last year’s decline of 2.6% ($1,500), the largest on record going back to 1987.

As living standards decline so do working conditions. Dear readers I implore you again: Raise your game. Get better at what you do or learn to do something more valuable. You will need to raise your game just to stay at your current living standard. Too many pressures are working against a return to rising living standards.

By Randall Parker 2011 September 24 06:30 PM  Economics Labor
Entry Permalink | Comments(24)
2011 September 23 Friday
Online Daters Strike Non-Partisan Pose

No mention of politics when doing the mating dance online.

PROVIDENCE, R.I. [Brown University] — New research suggests that individuals attempting to attract a mate often avoid advertising their political leanings. The findings, co-authored by political scientists Rose McDermott of Brown University, Casey A. Klofstad of the University of Miami, and Peter K. Hatemi, a genetic epidemiologist at Pennsylvania State University, are published in the journal Evolution and Human Behavior.

This makes sense to me. Why restrict the size of your potential mating pool over a characteristic that won't reduce the reproductive fitness of your offspring? Few guys will reject some hottie girl because she's a liberal Democrat. Similarly, a woman is unlikely to reject a solid wealthy alpha who leans right.

At a later stage of the mating ritual do people filter for characteristics that make them share more political views with their spouse. Or do they move toward their spouse in political views? Women who are married vote more right wing than women who are single. Though that's partly due to single women wanting services from the state that a husband would otherwise provide.

“Because we know that long-term mates are more politically similar than random attachment might predict, we were interested to see how people seeking a mate end up with people who share their political values,” said McDermott. “This is particularly important because political ideology appears to be in part heritable, and so mates pass their ideology on to their children.”

Online dating is very non-partisan.

For their study, titled “Do bedroom eyes wear political glasses? The role of politics in human mate attraction,” the research team randomly sampled 2,944 profiles from a popular Internet dating site and examined whether people indicated an interest in politics or selected a specific political view. They found that only 14 percent of online daters included “political interests” in their profile, which ranked 23rd out of 27 interest categories — just below “video games” and above “business networking” and “book club.”

Another way to look at it: women are more practical than men and are less interested in abstract ideology. That makes sense from an evolutionary standpoint. Women were selected to want a provider and protector while they raise the kids. So political interests end up weighing less for women. At the same time, men are programmed to want fertility signals. So men are much more focused on hot-or-not. Politics is something they can argue about with other men. How many political debates by guys in a bar have been interrupted by a hot woman walking by? Plenty.

By Randall Parker 2011 September 23 05:28 AM  Human Nature Mating
Entry Permalink | Comments(3)
2011 September 22 Thursday
Saudi Arabia Tries To Silence Critics In Canada

The Saudi government threatens legal action against a Canadian organization that points out Saudi women can't drive and that their testimony in court means less than a man's testimony.

A Canadian TV ad that promotes Canada’s “ethical oil “ and blasts Middle East oil — from the same organization that’s run print ads showing an Arab woman about to be stoned — has caused Saudi Arabia’s lawyers in Canada to send a threatening legal notice to Canadian TV network CTV, which has held off running the ad until the matter is resolved.

First point: Foreign governments should not be allowed to have legal standing in Western countries to sue for defamation or on other grounds that would have a chilling effect on free speech. Note that at this point the Saudis have cut off a channel for sending out a message for this organization just by threatening legal action.

Second point: The government of Wahhabi Muslim Saudi Arabia, which, btw, funds the spread of their version of Islam in America, does not hesitate to use oppressive hate speech laws (thanks illiberal leftists) to choke off free speech in Western countries. Not a few Muslims in Western countries support this oppression.

By Randall Parker 2011 September 22 06:15 AM  Civilizations Clash Of
Entry Permalink | Comments(6)
2011 September 21 Wednesday
New Higher US Civil War Death Toll Estimate

A historian estimates that the United States suffered 650,000 to 850,000 deaths as a result of the US Civil War.

BINGHAMTON, NY – The Civil War — already considered the deadliest conflict in American history — in fact took a toll far more severe than previously estimated. That's what a new analysis of census data by Binghamton University historian J. David Hacker reveals.

Hacker says the war's dead numbered about 750,000, an estimate that's 20 percent higher than the commonly cited figure of 620,000. His findings will be published in December in the journal Civil War History.

"The traditional estimate has become iconic," Hacker says. "It's been quoted for the last hundred years or more. If you go with that total for a minute — 620,000 — the number of men dying in the Civil War is more than in all other American wars from the American Revolution through the Korean War combined. And consider that the American population in 1860 was about 31 million people, about one-tenth the size it is today. If the war were fought today, the number of deaths would total 6.2 million."

Even the older lower estimate is a stunning number given the population of the US at the time. Though it is a much lower percentage loss than the Soviet Union suffered in World War II and is a lower percentage than the Serbs suffered in WWI.

Hacker used census numbers for males and females to come up with the much higher range of deaths.

Hacker looked at the ratio of male survival relative to female survival for each age group. He established a "normal" pattern in survival rates for men and women by looking at the numbers for 1850-1860 and 1870-1880. Then he compared the war decade, 1860-1870, relative to the pattern.

His new estimate of Civil War deaths contains a wide margin: 650,000 to 850,000, with 750,000 as the central figure.

Will any industrialized countries engage in wars with such high casualties in the future? Will China and the United States ever duke it out? Or will China and India ever fight a major war?

By Randall Parker 2011 September 21 11:06 PM  Military War Costs
Entry Permalink | Comments(3)
2011 September 18 Sunday
Germans Oppose Denkverbot And Eurozone

For the first time ever, a clear majority (60%) of Germans no longer sees any benefits to being part of the Eurozone, given all the risks, according to a poll published September 16 (FAZ, article in German). In the age group 45 to 54, it jumps to 67%. And 66% reject aiding Greece and other heavily indebted countries. Ominously for Chancellor Angela Merkel, 82% believe that her government's crisis management is bad, and 83% complain that they're kept in the dark about the politics of the euro crisis.

The odds of a bailout of the southern European countries seem to be getting worse. At the same time, I expect their financial conditions to worsen as economic growth fails to resume. So the need for a bailout seems likely to grow. Does this mean the end of the Eurozone? Or just a splitting off of some members? Or perhaps the creation of a couple of smaller Euro currencies? Will the Germans bring back the Deutsche Mark while some neighboring countries (e.g. the Netherlands) decide to use it?

Denkverbot: a cool word. You can classify people by whether they support or oppose denkverbot. The denkverbot supporters on a particular subject may cloak their opposition to thinking thru evidence and debating a subject. But their intentions are usually clear enough.

"There cannot be any prohibition to think" just so that the euro can be stabilized, wrote Philipp Rösler, Minister of Economics and Technology, in a commentary published on September 9 (Welt, article in German). "And the orderly default of Greece is part of that," he added. Instantly, all hell broke loose, and Denkverbot (prohibition to think) became a rallying cry against the onslaught of criticism that his remarks engendered.

Once the taboo breaks against seriously considering alternatives to the current Euro zone the debate might spark a large flight of deposits out of banks in heavily indebted countries. Those banks hold lots of sovereign debt. If the southern European governments don't get bailed out then the banks will fail. You can expect to see Greek, Italian, Spanish, and Portuguese banks totter. If they aren't propped up then watch the dominoes fall. The 1931 Credit Anstalt collapse in Austria is the historical precedent most feared by policy makers.

You might think bailout is the right response to a financial crisis that has the potential to cause a big economic downturn. The problem that the Germans correctly sense is that Greece is unlikely to reform if the past pattern up the the present is any indication. Prudent people not under the sway of denkverbot would admit this.

Greece is a chronic defaulter. Since winning independence from the Ottoman Empire in 1832, the nation has spent half its time in various stages of default or restructuring.

Yet various writers keep proclaiming that surely now the Greeks have learned the folly of excess deficit spending. To which I reply: The Americans haven't even learned that lesson.

The idea, which has floated around for months without getting much uptake from European decision-makers, is to scarf up Greece's unaffordable debt on the open market and exchange it for new, more affordable long-term bonds issued by a (presumably) reformed Greek government.

The Euro zone is the creation of idealistic fools. Milton Friedman opposed the Euro founding in 1999 and commented in 2004 that its collapse was "a strong possibility". Given that the Germans have taken positions that make a Greek hard default and even a Portuguese hard default very likely if the Germans intend to eject a few Euro members they had better shift into high gear with preparations to redraw the boundaries of the Euro. The faster done the better. Read that last link. Ambrose Evans-Pritchard of The Daily Telegraph takes a look at the European debt and currency crisis from lots of angles.

Update: The top leaders do not want to hear talk of Greece leaving the Euro.

The key people behind these moves also agreed that one topic was off the agenda: the possibility of a break-up of the euro and, more immediately, the ejection of Greece, was not to be spoken of in public. Chancellor Merkel warned wayward German MPs to “weigh their words very carefully”. Geithner urged EU policy-makers to avoid “loose talk”. Luxembourg prime minister Jean-Claude Juncker, presiding over the Eurogroup, called for “verbal discipline”, lest saying the wrong thing should trigger “irrational” market responses.

Right now the market is pricing in a big default in Greek debt. Is that what the German leaders have decided on? Sovereign default, prop up some banks, and then keep Greece in the Euro? If that's not their conscious choice then are they stalemated?

By Randall Parker 2011 September 18 09:58 AM  Economics Sovereign Crises
Entry Permalink | Comments(12)
2011 September 13 Tuesday
Jackie Kennedy: Alpha Jack Versus Beta Adlai Stevenson

Interviews of Jacqueline Kennedy from 1964 are just now reaching the public eye. She spoke in an era before political correctness would have made such admissions unlikely even in private. A bit of frankness about sexual attraction from Jackie.

Mrs Kennedy reveals she enjoyed having her husband 'proud of her', saw no reason to have a policy opinion that wasn't the same as his and laughed at the thought of 'violently liberal women' who preferred the more effect Adlai Stevenson to her husband.

She said: 'Jack so obviously demanded from a woman - a relationship between a man and a woman where a man would be the leader and a woman be his wife and look up to him as a man.

'With Adlai you could have another relationship where - you know, he'd sort of be sweet and you could talk, but you wouldn't ever... I always thought women who were scared of sex loved Adlai.'

Nice guys finish last? Well, Jackie was turned on by her demanding husband and turned off by nice guy Adlai Stevenson. Nice guys turn off many women.

By Randall Parker 2011 September 13 07:12 AM  Human Nature Attraction
Entry Permalink | Comments(15)
2011 September 12 Monday
Rising Health Care Costs Causing Stagnant Living Standards

The rising costs of medical care have eaten up almost all income gains in the last decade.

Fast-rising health costs have eaten nearly all the income gains made by a median-income American family of four over the past decade, leaving them with just $95 per month in extra income, after accounting for taxes and price increases, according to a new RAND Corporation study.

Had health care costs risen only as fast as the cost of other goods and services in the United States from 1999 to 2009, the same family would have an additional $545 per month to spend in 2009, according to findings published in the September edition of the journal Health Affairs.

"Accelerating health care costs are a primary reason that the so many American families feel like they are just treading water financially," said David Auerbach, the study's lead author and an economist at the RAND Corporation, a nonprofit research organization. "Unless we reverse the trend, Americans increasingly will notice that health costs compromise their other spending options."

Between 1999 and 2009, total spending on health care in the United States nearly doubled, from $1.3 trillion to $2.5 trillion. During the same period, the percentage of the nation's gross domestic product devoted to health care climbed from 13.8 percent to 17.6 percent. Per person health care spending grew from $4,600 to just over $8,000 annually.

The automation of health care has the greatest potential to raise living standards. The growing size of medicine in the US economy (over 17% and rising) means it is pulling in more skilled workers and other resources. Imagine going to a drug store to provide blood, urine, and other samples for testing. Then the result would get sent to a web server that has assorted expert systems for diagnosis. The server would also have your genetic sequence which it would use to inform drug choice and dosage level (e.g. use liver enzyme genetic variants to predict drug break-down rates). Hospitals will use robots to do surgery, clean, deliver food to rooms, and deliver drugs.

What incentives need fixing to bring about a long term trend of rising health care industry productivity?

By Randall Parker 2011 September 12 07:26 AM  Economics Health
Entry Permalink | Comments(8)
2011 September 11 Sunday
Defense Of Bondholders Holding Back Economic Recovery

John Hussman argues governments are making a mistake by defending bondholders rather than allowing losses would cut the debt overhang that is weighing down economies. Agreed.

The global economy is at a crossroad that demands a decision - whom will our leaders defend? One choice is to defend bondholders - existing owners of mismanaged banks, unserviceable peripheral European debt, and lenders who misallocated capital by reaching for yield and fees by making mortgage loans to anyone with a pulse. Defending bondholders will require forced austerity in government spending of already depressed economies, continued monetary distortions, and the use of public funds to recapitalize poor stewards of capital. It will do nothing for job creation, foreclosure reduction, or economic recovery.

So far the banks that hold large amounts of sovereign debt are being defended against losses by their governments. The European lending to Greece, Ireland, and other heavily indebted countries has as one of its major aims the prevention of the bankruptcy of northern European banks that hold large amounts of PIIGS debt. Too much debt. What do to? Create more debt to fund the interest payments on the existing debt. It is a pyramid scheme that will collapse eventually with far more pain.

Hussman thinks the bondholders can afford the losses. I'm more skeptical. I think bondholders need to take major losses. But we need an agreed structure that allows the losses without causing a financial panic.

The alternative is to defend the public by focusing on the reduction of unserviceable debt burdens by restructuring mortgages and peripheral sovereign debt, recognizing that most financial institutions have more than enough shareholder capital and debt to their own bondholders to absorb losses without hurting customers or counterparties - but also recognizing that properly restructuring debt will wipe out many existing holders of mismanaged financials and will require a transfer of ownership and recapitalization by better stewards. That alternative also requires fiscal policy that couples the willingness to accept larger deficits in the near term with significant changes in the trajectory of long-term spending.

The problem is even bigger than the current mainstream projections show because of Peak Oil. Therefore even if bank and sovereign bondholders take big haircuts we aren't going to return to the old economic growth trend. At beset economic growth will be low or negative. More debt will go bad as a result. Future tax revenues will be lower as demands on governments rise from the unemployed and retired. Debt haircuts will just make conditions less bad than they otherwise would be.

As an example of the excessive bias toward protecting bondholders at the expense of everyone else look at the disagreement between the European Central Bank and the Irish government over whether bondholders of senior unsecured unguaranteed debt should get repaid after 2 major Irish banks failed. When companies fail bond holders take losses. So why should bond holders get bailed out by the Irish taxpayers for the failure of these banks? Answer: Other European banks would benefit from the taxpayer bail-out.

EUROPEAN CENTRAL Bank chief Jean-Claude Trichet has ruled out supporting Minister for Finance Michael Noonan in his push to avoid repaying some of the debt owed by Anglo Irish Bank and Irish Nationwide Building Society.

JP Morgan analysts think making Anglo Irish Bank debt holders whole is unnecessary and unwise.

In addition, the nature of Anglo Irish Bank as a run-off institution and clearly not having the same importance as a Pillar banks, would most likely have facilitated some type of burden sharing outcome with nominal contagion impact. We also note a willingness of domestic policymakers to implement burden-sharing on the institution. However, despite all these perfectly valid reasons we note that opposition of the ECB to the burden sharing outcome will most likely imply that the senior debt will mature at par, with the ECB most likely having concerns with the impact that broader contagion might have on its outstanding exposures to the European banking sector. In the event that Anglo Irish debt is not burden shared then we would take this as a very strong indicator of the lack of willingness to inflict losses on the senior unsecured debt of European banks under the current regime.

I find this push by the ECB outrageous. Western governments have been captured by the banking industry and its bond holders. Bond holders should take losses when companies fail. The total amount of debt should go down due to losses on the debt. Otherwise private debt gets converted into public debt and the needed shrinkage of the total debt burden does not happen. The political machinations to try to prevent Greek default have make the crisis there far worse. To lesser degrees the same is happening in most other Western countries including the United States.

By Randall Parker 2011 September 11 10:11 AM  Economics Credit
Entry Permalink | Comments(6)
2011 September 08 Thursday
Life In Saudi Arabia

So what is life like in Saudi Arabia, what do Saudis think,what are their fears (Shias, the government), and what is life like in a tyranny? A guy apparently from Chico California working as an academic in Saudi Arabia and writing with the pseudonym Joseph Marais lays out lots of interesting details. Read the whole thing. Then tell me what this portends for Saudia Arabia's future.

Now that the regional lid has come off and everyone is wondering whether Saudi Arabia is next, trying to figure out what’s going on here makes the long-ago work of Kremlinologists look easy. To ask students about it is extremely risky. Of the innumerable, unwritten, ironclad rules, No. 1 is: Never talk about anything that actually matters. No. 2 is: If you wish to violate No. 1, make sure the corridor is empty, the door is locked, and voices are kept low. Religion—out. Politics—out. Sex—out. Social system—out. The government—way out. The monarchy and the Saud family? Mention them, and people turn into ice statues.

So then what to talk about? Even the streets are mostly empty according to Marais. The students are aware of all the things they are missing.

Since the University of the Empty Quarter nowhere provides clear rules, it’s all guesswork about where the minefields have been laid. Whispers in departmental corridors of “one wrong note and they’ll toss you out” encourage teachers to play it safe. Yet students often complain bitterly about the extreme suffocation of Saudi life.

They bemoan the absence of music, art, cinema and theater, and gripe that “there’s nothing to do.” They complain about the impossibility of pursuing activities that elsewhere are commonplace, such as a dance class, a music lesson or a yoga session. Many are irritated with the domination of the mosques and the inescapability of religion, and chafe at the forced insularity of life in Saudi Arabia. It’s the rare student who does not express an intense desire to get away from the country.

How many at least have fast internet and how sophisticated are the internet firewalls around Saudi Arabia? Do you have to use a VPN connection to a server that lets you reach, say, Facebook or the NY Times or Hulu or Youtube? The article says it is pretty easy to get around Saudi government blocks on web sites. So are the Saudis all at home watching forbidden stuff on their PCs?

The real test for the Saudis will come when domestic oil demand grows so large and domestic production shrinks far enough that the Saudis make little off off oil exports. Then will the regime be able to maintain the loyalties of all those Saudis who do little work in their jobs in Aramco and the government? What happens when work becomes necessary for the elite? Will extreme Islamic culture become so inefficient and unaffordable that the government (before or after overthrow) be forced to loosen up? Will males still support the government just to keep the women down?

By Randall Parker 2011 September 08 06:47 PM  MidEast Saudi Arabia
Entry Permalink | Comments(15)
2011 September 06 Tuesday
Greek 1 Year Sovereign Bond Yield: 88.48%

The European financial crisis continues to build. A shockingly high number. I can understand a high yield given that the Greeks are going to default. But will principal loss be so high as to justify 88.48% yield? That's a huge number. If I was in Greece I'd get some of my money transferred into northern European banks and perhaps some in a Canadian or Australian bank. Get your money into resource-rich industrialized countries.

Mish also points to Silvio Berlusconi's attempt to cut spending and raise taxes to try to get Italian government interest rates below 6%. Once a country with high debt gets interest rates up in the 5-6% range it is hard to prevent default. The cost of servicing debt becomes too large a fraction of total GDP.

The Germans appear to have decided to let Greece default. Will Greece stay in the Euro zone once that happens? Can the Germans prevent Italy and Spain from defaulting? What's the end game? Sovereign debt default means bank failures. Why we should care: the domino effect. Can a firewall prevent dominoes from falling into northern Europe and then into the United States?

Economic growth is not going to save the southern European countries from default. High oil prices preclude that possibility. Can Italy and Spain cut spending severely enough to avoid default? Taxing their way back to solvency seems hard to do as higher taxes will cut growth even further.

I find the scale of the European debt crisis an amazing thing to behold given the depth of the underlying problems and the potential for spread into other financial markets. In this crisis I look for clues on whether stagnant and eventually declining world oil production will cause slow economic contraction or episodes that parallel the great contraction of 1929-1933. Is slow decline possible? Or will financial market panics cause sharp contractions? The level of debt globally makes the slow decline scenario less likely. Cascading defaults and sudden sharp cutbacks seem more likely.

By Randall Parker 2011 September 06 10:31 PM  Economics Sovereign Crises
Entry Permalink | Comments(6)
2011 September 05 Monday
Book On Jane Fonda Plumbs The Depths Of Her Foolishness

Check out this Daily Mail piece about a new book on Jane Fonda by Patricia Bosworth. (h/t Ray Sawhill)

Not only that, but he’d made her sell her comfortable house in Los Angeles and buy a shabby two-bedroom shack in Santa Monica that smelled of mildew, where the couple shared a mattress on the floor. She couldn’t even wear her Cartier wristwatch any more, because Hayden disliked any show of possessions. So she’d replaced it with a cheaper Timex.

Sacrificing a Cartier for love.

Her brother and daughter loathed Tom Hayden. Good for them.

To the despair of her brother Peter and daughter Vanessa, who both loathed Hayden, she allowed herself to be belittled for years. ‘I simply didn’t think my ideas or feelings were as important or credible as his,’ she confessed later.

Before hooking up with Hayden she decided she ought to go to bed with lots of political activists. Ayn Rand would understand her man-worship.

‘She sat at Tom’s feet, literally,’ remembers fellow pacifist David Dellinger. ‘She looked up to him like he was some sort of god.’

Human beings go to ridiculous lengths to rationalize their instincts. The best example of her lack of self understanding:

Jane thought if she and Hayden had a child, it would express solidarity with Vietnam.

I haven't followed her at all. She seems like yet another Hollywood celebrity whose fame allowed them to express political nuttiness to a large audience. Ho hum. But I wonder if she ever became non-nutty about politics. Is it beyond intellectual capability to make sense of the world?

By Randall Parker 2011 September 05 09:37 AM  Cultural Wars Western
Entry Permalink | Comments(3)
2011 September 03 Saturday
Romney Tougher On Immigration Than Perry?

Sounds like Romney's willing to govern more as an immigration restrictionist as compared to Perry. Click thru and read some comparisons where Perry has taken more pro-immigration positions.

“Our country must do a better job of securing its borders, and as president, I will,” Romney told the Republican National Hispanic Assembly in Tampa, according to his prepared remarks. “That means completing construction of a high-tech fence, and investing in adequate manpower and resources.”

Romney, a former governor of Massachusetts, added: “We must stop providing the incentives that promote illegal immigration. As governor, I vetoed legislation that would have provided in-state tuition rates to illegal immigrants, and I strengthened the authority our state troopers had to enforce existing immigration laws.”

The Republican presidential nomination race matters a great deal because it looks like the unemployment rate will be quite high by November 2012 and therefore Obama is vulnerable. Hard for Obama to claim great governance skills when people will judge him on the economy:

In a statement, House Budget Committee Chairman Paul Ryan (R-Wis.) noted that the new report indicates the unemployment rate will remain above 8 percent throughout Obama’s first term in office — a level administration officials said in 2009 could be avoided by enacting an expensive economic stimulus package.

Peak Oil is going to make it hard for US Presidents to get re-elected, at least until the American public stops thinking any President can make the economy grow when it is held back by higher resource prices. As long as most people think Presidents can do much to improve the economy Presidents are going to be held responsible the electorate when they fail to do so. In the 2012 election the limits of economic growth might give us a better immigration policy.

By Randall Parker 2011 September 03 10:07 PM  Immigration Politics
Entry Permalink | Comments(8)
CIA Secret Flights Detailed In Court Case

Many flights where the US Central Intelligence Agency moved suspected terrorists around are now a matter of public record.

WASHINGTON — On Nov. 8, 2002, a Richmor Gulfstream, Tail No. N85VM, took off for Shannon Airport in Ireland, then to Dubai, in the United Arab Emirates, on a flight that paralleled the arrest that month of USS Cole bombing suspect Abd al-Nashiri.

It was the first of a run of secret long-distance flights by the Gulfstream between 2002 and 2005 that paralleled the suspected movements of captured al-Qaida and other terrorist leaders who vanished into CIA-run black prisons after their arrests following the Sept. 11 attacks.

You might expect the CIA to keep this sort of stuff secret. But a billing dispute between two companies involved in these flights has spilled into public records filed in a lawsuit. Apparently the CIA made no effort to prevent this from happening.

Incompetence or calculation?

The CIA operates with the power of a sovereign government and has been given legal authority to do things with a degree of secrecy that most agencies are not allowed to have. Does it lack the legal authority to, say, buy its own airplanes and then operate them without record of where they've been? Can't it rent an airplane with a contract that does not record where the airplane is going to go? Maybe just rent by the 25,000 mile increment?

Anyone understand how competent the CIA is at keeping secrets it really wants to keep?

By Randall Parker 2011 September 03 10:03 AM  Terrorists Western Response
Entry Permalink | Comments(2)
2011 September 02 Friday
Rick Perry An Uncompassionate Conservative?

My take on presidential elections: They are periodic sources of emotional pain if you spend much time thinking about the choices. One can't have a deep understanding of various facets of what is going wrong in the US of A and then listen with any degree of satisfaction to the press and promoters of the candidates argue about their visions of a future America. The course America is on now is tragic and the national debate touches only lightly on all that is going wrong.

Having said all that: Sounds like Texas governor Rick Perry is to the right of George W. Bush on social spending. He might even be willing to govern to the right of Bush on immigration, his previous statements on it notwithstanding.

Perry, who closely allied himself with Bush earlier in his career, was a supporter of Bush’s tax cuts and praised his leadership on national security issues. But he has been critical of Bush’s fiscal stewardship and his attempts to court the political middle by taking on issues such as education, immigration and Medicare. He has said that “this big-government binge [in Obama’s tenure] began under the administration of George W. Bush.”

Bush rankled conservatives with remarks such as this 2003 comment: “We have a responsibility that when somebody hurts, government has got to move.”

Perry has dismissed that idea.

Read the full article to see what Perry thinks of compassionate conservatism.

My take: We need leaders who will govern as if we aren't as wealthy as we imagined ourselves to be. The next President doesn't necessarily have to know we are poorer than we've imagined. He just has to be cheap and not easily emotionally swayed to try to relieve all suffering with social programs. While an accurate understanding of where we are headed would help it is too much to expect of our elites to have an accurate model of human nature or natural resources or the effects of globalization. An accurate understanding requires too big a willingness to reject the prevailing consensus on multiple topics. Someone like that is unlikely to make it into the Presidency.

It seems obvious that many developments both in the US and abroad will put intensifying pressure on living standards and therefore on tax revenues. The people in Washington DC need to scale back spending across the board and make it clear to the public that the federal government will have to unmake many promises. Why? The US economy can't grow enough to support the grandiose promises made for future retirees, poor folks, assorted industries sucking at the federal trough, and the many current and former federal employees and companies that make big money off of serving the federal government.

If you have been lucky and the financial crisis did not reach into your life you might be feeling complacent. But we've had a weak recovery and already the recovery has stalled and it looks like the world might already be in Global Financial Crisis Recession II (even the BRICs are tanking). The limited recovery was concentrated in the resource extraction regions and the same high oil prices that boosted their employment ultimately helped choke back the rest of the economy into recession. We are looking at either a lost decade of economic growth or, even worse, a steep decline.

By Randall Parker 2011 September 02 05:06 PM  Politics American Presidency
Entry Permalink | Comments(2)
China Coerces Technology Transfers

The purpose of Western free trade agreements with China: to allow the Chinese government to force technology transfers to China as part of the price of doing business in China.

GRAND RAPIDS, Mich. — At a General Electric flight simulator here, the visibility has been set at near zero to mimic thick rain and clouds. But a video console near the pilot shows a vivid picture of nearby mountains precise enough to allow a plane to take off or land despite the conditions. The system is one of several highly valuable next-generation technologies that GE has developed — and that the company has passed along to China as part of a joint venture with the state-owned Aviation Industry Corporation of China (AVIC).

It is the price GE pays for getting business in China. What's the long term cost? Easy enough to see. Harder to guess the exact timeline. When does GE's business partner become a competitor? When does China's government pressure Chinese buyers to only buy from the pure domestic supplier?

Why didn't the US Chamber of Commerce tell US Congress this would be the ultimate outcome of "free trade" with China back when America's business elite was busy lobbying for Most Favored Nation status in a trade bill back when Bill Clinton was in office?

The naive view that we were going to design and make products to sell to China is a "colonial" model that is so passe.

The number of jobs to be created in China would be much higher. GE executives say it is difficult to imagine otherwise. The “colonial” model — of multinationals making products in the developed world and selling them to the developing world — is long outdated, they argue.

So not only do we have to give up hope of selling manufactured goods to China but we also have to give up hope of doing the design and engineering work in the United States and other Western countries. What's next?

The Chinese mercantilist policy has a few major components:

  • Local content requirements, both acknowledged and hidden.
  • Get technology by theft, purchase, coerced transfers, and from open sources.
  • Use a fixed currency exchange rate to get factories shifted to China.
  • Use the rest of the world as commodities sources. The US has a big future as a food supplier and a lumber supplier for China.

Update: Some of our elites are thrilled to help China's rise. The competition for natural resources is making industrial development into a zero sum game. But our economic elites have been trained to believe all trade and all economic development comes as a net win for everyone.

By Randall Parker 2011 September 02 08:10 AM  China Mercantilism
Entry Permalink | Comments(6)
Advertise here. Contact randall dot parker at ymail dot com
Web parapundit.com
Site Traffic Info