Tuesday, July 28, 2009

Conservative on Israel and Iran: After years of failed diplomacy no one will be able to call an attack precipitous

It’s Crunch Time for Israel on Iran. By JOHN BOLTON
After years of failed diplomacy no one will be able to call an attack precipitous.
WSJ, Jul 29, 2009

Legions of senior American officials have descended on Jerusalem recently, but the most important of them has been Defense Secretary Robert Gates. His central objective was to dissuade Israel from carrying out military strikes against Iran’s nuclear weapons facilities. Under the guise of counseling “patience,” Mr. Gates again conveyed President Barack Obama’s emphatic thumbs down on military force.

The public outcome of Mr. Gates’s visit appeared polite but inconclusive. Yet Iran’s progress with nuclear weapons and air defenses means Israel’s military option is declining over time. It will have to make a decision soon, and it will be no surprise if Israel strikes by year’s end. Israel’s choice could determine whether Iran obtains nuclear weapons in the foreseeable future.

Mr. Obama’s approach to Tehran has been his “open hand,” yet his gesture has not only been ignored by Iran but deemed irrelevant as the country looks inward to resolve the aftermath of its fraudulent election. The hardliner “winner” of that election, President Mahmoud Ahmadinejad, was recently forced to fire a deputy who once said something vaguely soothing about Israel. Clearly, negotiations with the White House are not exactly topping the Iranian agenda.

Beyond that, Mr. Obama’s negotiation strategy faces insuperable time pressure. French President Nicolas Sarkozy proclaimed that Iran must re-start negotiations with the West by September’s G-20 summit. But this means little when, with each passing day, Iran’s nuclear and ballistic missile laboratories, production facilities and military bases are all churning. Israel is focused on these facts, not the illusion of “tough” diplomacy.

Israel rejects another feature of Mr. Obama’s diplomatic stance. The Israelis do not believe that progress with the Palestinians will facilitate a deal on Iran’s nuclear weapons program. Though Mr. Gates and others have pressed this fanciful analysis, Israel will not be moved.

Worse, Mr. Obama has no new strategic thinking on Iran. He vaguely promises to offer the country the carrot of diplomacy—followed by an empty threat of sanctions down the road if Iran does not comply with the U.S.’s requests. This is precisely the European Union’s approach, which has failed for over six years.

There’s no reason Iran would suddenly now bow to Mr. Obama’s diplomatic efforts, especially after its embarrassing election in June. So with diplomacy out the door, how will Iran be tamed?

Mr. Gates’ mission had extraordinary significance. Israel sees the political and military landscape in a very inauspicious light. It also worries that, once ensnared in negotiations, the Obama administration will find it very hard to extricate itself. The Israelis are probably right. To prove the success of his “open hand,” Mr. Obama will declare victory for “diplomacy” even if it means little to no gains on Iran’s nuclear program.

Under the worst-case scenario, Iran will continue improving its nuclear facilities and Mr. Obama will become the first U.S. president to tie the issue of Israel’s nuclear capabilities into negotiations about Iran’s.

Israel understands that Secretary of State Hillary Clinton’s recent commitment to extend the U.S. “defense umbrella” to Israel is not a guarantee of nuclear retaliation, and that it is wholly insufficient to deter Iran from obliterating Israel if it so decides. In fact, Mrs. Clinton’s comment tacitly concedes that Iran will acquire nuclear weapons, exactly the wrong message. Since Israel, like the U.S., is well aware its missile defense system is imperfect, whatever Mr. Gates said about the “defense umbrella” will be politely ignored.

Relations between the U.S. and Israel are more strained now than at any time since the 1956 Suez Canal crisis. Mr. Gates’s message for Israel not to act on Iran, and the U.S. pressure he brought to bear, highlight the weight of Israel’s lonely burden.

Striking Iran’s nuclear program will not be precipitous or poorly thought out. Israel’s attack, if it happens, will have followed enormously difficult deliberation over terrible imponderables, and years of patiently waiting on innumerable failed diplomatic efforts. Absent Israeli action, prepare for a nuclear Iran.

We should listen to Chinese warnings on the dollar

The Customer Is Right. WSJ Editorial
Mr. Obama should listen to Chinese warnings on the dollar.
WSJ, Jul 29, 2009

"We exercise our leadership best when we are listening," President Obama said in April, when asked how his foreign policy differs from that of George W. Bush. Let’s hope that he and Congress were listening when Chinese officials visited the U.S. this week.

The unambiguous message from these investors who hold more than $800 billion in U.S. Treasury debt: Washington needs to take better care of their investment. Yesterday, China Vice Premier Wang Qishan urged the U.S. to get a handle on its soaring debt to protect the value of the dollar. “As a major reserve currency-issuing country in the world, the U.S. should balance and properly handle the dollar’s supply,” Mr. Wang said through an interpreter. Well put.

Like investors everywhere, the Chinese are concerned that America will simply print money to pay off its ballooning debts. The visitors from Beijing were so concerned about the Federal Reserve’s money-creation binge that Fed Chairman Ben Bernanke had to reassure them that he had an exit strategy from what has been the most accommodative U.S. monetary policy since the 1970s. Our guess is that after a decade of Fed missteps, the Chinese are in a Missouri state of mind about this and will want Mr. Bernanke to show them he means it.

The Chinese also zeroed in on Uncle Sam’s finances. “We sincerely hope the U.S. fiscal deficit will be reduced, year after year,” Assistant Finance Minister Zhu Guangyao said on Monday. We have long held that deficits per se are less important than their size relative to the overall economy, and that the real burden on taxpayers is the spending that creates deficits. However, Mr. Obama and Congressional Democrats have been rapidly raising both. One has to go back to the era of World War II to see deficits consuming so large a percentage of GDP as this year’s 13%.

The Chinese might have cause to be less worried if these deficits were poised to fall quickly amid an economic expansion. But the tragedy is that this blowout of the U.S. balance sheet was used to finance spending, largely on transfer payments like Medicaid and jobless benefits, rather than pro-growth tax cuts. The recession is already bottoming out, but the danger is that the expansion to come will be too mediocre to drive job creation and raise revenues enough to reduce the deficit the way it did in the 1980s.

These deficits must eventually be paid for with cash taken from taxpayers, which limits economic growth, or with inflation, which robs investors of the value of their savings. With the U.S. deficit exceeding $1.8 trillion in 2009, and likely to stay high for years to come, investors in China and around the world have every right to be concerned. The Chinese have economic problems of their own, but when they come visiting with a message of sound money and spending restraint, Americans ignore them at our peril.

Some pre-emptive scapegoating over rising oil prices

The Politics of ‘Speculation’. WSJ Editorial
Some pre-emptive scapegoating over rising oil prices.
WSJ, Jul 29, 2009

The oil speculators are back—that is, back in the cross-hairs of the political class. On Tuesday, Commodity Futures Trading Commission Chairman Gary Gensler uttered the Pentagon-like phrase that “every option must be on the table” to curb “excessive speculation.” If you’re wondering what makes speculation “excessive,” in Washington the answer is this: Speculation becomes excessive when prices move in a politically inconvenient direction. Which brings us to the real meaning of the three days of theater, er, hearings that Mr. Gensler is conducting this week.

Last summer, as oil prices were peaking, the CFTC launched an investigation into whether $100-plus oil was the result of market manipulation by those “speculators.” That interim report, issued in July 2008, concluded that price movements were largely driven by—wait for it— supply and demand.

The report noted, among other findings, that so-called speculators were net short during some of the biggest run-ups in oil prices over the past several years. In other words, they were, if anything, putting downward pressure on prices during some big spikes. The CFTC also found that markets in which futures trading is outlawed altogether—such as onions (yes, onions)—price volatility tended to be even greater than in commodities like oil with deep and efficient futures markets.

Oil prices began their six-month, 80% slide about the time that report was issued. But since last December oil prices have climbed back up again, and consumer gasoline prices have climbed along with them. This is not popular with voters. Three weeks ago, British Prime Minister Gordon Brown and French President Nicolas Sarkozy warned on these pages about the dangers of “damaging speculation.” Now the U.S. is getting into the act in the form of Obama appointee Mr. Gensler—and Congress can’t be far behind.

So the Gensler CFTC is now poised to issue a follow-up repudiating the commission’s earlier findings. This week’s hearings are being held without the benefit of the CFTC’s actual findings, which are due out in August—but no matter. The CFTC’s about-face is all about the politics, not the economics, of price discovery. And the real goal is not to blame the evil speculators for last year’s price spike or this year’s oil rally, but to lay the groundwork for explaining away the commodity-price bull run that we’re likely to see as a result of the Federal Reserve’s easy money and the Obama Administration’s spending and debt party.

As the CFTC’s 2008 report noted, price signals drive discovery and exploration, albeit with a lag. Low prices today beget shortages tomorrow, while high prices today encourage the discovery and development of future supply. Those prices, in turn, are not the product of any economic model or forecast, but are the sum total of the bids and offers available on the spot and futures markets.

In all of this, what nobody has managed to explain is what, exactly, happened to the omnipotent speculators between July and December 2008. Did they all go on vacation? Perhaps they paused for a six-month drinking binge with their winnings before returning to manipulate us anew in 2009.

No, what we really have here is the age-old scapegoating that our superstitious ancestors would have recognized. The only twist in Mr. Gensler’s case is that he’s trying to scape the goats pre-emptively. On our current fiscal and monetary policy course, the dollar is not done falling and interest rates have barely begun to rise. Both of these market moves will be felt in the commodities markets, as they were after Alan Greenspan cut short-term rates to 1% in 2003-2004. So better to send the posse after the speculators now than to confront the consequences of Washington’s policy errors.

There is an alternative to the market price—it’s called price controls. And the danger is that this is where we’re headed politically. If curbing speculation by limiting trader positions or restricting the ability of “non-commercial” buyers to trade is a politically acceptable way to dampen volatility (remember the onions), the logical next step is a political diktat that oil will not be bought or sold above a certain price.

Truth is, we need more speculators, not less. They’re the people who can help prices find the right level, because there is no “right” level other than the one the market gives us. And that’s why, in turn, excessive speculation is nothing more—or less—than a convenient fiction for when prices don’t move the way politicians would like.

Is There a ‘Right’ to Health Care?

Is There a ‘Right’ to Health Care?. By Theodore Dalrymple
In Britain, its recognition has led to substandard care.
WSJ, Jul 29, 2009

If there is a right to health care, someone has the duty to provide it. Inevitably, that “someone” is the government. Concrete benefits in pursuance of abstract rights, however, can be provided by the government only by constant coercion.

People sometimes argue in favor of a universal human right to health care by saying that health care is different from all other human goods or products. It is supposedly an important precondition of life itself. This is wrong: There are several other, much more important preconditions of human existence, such as food, shelter and clothing.

Everyone agrees that hunger is a bad thing (as is overeating), but few suppose there is a right to a healthy, balanced diet, or that if there was, the federal government would be the best at providing and distributing it to each and every American.

Where does the right to health care come from? Did it exist in, say, 250 B.C., or in A.D. 1750? If it did, how was it that our ancestors, who were no less intelligent than we, failed completely to notice it?

If, on the other hand, the right to health care did not exist in those benighted days, how did it come into existence, and how did we come to recognize it once it did?

When the supposed right to health care is widely recognized, as in the United Kingdom, it tends to reduce moral imagination. Whenever I deny the existence of a right to health care to a Briton who asserts it, he replies, “So you think it is all right for people to be left to die in the street?”

When I then ask my interlocutor whether he can think of any reason why people should not be left to die in the street, other than that they have a right to health care, he is generally reduced to silence. He cannot think of one.

Moreover, the right to grant is also the right to deny. And in times of economic stringency, when the first call on public expenditure is the payment of the salaries and pensions of health-care staff, we can rely with absolute confidence on the capacity of government sophists to find good reasons for doing bad things.

The question of health care is not one of rights but of how best in practice to organize it. America is certainly not a perfect model in this regard. But neither is Britain, where a universal right to health care has been recognized longest in the Western world.

Not coincidentally, the U.K. is by far the most unpleasant country in which to be ill in the Western world. Even Greeks living in Britain return home for medical treatment if they are physically able to do so.

The government-run health-care system—which in the U.K. is believed to be the necessary institutional corollary to an inalienable right to health care—has pauperized the entire population. This is not to say that in every last case the treatment is bad: A pauper may be well or badly treated, according to the inclination, temperament and abilities of those providing the treatment. But a pauper must accept what he is given.

Universality is closely allied as an ideal, ideologically, to that of equality. But equality is not desirable in itself. To provide everyone with the same bad quality of care would satisfy the demand for equality. (Not coincidentally, British survival rates for cancer and heart disease are much below those of other European countries, where patients need to make at least some payment for their care.)

In any case, the universality of government health care in pursuance of the abstract right to it in Britain has not ensured equality. After 60 years of universal health care, free at the point of usage and funded by taxation, inequalities between the richest and poorest sections of the population have not been reduced. But Britain does have the dirtiest, most broken-down hospitals in Europe.

There is no right to health care—any more than there is a right to chicken Kiev every second Thursday of the month.

Theodore Dalrymple is the pen name of Anthony Daniels, a British physician. He is a contributing editor to the City Journal.

The CFTC’s Flip Flop on Oil Speculation

The CFTC’s Flip Flop on Oil Speculation
IER, July 28, 2009

People, personalities, policies, drapes – just a few of the things the American people have come to expect will change from year to year, and from administration to administration, depending on the philosophy, interest and artistic sensibility of the chief executive.

Here’s what’s not suppose to change: the facts of existence, and the substance of the truth. Unfortunately, in the case of President Obama’s Commodity Futures Trading Commission (CFTC), every bit of analysis the agency did previous to the current regime can be tossed out the window – not because it was wrong then, but because it’s politically inconvenient now.

Observe the latest news from the CFTC this week. On Tuesday, the Commission announced that it will release a report in mid-August blaming the 2008 swings in oil prices on speculators (spoiler alert!) The announcement raises eyebrows because in 2008, the CFTC itself decisively concluded that fundamental supply and demand, not speculation, drove oil up to record highs in the summer of 2008. Bummer if you happen to make a political living off of scaring your constituents with shadows and straw men.

Could it be that the CFTC’s flip flop has something to do with the Obama Administration’s desire to further regulate the financial markets? By placing arbitrary limits on which institutions are allowed to spend their money on certain financial products, the government will make oil prices more volatile, and it will steer even more profits into the huge, politically connected firms on Wall Street. Meanwhile, the American people are still waiting for the government to remove the roadblocks to the offshore energy they were promised last year when two separate bans were finally and formally put out to pasture.

The Social Function of Oil Speculation

The essential insight of Adam Smith was that a market economy harnesses the self-indulgence of individuals and motivates them to serve the common welfare. In a free market, one becomes affluent by creating better and cheaper products or services that consumers are willing to buy.

In the case of speculation, this process actually reduces the volatility of price swings. We have all heard the successful speculator’s motto of “buy low, sell high.” To be more specific, the phrase should really be “short-sell high, cover low.” What this means it that if some investors believe that oil prices will rise sharply in a month, they can profit from this hunch by buying oil futures contracts. If and when the price of oil does rise as they had anticipated, their futures contracts will be adjusted, booking a profit to their trading accounts. (On the flip side, if some investors think oil prices will fall, they can sell—“go short”—oil futures contracts.)

It’s true, as the critics point out, that an investor who purchases oil futures contracts will indirectly pull up the current price of oil. This happens because producers have an incentive to reduce current sales when the futures price gets pushed up. They are effectively diverting some of their scarce supplies of oil to the future, rather than selling it all in the present.

But even if futures purchases push up current oil prices, the speculators perform a service to everybody else so long as they correctly anticipated a price spike. If oil is currently selling at $50, and an investor believes it will jump up to $70 in one month, then the investor will buy futures contracts until the “futures price” gets pushed up to reflect his forecast. In the process, his actions may have pushed the current, spot price up to $55. But that’s a good thing, because now the price will approach $70 more gradually; it won’t shock the market as much when oil hits $70.

Of course, if speculators are wrong, then they do make market prices more volatile. If a price is actually going to fall in the future, and speculators foolishly buy futures contracts because they mistakenly expect a price hike, then yes that does distort markets. But the government doesn’t need to crack down on this antisocial behavior, because the market has a built-in penalty: speculators who guess wrong lose money. And in fact, many investors lost a bundle of money when oil prices collapsed in the fall of 2008. And you didn’t hear the politicians praising speculators for the run down in the price of oil either.

The other thing producers do, and perhaps the most important thing for consumers, is that they are encouraged by the higher price to invest in finding more oil, because they will get a higher price for the oil. They buy equipment, hire people and buy services. They explore for new supplies and add new capacity. By combining their risked capital, additional human resources and intelligence, they bring new oil to the markets. New oil supplies help producers meet the increased demand and prices fall. This is supply and demand working to meet the wants and needs of consumers and there is nothing sinister about it.

Even Paul Krugman Agreed that Speculators Didn’t Cause the 2008 Spike

So we see that even when speculators move prices, so long as their forecasts are correct, they are actually helping to stabilize prices. Ironically, the point is moot regarding the 2008 price swings, because many analysts from across the political spectrum did not believe that speculation drove those movements. Instead, the underlying supply and demand conditions were the best explanation for why oil rose so high by the summer of 2008, and then collapsed in the fall.

The “smoking gun” in this conclusion was the fact that oil inventories were not rising during oil’s large ascent. Independent analyses by IER and the CFTC pointed to this fact, and Paul Krugman has recently reminded his readers that he too does not believe oil speculators were responsible for the 2008 movements.

All three analyses noted that the only way for speculators to drive up prices, is by giving an incentive for people to take oil off the current market and stockpile it for future sale. Since there was no obvious accumulation of oil inventories during the first half of 2008, oil speculation couldn’t have been the driving force. The reason the spot price of oil rose so much through the summer, was that worldwide supply still lagged behind demand for much of the year.Putting

New Curbs on Financial Markets Will Hurt Consumers

Of course, the real reason behind the CFTC’s change of heart is that it needs to justify its desire to expand its regulatory purview and slap on even more regulations of the financial markets. Specifically, the CFTC wants the power to limit “speculative” purchases of oil futures and other derivatives. The idea is that “physical hedgers”—such as airlines and oil producers—can trade in futures contracts as much as they want, because in theory they are just shielding their businesses from sensitive oil price moves. In contrast, the CFTC wants to crack down on those who buy futures contracts out of purely speculative motives.

This is a false dichotomy, and certainly we can’t trust bureaucrats to know the difference in practice. Airline companies can hold an opinion on oil prices too, and “bet” accordingly—that’s why some airlines invest more heavily than others in futures contracts. So even institutions that are directly related to the oil business can dabble in speculative transactions that will affect oil prices based on their forecasts.

On the other hand, investors who are completely isolated from the oil market might buy oil futures as a “hedge.” For example, during 2008 many portfolio managers gained more and more exposure to oil, meaning they “went long” on oil futures contracts. But they weren’t doing this in order to bet on higher prices. Rather, they could see that as oil kept rising, it was hurting the share prices on many major companies. So in order to protect their clients, the portfolio managers diversified their holdings, by selling off some of their stock and bond holdings in order to buy commodity futures. New government regulations could hinder this very useful tool to shield average investors from large price swings.

Finally, we need to realize that CFTC regulations will not stop large speculators from changing the world price of oil. Politically connected investment firms will easily be able to qualify as an “approved” purchaser of oil futures. And if nothing else, rich investors who want to bet on the price of oil can always take their business to foreign exchanges. Does anybody really think George Soros won’t be able to find someone else in the whole wide world willing to take the opposite position of an oil trade he wants to make?

Of course, we will have to suspend final judgment until we see the CFTC’s new report. It’s possible that every single analyst at the CFTC missed something last year when they concluded that speculation wasn’t driving oil prices. But one can’t help but note the timing of the CFTC’s about face – just as the Obama Administration is pushing for more regulation of energy markets.

Resistance to mind-altering substances is futile, according to a new "Secret History of Getting High in America"

Why we say yes to drugs. By Laura Miller
Resistance to mind-altering substances is futile, according to a new "Secret History of Getting High in America"
Salon, Jul. 20, 2009

Not long ago, I was talking with a couple of friends who are about a decade younger than I am. We got onto the subject of recreational drugs and how my friends had recently sworn off Ecstasy. "I know a guy who used to love it, and he's quitting, too," one of them explained. "He's learned a lot about it and says it's just too hard on your body." I remarked that since Ecstasy is the sort of drug most people take only very occasionally, it probably wasn't as dangerous as something like cocaine, which can be addictive, expensive and lethal. "Oh, cocaine's not that bad," said my friend, looking puzzled and leaving me surprised. Hadn't he ever worked for someone who'd gotten so tweaked on coke that he burned out his septum, emptied his bank account and triggered a heart attack? Hasn't every journalist worked with someone like that?

Ryan Grim would understand this disconnect perfectly. One of the theses of his new book, "This is Your Country on Drugs: The Secret History of Getting High in America" -- a cornucopia of unconventional wisdom about our relationship to mind-altering substances -- is that the popularity of drugs waxes and wanes according to a complex sum of factors. One of those factors is the "perceived risk" of using a particular chemical, which also fluctuates. There's a tendency to idealize new drugs, as the Boston Medical and Surgical Journal did with a recently isolated narcotic in 1900. "There's no danger of acquiring a habit," it assured its readers about the drug that had just emerged from the labs of the aspirin manufacturer, Bayer. They named it heroin.

Even when we ought to know better, we don't. "It takes about seven years," Grim writes, "for folks to realize what's wrong with any given drug. It slips away, only to return again as if it were new." I came of age professionally at a time when older journalists and editors were wrecking themselves on cocaine right and left; as a result, I still think of the drug as equal parts perilous and pathetic, as well as hopelessly uncool. My friend, no doubt, came up during a coke lull.

A political reporter who currently works at the Huffington Post, Grim wrote a 2004 article for Slate inspired by a curious observation: LSD, which had been "a fixture of my social scene since the early '90s," seemed to have vanished from that scene. No one he knew was taking it or selling it, and when he approached a drugs-policy researcher for some hard data, they discovered that according to several metrics, acid use was at "an historic low: 3.5 percent." By 2003, it was down to 1.9 percent. Why?

It wasn't just that LSD had gone out of style, although it had, somewhat. Grim found evidence of a perfect storm of causes for the decline. In 2000, the DEA had arrested a man named William Pickard, thought to be the manufacturer of as much as 95 percent of the available acid in the U.S. The Grateful Dead, whose concerts provided an opportunity for suppliers and users to connect and network, had stopped touring after the 1995 death of Jerry Garcia, and Phish, a jam band that had stepped in to fill the gap, also stopped touring by the end of 2000. The rave scene began to fade away under pressure from authorities who threatened to arrest organizers for drug offenses committed at their events.

But if Grim has learned anything from his forays into the tangled world of drug laws (he once worked for the Marijuana Policy Project, which lobbies for the repeal of pot prohibition), it's that the American passion for getting high turns enforcement-centered strategies into a vast game of Whack-a-Mole. "Policies enacted to counter other drugs -- marijuana and cocaine, for example -- have ended up encouraging the meth trade, as have laws against meth itself," he writes. Crackdowns on pot smuggled from Mexico during the 1970s caused growers, dealers and users to turn to heroin, meth and especially cocaine, the last of which was brought in from Colombia via the Caribbean and Miami. When federal authorities finally got around to draining the swamp of crime and corruption in Miami (where one-fifth of all real estate transactions were paid for in cash), coke smuggling migrated to Mexico, and when attacked there, it scattered throughout the region, "creating the cartel structure that exists today." This year, the National Drug Threat Assessment has described Mexican cartels as "the greatest organized crime threat to the United States," whose violence has spilled over the border and whose influence "over domestic drug trafficking is unrivaled."

Grim has a knack for digging up facts and crunching statistics to get unexpected results. The meth "epidemic" that has recently inspired so much media alarm is already in decline, while crack use, never as pervasive as it was depicted in the 1980s, has remained fairly steady since then. Today's kids aren't smoking much pot because pot is a "social" drug, shared among peers who gather in parking lots and other hangouts; teens have less unstructured time now and tend to socialize online. They still get high, only on prescription drugs pilfered from adults or ordered off the Internet. "There's no social ritual involved," he observes, "just a glass of water and a pill," which "fits well into a solitary afternoon."

There's more. Early American settlers drank like fish, even the Puritans (though, as Grim fails to note, this was likely a habit transferred from Europe, where the water in many communities wasn't potable). In the 19th century, the heyday of temperance campaigns, it was more socially acceptable to consume opium than alcohol, and by the end of the 1900s, America was a "pharmacopoeia utopia" in which coke, heroin and morphine were all readily available, either with a doctor's prescription or in patent medicines and products like Coca-Cola, once a cocaine-containing beverage marketed as "a substitute for alcohol." Traditionally, attempts to regulate or prohibit drugs in America have come from the left rather than the right; only with the advent of the counterculture did this change.

Some of Grim's arguments are familiar, but with a twist. By now, most informed people know that anti-drug education and P.R. campaigns directed at children don't work, but Grim has noted several studies indicating that they may actually foster experimentation. He sees the mini-boom in drug use among 10th graders in the late '90s as caused by a confluence of the "inner child" therapy boom exhorting parents to encourage children's curiosity and programs like D.A.R.E. (Drug Abuse Resistance Education), which inadvertently directed that curiosity toward exotic chemicals. Despite ample proof of its ineffectiveness, D.A.R.E. continues to be used in three-quarters of all American school districts on some 25 million children. (President Obama even proclaimed April 8 "National D.A.R.E. Day" in honor of the organization's "important work.") Grim thinks that D.A.R.E. and similarly wasteful programs persist simply because they relieve parents from the duty of having awkward (and possibly "hypocritical") conversations with their kids about drugs. Also because no one knows what else to do.

Even less excusable in Grim's eyes is the predominance of law enforcement strategies in America's disastrous war on drugs, initiated by the Reagan administration. Drug courts, in which offenders are directed to court-monitored treatment programs instead of into prison, are, according to Grim, both cheaper and more successful. Yet even politicians inclined to support a treatment-oriented approach to diminishing the American appetite for illegal drugs have opted to emphasize enforcement in order to position themselves as "tough" on crime.

For just this reason, President Clinton replaced his first, reform-minded drug czar, Lee Brown, with retired Gen. Barry McCaffrey, who squandered billions on a scandal-ridden media campaign (planting secret anti-drug messages in prime-time TV dramas) and combating the medical marijuana movement, which is supported by a majority of Americans. Worse yet, overseas enforcement campaigns lead to horrific blowback. Grim points out that aggressive attacks on growers and suppliers cause centralization of the drug trade (only big organizations can afford the losses) and this in turn leads to corruption, as cartel leaders parlay their fortunes into political influence. Not only are we pissing away our own resources on ineffectual enforcement efforts, we have "brought the Mexican government to the brink of collapse, making the prospect of a failed state on America's southern border a very real possibility."

For Grim, most of these mistakes have roots in an elementary error, the inability to accept that "altering one's consciousness is a fundamental human desire." The craving to be more relaxed or more alert, more outgoing or more reflective, happier or deeper or even just sillier and less bored -- in one form other another, this drive has always been and always will be with us, though many of us refuse to admit it. As a result, our political response to drug problems tends to be blinkered. "In reality, there's no such thing as drug policy," Grim writes. "As currently understood and implemented, drug policy attempts to isolate a phenomenon that can't be taken in isolation. Economic policy is drug policy. Healthcare policy is drug policy. Foreign policy, too, is drug policy. When approached in isolation, drug policy almost always backfires, because it doesn't take into account the powerful economic, social and cultural forces that also determine how and why Americans get high."

Yet a simplistic call for legalization fails to take into account the fact that almost all drugs can be very dangerous, and that the impulse to control them may run as deep as the desire to enjoy them. People who trust themselves to use drugs wisely don't necessarily want their kids, or their irresponsible neighbors, or their troubled relatives to enjoy unfettered access to previously controlled substances. For that reason, Grim -- who exhibits a distinct preference for hallucinogens and is prone to idealizing the "psychonauts" who use them to "expand consciousness" -- stops short of calling for the repeal of all drug prohibitions, for the most part, apparently, because he thinks it just won't last. "What would happen if drugs were legalized?" he asks, referring to the "pharmacopoeia utopia" of the late 1800s. "Well, it happened. And history suggests that if we ever legalize them again, it won't be long before we ban them all over again."

"Realism" seems to be the most Grim can bring himself to hope for, which is why he applauds cable TV series like "Weeds," "Breaking Bad" and "The Wire" for their nuanced depictions of the drug trade and the people who ply it. The library-like Web site Erowid.com emerges as one of the few real heroes in "This Is Your Country on Drugs," due to its curators' fierce commitment to objectively and thoroughly substantiating the vast amounts of information -- positive and negative -- they present about virtually every drug under the sun. A little realism would certainly help with regard to cocaine, whose "perceived risk" is rapidly shrinking in my own (admittedly highly anecdotal) experience. In the final pages of the book, Grim remarks that his own observations suggest that "coke's next honeymoon could be right around the corner." Sounds prescient, but not more so than his world-weary conclusion that "America has shown just about zero capacity to learn from its long and complicated history with drugs."

Germany and the U.K. resist France and the U.S. on green tariffs

Resisting Green Tariffs. WSJ Editorial
Germany and the U.K. resist France and the U.S. on green tariffs.
WSJ, Jul 28, 2009

One of the most dangerous but least reported undercurrents of the global-warming movement is trade protectionism. Now some politicians in Europe are beginning to push back, and we’re delighted to see it.

A carbon tariff has been popular on the intellectual left for some time, as a way to sell heavy new energy taxes to Western voters worried that their jobs will get shipped to countries that don’t also punish carbon use. The U.S. House of Representatives wrote a tariff provision into its recent cap-and-tax bill, rolling over the muted objections of President Obama. Coming from the world’s largest economy and ostensible free-trade leader, the bill is an invitation to the world’s protectionists to camouflage their self-interest in claims of green virtue.

French President Nicolas Sarkozy—a mercantalist in the best of times—escalated the threat last month by suggesting import duties to “level the playing field” with countries that oppose binding greenhouse-gas targets at December’s United Nations climate talks in Copenhagen. Just what a world trying to rebound from recession needs: beggar-thy-neighbor environmentalism.

Now other leaders are beginning to recognize and speak up about the peril. With typical British understatement, U.K. Secretary of State for Energy and Climate Change Ed Miliband said Saturday his government was “skeptical” about the French proposal for carbon tariffs. Germany’s Deputy Environment Minister Matthias Machnig was even more forthright on Friday, branding the exercise as “eco-imperialism” for attempting to punish countries that don’t follow these green dictates. “We are closing our markets for their products, and I don’t think this is a very helpful signal for the international negotiations,” he added. Both statements are notable coming as they do from parties on the political left.

Berlin’s criticism is especially important. Germany has been at the forefront of Europe’s eco-movement from the start, enriching the French language with such words as “le Waldsterben,” a German compound meaning “forest death.” The idea of the man-made destruction of Europe’s trees was the great green scare of the 1970s and 1980s. The forests are still with us, and scientists now believe that the tree decline was as much due to natural phenomena as to “acid rain.” That episode is a lesson in the need for skepticism about proposals that would do tangible economic harm in the heat of environmental manias.

A climate tariff would be damaging even on its own green terms. To the extent it reduced global trade, carbon protectionism would slow the rise in income that we know from the last half century has been crucial to antipollution progress. The richer people are, the more of their income they are willing to devote to cleaner air and water. Several hundred million people have risen from poverty in the last generation thanks to expanding trade, and the world doesn’t need a reversal thanks to old-fashioned protectionism dressed in green drag.

India Picks Economic Growth Over Carbon Dioxide Caps

India Picks Economic Growth Over Carbon Dioxide Caps
IER, July 27, 2009

The Obama Administration and European governments continue to lobby developing countries, such as India and China, to reduce their carbon dioxide emissions. But India and China reject these calls because they understand that artificial restrictions on carbon dioxide emissions will harm their economies.

During her recent visit, India’s Environment Minister reminded Secretary of State Hillary Clinton that India would not accept caps on their carbon dioxide emissions. According to the Washington Post:

But the clash between developed and developing countries over climate change intruded on the high-profile photo opportunity midway through Clinton’s three-day tour of India. Indian Environment Minister Jairam Ramesh complained about U.S. pressure to cut a worldwide deal, and Clinton countered that the Obama administration’s push for a binding agreement would not sacrifice India’s economic growth.

As dozens of cameras recorded the scene, Ramesh declared that India would not commit to a deal that would require it to meet targets to reduce emissions. “It is not true that India is running away from mitigation,” he said. But “India’s position, let me be clear, is that we are simply not in the position to take legally binding emissions targets.” [emphasis added]

It is refreshing to see that at least some government officials—though not from this country – understand that when you take options away from businesses, you reduce economic activity. If it were really true, as Secretary of State Clinton alleges, that reducing emissions will actually spur job creation and economic growth, then why would the government need to force its plan on the private sector? (See video.)

Furthermore, why stop with caps on carbon dioxide emissions? Why not impose a cap-and-trade plan on the use of steel? All those businesses currently using steel as an input would then have to scramble to find higher-priced substitutes, and this would create jobs in the plastics industries.

Of course the above “logic” is nonsense. Steadily shrinking the cap on permissible emissions will hamper U.S. economic growth and because businesses will be forced to switch to lower-carbon-intensive techniques than they otherwise would have chosen, their output will be lower and the productivity of labor will fall. That is, of course, the intent of the proponents of cap and trade plans including the Waxman-Markey bill that recently passed in the House of Representatives. The so-called “green jobs” created in some sectors, such as wind turbines and solar panels, will be counterbalanced by job destruction in other sectors that rely on fossil fuels and inexpensive energy.

Indian officials have it exactly right: They are being asked to sacrifice the welfare of their own citizens by Western leaders whose countries were built on a foundation of abundant energy.
India’s declaration also undermines the entire rationale for the Waxman-Markey bill. Taken in isolation, some experts contend that the Waxman-Markey caps on U.S. emissions will have virtually no impact on the trajectory of global warming, even taking the standard climate models at face value. Even the most outspoken scientists on global warming agree that unilateral American efforts are pointless, without similar targets being adopted by the developing world.

Proponents of cap and trade have justified its economically crippling, yet environmentally irrelevant, constraints on the U.S. by saying it will provide American negotiators with moral authority when seeking worldwide restrictions on industry. The idea is that we need to impose limits on the U.S. economy before other governments will agree to shackle their own economies in turn.

India, rightly so, has just declared that it will do no such thing. Let us hope that our leaders see the flaws in their logic and reverse course on this job-killing cap and trade plan before it is too late.