Securing U.S. Objectives in North Korea: A Memo to President-elect Obama. By Bruce Klingner and Walter Lohman
Heritage, January 6, 2009Special Report #37
I have no illusions about North Korea, and we must be firm and unyielding in our commitment to a non-nuclear Korean peninsula.
--Barack Obama, Chosun Ilbo, February 15, 2008[1]
President-elect Obama, during the campaign you stressed the need for "sustained, direct, and aggressive diplomacy" with North Korea in order to achieve "the complete and verifiable elimination of all of North Korea's nuclear weapons programs, as well as its past proliferation activities, including with Syria."[2] When North Korea provided data on its nuclear weapons programs, you stated that:
[S]anctions are a critical part of our leverage to pressure North Korea to act. They should only be lifted based on performance. If the North Koreans do not meet their obligations, we should move quickly to re-impose sanctions that have been waived, and consider new restrictions going forward.[3]
Yet, after National Security Advisor Stephen Hadley admitted that North Korea's data declaration "was not the complete and correct declaration that we had hoped,"[4] you did not advocate re-imposing any sanctions on North Korea.
You also stated that a strict verification protocol was an absolute prerequisite for removing North Korea from the list of state sponsors of terrorism, as well as for making further progress in the nuclear negotiations. You called for "a clear understanding that if North Korea fails to follow through there will be immediate consequences." Specifically, "If North Korea refuses to permit robust verification, we should lead all members of the Six Party talks in suspending energy assistance, re-imposing sanctions that have recently been waived, and considering new restrictions."[5]
It has become evident that the verification protocol has significant shortcomings and does not apply to Pyongyang's uranium-based weapons program or proliferation activities. North Korea declared on November 12 that no scientific sampling of Pyongyang's nuclear programs will be allowed, that inspections will be confined to the Yongbyon facility, and that divergence "even by one word, [would] lead inevitably to war."[6] Yet you have not altered your description of North Korea's removal from the terrorism list as a "modest step forward" and have not called for any slowdown in negotiations.
You have blamed the Bush Administration's initial hard-line policy for allowing "North Korea to expand its nuclear arsenal as it resumed reprocessing of plutonium and tested a nuclear device."[7] But this ignores North Korea's role in instigating the crisis. Pyongyang began violating its international denuclearization commitments in the benign threat environment of the 1990s during the administrations of U.S. President William J. Clinton and South Korean President Kim Dae-jung. At the time, both presidents were intent on engaging North Korea and providing diplomatic and economic benefits in return for non-threatening behavior by Pyongyang.
During the past two years, the Bush Administration has engaged in the direct bilateral diplomacy with Pyongyang that you advocate, but North Korea's intransigence, noncompliance, and brinksmanship have continued. Nor--three years after Pyongyang agreed to do so--have diplomats yet begun the real negotiations to discuss the elimination of nuclear weapons. This strategy has resulted in the abandonment of important principles, including enforcement of international law and attaining sufficient verification measures.
North Korean denuclearization is a critically important goal, but how it is attained is equally important. Being excessively eager to compromise not only rewards abhorrent behavior, but also undermines the negotiating leverage that is necessary to get Pyongyang to abandon its nuclear weapons. An engagement policy toward North Korea should be based on several key negotiating precepts:
Insist that North Korea fulfill its existing requirements. Pyongyang should provide full disclosure of its plutonium-based and uranium-based nuclear weapons programs before receiving the entirety of Phase Two benefits. Required information includes all nuclear production, weaponization, and test facilities; the number of nuclear weapons produced; and the export (proliferation) of nuclear technology, materials, and equipment to Syria, Iran, and any other countries. Until North Korea fully complies, the Six-Party-Talks nations should not provide all of the Phase Two benefits.
Implement a rigorous and intrusive verification mechanism. The U.S. should insist on verification requirements as called for under U.N. Resolution 1718; North Korea's accession to the Non-Proliferation Treaty (NPT) and International Atomic Energy Agency (IAEA) Safeguards, as Pyongyang promised to do at an early date in September 2005; and observance of the precedence of previous U.S. arms control treaties. The verification protocol should include short-notice challenge inspections of non-declared facilities for the duration of the agreement to redress any questions about North Korea's nuclear weapons programs.
Require more detailed follow-on joint statements. North Korea has used the vagaries of existing Six-Party-Talks agreements to exploit loopholes and defer full compliance. The U.S. should insist that follow-on agreements explicitly define the linkages between North Korean steps toward denuclearization and the economic and diplomatic benefits to be provided.
Use all of the instruments of national power (diplomatic, informational, military, and economic) in a coordinated, integrated strategy. While it is important to continue negotiations to seek a diplomatic resolution to the North Korean nuclear problem, the U.S. and its allies should simultaneously use outside pressure to influence North Korea's negotiating behavior.
Realize that talking is not progress. The U.S. should favor resolving issues rather than repeatedly lowering the bar simply to maintain the negotiating process. North Korea should not be treated differently from every other country in the world. You should insist that North Korea abide by international standards of behavior and not be allowed to carve out another "special status" within the NPT and IAEA Safeguards.
Define redlines and their consequences. The Bush Administration's abandonment of its stated resolve to impose costs on North Korea for proliferating nuclear technology to Syria undermined U.S. credibility and sent a dangerous signal to other potential proliferators.
Establish deadlines with consequences for failure to meet them. North Korea must not be allowed to drag out the Six-Party Talks indefinitely in order to achieve de facto international acceptance as a nuclear weapons state. Repeatedly deferring difficult issues in response to Pyongyang's intransigence is not an effective way to achieve U.S. strategic objectives.
In addition to these heightened standards for negotiating with North Korea, the U.S. should deepen its relations with South Korea to retain its influence in the region and ensure that U.S. security interests are safeguarded. The first step should be to extend the current relationship from a primarily military one to one that includes bilateral economic ties. Government and independent studies overwhelmingly conclude that the Korea-U.S. free trade agreement (KORUS FTA) will provide clear economic benefits to the United States, but it will also strengthen ties on the Korean peninsula and ensure that the U.S. maintains a strategic ally in dealing with North Korea.
Conclusion
You have stated the need for an aggressive policy toward North Korea and recognize the threat that it poses. But while denuclearization is critical, the measures used to achieve it are just as critical. You must pursue a policy that does not reward blatant disobedience and disregard for agreed-to measures and that does not compromise on something that is so fundamental to U.S. security.
Specifically, you should abide by strict negotiation standards and not reward North Korea when it breaks them. Additionally, you should deepen ties with South Korea, our key ally on the peninsula. The KORUS agreement will bolster this critically important alliance and continue to build the strategic relationship that is crucial to protecting U.S. security interests and ensuring continued U.S. influence in the region.
Bruce Klingner is Senior Research Fellow for Northeast Asia in, and Walter Lohman is Director of, the Asian Studies Center at The Heritage Foundation.
References
[1] "Obama Has Misgivings About Korea-US FTA," Chosun Ilbo, February 15, 2008.
[2] "Barack Obama and Joe Biden's Plan to Renew U.S. Leadership in Asia," at http://obama.3cdn.net/ef3d1c1c34cf996edf_s3w2mv24t.pdf (December 8, 2008).
[3] Jonathan Ellis, "McCain and Obama on North Korea," The New York Times, political blog, June 26, 2008, at http://thecaucus.blogs.nytimes.com/2008/06/26/mccain-and-obama-on-north-korea (December 8, 2008).
[4] Press release, "Press Briefing by National Security Advisor Stephen Hadley on the Upcoming United Nations General Assembly," The White House, September 20, 2008, at http://www.whitehouse.gov/news/releases/2008/09/20080920-2.html (December 8, 2008).
[5] "Candidate Statements on North Korea," RealClearPolitics, at http://realclearpolitics.blogs.time.com/2008/10/11/candidate_statements_on_north (December 8, 2008).
[6] Choe Sang-hun, "North Korea to Bar Taking of Nuclear Samples," International Herald Tribune, November 12, 2008.
[7] "Obama Has Misgivings About Korea-US FTA."
Tuesday, January 6, 2009
David Boaz on Blagojevich and corruption in politics
Politics and Corruption, Together Again. By David Boaz
This article appeared in the Fort Worth Star-Telegram on January 6, 2009.
Illinois Gov. Rod Blagojevich is the new poster boy for political corruption, but he is really just the most recent reminder of the fundamentally grubby and corrupt nature of politics. In Illinois alone, three recent governors — liberal "reformers" Otto Kerner and Dan Walker and career politician George Ryan — have preceded Blagojevich in making the journey from the statehouse to the big house.
Cases like these remind us of the fundamental nature of politics. Blagojevich showed less intelligence and more vulgarity than most politicians, but trading taxpayer money for personal or political gain is the common coin of politicians. In his first post-indictment news conference, Blagojevich himself strongly hinted that he will defend himself with the notion that swapping appointments and favors is merely stock in trade for politicians of the upper echelon.
That leads to a virtually inescapable conclusion: The best way to limit such tawdry quid pro quo is to limit the power of politicians and of government.
Stories of ambitious men being corrupted by the political game have been plentiful since my youth. It amazes me, here amid many calls for the government to take an ever more active role in our country’s doings, that so many of these cautionary tales seem to be forgotten.
Spiro T. Agnew got his start on the Baltimore County zoning board, which is probably evidence enough that he was a crook from the start. He went on to serve as Baltimore County executive, governor of Maryland and vice president under President Richard M. Nixon, taking bribes in return for government contracts the whole way through.
Agnew pleaded no contest to one count of tax evasion and resigned the vice presidency. But one of the federal attorneys on the case said: "I’ve never seen a stronger extortion case. The man is a crook."
When I was a college student in Nashville, Rep. Ray Blanton was elected governor of Tennessee. Four years later, he lost his bid for re-election to Lamar Alexander, who now serves in the U.S. Senate. On Jan. 16, 1979, Alexander was suddenly sworn in as governor, three days before his scheduled inauguration, to prevent Blanton from commuting the sentences of any more prisoners.
Blanton accelerated his sales of pardons after he was defeated for re-election and realized his time to profit was drawing short. Blagojevich is accused of speeding up his efforts to trade favors for campaign funds before a Dec. 31 change in the campaign finance laws.
Blanton had ordered commutations or pardons for 24 convicted murderers and 28 other prisoners before his signing frenzy ended with Alexander’s surprise swearing-in. Those 52 last-minute pardons came a month after three state employees, including two members of his office legal staff, were arrested by the FBI and charged with extortion and conspiracy to sell pardons, paroles and commutations. As with Blagojevich, the knowledge that an FBI investigation was under way just made Blanton double down.
The Blanton pardons were recalled to public memory when another Southern politician created a pardon scandal as he left office in 2001. President Bill Clinton’s pardons differed from Blanton’s in many ways. Blanton’s aides apparently sold pardons and commutations for straight cash on the barrelhead, though the governor himself did not pocket any of the loot. Blanton commuted the sentences of convicted murderers, some of whom had served only a few years.
Clinton’s last-minute pardons involved a broader range of offenses against decency and good sense. His notorious pardons for Marc Rich and Pincus Green, who had fled the country and never faced trial, overshadowed many of the other outrages on the morning of Jan. 20.
In his rush to the door, Clinton pardoned his brother; people associated with Whitewater and related Clinton scandals; his former Cabinet secretary Henry Cisneros and Cisneros’ former mistress; several people convicted of bribery involving another Clinton Cabinet member; former Rep. Mel Reynolds, convicted of wire fraud, bank fraud and sex with an underage girl; a Clinton fundraiser who had embezzled clients’ money; supporters of Hillary Clinton’s Senate bid; a Democratic party activist who had embezzled money intended for the homeless; several people smart enough to hire former Clinton staffers as their lawyers; a group of female leftist bombers, one of whom told the media that she was excited about resuming her activism; and a convicted defrauder then under investigation in yet another money-laundering scheme.
FBI investigations and anti-bribery laws will never take the corruption out of politics. The best way to limit it is to keep government small, with few jobs to fill and limited money to spend.
This article appeared in the Fort Worth Star-Telegram on January 6, 2009.
Illinois Gov. Rod Blagojevich is the new poster boy for political corruption, but he is really just the most recent reminder of the fundamentally grubby and corrupt nature of politics. In Illinois alone, three recent governors — liberal "reformers" Otto Kerner and Dan Walker and career politician George Ryan — have preceded Blagojevich in making the journey from the statehouse to the big house.
Cases like these remind us of the fundamental nature of politics. Blagojevich showed less intelligence and more vulgarity than most politicians, but trading taxpayer money for personal or political gain is the common coin of politicians. In his first post-indictment news conference, Blagojevich himself strongly hinted that he will defend himself with the notion that swapping appointments and favors is merely stock in trade for politicians of the upper echelon.
That leads to a virtually inescapable conclusion: The best way to limit such tawdry quid pro quo is to limit the power of politicians and of government.
Stories of ambitious men being corrupted by the political game have been plentiful since my youth. It amazes me, here amid many calls for the government to take an ever more active role in our country’s doings, that so many of these cautionary tales seem to be forgotten.
Spiro T. Agnew got his start on the Baltimore County zoning board, which is probably evidence enough that he was a crook from the start. He went on to serve as Baltimore County executive, governor of Maryland and vice president under President Richard M. Nixon, taking bribes in return for government contracts the whole way through.
Agnew pleaded no contest to one count of tax evasion and resigned the vice presidency. But one of the federal attorneys on the case said: "I’ve never seen a stronger extortion case. The man is a crook."
When I was a college student in Nashville, Rep. Ray Blanton was elected governor of Tennessee. Four years later, he lost his bid for re-election to Lamar Alexander, who now serves in the U.S. Senate. On Jan. 16, 1979, Alexander was suddenly sworn in as governor, three days before his scheduled inauguration, to prevent Blanton from commuting the sentences of any more prisoners.
Blanton accelerated his sales of pardons after he was defeated for re-election and realized his time to profit was drawing short. Blagojevich is accused of speeding up his efforts to trade favors for campaign funds before a Dec. 31 change in the campaign finance laws.
Blanton had ordered commutations or pardons for 24 convicted murderers and 28 other prisoners before his signing frenzy ended with Alexander’s surprise swearing-in. Those 52 last-minute pardons came a month after three state employees, including two members of his office legal staff, were arrested by the FBI and charged with extortion and conspiracy to sell pardons, paroles and commutations. As with Blagojevich, the knowledge that an FBI investigation was under way just made Blanton double down.
The Blanton pardons were recalled to public memory when another Southern politician created a pardon scandal as he left office in 2001. President Bill Clinton’s pardons differed from Blanton’s in many ways. Blanton’s aides apparently sold pardons and commutations for straight cash on the barrelhead, though the governor himself did not pocket any of the loot. Blanton commuted the sentences of convicted murderers, some of whom had served only a few years.
Clinton’s last-minute pardons involved a broader range of offenses against decency and good sense. His notorious pardons for Marc Rich and Pincus Green, who had fled the country and never faced trial, overshadowed many of the other outrages on the morning of Jan. 20.
In his rush to the door, Clinton pardoned his brother; people associated with Whitewater and related Clinton scandals; his former Cabinet secretary Henry Cisneros and Cisneros’ former mistress; several people convicted of bribery involving another Clinton Cabinet member; former Rep. Mel Reynolds, convicted of wire fraud, bank fraud and sex with an underage girl; a Clinton fundraiser who had embezzled clients’ money; supporters of Hillary Clinton’s Senate bid; a Democratic party activist who had embezzled money intended for the homeless; several people smart enough to hire former Clinton staffers as their lawyers; a group of female leftist bombers, one of whom told the media that she was excited about resuming her activism; and a convicted defrauder then under investigation in yet another money-laundering scheme.
FBI investigations and anti-bribery laws will never take the corruption out of politics. The best way to limit it is to keep government small, with few jobs to fill and limited money to spend.
Monday, January 5, 2009
Michael Ledeen On Leon Panetta as CIA Chief
Panetta to CIA, by Michael Ledeen
The Corner/NRO, Jan 05, 2009, 05:23 PM
In the very early days of the Bush administration, Karl Rove asked a Washington policy wonk what personnel changes he'd recommend to newly arrived George W. The wonk said "there is one matter of life and death: he must replace Tenet at CIA and put in one of his own people, someone he absolutely trusts." Rove said "well, good luck with that one." Obama knows better, and he's putting Leon Panetta in Langley.
I always liked Panetta. He served in the Army and is openly proud of it. He seems to be a good lawyer (oxymoronic though it may seem). He's a good manager. And he's going to watch Obama's back at a place that's full of stilettos and a track record for attempted presidential assassination second to none. But Italians know all about political assassination; you may remember Julius Caesar. Or Aldo Moro. The self-proclaimed cognoscenti will deride his lack of "spycraft," and he's never worked in the intel bureaucracy or, for that matter, in foreign policy or national security. But he's been chief of staff, which involved all that stuff.
I think it's a smart move.
The Corner/NRO, Jan 05, 2009, 05:23 PM
In the very early days of the Bush administration, Karl Rove asked a Washington policy wonk what personnel changes he'd recommend to newly arrived George W. The wonk said "there is one matter of life and death: he must replace Tenet at CIA and put in one of his own people, someone he absolutely trusts." Rove said "well, good luck with that one." Obama knows better, and he's putting Leon Panetta in Langley.
I always liked Panetta. He served in the Army and is openly proud of it. He seems to be a good lawyer (oxymoronic though it may seem). He's a good manager. And he's going to watch Obama's back at a place that's full of stilettos and a track record for attempted presidential assassination second to none. But Italians know all about political assassination; you may remember Julius Caesar. Or Aldo Moro. The self-proclaimed cognoscenti will deride his lack of "spycraft," and he's never worked in the intel bureaucracy or, for that matter, in foreign policy or national security. But he's been chief of staff, which involved all that stuff.
I think it's a smart move.
Common perception that trade is, at best, a mixed blessing
Imports as Inputs. By Doug Karmin
Progressive Policy Institute, January 5, 2009
Introduction
With the U.S. economy in crisis, and the dollar weakening against most major currencies, trade has become the only bright spot in an otherwise bleak economic landscape. Indeed, exports have grown over 10 percent in 2008, while a decline in Americans' disposable incomes has caused imports to shrink for the first time in years -- bringing our trade deficit down with it.1
Yet while the net impact of trade on the U.S. economy is now at its most positive, helping prevent the current crisis from becoming even worse, there is still a common perception that trade is, at best, a mixed blessing.
After all, we like having expanded markets to sell our products and services, but we don't always like to accept that other countries will want to sell theirs to us. When it comes to trade, we just hope that the good somehow outweighs the bad.
This assumption that all imports are bad because they compete against U.S.-based companies is flawed, and needs to be examined. Normally, the best anyone can say for imports is that they allow consumers to buy things for less and therefore improve our standard of living. What is largely overlooked is that imported inputs -- the components used by U.S.-based companies to produce their finished goods -- are essential for our economy to remain competitive.
Imports in the Aggregate
It's surprising how little is mentioned about the linkage between foreign inputs and our competitiveness given how dependent U.S. producers have become on global supply chains.2 Census Bureau data for 2007 show that 47 percent of imports came from related-party companies, or cases when the U.S. importer was a subsidiary or parent company of the foreign exporter.3
In other words, almost half of all imported goods are not the traditional case of a foreign company selling directly to U.S. consumers, but rather are part of an intra-company global supply chain. Furthermore, almost 30 percent of all goods imported by U.S. affiliates of foreign companies were destined for further manufacturing within the United States.4 In cases such as these, where the importing company is using foreign inputs to build finished goods, restricting imports would directly affect U.S. production and employment.
Indeed, it's difficult to find any large U.S. manufacturer that doesn't depend on some foreign inputs. To name just a few examples:
Unintended Consequences of So-Called Safeguards
Perhaps the clearest way to illustrate how much our economy has become dependent on high-quality, low-cost inputs from abroad is to look at what happens when that supply is temporarily disrupted.
A very high-profile example of this occurred in 2002, when President Bush invoked a "safeguard" to protect U.S. steel producers. Tariffs ranging from 8 percent to 30 percent were increased on foreign steel in March 2002, with an original plan of holding them in place until 2005 so that U.S. steel companies could adjust to a surge in competition from low-cost imports.8
While U.S. steel companies undoubtedly benefited from this reduction in competition, what hadn't been fully anticipated was the negative impact on U.S.-based steel users. Manufacturers of steel-dependent goods like machine tools or auto parts suddenly saw their costs spike overnight.
Several studies have shown that more U.S. jobs were lost as a result of the tariffs than were saved, and even Bush allies like Sen. Lamar Alexander (R-Tenn.) concluded the tariffs had "shifted more steel-consuming jobs overseas than exist in the steel-producing industry in the United States."9
Eventually, the Bush administration caved in to pressure from steel users, as well as the threat of retaliation from the impacted foreign nations, and lifted the safeguard in December 2003, more than a year earlier than originally planned. The lesson was clear: the interdependence of U.S. producers with foreign suppliers has made it too complicated to easily protect one domestic industry without harming many others.
Conclusion
None of this is to say that imports don't affect U.S. jobs. We must recognize that some imports do replace domestic production -- and that, by doing so, they cost some Americans their livelihoods. For these reasons, it's critical that public policy be designed to both prepare workers for the demands of 21st century competition through efforts to improve worker productivity (including through training and education, as well as better infrastructure). We also need policies that will help cushion the blow for those who do lose their jobs. This should include effective unemployment and wage insurance, as well as universal and portable health coverage.
But the idea that jobs can be saved simply by raising barriers to imports is misguided, especially when those imports are inputs used for domestic production. As the steel example shows, even the best intentions to protect one set of U.S. companies will have costs and competitive effects on others, even ignoring the foreign retaliation that often hits unrelated U.S. industries.
Especially in this era of heightened globalization, in which technology can enable companies to move production and employment virtually anywhere in the world, it's imperative that U.S. companies and workers be as competitive as possible. One way of achieving this is to ensure that U.S.-based employers have access to the inputs they need, including those that arrive from overseas. Otherwise, we risk watching jobs cross the water -- in the opposite direction.
Endnotes
1. See Bureau of Economic Analysis, U.S. Department of Commerce, news release from September 26, 2008 for most current data on export and import growth.http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htmFor a discussion on the inverse relationship between import growth and unemployment, see "The Facts on Trade Deficits and Jobs," by Doug Karmin. Progressive Policy Institute, October 3, 2007.
2. For a less serious look at the impact of restricting inputs on competitiveness, see "GATT confusing? Canadian football provides some answers" by Doug Karmin in The Hill (November 30, 1994). It describes how the Canadian football league tilted the competitive balance against its own teams by restricting the number of foreign players allowed on Canadian teams while allowing U.S. teams to hire the best available talent.
3. Census Bureau, U.S. Department of Commerce, "U.S. Goods Trade: Imports & Exports by Related Parties 2007." May 9, 2008.
4. Bureau of Economic Analysis, U.S. Department of Commerce, Operations of Multinational Companies, Product Guide for Foreign Direct Investment in the U.S., 2002 Benchmark Survey, "U.S. Imports of Goods Shipped to Affiliates and Intended Use." Most recent data is for 2002, and it shows that U.S. affiliates imported $95 billion in goods destined for further manufacturing out of a total of $335 billion in imports (28.3%). Intended use of imports only exists for U.S. affiliates.
5. "Lack of Hybrids-Parts Suppliers Could Hurt U.S. Auto Makers," by Norihiko Shirouzu. The Wall Street Journal, August 16, 2004. The need for importing batteries for hybrid cars has continued since Ford's initial launch of their hybrid SUV. See "Hybrid Cars' Foreign Dependence," by Jim Ostroff. The Kiplinger Letter, September 9, 2008.
6. "Boeing, too, uses foreign parts," by Joelle Tessler. The Associated Press, March 7, 2008. It was also reported in September 2007 in China's "People's Daily Online" that Boeing's Vice President of China Operations stated that China had become one of Boeing's largest foreign suppliers with $2.5 billion in active contracts.
7. "Living in Dell Time," by Bill Breen. Fast Company.com, November 2004.
8. Remarks by Robert B. Zoellick, United States Trade Representative, on the decision by the president to terminate steel safeguards, December 4, 2003.
9. "Steel Tariffs Appear to Have Backfired on Bush," by Mike Allen and Jonathan Weisman. The Washington Post, September 19, 2003.
Progressive Policy Institute, January 5, 2009
Introduction
With the U.S. economy in crisis, and the dollar weakening against most major currencies, trade has become the only bright spot in an otherwise bleak economic landscape. Indeed, exports have grown over 10 percent in 2008, while a decline in Americans' disposable incomes has caused imports to shrink for the first time in years -- bringing our trade deficit down with it.1
Yet while the net impact of trade on the U.S. economy is now at its most positive, helping prevent the current crisis from becoming even worse, there is still a common perception that trade is, at best, a mixed blessing.
After all, we like having expanded markets to sell our products and services, but we don't always like to accept that other countries will want to sell theirs to us. When it comes to trade, we just hope that the good somehow outweighs the bad.
This assumption that all imports are bad because they compete against U.S.-based companies is flawed, and needs to be examined. Normally, the best anyone can say for imports is that they allow consumers to buy things for less and therefore improve our standard of living. What is largely overlooked is that imported inputs -- the components used by U.S.-based companies to produce their finished goods -- are essential for our economy to remain competitive.
Imports in the Aggregate
It's surprising how little is mentioned about the linkage between foreign inputs and our competitiveness given how dependent U.S. producers have become on global supply chains.2 Census Bureau data for 2007 show that 47 percent of imports came from related-party companies, or cases when the U.S. importer was a subsidiary or parent company of the foreign exporter.3
In other words, almost half of all imported goods are not the traditional case of a foreign company selling directly to U.S. consumers, but rather are part of an intra-company global supply chain. Furthermore, almost 30 percent of all goods imported by U.S. affiliates of foreign companies were destined for further manufacturing within the United States.4 In cases such as these, where the importing company is using foreign inputs to build finished goods, restricting imports would directly affect U.S. production and employment.
Indeed, it's difficult to find any large U.S. manufacturer that doesn't depend on some foreign inputs. To name just a few examples:
- When Ford originally set out to build a hybrid SUV in the United States, it found that key components like the battery pack had to be sourced from Japan and Europe because U.S. suppliers lacked the leading-edge capabilities. Ford's ability to compete effectively against Toyota and others in the nascent hybrid market was therefore dependent on its access to high-quality imports.5
- Boeing is in the middle of a fierce battle with an Airbus joint venture to compete for a $35 billion Pentagon contract to build aerial refueling tankers. National allegiances have played a role in the competition, and while Boeing's bid would reportedly use more U.S. content than the Airbus bid, Boeing's own estimates say that about 15 percent of the tankers (including such high-value components as the fuselage and tail) would have to be imported to meet the Air Force's needs.6
- Dell is one of the last companies that still assembles computers in the United States, and is famous for its custom-configuration sales model. What is less known is how dependent Dell's U.S.-based manufacturing sites are on foreign suppliers, to the point where Dell had to charter a dozen and a half 747s to move necessary components from Asia to keep its U.S. plants from shutting down when a dock strike closed 29 ports along the West Coast in 2002.7
Unintended Consequences of So-Called Safeguards
Perhaps the clearest way to illustrate how much our economy has become dependent on high-quality, low-cost inputs from abroad is to look at what happens when that supply is temporarily disrupted.
A very high-profile example of this occurred in 2002, when President Bush invoked a "safeguard" to protect U.S. steel producers. Tariffs ranging from 8 percent to 30 percent were increased on foreign steel in March 2002, with an original plan of holding them in place until 2005 so that U.S. steel companies could adjust to a surge in competition from low-cost imports.8
While U.S. steel companies undoubtedly benefited from this reduction in competition, what hadn't been fully anticipated was the negative impact on U.S.-based steel users. Manufacturers of steel-dependent goods like machine tools or auto parts suddenly saw their costs spike overnight.
Several studies have shown that more U.S. jobs were lost as a result of the tariffs than were saved, and even Bush allies like Sen. Lamar Alexander (R-Tenn.) concluded the tariffs had "shifted more steel-consuming jobs overseas than exist in the steel-producing industry in the United States."9
Eventually, the Bush administration caved in to pressure from steel users, as well as the threat of retaliation from the impacted foreign nations, and lifted the safeguard in December 2003, more than a year earlier than originally planned. The lesson was clear: the interdependence of U.S. producers with foreign suppliers has made it too complicated to easily protect one domestic industry without harming many others.
Conclusion
None of this is to say that imports don't affect U.S. jobs. We must recognize that some imports do replace domestic production -- and that, by doing so, they cost some Americans their livelihoods. For these reasons, it's critical that public policy be designed to both prepare workers for the demands of 21st century competition through efforts to improve worker productivity (including through training and education, as well as better infrastructure). We also need policies that will help cushion the blow for those who do lose their jobs. This should include effective unemployment and wage insurance, as well as universal and portable health coverage.
But the idea that jobs can be saved simply by raising barriers to imports is misguided, especially when those imports are inputs used for domestic production. As the steel example shows, even the best intentions to protect one set of U.S. companies will have costs and competitive effects on others, even ignoring the foreign retaliation that often hits unrelated U.S. industries.
Especially in this era of heightened globalization, in which technology can enable companies to move production and employment virtually anywhere in the world, it's imperative that U.S. companies and workers be as competitive as possible. One way of achieving this is to ensure that U.S.-based employers have access to the inputs they need, including those that arrive from overseas. Otherwise, we risk watching jobs cross the water -- in the opposite direction.
Endnotes
1. See Bureau of Economic Analysis, U.S. Department of Commerce, news release from September 26, 2008 for most current data on export and import growth.http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htmFor a discussion on the inverse relationship between import growth and unemployment, see "The Facts on Trade Deficits and Jobs," by Doug Karmin. Progressive Policy Institute, October 3, 2007.
2. For a less serious look at the impact of restricting inputs on competitiveness, see "GATT confusing? Canadian football provides some answers" by Doug Karmin in The Hill (November 30, 1994). It describes how the Canadian football league tilted the competitive balance against its own teams by restricting the number of foreign players allowed on Canadian teams while allowing U.S. teams to hire the best available talent.
3. Census Bureau, U.S. Department of Commerce, "U.S. Goods Trade: Imports & Exports by Related Parties 2007." May 9, 2008.
4. Bureau of Economic Analysis, U.S. Department of Commerce, Operations of Multinational Companies, Product Guide for Foreign Direct Investment in the U.S., 2002 Benchmark Survey, "U.S. Imports of Goods Shipped to Affiliates and Intended Use." Most recent data is for 2002, and it shows that U.S. affiliates imported $95 billion in goods destined for further manufacturing out of a total of $335 billion in imports (28.3%). Intended use of imports only exists for U.S. affiliates.
5. "Lack of Hybrids-Parts Suppliers Could Hurt U.S. Auto Makers," by Norihiko Shirouzu. The Wall Street Journal, August 16, 2004. The need for importing batteries for hybrid cars has continued since Ford's initial launch of their hybrid SUV. See "Hybrid Cars' Foreign Dependence," by Jim Ostroff. The Kiplinger Letter, September 9, 2008.
6. "Boeing, too, uses foreign parts," by Joelle Tessler. The Associated Press, March 7, 2008. It was also reported in September 2007 in China's "People's Daily Online" that Boeing's Vice President of China Operations stated that China had become one of Boeing's largest foreign suppliers with $2.5 billion in active contracts.
7. "Living in Dell Time," by Bill Breen. Fast Company.com, November 2004.
8. Remarks by Robert B. Zoellick, United States Trade Representative, on the decision by the president to terminate steel safeguards, December 4, 2003.
9. "Steel Tariffs Appear to Have Backfired on Bush," by Mike Allen and Jonathan Weisman. The Washington Post, September 19, 2003.
Card Check
More on Hoyer & Card Check, posted Jonah Goldberg
The Corner/NRO, Monday, January 05, 2009 @02:57 PM
From Patrick Semmens at National Right to Work Legal Defense Foundation:
Jonah-
Just to add to what others have written regarding Hoyer's comments on FNS. While it's often a fine line between gross misrepresentation and out and out lie, I'd say at least one aspect of Hoyer's comments fall into the second category:
Hoyer says "The employees currently have and will have the opportunity to opt for a secret ballot. They don't have to sign the card. They can say, 'Look, we'll have an election, and we may vote.' But they have that choice right now, and they will continue to have that choice."
But the fact is the so-called "authorization cards" that unions use to run a card check doesn't give employees the choice to opt for a secret ballot election. In fact, the cards often seem to intentionally bait-and-switch employees into thinking that they are supporting an election, when really they have done just the opposite by signing a card that will be later be counted as a "vote" for unionization under card check.
We have an example of a typical union card here. You'll see that on the top of the card in big bold print it says it is a request for a representation election. However, in fine print at the bottom it says that signing the card authorizes the union "also to represent me..." (meaning that it would count in a card check).
In short workers have no opportunity to request only a secret ballot vote... it's card check or nothing because the union controls the cards and what they are used for. Meanwhile as others have pointed out, union organizers technically could request a vote, but they never would because it is always easier to pressure or mislead 50% +1 workers into signing cards, than it is to get them to vote in a union within the privacy of the secret ballot.
Hope that helps.
Also, people need to be reminded that in most states (the 28 without Right to Work laws) once a union gets in (through card check or secret ballot) every worker must (1) accept the union's representation even if they don't want it and (2) pay dues to the union or be fired. So while obviously the secret ballot election is far less coercive than the card check scheme, let's not forget that both are still part of a fundamentally unjust system.
Regards.
—Patrick T. Semmens
Legal Information Director
National Right to Work Legal Defense Foundation
The Corner/NRO, Monday, January 05, 2009 @02:57 PM
From Patrick Semmens at National Right to Work Legal Defense Foundation:
Jonah-
Just to add to what others have written regarding Hoyer's comments on FNS. While it's often a fine line between gross misrepresentation and out and out lie, I'd say at least one aspect of Hoyer's comments fall into the second category:
Hoyer says "The employees currently have and will have the opportunity to opt for a secret ballot. They don't have to sign the card. They can say, 'Look, we'll have an election, and we may vote.' But they have that choice right now, and they will continue to have that choice."
But the fact is the so-called "authorization cards" that unions use to run a card check doesn't give employees the choice to opt for a secret ballot election. In fact, the cards often seem to intentionally bait-and-switch employees into thinking that they are supporting an election, when really they have done just the opposite by signing a card that will be later be counted as a "vote" for unionization under card check.
We have an example of a typical union card here. You'll see that on the top of the card in big bold print it says it is a request for a representation election. However, in fine print at the bottom it says that signing the card authorizes the union "also to represent me..." (meaning that it would count in a card check).
In short workers have no opportunity to request only a secret ballot vote... it's card check or nothing because the union controls the cards and what they are used for. Meanwhile as others have pointed out, union organizers technically could request a vote, but they never would because it is always easier to pressure or mislead 50% +1 workers into signing cards, than it is to get them to vote in a union within the privacy of the secret ballot.
Hope that helps.
Also, people need to be reminded that in most states (the 28 without Right to Work laws) once a union gets in (through card check or secret ballot) every worker must (1) accept the union's representation even if they don't want it and (2) pay dues to the union or be fired. So while obviously the secret ballot election is far less coercive than the card check scheme, let's not forget that both are still part of a fundamentally unjust system.
Regards.
—Patrick T. Semmens
Legal Information Director
National Right to Work Legal Defense Foundation
State Dept: U.S. Government Support for Humanitarian Assistance Activities in Gaza
U.S. Government Support for Humanitarian Assistance Activities in Gaza
Fact Sheet
US State Dept, Office of the Spokesman
Washington, DC, January 5, 2009
The United States Government continues to support the delivery of urgently needed food, health, shelter and other emergency assistance to the people of Gaza through our ongoing support for international organizations such as the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the World Food Program (WFP), and the International Committee of the Red Cross (ICRC) and non-governmental organizations (NGOs).
On December 30, the United States announced a contribution to UNRWA for its 2009 appeals. Of the $85 million contribution, $5 million will directly support UNRWA’s Gaza Flash Appeal that will provide food, temporary shelter, and medical assistance for over 500,000 conflict-affected refugees in Gaza. The Flash Appeal funding will also supply up to 500,000 liters of fuel to municipalities and utilities for basic public services, including electricity and water treatment. $20 million will support UNRWA’s 2009 Emergency Appeal for the West Bank and Gaza, of which a large portion bolsters UNRWA’s ongoing emergency assistance activities for more than 1 million Palestinian refugees in Gaza. $60 million will support UNRWA’s General Fund for the provision of education, primary health care, and relief services to Palestinian refugees in the region, including Gaza.
The United States Government continues to provide food assistance through the World Food Program (WFP) to 20,000 non-refugee Palestinian households in Gaza with a bi-monthly package of five basic foods. Since December 28, WFP and its implementing partner, Community Housing Foundation (CHF), have distributed some 720 metric tons (MT) of food commodities to beneficiaries in Gaza. An additional 1,350 MT is available in Gaza for distribution when the security situation allows.
The United States Government also continues to support the International Committee of the Red Cross’s (ICRC 's) efforts to supply Gaza’s hospitals and clinics with urgently needed medicines, surgery kits, hygiene kits, intravenous fluids, bandages, plastic sheeting and other medical equipment. The ICRC is bringing two generators into Gaza to ensure continued operation of Gaza’s hospitals despite electricity cuts and maintenance problems resulting from a lack of spare parts.
The United States Government has provided other medical and food supplies to health care facilities in Gaza, including syringes, tubes, gloves, x-ray film, tape, silk for sutures and bedding (mattresses, blankets and linens), and 18,000 kilograms of plastic sheeting to cover broken windows and help mitigate the cold.
The United States is the largest bilateral donor to UNRWA, which provides essential services to hundreds of thousands of Palestinian refugees in Gaza, the West Bank, Lebanon and elsewhere.
The United States is deeply concerned about the safety of civilians caught up in this conflict, and urges all sides to facilitate the provision of humanitarian relief.
2009/009
Released on January 5, 2009
Obama-Biden: Keeping college affordable
Keeping college affordable, by Dan McSwain
Change.gov, Monday, January 5, 2009 11:49am EST
Claiborne Pell, a Rhode Island senator whose achievements brought about lasting change both at home and abroad, died on January 1st, 2009, at the age of 90.
In a statement, Vice President-elect Joe Biden honored Sen. Pell’s many accomplishments, noting that, “few Senators have done more to expand opportunity in America.”
Pell’s domestic efforts led to the establishment of the Pell Grant, a federal higher education subsidy that has defrayed the cost of college tuition for thousands of American students since their establishment in 1973.
In 2000, nearly 30% of public university students were Pell Grant recipients.
Still, many students and their families worry that the worsening economy will increase the burden of tuition and other college costs.
Carolyn from California shared some of her concerns:
http://change.gov/newsroom/entry/keeping_college_affordable/
Change.gov, Monday, January 5, 2009 11:49am EST
Claiborne Pell, a Rhode Island senator whose achievements brought about lasting change both at home and abroad, died on January 1st, 2009, at the age of 90.
In a statement, Vice President-elect Joe Biden honored Sen. Pell’s many accomplishments, noting that, “few Senators have done more to expand opportunity in America.”
Pell’s domestic efforts led to the establishment of the Pell Grant, a federal higher education subsidy that has defrayed the cost of college tuition for thousands of American students since their establishment in 1973.
In 2000, nearly 30% of public university students were Pell Grant recipients.
Still, many students and their families worry that the worsening economy will increase the burden of tuition and other college costs.
Carolyn from California shared some of her concerns:
“With the state of our current economy my parents are worried with how they are going to be able to support me and my younger brother as he goes off to college. We are considered upper-middle class (I think) and if we are having a hard time, I can only imagine what other families are facing. Please continue to support federal funding for higher education including the Pell Grant Program. Your proposed changes to the Financial Aid application would be very helpful, but at the same time increased funding of federal programs is necessary.”Making higher education more affordable is a priority for the Obama-Biden administration. Use the discussion forum below to tell us some of your concerns about education costs:
http://change.gov/newsroom/entry/keeping_college_affordable/
Rahn on the Fed, the SEC, and the Community Reinvestment Act
Avoidable disasters, by Richard Rahn
Washington Times, Wednesday, December 31, 2008
Excerpts:
Many had warned, but few who were in a position to act even tried to avoid the very predictable economic calamities of 2008. This was the year that proved Ronald Reagan's old adage, "The government is not the solution; it is the problem." As we enter the New Year, the question is again, "Will those in charge do what is necessary to avoid the very obvious new economic wrecks coming?"
The U.S. government has now explicitly said there are financial institutions (and other companies - autos, etc.) that are "too big to fail." If that is (arguably) true, then they must be more highly regulated than the smaller institutions, particularly in terms of capital adequacy.
The reason is quite simple. If the government guarantees the debt of big companies, those institutions will have a much lower cost of capital than their smaller competitors, which is not only unfair but will destroy new and smaller companies, thus killing much of the job and productivity creating innovation in the U.S. economy. So far, the Washington governing class has failed to even discuss this disastrous consequence of the bailouts, let alone figure out a solution.
It is now widely understood that the current economic mess was a result of the Federal Reserve (Fed) keeping interest rates too low during the middle of this decade, as even Alan Greenspan now admits. Also, Congress pushed banks into providing mortgages to people who were insufficiently creditworthy, while at the same time resisting calls to provide more oversight and regulation of the two government-sponsored mortgage giants (Fannie Mae and Freddie Mac).
In addition, the Securities and Exchange Commission chose to take its eye off the ball of rooting out financial fraud and instead imposed very costly, counterproductive and destructive rules on the financial industry, including forcing companies to "expense" stock options and incomprehensible "mark to market" accounting rules.
The economic situation will not appreciably improve without corrective action on the above-mentioned items. In the late 1990s, the Fed implicitly followed the Taylor Rule, a formula developed in 1992 by John Taylor, a former member of the President's Council of Economic Advisers and undersecretary of the U.S. Treasury, that indicated when to increase or decrease interest rates in conducting monetary policy. This resulted in relatively low inflation and strong growth.
The Fed made an exception to the rule in 2000 because of the anticipated Y2K problem, which turned out not to be a problem - but this Fed policy deviation largely caused the 2000-01 recession.
[...]
In addition to the Fed's actions, the mortgage meltdown was caused by banks being forced, by regulatory actions and the Community Reinvestment Act (CRA), to make loans to unqualified people; plus irresponsible behavior and undercapitalization at Fannie Mae, Freddie Mac and a number of private financial institutions. For at least a decade, many economists and noted financial experts had warned about the debacle that would occur at Fannie and Freddie. They were ignored by the members of Congress (because all too many of them were on the take - that is, recipients of large political donations from Freddie and Fannie).
The same congressional committee chairmen, Barney Frank in the House and Chris Dodd in the Senate, who failed in their oversight responsibilities, now say they want to "reform" rather than abolish Fannie and Freddie - which will almost certainly result in a repeat of the current disaster. (Nonconflicted experts, such as former Treasury General Council, Peter Wallison, have advocated a phaseout of the two organizations - which is the correct course of action.)
The SEC also needs to be abolished, and the Sarbanes-Oxley bill should be repealed. The SEC has repeatedly failed in its primary mission - investor protection - as has been all too evident in the world record Madoff Ponzi scheme - while at the same time destroying the U.S. Initial Public Offering market, which is the engine of future economic growth. (Where would the United States be without Intel, Microsoft, Apple, Google, Amazon, etc? Under the new SEC rules, it would have been almost impossible to create these innovative powerhouses.) There are plenty of federal and state laws against financial fraud, which makes the SEC redundant at best.
As for Ponzi schemes - when will Congress address the world's largest Ponzi scheme - Social Security, which it created? Social Security depends on an ever-increasing number of new taxpayers to fund the retirement payments of the ever-growing numbers of the longer-living elderly. The only question is, "In what year will it fail?"
Finally, the new administration and Congress are promising a big increase in federal spending, ignoring the fact that historically when government spending rises as a percentage of gross domestic product, growth falters and vice versa. A major reason growth has been relatively weak during George W. Bush's term is that, unlike Ronald Reagan and Bill Clinton, he allowed (by not using his veto pen) government spending to grow more rapidly than the economy.
Those who want to replicate Herbert Hoover's and Franklin Roosevelt's spending increases will find that if they succeed, they too will replicate a decade without growth.
Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.
Washington Times, Wednesday, December 31, 2008
Excerpts:
Many had warned, but few who were in a position to act even tried to avoid the very predictable economic calamities of 2008. This was the year that proved Ronald Reagan's old adage, "The government is not the solution; it is the problem." As we enter the New Year, the question is again, "Will those in charge do what is necessary to avoid the very obvious new economic wrecks coming?"
The U.S. government has now explicitly said there are financial institutions (and other companies - autos, etc.) that are "too big to fail." If that is (arguably) true, then they must be more highly regulated than the smaller institutions, particularly in terms of capital adequacy.
The reason is quite simple. If the government guarantees the debt of big companies, those institutions will have a much lower cost of capital than their smaller competitors, which is not only unfair but will destroy new and smaller companies, thus killing much of the job and productivity creating innovation in the U.S. economy. So far, the Washington governing class has failed to even discuss this disastrous consequence of the bailouts, let alone figure out a solution.
It is now widely understood that the current economic mess was a result of the Federal Reserve (Fed) keeping interest rates too low during the middle of this decade, as even Alan Greenspan now admits. Also, Congress pushed banks into providing mortgages to people who were insufficiently creditworthy, while at the same time resisting calls to provide more oversight and regulation of the two government-sponsored mortgage giants (Fannie Mae and Freddie Mac).
In addition, the Securities and Exchange Commission chose to take its eye off the ball of rooting out financial fraud and instead imposed very costly, counterproductive and destructive rules on the financial industry, including forcing companies to "expense" stock options and incomprehensible "mark to market" accounting rules.
The economic situation will not appreciably improve without corrective action on the above-mentioned items. In the late 1990s, the Fed implicitly followed the Taylor Rule, a formula developed in 1992 by John Taylor, a former member of the President's Council of Economic Advisers and undersecretary of the U.S. Treasury, that indicated when to increase or decrease interest rates in conducting monetary policy. This resulted in relatively low inflation and strong growth.
The Fed made an exception to the rule in 2000 because of the anticipated Y2K problem, which turned out not to be a problem - but this Fed policy deviation largely caused the 2000-01 recession.
[...]
In addition to the Fed's actions, the mortgage meltdown was caused by banks being forced, by regulatory actions and the Community Reinvestment Act (CRA), to make loans to unqualified people; plus irresponsible behavior and undercapitalization at Fannie Mae, Freddie Mac and a number of private financial institutions. For at least a decade, many economists and noted financial experts had warned about the debacle that would occur at Fannie and Freddie. They were ignored by the members of Congress (because all too many of them were on the take - that is, recipients of large political donations from Freddie and Fannie).
The same congressional committee chairmen, Barney Frank in the House and Chris Dodd in the Senate, who failed in their oversight responsibilities, now say they want to "reform" rather than abolish Fannie and Freddie - which will almost certainly result in a repeat of the current disaster. (Nonconflicted experts, such as former Treasury General Council, Peter Wallison, have advocated a phaseout of the two organizations - which is the correct course of action.)
The SEC also needs to be abolished, and the Sarbanes-Oxley bill should be repealed. The SEC has repeatedly failed in its primary mission - investor protection - as has been all too evident in the world record Madoff Ponzi scheme - while at the same time destroying the U.S. Initial Public Offering market, which is the engine of future economic growth. (Where would the United States be without Intel, Microsoft, Apple, Google, Amazon, etc? Under the new SEC rules, it would have been almost impossible to create these innovative powerhouses.) There are plenty of federal and state laws against financial fraud, which makes the SEC redundant at best.
As for Ponzi schemes - when will Congress address the world's largest Ponzi scheme - Social Security, which it created? Social Security depends on an ever-increasing number of new taxpayers to fund the retirement payments of the ever-growing numbers of the longer-living elderly. The only question is, "In what year will it fail?"
Finally, the new administration and Congress are promising a big increase in federal spending, ignoring the fact that historically when government spending rises as a percentage of gross domestic product, growth falters and vice versa. A major reason growth has been relatively weak during George W. Bush's term is that, unlike Ronald Reagan and Bill Clinton, he allowed (by not using his veto pen) government spending to grow more rapidly than the economy.
Those who want to replicate Herbert Hoover's and Franklin Roosevelt's spending increases will find that if they succeed, they too will replicate a decade without growth.
Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.
TNYT Editorial: A Pitch for Mass Transit
TNYT Editorial: A Pitch for Mass Transit
January 5, 2009, page A20
Unlike President Bush, Barack Obama is going to enter office with a clear appreciation of the urgent problems of climate change and America’s growing dependency on foreign oil — and a strong commitment to address both.
One way he can do this is to give mass transit — trains, buses, commuter rails — the priority it deserves and the full financial and technological help it needs and has long been denied.
Mass transit has always played second fiddle to the automobile, so Mr. Obama will need strong allies. Ray LaHood, Mr. Obama’s choice for transportation secretary, must be not only an ally but a champion for mass transit. Mr. LaHood is a Republican and former member of Congress from rural Illinois, where farmers produce a lot of ethanol and where people mostly drive. His résumé on transportation issues is thin, and we fear he may need some coaxing in this new direction.
Another important ally should be — and almost certainly will be — James Oberstar, a Minnesota Democrat who is chairman of the House Transportation and Infrastructure Committee.
For years, the division of transportation money in Washington has heavily favored cars and trucks — more than 80 percent of the big transit money from gas taxes goes to highways and bridges, and less than 20 percent to railroads or mass transit. Mr. Oberstar is leading the charge to change that formula and divide this money a little more evenly. This will not be easy. Automobiles will be with us a long time, and old spending habits die hard. But as part of the stimulus package now under discussion for transportation, Mr. Oberstar is proposing $30 billion for highways and bridges and $12 billion for public transit. That is certainly a far healthier mix.
The new administration could further help mass transit by shelving the unfair “cost effectiveness index” that President Bush put in place several years ago for new transit programs. The net effect of this index was to make it easier to build highways and almost impossible to use federal money for buses, streetcars, light rail, trolleys — indeed, any commuter-rail projects.
For Mr. Obama’s transit agenda and for Mr. LaHood, the next big challenge will be a transit bill that Congress must pass by September. Mr. LaHood is widely praised for his management skills and his ability to work well with others. Those abilities will certainly be needed if he and the Congress are to find and then finance the best, the most-efficient and the most-advanced ways for Americans to move around.
January 5, 2009, page A20
Unlike President Bush, Barack Obama is going to enter office with a clear appreciation of the urgent problems of climate change and America’s growing dependency on foreign oil — and a strong commitment to address both.
One way he can do this is to give mass transit — trains, buses, commuter rails — the priority it deserves and the full financial and technological help it needs and has long been denied.
Mass transit has always played second fiddle to the automobile, so Mr. Obama will need strong allies. Ray LaHood, Mr. Obama’s choice for transportation secretary, must be not only an ally but a champion for mass transit. Mr. LaHood is a Republican and former member of Congress from rural Illinois, where farmers produce a lot of ethanol and where people mostly drive. His résumé on transportation issues is thin, and we fear he may need some coaxing in this new direction.
Another important ally should be — and almost certainly will be — James Oberstar, a Minnesota Democrat who is chairman of the House Transportation and Infrastructure Committee.
For years, the division of transportation money in Washington has heavily favored cars and trucks — more than 80 percent of the big transit money from gas taxes goes to highways and bridges, and less than 20 percent to railroads or mass transit. Mr. Oberstar is leading the charge to change that formula and divide this money a little more evenly. This will not be easy. Automobiles will be with us a long time, and old spending habits die hard. But as part of the stimulus package now under discussion for transportation, Mr. Oberstar is proposing $30 billion for highways and bridges and $12 billion for public transit. That is certainly a far healthier mix.
The new administration could further help mass transit by shelving the unfair “cost effectiveness index” that President Bush put in place several years ago for new transit programs. The net effect of this index was to make it easier to build highways and almost impossible to use federal money for buses, streetcars, light rail, trolleys — indeed, any commuter-rail projects.
For Mr. Obama’s transit agenda and for Mr. LaHood, the next big challenge will be a transit bill that Congress must pass by September. Mr. LaHood is widely praised for his management skills and his ability to work well with others. Those abilities will certainly be needed if he and the Congress are to find and then finance the best, the most-efficient and the most-advanced ways for Americans to move around.
Environmental reporters ought to be more responsible too
Environmental reporters ought to be more responsible too. By "eric"
Real Climate, Jan 03, 2009
At RealClimate, we have more than once been accused of being imbalanced — criticizing those who would deny the basic science of climate change, while leaving inflammatory statements by what might be called the "environmentalist side" without comment. It's not an entirely a fair criticism, because there is a world of difference between the willful obfuscation of science and the naive exaggeration of it. There are however plenty of silly, and sometimes outrageous, claims made - see e.g. the Telegraph on Jan. 3rd — and we probably ought to do a better job of calling these out, particularly when they show up in prominent places. So to inaugurate the New Year, I humbly offer a rant about a minor but illustrative example that I happened to notice because there was a link to it on Nature Reports Climate Change.
The subject of the linked article, in the British online newspaper The Independent, is the decline of various bird and butterfly species in England. The article, entitled Changing climate devastates UK species, reports that "insects in particular, and creatures that feed on insects…were sharply reduced in numbers" due to a "cold late spring, a wet summer, with few sunny days, and the long dry autumn…." Now I have no reason to doubt the accuracy of the claim that 2008 was a hard year for UK insects and insectivores. But this is weather we're talking about, not climate. And while it is true that at least one prominent study shows that there has been an overall increase in rainfall in the latitude band that includes the UK, and that climate models reproduce this trend (see e.g. the Zhang et al. article in Nature, in 2007), one cannot, as we are fond of pointing out, attribute a single, or even several individual extreme weather events to "climate change".
Indeed, Peter Stott, a co-author on the Zhang et al. study noted, in reference to 2007 (the wettest summer on record in the UK) that "This latest study cannot make the link between climate change and what we have experienced so far this summer." Moreover, most projections actually suggest drier summers in the UK in the future, though with increased convection (so less total precipitation, but bigger rainstorms).
Another thing that bugs me about the Independent article is the suggestion that climate is becoming "more unpredictable". I suspect what is meant here is that we used to know what a mean season and normal variations were, and now we don't. That's valid, since the baseline climate is changing. But saying it this way — that "climate is becoming more unpredictable" is misleading. In fact, climate may, if anything, become more predictable as anthropogenic forcing becomes even more dominant (as greenhouse gas concentrations increase), relative to natural forcing and variability. And what is definitely not the case — but might be inferred from the article — is that weather is becoming more unpredictable. Weather prediction is based on observations just a few days in advance — climate and climate trends have nothing to do with it.
The point here is not that we shouldn't be concerned about the fate of insects and birds in the UK (that would be the kind of conclusion that only the most willfully ignorant would draw.) They have been in decline for a long time (mostly due to land use change and pesticides) and there is little doubt that climate change will continue to add insult to injury. But it is simply wrong to confuse a year or even two years of unfavorable weather with a change in climate, and it is irresponsible to headline an article that is really about weather with the provocative juxtaposition of "climate" and "devastates". Doing so gives the average reader the sense that their personal observations about "weird weather patterns" or fewer sightings of Parus caeruleus represent definitive manifestations of climate change. The fact is, climate changes are — so far — small enough in most places, relative to the natural variability, that one's personal experience is a very poor guide to what is happening over the long term (observations of sea ice changes by those that live in the high Arctic notwithstanding).
Real Climate, Jan 03, 2009
At RealClimate, we have more than once been accused of being imbalanced — criticizing those who would deny the basic science of climate change, while leaving inflammatory statements by what might be called the "environmentalist side" without comment. It's not an entirely a fair criticism, because there is a world of difference between the willful obfuscation of science and the naive exaggeration of it. There are however plenty of silly, and sometimes outrageous, claims made - see e.g. the Telegraph on Jan. 3rd — and we probably ought to do a better job of calling these out, particularly when they show up in prominent places. So to inaugurate the New Year, I humbly offer a rant about a minor but illustrative example that I happened to notice because there was a link to it on Nature Reports Climate Change.
The subject of the linked article, in the British online newspaper The Independent, is the decline of various bird and butterfly species in England. The article, entitled Changing climate devastates UK species, reports that "insects in particular, and creatures that feed on insects…were sharply reduced in numbers" due to a "cold late spring, a wet summer, with few sunny days, and the long dry autumn…." Now I have no reason to doubt the accuracy of the claim that 2008 was a hard year for UK insects and insectivores. But this is weather we're talking about, not climate. And while it is true that at least one prominent study shows that there has been an overall increase in rainfall in the latitude band that includes the UK, and that climate models reproduce this trend (see e.g. the Zhang et al. article in Nature, in 2007), one cannot, as we are fond of pointing out, attribute a single, or even several individual extreme weather events to "climate change".
Indeed, Peter Stott, a co-author on the Zhang et al. study noted, in reference to 2007 (the wettest summer on record in the UK) that "This latest study cannot make the link between climate change and what we have experienced so far this summer." Moreover, most projections actually suggest drier summers in the UK in the future, though with increased convection (so less total precipitation, but bigger rainstorms).
Another thing that bugs me about the Independent article is the suggestion that climate is becoming "more unpredictable". I suspect what is meant here is that we used to know what a mean season and normal variations were, and now we don't. That's valid, since the baseline climate is changing. But saying it this way — that "climate is becoming more unpredictable" is misleading. In fact, climate may, if anything, become more predictable as anthropogenic forcing becomes even more dominant (as greenhouse gas concentrations increase), relative to natural forcing and variability. And what is definitely not the case — but might be inferred from the article — is that weather is becoming more unpredictable. Weather prediction is based on observations just a few days in advance — climate and climate trends have nothing to do with it.
The point here is not that we shouldn't be concerned about the fate of insects and birds in the UK (that would be the kind of conclusion that only the most willfully ignorant would draw.) They have been in decline for a long time (mostly due to land use change and pesticides) and there is little doubt that climate change will continue to add insult to injury. But it is simply wrong to confuse a year or even two years of unfavorable weather with a change in climate, and it is irresponsible to headline an article that is really about weather with the provocative juxtaposition of "climate" and "devastates". Doing so gives the average reader the sense that their personal observations about "weird weather patterns" or fewer sightings of Parus caeruleus represent definitive manifestations of climate change. The fact is, climate changes are — so far — small enough in most places, relative to the natural variability, that one's personal experience is a very poor guide to what is happening over the long term (observations of sea ice changes by those that live in the high Arctic notwithstanding).
Sunday, January 4, 2009
Mary Schapiro Will Protect Investors the Same Way Willie Sutton Protected Banks
Mary Schapiro Will Protect Investors the Same Way Willie Sutton Protected Banks. By Dan Solin
Huffington Post, January 4, 2009 03:24 PM (EST)
We don't have to guess how Mary Schapiro, named by President-elect Obama to head the SEC, will protect investors. As the CEO of the Financial Industry Regulatory Authority (FINRA), she had been a strong advocate of the mandatory arbitration system which requires investors to arbitrate all disputes with their brokers before a panel selected by FINRA and governed by its rules.
How has this worked for investors?
Here is a recent example. It is a true story. You can't make this up.
A 60 year old doctor invested $100,000 he had in an IRA with a FINRA broker.
The broker put the funds into an after-tax account, triggering a $35,000 tax liability.
Over the next 14 months, during which time the S&P 500 increased in value, the portfolio lost a whopping $86,000, reducing its value to $14,000.
This is not surprising given the amount of trading by the broker. His commissions were so huge that the account would have had to earn 31% just to break even! The broker used margin to generate even more trades.
The stocks in the portfolio were 600% more volatile (risky) than the S&P 500.
Before any Judge or jury, the investor would have recovered his losses and most likely would have received a meaningful award of punitive damages.
Not before the FINRA arbitration panel.
They found that the broker had to pay back only the tax liability caused by the transfer of the IRA to a taxable account.
Now for the unbelievable part.
This "impartial" FINRA arbitration panel concluded that the broker did nothing else wrong. No unsuitability. No excessive trading. They gave him a clean bill of health.
Just another day at the office, ripping off investors with impunity. Instead of being drummed out of the industry, he is happily back in his office high fiving his fellow brokers.
So much for FINRA "self-regulation."
This shameful process is "supervised" by the SEC, the very agency Ms. Schapiro will head if she is confirmed.
"Real change" would be to put an investor advocate, and not an industry shill, in charge of the SEC.
"Real change" would be to abolish the FINRA mandatory arbitration system and expose it for the farce it is.
"Real change" would be give investors their constitutional right to a trial by jury.
Do you think Mary Schapiro will represent "real change" at the SEC?
Do you think Willie Sutton protected banks?
Huffington Post, January 4, 2009 03:24 PM (EST)
We don't have to guess how Mary Schapiro, named by President-elect Obama to head the SEC, will protect investors. As the CEO of the Financial Industry Regulatory Authority (FINRA), she had been a strong advocate of the mandatory arbitration system which requires investors to arbitrate all disputes with their brokers before a panel selected by FINRA and governed by its rules.
How has this worked for investors?
Here is a recent example. It is a true story. You can't make this up.
A 60 year old doctor invested $100,000 he had in an IRA with a FINRA broker.
The broker put the funds into an after-tax account, triggering a $35,000 tax liability.
Over the next 14 months, during which time the S&P 500 increased in value, the portfolio lost a whopping $86,000, reducing its value to $14,000.
This is not surprising given the amount of trading by the broker. His commissions were so huge that the account would have had to earn 31% just to break even! The broker used margin to generate even more trades.
The stocks in the portfolio were 600% more volatile (risky) than the S&P 500.
Before any Judge or jury, the investor would have recovered his losses and most likely would have received a meaningful award of punitive damages.
Not before the FINRA arbitration panel.
They found that the broker had to pay back only the tax liability caused by the transfer of the IRA to a taxable account.
Now for the unbelievable part.
This "impartial" FINRA arbitration panel concluded that the broker did nothing else wrong. No unsuitability. No excessive trading. They gave him a clean bill of health.
Just another day at the office, ripping off investors with impunity. Instead of being drummed out of the industry, he is happily back in his office high fiving his fellow brokers.
So much for FINRA "self-regulation."
This shameful process is "supervised" by the SEC, the very agency Ms. Schapiro will head if she is confirmed.
"Real change" would be to put an investor advocate, and not an industry shill, in charge of the SEC.
"Real change" would be to abolish the FINRA mandatory arbitration system and expose it for the farce it is.
"Real change" would be give investors their constitutional right to a trial by jury.
Do you think Mary Schapiro will represent "real change" at the SEC?
Do you think Willie Sutton protected banks?
James Hansen's open letter to Michelle and Barack Obama
Thanks to the people on my e-mail list for all the suggestions (more than 100!) about my draft
“Tell Barack Obama the Truth – the Whole Truth”. Most frequent criticism: the need for an
executive summary. Two people suggested: put a summary in the form of a letter to Michelle
and Barack Obama. I like that idea. They are equally smart lawyers, and if we can get either
of them to really focus on the actions that are needed, the planet has a chance.
The letter turned out to be four pages. Sorry. But I wrote a note to John Holdren, which can
serve as an executive summary. John has promised to deliver the letter, but cannot do so
prior to the inauguration. That delay is a problem for one of the three recommendations: tax
and dividend. Thus I am making the letter available at
http://www.columbia.edu/~jeh1/mailings/20081229_DearMichelleAndBarack.pdf
and the revised “Tell Barack Obama the Truth” at
http://www.columbia.edu/~jeh1/mailings/20081229_Obama_revised.pdf
in hopes of getting the information to people who continue to push for “goals” and “caps”.
“Goals” for percentage CO2 emission reductions and “cap & trade & dividend” are a threat to
the planet, weak tea, not commensurate with the task of getting CO2 back to 350 ppm and
less. Note:
(1) There must be a tax at the mine or port of entry, the first sale of oil, gas and coal, so every direct and indirect use of the fuel is affected. Anything less means that the reduction of demand for the fuel will make it cheaper for some uses; e.g., people will start burning coal in their stoves. Peter Barnes’ idea to push the cap upstream to the extent possible is not adequate nor is a ‘gas tax’ suggested by NY Times and others. A comprehensive approach is needed.
(2) “Cap & trade & dividend” creates Wall Street millionaires and complex bureaucracy. The public is fed up with that – rightly so. A single carbon tax rate can be adjusted upward affecting all activities appropriately. With 100% dividend the public will allow a carbon price adequate to the job, i.e., helping us move to the postfossil-fuel world.
(3) Supply ‘caps’ cannot yield a really big reduction because of the weapon: ‘shortages’. All a utility has to say is ‘blackout coming’ and politicians and public have to cave in – we are not going to have the lights turned out. Will the public allow a high enough tax rate? Yes, dividends will exceed tax for most people concerned about their bills.
(4) A tax is not sufficient. All other measures, such as building codes, are needed. But with millions of buildings, all construction codes and operations cannot be enforced. A rising carbon price provides effective enforcement.
(5) Wouldn’t it be cheaper to let people burn the dirtiest fuel? No. The clean future that we aim for, including more efficient energy use, is not more expensive. For example, you may have read about passively heated homes that require little energy and increase construction costs only several percent. Such possibilities remain the oddball (with high price tag), not the standard construction, unless the government adopts policies that make things happen.
Some of you suggested that I should only explain the urgency of the climate crisis, the need
to get back to 350 ppm CO2 and less. Politicians are happy if scientists provide information
and then go away and shut up. But science and policy cannot be divorced. What I learned in
the past few years is that politicians often adopt convenient policies that can be shown to be
inconsistent with long-term success, given readily available scientific data and empirical
information on policy impacts.
Jim Hansen
“Tell Barack Obama the Truth – the Whole Truth”. Most frequent criticism: the need for an
executive summary. Two people suggested: put a summary in the form of a letter to Michelle
and Barack Obama. I like that idea. They are equally smart lawyers, and if we can get either
of them to really focus on the actions that are needed, the planet has a chance.
The letter turned out to be four pages. Sorry. But I wrote a note to John Holdren, which can
serve as an executive summary. John has promised to deliver the letter, but cannot do so
prior to the inauguration. That delay is a problem for one of the three recommendations: tax
and dividend. Thus I am making the letter available at
http://www.columbia.edu/~jeh1/mailings/20081229_DearMichelleAndBarack.pdf
and the revised “Tell Barack Obama the Truth” at
http://www.columbia.edu/~jeh1/mailings/20081229_Obama_revised.pdf
in hopes of getting the information to people who continue to push for “goals” and “caps”.
“Goals” for percentage CO2 emission reductions and “cap & trade & dividend” are a threat to
the planet, weak tea, not commensurate with the task of getting CO2 back to 350 ppm and
less. Note:
(1) There must be a tax at the mine or port of entry, the first sale of oil, gas and coal, so every direct and indirect use of the fuel is affected. Anything less means that the reduction of demand for the fuel will make it cheaper for some uses; e.g., people will start burning coal in their stoves. Peter Barnes’ idea to push the cap upstream to the extent possible is not adequate nor is a ‘gas tax’ suggested by NY Times and others. A comprehensive approach is needed.
(2) “Cap & trade & dividend” creates Wall Street millionaires and complex bureaucracy. The public is fed up with that – rightly so. A single carbon tax rate can be adjusted upward affecting all activities appropriately. With 100% dividend the public will allow a carbon price adequate to the job, i.e., helping us move to the postfossil-fuel world.
(3) Supply ‘caps’ cannot yield a really big reduction because of the weapon: ‘shortages’. All a utility has to say is ‘blackout coming’ and politicians and public have to cave in – we are not going to have the lights turned out. Will the public allow a high enough tax rate? Yes, dividends will exceed tax for most people concerned about their bills.
(4) A tax is not sufficient. All other measures, such as building codes, are needed. But with millions of buildings, all construction codes and operations cannot be enforced. A rising carbon price provides effective enforcement.
(5) Wouldn’t it be cheaper to let people burn the dirtiest fuel? No. The clean future that we aim for, including more efficient energy use, is not more expensive. For example, you may have read about passively heated homes that require little energy and increase construction costs only several percent. Such possibilities remain the oddball (with high price tag), not the standard construction, unless the government adopts policies that make things happen.
Some of you suggested that I should only explain the urgency of the climate crisis, the need
to get back to 350 ppm CO2 and less. Politicians are happy if scientists provide information
and then go away and shut up. But science and policy cannot be divorced. What I learned in
the past few years is that politicians often adopt convenient policies that can be shown to be
inconsistent with long-term success, given readily available scientific data and empirical
information on policy impacts.
Jim Hansen
In TNYT: Should Congress Put a Cap on Executive Pay?
Should Congress Put a Cap on Executive Pay? By Robert H. Frank
TNYT, January 4, 2009, BU5
It's no wonder that voters’ outrage over exorbitant executive pay is mounting. After all, the government just had to bail out financial firms that paid big bonuses last year to many of the same executives who helped precipitate the current financial crisis.
Nor is it any wonder that Congress is considering measures to limit executive pay — not just in the financial industry, but economywide. So far, the only formal legislative proposal is “say on pay,” which would require a nonbinding shareholder vote on executive pay proposals. But critics complain that this would have little impact and are hungry for stronger measures.
One popular proposal would cap the chief executive’s pay at each company at 20 times its average worker’s salary. But while Congress may well have compelling reasons to limit executive pay in companies seeking bailout money, voter anger is not a good reason to extend pay caps more generally.
To be sure, executive pay in the United States is vastly higher than necessary. Executives in other countries, whose pay is often less than one-fifth that of their American counterparts, seem to work just as hard and perform just as well. The same was true of American executives in the 1980s.
So why not limit executive pay? The problem is that although every company wants a talented chief executive, there are only so many to go around. Relative salaries guide job choices. If salaries were capped at, say, $2 million annually, the most talented candidates would have less reason to seek the positions that make best use of their talents.
More troubling, if C.E.O. pay were capped and pay for other jobs was not, the most talented potential managers would be more likely to become lawyers or hedge fund operators. Can anyone think that would be a good thing?
In large companies, even small differences in managerial talent can make an enormous difference. Consider a company with $10 billion in annual earnings that has narrowed its C.E.O. search to two finalists. If one would make just a handful of better decisions each year than the other, the company’s annual earnings might easily be 3 percent — or $30 million — higher under the better candidate’s leadership. That same candidate couldn’t possibly make as much difference at a company with only $10 million in earnings.
That’s why companies where executive decisions have the greatest impact tend to outbid others in hiring the ablest managers.
Critics complain that executive labor markets are not really competitive — that chief executives appoint friends to their boards who approve unjustifiably large pay packages. But C.E.O.’s have always appointed friends, so that can’t explain recent trends.
One reason for these trends is that companies themselves have become bigger. As the New York University economists Xavier Gabaix and Augustin Landier argue in a 2006 paper, C.E.O. pay in a competitive market should vary in direct proportion to the market capitalization of the company. They found that C.E.O. compensation at large companies grew sixfold between 1980 and 2003, the same as the market-cap growth of these businesses.
Beyond growth in company size, executive mobility has also increased. In past decades, about the only way to become a C.E.O. was to have spent one’s entire career with the company. With only a handful of plausible internal candidates, pay was essentially a matter of bilateral negotiation between the board and the chosen. Increasingly, however, hiring committees believe that a talented executive from one industry can also deliver top performance in another.
A celebrated case in point was Louis V. Gerstner Jr. Having produced record earnings at RJR Nabisco, he was hired by I.B.M., where he led the computer giant, then struggling, to a dramatic turnaround in the 1990s.
This new spot market for talent has affected executive salaries in much the same way that free agency affected the salaries of professional athletes.
If the market for executive talent is competitive, critics ask, why are C.E.O.’s in an industry paid about the same, regardless of performance? That’s because no one knows with certainty how a particular executive will perform. But most hiring decisions are based on well-researched predictions, and always with hope for success. Executives whose record predicts good performance command a high rate. Their leash, however, has grown shorter.
In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two.
In short, evidence suggests that the link between pay and performance is tighter than proponents of pay caps seem to think. Since the fall of the former Soviet Union, no one has seriously challenged the wisdom of relegating a high proportion of society’s most important tasks to private markets. And the market-determined salary of a job generally offers the best — if imperfect — measure of its importance.
The financial industry, however, may be an exception. A money manager’s pay depends primarily on the amount of money managed, which in turn depends on the fund’s rate of return relative to other funds. This provides strong incentives to invest in highly leveraged risky assets, which yield higher average returns. But as recent events have shown, these complex assets also expose the rest of us to considerable systemic risk.
On balance, then, the high pay that lures talent to the financial industry may actually cause harm. So if Congress wants to cap executive pay in financial institutions receiving bailout money, well and good.
Elsewhere, however, the more prudent response to runaway salaries at the top is to raise marginal tax rates on the highest earners, irrespective of occupation. Again, relative salaries drive job choices. The jobs with the highest pretax salaries will still offer the highest post-tax salaries, just as before, so this step will not compromise the price signals that steer talented performers to the most important jobs.
In answering voter outrage about executive pay, Congress should recall the words of Marcus Aurelius: “How much more grievous are the consequences of anger than the causes of it.”
Robert H. Frank, an economist at Cornell, is a visiting faculty member at the Stern School of Business at New York University.
TNYT, January 4, 2009, BU5
It's no wonder that voters’ outrage over exorbitant executive pay is mounting. After all, the government just had to bail out financial firms that paid big bonuses last year to many of the same executives who helped precipitate the current financial crisis.
Nor is it any wonder that Congress is considering measures to limit executive pay — not just in the financial industry, but economywide. So far, the only formal legislative proposal is “say on pay,” which would require a nonbinding shareholder vote on executive pay proposals. But critics complain that this would have little impact and are hungry for stronger measures.
One popular proposal would cap the chief executive’s pay at each company at 20 times its average worker’s salary. But while Congress may well have compelling reasons to limit executive pay in companies seeking bailout money, voter anger is not a good reason to extend pay caps more generally.
To be sure, executive pay in the United States is vastly higher than necessary. Executives in other countries, whose pay is often less than one-fifth that of their American counterparts, seem to work just as hard and perform just as well. The same was true of American executives in the 1980s.
So why not limit executive pay? The problem is that although every company wants a talented chief executive, there are only so many to go around. Relative salaries guide job choices. If salaries were capped at, say, $2 million annually, the most talented candidates would have less reason to seek the positions that make best use of their talents.
More troubling, if C.E.O. pay were capped and pay for other jobs was not, the most talented potential managers would be more likely to become lawyers or hedge fund operators. Can anyone think that would be a good thing?
In large companies, even small differences in managerial talent can make an enormous difference. Consider a company with $10 billion in annual earnings that has narrowed its C.E.O. search to two finalists. If one would make just a handful of better decisions each year than the other, the company’s annual earnings might easily be 3 percent — or $30 million — higher under the better candidate’s leadership. That same candidate couldn’t possibly make as much difference at a company with only $10 million in earnings.
That’s why companies where executive decisions have the greatest impact tend to outbid others in hiring the ablest managers.
Critics complain that executive labor markets are not really competitive — that chief executives appoint friends to their boards who approve unjustifiably large pay packages. But C.E.O.’s have always appointed friends, so that can’t explain recent trends.
One reason for these trends is that companies themselves have become bigger. As the New York University economists Xavier Gabaix and Augustin Landier argue in a 2006 paper, C.E.O. pay in a competitive market should vary in direct proportion to the market capitalization of the company. They found that C.E.O. compensation at large companies grew sixfold between 1980 and 2003, the same as the market-cap growth of these businesses.
Beyond growth in company size, executive mobility has also increased. In past decades, about the only way to become a C.E.O. was to have spent one’s entire career with the company. With only a handful of plausible internal candidates, pay was essentially a matter of bilateral negotiation between the board and the chosen. Increasingly, however, hiring committees believe that a talented executive from one industry can also deliver top performance in another.
A celebrated case in point was Louis V. Gerstner Jr. Having produced record earnings at RJR Nabisco, he was hired by I.B.M., where he led the computer giant, then struggling, to a dramatic turnaround in the 1990s.
This new spot market for talent has affected executive salaries in much the same way that free agency affected the salaries of professional athletes.
If the market for executive talent is competitive, critics ask, why are C.E.O.’s in an industry paid about the same, regardless of performance? That’s because no one knows with certainty how a particular executive will perform. But most hiring decisions are based on well-researched predictions, and always with hope for success. Executives whose record predicts good performance command a high rate. Their leash, however, has grown shorter.
In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two.
In short, evidence suggests that the link between pay and performance is tighter than proponents of pay caps seem to think. Since the fall of the former Soviet Union, no one has seriously challenged the wisdom of relegating a high proportion of society’s most important tasks to private markets. And the market-determined salary of a job generally offers the best — if imperfect — measure of its importance.
The financial industry, however, may be an exception. A money manager’s pay depends primarily on the amount of money managed, which in turn depends on the fund’s rate of return relative to other funds. This provides strong incentives to invest in highly leveraged risky assets, which yield higher average returns. But as recent events have shown, these complex assets also expose the rest of us to considerable systemic risk.
On balance, then, the high pay that lures talent to the financial industry may actually cause harm. So if Congress wants to cap executive pay in financial institutions receiving bailout money, well and good.
Elsewhere, however, the more prudent response to runaway salaries at the top is to raise marginal tax rates on the highest earners, irrespective of occupation. Again, relative salaries drive job choices. The jobs with the highest pretax salaries will still offer the highest post-tax salaries, just as before, so this step will not compromise the price signals that steer talented performers to the most important jobs.
In answering voter outrage about executive pay, Congress should recall the words of Marcus Aurelius: “How much more grievous are the consequences of anger than the causes of it.”
Robert H. Frank, an economist at Cornell, is a visiting faculty member at the Stern School of Business at New York University.
A Century of Chlorination
Perspective on a Century of Chlorination
Jan 04, 2009
Article originally from American Chemistry magazine.
For an industry expert’s perspective on the 100th anniversary of the chlorinationof U.S. drinking water, the American Chemistry Council (ACC) interviewed Dr. James P. Brennan, Technology Manager with Arch Chemicals in Smyrna, Ga., who has worked extensively with water chlorination chemistry for more than 30 years.
“The chlorination process has long been the conventional method of disinfection for municipal water and wastewater, due to its low chemical cost and consistent performance,” he says.
Beyond drinking water, chlorine disinfection is an important component to healthyswimming pools, schools, daycare centers, and restaurants. As Brennan puts it, chlorine and the chlorination process are used for everything from preventing the transmission of disease to reducing spoilage in freshly harvested fruits and vegetables.
“Chlorine had a marvelous effect on public health during the first 50 years of use,” hesays. “Through the chlorination process, the average lifespan went from 49 to 70 years.”
During that time, he adds, the basic principle of cleaning and sanitizing had already begun; and because of the concepts of good hygiene, the population as a whole benefited.
Chlorine can be applied to water as a gas (elemental chlorine), a liquid solution (sodiumhypochlorite), or in several dry forms. A granular form of dry chlorine (calcium hypochlorite), introduced 80 years ago, was stronger and had a longer shelf life. This product also evolved and is now easier to handle and store than ever.
“One success begets another, and chlorine evolved in its uses and its forms,” says Brennan.
More recently, he says, this product has become available in consistent tablet forms with delivery systems designed to provide dosage control and convenience, resulting in higher-quality treated water.
Calcium hypochlorite is also used in municipal water treatment plants and for sanitizing pools and spas. Private owners of pools and spas can conveniently transport and store it, and plant operators can easily apply it directly to the source, which is imperative for stopping the transmission of diseases.
Over the past 30 years, Brennan’s career has taken him from the laboratory bench to field locations throughout the U.S. and, more recently, around the globe. Most interesting and rewarding to him has been the opportunity to educate others about the chlorination process, particularly in underdeveloped areas in Asia and South America, where he has traveled in efforts to improve public health by emphasizing the importance of safe drinking water and how to treat it efficiently and reliably.
"We are teaching sustainable methods to treat water,” he says. “We want to keep the process simple and teach people how to use the products and protect their water sources.”
Looking ahead, Brennan says he believes improvements to the chlorination process are always evolving, especially in ways to make it more available and reliable.
And for the enormous effect chlorine has had on everything from public health to ensuring safe drinking water, he says, “Job well done.”
Jan 04, 2009
Article originally from American Chemistry magazine.
For an industry expert’s perspective on the 100th anniversary of the chlorinationof U.S. drinking water, the American Chemistry Council (ACC) interviewed Dr. James P. Brennan, Technology Manager with Arch Chemicals in Smyrna, Ga., who has worked extensively with water chlorination chemistry for more than 30 years.
“The chlorination process has long been the conventional method of disinfection for municipal water and wastewater, due to its low chemical cost and consistent performance,” he says.
Beyond drinking water, chlorine disinfection is an important component to healthyswimming pools, schools, daycare centers, and restaurants. As Brennan puts it, chlorine and the chlorination process are used for everything from preventing the transmission of disease to reducing spoilage in freshly harvested fruits and vegetables.
“Chlorine had a marvelous effect on public health during the first 50 years of use,” hesays. “Through the chlorination process, the average lifespan went from 49 to 70 years.”
During that time, he adds, the basic principle of cleaning and sanitizing had already begun; and because of the concepts of good hygiene, the population as a whole benefited.
Chlorine can be applied to water as a gas (elemental chlorine), a liquid solution (sodiumhypochlorite), or in several dry forms. A granular form of dry chlorine (calcium hypochlorite), introduced 80 years ago, was stronger and had a longer shelf life. This product also evolved and is now easier to handle and store than ever.
“One success begets another, and chlorine evolved in its uses and its forms,” says Brennan.
More recently, he says, this product has become available in consistent tablet forms with delivery systems designed to provide dosage control and convenience, resulting in higher-quality treated water.
Calcium hypochlorite is also used in municipal water treatment plants and for sanitizing pools and spas. Private owners of pools and spas can conveniently transport and store it, and plant operators can easily apply it directly to the source, which is imperative for stopping the transmission of diseases.
Over the past 30 years, Brennan’s career has taken him from the laboratory bench to field locations throughout the U.S. and, more recently, around the globe. Most interesting and rewarding to him has been the opportunity to educate others about the chlorination process, particularly in underdeveloped areas in Asia and South America, where he has traveled in efforts to improve public health by emphasizing the importance of safe drinking water and how to treat it efficiently and reliably.
"We are teaching sustainable methods to treat water,” he says. “We want to keep the process simple and teach people how to use the products and protect their water sources.”
Looking ahead, Brennan says he believes improvements to the chlorination process are always evolving, especially in ways to make it more available and reliable.
And for the enormous effect chlorine has had on everything from public health to ensuring safe drinking water, he says, “Job well done.”
On Griggs v. Duke Power: Implications for College Credentialing
The Toll of a Rights 'Victory', by George F. Will
Washington Post, Sunday, January 4, 2009; B07
Like pebbles tossed into ponds, important Supreme Court rulings radiate ripples of consequences. Consider a 1971 Supreme Court decision that supposedly applied but actually altered the 1964 Civil Rights Act.
During debate on the legislation, prescient critics worried that it might be construed to forbid giving prospective employees tests that might produce what was later called, in the 1971 case, a "disparate impact" on certain preferred minorities. To assuage these critics, the final act stipulated that employers could use "professionally developed ability tests" that were not "designed, intended or used to discriminate."
Furthermore, two Senate sponsors of the act insisted that it did not require "that employers abandon bona fide qualification tests where, because of differences in background and educations, members of some groups are able to perform better on these tests than members of other groups." What subsequently happened is recounted in "Griggs v. Duke Power: Implications for College Credentialing," a paper written by Bryan O'Keefe, a law student, and Richard Vedder, a professor of economics at Ohio University.
In 1964, there were more than 2,000 personnel tests available to employers. But already an Illinois state official had ruled that a standard ability test used by Motorola was illegal because it was unfair to "disadvantaged groups."
Before 1964, Duke Power had discriminated against blacks in hiring and promotion. After the 1964 act, the company changed its policies, establishing a high school equivalence requirement for all workers and allowing them to meet that requirement by achieving minimum scores on two widely used aptitude tests, including one used today by almost every NFL team to measure players' learning potential.
Plaintiffs in the Griggs case argued that the high school and testing requirements discriminated against blacks. A unanimous Supreme Court, disregarding the relevant legislative history, held that Congress intended the 1964 act to proscribe not only overt discrimination but also "practices that are fair in form, but discriminatory in operation." The court added:
Thus a heavy burden of proof was placed on employers, including that of proving that any test that produced a "disparate impact" detrimental to certain minorities was a "business necessity" for various particular jobs. In 1972, Congress codified the Griggs misinterpretation of what Congress had done in 1964. And after a 1989 Supreme Court ruling partially undid Griggs, Congress in 1991 repudiated that 1989 ruling and essentially reimposed the burden of proof on employers.
Small wonder, then, that many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants' satisfactory intelligence and diligence.
This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O'Keefe and Vedder write:
"Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach."
Indeed, by turning college degrees into indispensable credentials for many of society's better jobs, this series of events increased demand for degrees and, O'Keefe and Vedder say, contributed to "an environment of aggressive tuition increases." Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.
Griggs and its consequences are timely reminders of the Law of Unintended Consequences, which is increasingly pertinent as America's regulatory state becomes increasingly determined to fine-tune our complex society. That law holds that the consequences of government actions often are different than, and even contrary to, the intended consequences.
Soon the Obama administration will arrive, bristling like a very progressive porcupine with sharp plans -- plans for restoring economic health by "demand management," for altering the distribution of income by using tax changes and supporting more muscular labor unions, for cooling the planet by such measures as burning more food as fuel, and for many additional improvements. At least, those will be the administration's intended consequences.
Washington Post, Sunday, January 4, 2009; B07
Like pebbles tossed into ponds, important Supreme Court rulings radiate ripples of consequences. Consider a 1971 Supreme Court decision that supposedly applied but actually altered the 1964 Civil Rights Act.
During debate on the legislation, prescient critics worried that it might be construed to forbid giving prospective employees tests that might produce what was later called, in the 1971 case, a "disparate impact" on certain preferred minorities. To assuage these critics, the final act stipulated that employers could use "professionally developed ability tests" that were not "designed, intended or used to discriminate."
Furthermore, two Senate sponsors of the act insisted that it did not require "that employers abandon bona fide qualification tests where, because of differences in background and educations, members of some groups are able to perform better on these tests than members of other groups." What subsequently happened is recounted in "Griggs v. Duke Power: Implications for College Credentialing," a paper written by Bryan O'Keefe, a law student, and Richard Vedder, a professor of economics at Ohio University.
In 1964, there were more than 2,000 personnel tests available to employers. But already an Illinois state official had ruled that a standard ability test used by Motorola was illegal because it was unfair to "disadvantaged groups."
Before 1964, Duke Power had discriminated against blacks in hiring and promotion. After the 1964 act, the company changed its policies, establishing a high school equivalence requirement for all workers and allowing them to meet that requirement by achieving minimum scores on two widely used aptitude tests, including one used today by almost every NFL team to measure players' learning potential.
Plaintiffs in the Griggs case argued that the high school and testing requirements discriminated against blacks. A unanimous Supreme Court, disregarding the relevant legislative history, held that Congress intended the 1964 act to proscribe not only overt discrimination but also "practices that are fair in form, but discriminatory in operation." The court added:
"The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited."
Thus a heavy burden of proof was placed on employers, including that of proving that any test that produced a "disparate impact" detrimental to certain minorities was a "business necessity" for various particular jobs. In 1972, Congress codified the Griggs misinterpretation of what Congress had done in 1964. And after a 1989 Supreme Court ruling partially undid Griggs, Congress in 1991 repudiated that 1989 ruling and essentially reimposed the burden of proof on employers.
Small wonder, then, that many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants' satisfactory intelligence and diligence.
This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O'Keefe and Vedder write:
"Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach."
Indeed, by turning college degrees into indispensable credentials for many of society's better jobs, this series of events increased demand for degrees and, O'Keefe and Vedder say, contributed to "an environment of aggressive tuition increases." Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.
Griggs and its consequences are timely reminders of the Law of Unintended Consequences, which is increasingly pertinent as America's regulatory state becomes increasingly determined to fine-tune our complex society. That law holds that the consequences of government actions often are different than, and even contrary to, the intended consequences.
Soon the Obama administration will arrive, bristling like a very progressive porcupine with sharp plans -- plans for restoring economic health by "demand management," for altering the distribution of income by using tax changes and supporting more muscular labor unions, for cooling the planet by such measures as burning more food as fuel, and for many additional improvements. At least, those will be the administration's intended consequences.
Saturday, January 3, 2009
Ban Voices Concerns Over Threats Against Iranian Nobel Peace Prize Laureate
Ban Voices Concerns Over Threats Against Iranian Nobel Peace Prize Laureate
UN, New York, Jan 3 2009 12:10PM
Secretary-General Ban Ki-moon today expressed his great concern over reports that Iranian lawyer, human rights activist and Nobel Peace Prize laureate Shirin Ebadi has been threatened recently.
It has also been reported that her Center for the Defense of Human Rights has been broken into and materials taken, and that hostile crowds have gathered outside her office and home.
Mr. Ban "calls on the Iranian authorities to take immediate measures to prevent any further harassment and to ensure Shirin Ebadi''s safety and security," according to a statement issued by his spokesperson.
Jan 3 2009 12:10PM
________________
For more details go to UN News Centre at http://www.un.org/news
UN, New York, Jan 3 2009 12:10PM
Secretary-General Ban Ki-moon today expressed his great concern over reports that Iranian lawyer, human rights activist and Nobel Peace Prize laureate Shirin Ebadi has been threatened recently.
It has also been reported that her Center for the Defense of Human Rights has been broken into and materials taken, and that hostile crowds have gathered outside her office and home.
Mr. Ban "calls on the Iranian authorities to take immediate measures to prevent any further harassment and to ensure Shirin Ebadi''s safety and security," according to a statement issued by his spokesperson.
Jan 3 2009 12:10PM
________________
For more details go to UN News Centre at http://www.un.org/news
Obama Address On Economic Recovery
American Recovery and Reinvestment, by Dave Rochelson
Obama-Biden Transition Team, Saturday, January 3, 2009 06:00am EST
In this week’s weekly address, President-elect Barack Obama lays out the challenges that face us in the new year, and his plan for taking them on.
“We need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term,” he says. “And this plan must be designed in a new way—we can’t just fall into the old Washington habit of throwing money at the problem. We must make strategic investments that will serve as a down payment on our long-term economic future. We must demand vigorous oversight and strict accountability for achieving results. And we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down. That is how we will achieve the number one goal of my plan—which is to create three million new jobs, more than eighty percent of them in the private sector.”
Watch the full address or read the text here.
Obama-Biden Transition Team, Saturday, January 3, 2009 06:00am EST
In this week’s weekly address, President-elect Barack Obama lays out the challenges that face us in the new year, and his plan for taking them on.
“We need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term,” he says. “And this plan must be designed in a new way—we can’t just fall into the old Washington habit of throwing money at the problem. We must make strategic investments that will serve as a down payment on our long-term economic future. We must demand vigorous oversight and strict accountability for achieving results. And we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down. That is how we will achieve the number one goal of my plan—which is to create three million new jobs, more than eighty percent of them in the private sector.”
Watch the full address or read the text here.
Taking Detainees: As the Obama Effect Fades
As the Obama Effect Fades, by Abe Greenwald
Contentions, Commentary Blog, Jan 03, 2009
On December 23, the Associated Press reported that European nations were newly open to the U.S.’s request that EU countries resettle some Guantanamo Bay detainees. The AP’s taunting coverage went, predictably, like this:
The willingness to consider accepting prisoners who cannot be returned to their home countries, because of fears they may be tortured there, represents a major change in attitude on the part of European governments. Repeated requests from the Bush administration that European allies accept some Guantanamo Bay detainees received only refusals.
The Bush administration “produced the problem,” Karsten Voigt, coordinator of German-American cooperation at the German Foreign Ministry, said in a telephone interview. “With Obama, the difference is that he tries to solve it.
The very next day, EU Business reported soberly:
Europe reacted cautiously Wednesday to the idea of resettling terror suspects released from Guantanamo Bay, with some countries seeking a concerted European approach and others already opposed to the idea.
The Netherlands went furthest, ruling out accepting any newly freed inmates, despite broad European support for US president elect Barack Obama’s promise to shut down the notorious military detention centre.
A story in New York Times nearly completes our round-trip journey from reality to fantasy and back:
Australia said Friday that it would not agree to American requests to accept more detainees from the prison at Guantánamo Bay, and Britain signaled reluctance to take in significant numbers of former inmates, underscoring the difficulties both the departing and incoming administrations in Washington face in trying to close the camp, which has stirred bitter controversy around the world.
So, what the truth? Some spokesman at the German Foreign Ministry saw an opportunity to give the outgoing American president a dig and he took it. Sure, Germany and Portugal say they’d think about taking in detainees if Obama closes down Gitmo. And that’s good. But it’s predicated on a pretty big “if.”
Industry Views On The Race for Chemical Security
The Race for Chemical Security
Jan 03, 2008
Article originally from American Chemistry magazine.
For some in Washington, D.C., the issue of chemical plant security seemed resolved when Congress passed legislation just prior to the 2006 election recess. However, for the American Chemistry Council (ACC) and its member companies, passage of the legislation was not a checkered flag that ended the race. In reality, there will be lots of hard work ahead and many decisions to be made. Fortunately, thanks to the efforts of ACC and its members, the foundation for the future was laid by the Responsible Care® Security Code.
The quest for legislation
Since 2003, ACC has led the charge for a strong, effective chemical security law. It worked with Congress, testified at hearings, and made sure the final bill took into account the importance of protecting the business of chemistry for the good of the nation. The measure signed into law last October reflected many of ACC’s views and met the nation’s needs. It granted the Department of Homeland Security (DHS) the authority to establish national performance standards for chemical facility security, to enforce those standards through inspection, as well as the power to require corrective action.
Of course, that was only one aspect of ACC’s leadership. Following the terrorist attacks of Sept. 11, 2001, without waiting for legislation or other federal directives, ACC initiated its mandatory RCSC to protect member company communities, employees, products, and facilities. The code covers site, cyber, and transportation security. Its four essential components require member companies to:
Out of the starting gate
Typically, rule making of this kind involves a broad exchange of ideas among stakeholders and agency experts, and this process has been no exception. It is clear DHS is already incorporating elements drawn from the RCSC. In particular, DHS regulations will prioritize facilities, requiring “high-risk” sites to undertake vulnerability assessments and develop and implement site security plans proportionate to its risk level.
Defining what constitutes high risk and determining which facilities cross that threshold will be among the greatest challenges faced by DHS. Ted Cromwell, ACC’s Senior Director for Security, explains that DHS is utilizing a four-fold risk model that encompasses:
ACC’s formal comments on the rulemaking supported the overall effort and offered guidance on specific issues. Full comments can be downloaded from www.americanchemistry.com/security. DHS will issue its final regulations on April 4.
A change in attitude?
Throughout the chemical security legislative and regulatory process, Cromwell and his colleagues at ACC and its member companies have seen a significant change in Washington’s view of the chemical industry.
“The most refreshing aspect of our new relationship with the government is that our products, facilities, and role in society are seen as assets to be protected, not just liabilities to be regulated,” he says.
This growing awareness on the part of the nation’s officials is not an accident, but rather, the result of a focused education and outreach effort by ACC and member companies, including the widely praised essential2 ® campaign, CHEMTREC®, TRANSCAER®, and Responsible Care® programs. It is also thanks to long hours of hard work by officials in industry-government relations, communications, and regulatory affairs.
“It’s still early in the race for chemical security,” Cromwell notes. “The government, ACC, and our members are well-positioned, and if we all do our part, the real winners will be the people, the communities, and the customers who depend on chemistry every day.”
Jan 03, 2008
Article originally from American Chemistry magazine.
For some in Washington, D.C., the issue of chemical plant security seemed resolved when Congress passed legislation just prior to the 2006 election recess. However, for the American Chemistry Council (ACC) and its member companies, passage of the legislation was not a checkered flag that ended the race. In reality, there will be lots of hard work ahead and many decisions to be made. Fortunately, thanks to the efforts of ACC and its members, the foundation for the future was laid by the Responsible Care® Security Code.
The quest for legislation
Since 2003, ACC has led the charge for a strong, effective chemical security law. It worked with Congress, testified at hearings, and made sure the final bill took into account the importance of protecting the business of chemistry for the good of the nation. The measure signed into law last October reflected many of ACC’s views and met the nation’s needs. It granted the Department of Homeland Security (DHS) the authority to establish national performance standards for chemical facility security, to enforce those standards through inspection, as well as the power to require corrective action.
Of course, that was only one aspect of ACC’s leadership. Following the terrorist attacks of Sept. 11, 2001, without waiting for legislation or other federal directives, ACC initiated its mandatory RCSC to protect member company communities, employees, products, and facilities. The code covers site, cyber, and transportation security. Its four essential components require member companies to:
- prioritize facilities;
- assess vulnerabilities, using rigorous methodologies developed or approved by experts at Sandia National Lab and the Center for Chemical Process Safety (CCPS);
- implement security enhancements commensurate with risks, and;
- verify physical enhancements through local officials or other credible third parties.
Out of the starting gate
Typically, rule making of this kind involves a broad exchange of ideas among stakeholders and agency experts, and this process has been no exception. It is clear DHS is already incorporating elements drawn from the RCSC. In particular, DHS regulations will prioritize facilities, requiring “high-risk” sites to undertake vulnerability assessments and develop and implement site security plans proportionate to its risk level.
Defining what constitutes high risk and determining which facilities cross that threshold will be among the greatest challenges faced by DHS. Ted Cromwell, ACC’s Senior Director for Security, explains that DHS is utilizing a four-fold risk model that encompasses:
- off-site consequences, based on the types of chemicals, their quantities, and
proximity to population centers; - sabotage and the threat posed by contaminated products;
- theft and the potential use of stolen products to harm people and property, and;
- economic consequences to national security or the region, due to lost production and reduced accessibility of chemical products.
ACC’s formal comments on the rulemaking supported the overall effort and offered guidance on specific issues. Full comments can be downloaded from www.americanchemistry.com/security. DHS will issue its final regulations on April 4.
A change in attitude?
Throughout the chemical security legislative and regulatory process, Cromwell and his colleagues at ACC and its member companies have seen a significant change in Washington’s view of the chemical industry.
“The most refreshing aspect of our new relationship with the government is that our products, facilities, and role in society are seen as assets to be protected, not just liabilities to be regulated,” he says.
This growing awareness on the part of the nation’s officials is not an accident, but rather, the result of a focused education and outreach effort by ACC and member companies, including the widely praised essential2 ® campaign, CHEMTREC®, TRANSCAER®, and Responsible Care® programs. It is also thanks to long hours of hard work by officials in industry-government relations, communications, and regulatory affairs.
“It’s still early in the race for chemical security,” Cromwell notes. “The government, ACC, and our members are well-positioned, and if we all do our part, the real winners will be the people, the communities, and the customers who depend on chemistry every day.”
Unraveling Judicial Restraint: Guns, Abortion, and the Faux Conservatism of J. Harvie Wilkinson III
Unraveling Judicial Restraint: Guns, Abortion, and the Faux Conservatism of J. Harvie Wilkinson III, by Nelson Lund & David B. Kopel
December 1, 2008
Abstract:
Writing in the Virginia Law Review, a distinguished federal judge maintains that true conservatives are required to substitute principles of judicial restraint for an inquiry into the original meaning of the Constitution. Accordingly, argues J. Harvie Wilkinson, III, the Supreme Court's Second Amendment decision in District of Columbia v. Heller is an activist decision just like Roe v. Wade: "[B]oth cases found judicially enforceable substantive rights only ambiguously rooted in the Constitution's text." In this response, we challenge his critique.
Part I shows that Judge Wilkinson's analogy between Roe and Heller is untenable. The right of the people to keep and bear arms is in the Constitution, and the right to abortion is not. Contrary to Judge Wilkinson, the genuine conservative critique of Roe is based on the Constitution, not on judicial "values." Judge Wilkinson, moreover, does not show that Heller's interpretation of the Second Amendment is refuted, or even called into serious question, by Justice Stevens' dissenting opinion.
Part II shows that Judge Wilkinson himself does not adhere to the "neutral principle" that he claims to derive from "judicial values." Under the principle of judicial restraint that he articulates, many now-reviled statutes, including the Jim Crow laws of the twentieth century, should have been upheld by the courts. Judge Wilkinson does not accept the consequences of his own supposedly neutral principle, preferring instead to endorse or condemn Supreme Court decisions solely on the basis of his policy preferences. That is not judicial restraint. It is judicial lawlessness.
December 1, 2008
Abstract:
Writing in the Virginia Law Review, a distinguished federal judge maintains that true conservatives are required to substitute principles of judicial restraint for an inquiry into the original meaning of the Constitution. Accordingly, argues J. Harvie Wilkinson, III, the Supreme Court's Second Amendment decision in District of Columbia v. Heller is an activist decision just like Roe v. Wade: "[B]oth cases found judicially enforceable substantive rights only ambiguously rooted in the Constitution's text." In this response, we challenge his critique.
Part I shows that Judge Wilkinson's analogy between Roe and Heller is untenable. The right of the people to keep and bear arms is in the Constitution, and the right to abortion is not. Contrary to Judge Wilkinson, the genuine conservative critique of Roe is based on the Constitution, not on judicial "values." Judge Wilkinson, moreover, does not show that Heller's interpretation of the Second Amendment is refuted, or even called into serious question, by Justice Stevens' dissenting opinion.
Part II shows that Judge Wilkinson himself does not adhere to the "neutral principle" that he claims to derive from "judicial values." Under the principle of judicial restraint that he articulates, many now-reviled statutes, including the Jim Crow laws of the twentieth century, should have been upheld by the courts. Judge Wilkinson does not accept the consequences of his own supposedly neutral principle, preferring instead to endorse or condemn Supreme Court decisions solely on the basis of his policy preferences. That is not judicial restraint. It is judicial lawlessness.
The Politics of Fat
The Politics of Fat, by Andrew Ferguson
The Weekly Standard, Jan 05, 2009, Volume 014, Issue 16
On December 15, the city council of Binghamton, New York--every member a proud progressive--unanimously passed an ordinance making it a crime to discriminate against fat people. The next day, David Paterson, the famously progressive governor of New York, proposed a special "fat tax" on soda pop because soda pop makes people fat.
When it comes to obesity, the authorities in New York have put their citizens on notice: We will get you coming and going.
Supporters make clear that each move is only preliminary to even greater reforms. Several legislators are interested in a statewide "weight-based" discrimination law, and fat taxes on other foods may prove irresistible.
Obesity is very today, very right now. Obesity is the new smoking. "What smoking was to my parents' generation," Paterson says, "obesity is to my children's generation." He means this in two ways. One is that kids today--these kids today!--eat fatty foods with as much ardor as their grandparents smoked tobacco. The other is that government intends to eradicate the first vice with the same ruthlessness as it did the second. And it's not an idle threat. The campaign against smoking was progressivism's greatest recent success. Over a span of 20 years, an ancient human weakness once enjoyed by nearly half the population and quietly tolerated by the other half became virtually outlawed.
The anti-smoking campaign shows how to turn a private vice requiring tolerance and indulgence into a public offense demanding regulation and official censure. Paterson is following the campaign step by step. First comes the misappropriation of the language of epidemiology. The terms are liberated from their scientific meaning and then attached to a widely shared activity or condition. The condition, in this case obesity, is renamed a "disease," suggesting that some kind of contagion is making the rounds. Then the disease inflates into an "epidemic," suggesting an urgency that only the foolhardy would ignore. "We find ourselves," says Paterson, "in the midst of a new public health epidemic, childhood obesity." Any libertarian qualms are quickly overridden, since not even the most hollow-eyed anarcho-capitalist would deny that government is obliged to guard against runaway disease.
To intensify the urgency, Paterson deploys neutral statistics from sources that are already on his side. The statistics are always improbably exact. Unnamed public health researchers at Harvard have discovered that obesity is "associated" with 112,000 deaths in the United States every year; not 113,000, and not 111,000. Each can of soda pop "increases the risk" of making a child fat by 60 percent. Not 59 percent. Not 61 percent. An increase of $1.25 in tobacco taxes saves more than 37,000 lives and $5 billion in health care costs. And Paterson's 18 percent tax on sugary soft drinks will reduce consumption by 5 percent. Not four.
From here the rest of the argument tumbles like dominoes, clack clack clack. Fat people are not merely drawn to eating unhealthy food; they are "addicted." As addicts, they are rendered helpless by their addiction. Helpless, they deserve the status of victims. Like all victims, they must be victimized by something. By unhealthy food? No: Not food merely, for food and commercial marketing combine to create the TFE--the "Toxic Food Environment." The TFE is everywhere in today's America; it is today's America. It emanates from the seductive advertising of food, from the media's quasi-pornographic obsession with food, from the scandalously low price of food, from the ubiquitous sale of food in such unlikely places as gas-station minimarts. (In simpler times, Americans got gas when they ate food; now they eat food when they get gas.) Created by cynical corporations, the TFE is the ghastly miasma in which we live and move and have our being, swelling with every Frito.
Thus a private failing becomes a public menace.
This is the point in the argument where the city council of Binghamton jumps in. Actually, they perked up at the mention of the word "victims." Victims are citizens who have gone limp. They require the paternal care and protection of public officials. Researchers from Yale (no less) "found that obese adults were 37 times more likely"--not 36 times more likely, and not 38 either--"to report weight-based employment discrimination compared to 'normal' weight adults." Nonprogressives from places other than Binghamton might find this statistic less than eye-popping. Who else but fat people are going to suffer discrimination against fat people? But the very idea of such unregulated bigotry moved the city council to act. Specifically, it outlawed what has elsewhere been called weightism: "weight-based" discrimination in housing, employment, education, and public accommodation. The bill's sponsor explained the law by saying, "It is the human thing to do."
Well, it's certainly the progressive thing to do. Those same Yale researchers fleshed out the reasoning, if you'll forgive the expression. "Weight bias exists," they explained, because weightist bigots believe that "the only reason people fail to lose weight is because of [they're not teaching grammar at Yale these days] poor self-discipline or a lack of willpower." This wrongheaded notion "blames the victim rather than addressing environmental conditions that cause obesity."
The city council takes care of the first part of this incorrect thinking. Its new law reinforces the view that obesity, like sex or race, is an unchangeable condition deserving civil rights protection. The governor aims for the second part, by making the initial move toward taxing those "environmental conditions" out of existence; he will, in other words, directly attack the TFE and, if all goes well, cure the obesity epidemic.
The governor and the Binghamton city council acted independently, of course, but together they've concocted a perfectly progressive two-pronged approach, a one-two punch, a regulatory pincer movement designed to eliminate, all at once and simultaneously, not only discrimination against the obese but also the obese themselves.
One problem does suggest itself. If the government is to declare our hefty brothers and sisters a protected class, if they are to become a legal caste that cannot be singled out because of their weight, how can the government continue to go after their favorite foods? A "fat tax" on sugary soda pop punishes fat people by making the foods they love more expensive--merely because fat people love them. One tactic violates the other. It's only a matter of time before fat people will be able to sue the state of New York on grounds of discrimination for imposing a fat tax. And then where will we be?
I don't want to give anybody any ideas, but I have noticed an alarming number of dangerously skinny people drinking diet soda. It's like an -epidemic.
Andrew Ferguson is a senior editor at The Weekly Standard.
The Weekly Standard, Jan 05, 2009, Volume 014, Issue 16
On December 15, the city council of Binghamton, New York--every member a proud progressive--unanimously passed an ordinance making it a crime to discriminate against fat people. The next day, David Paterson, the famously progressive governor of New York, proposed a special "fat tax" on soda pop because soda pop makes people fat.
When it comes to obesity, the authorities in New York have put their citizens on notice: We will get you coming and going.
Supporters make clear that each move is only preliminary to even greater reforms. Several legislators are interested in a statewide "weight-based" discrimination law, and fat taxes on other foods may prove irresistible.
Obesity is very today, very right now. Obesity is the new smoking. "What smoking was to my parents' generation," Paterson says, "obesity is to my children's generation." He means this in two ways. One is that kids today--these kids today!--eat fatty foods with as much ardor as their grandparents smoked tobacco. The other is that government intends to eradicate the first vice with the same ruthlessness as it did the second. And it's not an idle threat. The campaign against smoking was progressivism's greatest recent success. Over a span of 20 years, an ancient human weakness once enjoyed by nearly half the population and quietly tolerated by the other half became virtually outlawed.
The anti-smoking campaign shows how to turn a private vice requiring tolerance and indulgence into a public offense demanding regulation and official censure. Paterson is following the campaign step by step. First comes the misappropriation of the language of epidemiology. The terms are liberated from their scientific meaning and then attached to a widely shared activity or condition. The condition, in this case obesity, is renamed a "disease," suggesting that some kind of contagion is making the rounds. Then the disease inflates into an "epidemic," suggesting an urgency that only the foolhardy would ignore. "We find ourselves," says Paterson, "in the midst of a new public health epidemic, childhood obesity." Any libertarian qualms are quickly overridden, since not even the most hollow-eyed anarcho-capitalist would deny that government is obliged to guard against runaway disease.
To intensify the urgency, Paterson deploys neutral statistics from sources that are already on his side. The statistics are always improbably exact. Unnamed public health researchers at Harvard have discovered that obesity is "associated" with 112,000 deaths in the United States every year; not 113,000, and not 111,000. Each can of soda pop "increases the risk" of making a child fat by 60 percent. Not 59 percent. Not 61 percent. An increase of $1.25 in tobacco taxes saves more than 37,000 lives and $5 billion in health care costs. And Paterson's 18 percent tax on sugary soft drinks will reduce consumption by 5 percent. Not four.
From here the rest of the argument tumbles like dominoes, clack clack clack. Fat people are not merely drawn to eating unhealthy food; they are "addicted." As addicts, they are rendered helpless by their addiction. Helpless, they deserve the status of victims. Like all victims, they must be victimized by something. By unhealthy food? No: Not food merely, for food and commercial marketing combine to create the TFE--the "Toxic Food Environment." The TFE is everywhere in today's America; it is today's America. It emanates from the seductive advertising of food, from the media's quasi-pornographic obsession with food, from the scandalously low price of food, from the ubiquitous sale of food in such unlikely places as gas-station minimarts. (In simpler times, Americans got gas when they ate food; now they eat food when they get gas.) Created by cynical corporations, the TFE is the ghastly miasma in which we live and move and have our being, swelling with every Frito.
Thus a private failing becomes a public menace.
This is the point in the argument where the city council of Binghamton jumps in. Actually, they perked up at the mention of the word "victims." Victims are citizens who have gone limp. They require the paternal care and protection of public officials. Researchers from Yale (no less) "found that obese adults were 37 times more likely"--not 36 times more likely, and not 38 either--"to report weight-based employment discrimination compared to 'normal' weight adults." Nonprogressives from places other than Binghamton might find this statistic less than eye-popping. Who else but fat people are going to suffer discrimination against fat people? But the very idea of such unregulated bigotry moved the city council to act. Specifically, it outlawed what has elsewhere been called weightism: "weight-based" discrimination in housing, employment, education, and public accommodation. The bill's sponsor explained the law by saying, "It is the human thing to do."
Well, it's certainly the progressive thing to do. Those same Yale researchers fleshed out the reasoning, if you'll forgive the expression. "Weight bias exists," they explained, because weightist bigots believe that "the only reason people fail to lose weight is because of [they're not teaching grammar at Yale these days] poor self-discipline or a lack of willpower." This wrongheaded notion "blames the victim rather than addressing environmental conditions that cause obesity."
The city council takes care of the first part of this incorrect thinking. Its new law reinforces the view that obesity, like sex or race, is an unchangeable condition deserving civil rights protection. The governor aims for the second part, by making the initial move toward taxing those "environmental conditions" out of existence; he will, in other words, directly attack the TFE and, if all goes well, cure the obesity epidemic.
The governor and the Binghamton city council acted independently, of course, but together they've concocted a perfectly progressive two-pronged approach, a one-two punch, a regulatory pincer movement designed to eliminate, all at once and simultaneously, not only discrimination against the obese but also the obese themselves.
One problem does suggest itself. If the government is to declare our hefty brothers and sisters a protected class, if they are to become a legal caste that cannot be singled out because of their weight, how can the government continue to go after their favorite foods? A "fat tax" on sugary soda pop punishes fat people by making the foods they love more expensive--merely because fat people love them. One tactic violates the other. It's only a matter of time before fat people will be able to sue the state of New York on grounds of discrimination for imposing a fat tax. And then where will we be?
I don't want to give anybody any ideas, but I have noticed an alarming number of dangerously skinny people drinking diet soda. It's like an -epidemic.
Andrew Ferguson is a senior editor at The Weekly Standard.
Our Oil Reserves Are Depleted; It's Time for Utopia
Our Oil Reserves Are Depleted; It's Time for Utopia, by Jim Schumacher and Debbie Bookch
Huffington Post, December 25, 2008 02:13 PM (EST)
Last week at a Christmas party in the hills of Umbria, we were part of a captive audience listening to an American businessman holding forth on an ever-popular expat subject - the dismal exchange rate of dollars to euros. He informed his listeners that they needn't worry: In just a couple of years, he said, America will have pulled out of the recession and the economy will be growing strong; Europe, on the other hand will still be facing the ripple effects of the global meltdown - and will be suffering.
"You'll see," he said blithely, "the dollar and the euro will be at par."
Although the conversation took place in Italy, it could have as easily occurred in a Wall Street boardroom. Despite the ongoing economic meltdown, the dominant, "business as usual" wisdom is that the ascendancy of the American model of global capitalism can only continue. It's just a matter of time before the good ship USS Free Enterprise rights itself and we have smooth sailing ahead.
But exactly what resources will the U.S. call upon to fuel the economic recovery that our American businessman and millions of others like him continue to believe in? Our longtime economic paradigm - growth fueled by cheap oil - has no future. Even when it did, it was a flawed concept because the constant growth required under the "grow or die" capitalist paradigm demands that we relentlessly exploit natural resources - how else to increase profit margins and pay investors their ever-greater dividends?
This paradigm has brought us to the brink of ecological disaster, with a planet so over-heated that even the most optimistic climate experts are doubtful whether we will be able to prevent cataclysmic disruptions unless worldwide carbon emissions are drastically reduced in the coming years - an unlikely scenario given the unwillingness of most governments to enact tough standards and regulations.
Not only has the planet been brought to its knees as a result of this capitalist ethos, but we humans haven't fared so well either. Can we really say we're succeeding as a human race when half of the world's population is starving, or lacks adequate access to potable water, or is suffering from preventable diseases? Even in the U.S., our "high standard of living" leaves much to be desired, not only for the 45 million people who have no health insurance but for the tens of millions who work 40-80 hours a week and find themselves with little time to socialize, go for a walk, prepare and enjoy a meal with friends, or read a book - in short, have less free time and a lower standard of living than their parents did.
With oil virtually at an end, what better time to re-examine the economic paradigm that allowed us to think we could use up finite resources and just "grow" forever? Isn't it time to rethink our blind embrace of the "grow or die" philosophy that led us down this self-destructive path?
In her recent post, "Laissez-Faire Capitalism Should Be as Dead as Soviet Communism," Arianna Huffington suggests that the collapse of our financial system as a result of deregulation proves that this form of deregulated capitalism should be relegated to the dust bin of history. But is it just deregulation, or is it capitalism itself that needs to be junked? Inherent in the capitalist ethos is the endless exploitation of natural resources. Indeed, not only the exploitation of nature, but the exploitation of individuals by individuals is a guiding principle of modern capitalist society. You needn't travel to 19th century England to understand this; it's not just the exploitation of workers in factories anymore. As capitalism colonizes the realm of interpersonal relations, we've ceased to become human to each other and instead become "resources" (think "networking") to be exploited for one type of gain or another.
Considering the tremendous advances in labor-saving technology in the last century, isn't it time for a new form of social organization? One that prizes mutual aid over competition, collective stewardship of nature over its rapacious exploitation, and recognition that "life, liberty and the pursuit of happiness" must include the provision of basic necessities for all, regardless of status: shelter, food, free healthcare. Even better, imagine if we could recognize that ultimately human beings are capable of much more than just earning money? It's time to use our immense powers of reason to ask ourselves: What does it mean to build a truly civilized world? History has shown us that Leninist Communism - itself a form of state-sanctioned exploitation of nature and human beings - wasn't the answer. But neither has capitalism allowed us to fully realize our potential as free, creative beings.
We stand on a threshold. Will we use our extraordinary technology, science and rationality to create a just, humane and truly free society? Or will we continue down the path of domination - of each other and of the natural world - destroying our environment and ourselves?
The great utopian, Murray Bookchin, said: "If we do not do the impossible, we shall be faced with the unthinkable." When he said those words, more than a quarter of a century ago, the notion that capitalism could bring the world to the brink of destruction was ridiculed by almost every mainstream intellectual. Yet here we are on the precipice, confronted with the unthinkable. The only course left to us, is to do the impossible - to abandon the paradigm of capitalism that has defined our cultural, political and economic life for the past 250 years, and whose supremacy has led inexorably to the despoilation of our planet and demeaning of human existence.
Let us choose to end the domination of each other and the unthinking exploitation of nature, and find a more human, decent form of social organization, one that prizes true, decentralized democracy, basic decency and the common good.
The oil is almost gone. The hourglass is about to run out. It's time to create a utopia.
Huffington Post, December 25, 2008 02:13 PM (EST)
Last week at a Christmas party in the hills of Umbria, we were part of a captive audience listening to an American businessman holding forth on an ever-popular expat subject - the dismal exchange rate of dollars to euros. He informed his listeners that they needn't worry: In just a couple of years, he said, America will have pulled out of the recession and the economy will be growing strong; Europe, on the other hand will still be facing the ripple effects of the global meltdown - and will be suffering.
"You'll see," he said blithely, "the dollar and the euro will be at par."
Although the conversation took place in Italy, it could have as easily occurred in a Wall Street boardroom. Despite the ongoing economic meltdown, the dominant, "business as usual" wisdom is that the ascendancy of the American model of global capitalism can only continue. It's just a matter of time before the good ship USS Free Enterprise rights itself and we have smooth sailing ahead.
But exactly what resources will the U.S. call upon to fuel the economic recovery that our American businessman and millions of others like him continue to believe in? Our longtime economic paradigm - growth fueled by cheap oil - has no future. Even when it did, it was a flawed concept because the constant growth required under the "grow or die" capitalist paradigm demands that we relentlessly exploit natural resources - how else to increase profit margins and pay investors their ever-greater dividends?
This paradigm has brought us to the brink of ecological disaster, with a planet so over-heated that even the most optimistic climate experts are doubtful whether we will be able to prevent cataclysmic disruptions unless worldwide carbon emissions are drastically reduced in the coming years - an unlikely scenario given the unwillingness of most governments to enact tough standards and regulations.
Not only has the planet been brought to its knees as a result of this capitalist ethos, but we humans haven't fared so well either. Can we really say we're succeeding as a human race when half of the world's population is starving, or lacks adequate access to potable water, or is suffering from preventable diseases? Even in the U.S., our "high standard of living" leaves much to be desired, not only for the 45 million people who have no health insurance but for the tens of millions who work 40-80 hours a week and find themselves with little time to socialize, go for a walk, prepare and enjoy a meal with friends, or read a book - in short, have less free time and a lower standard of living than their parents did.
With oil virtually at an end, what better time to re-examine the economic paradigm that allowed us to think we could use up finite resources and just "grow" forever? Isn't it time to rethink our blind embrace of the "grow or die" philosophy that led us down this self-destructive path?
In her recent post, "Laissez-Faire Capitalism Should Be as Dead as Soviet Communism," Arianna Huffington suggests that the collapse of our financial system as a result of deregulation proves that this form of deregulated capitalism should be relegated to the dust bin of history. But is it just deregulation, or is it capitalism itself that needs to be junked? Inherent in the capitalist ethos is the endless exploitation of natural resources. Indeed, not only the exploitation of nature, but the exploitation of individuals by individuals is a guiding principle of modern capitalist society. You needn't travel to 19th century England to understand this; it's not just the exploitation of workers in factories anymore. As capitalism colonizes the realm of interpersonal relations, we've ceased to become human to each other and instead become "resources" (think "networking") to be exploited for one type of gain or another.
Considering the tremendous advances in labor-saving technology in the last century, isn't it time for a new form of social organization? One that prizes mutual aid over competition, collective stewardship of nature over its rapacious exploitation, and recognition that "life, liberty and the pursuit of happiness" must include the provision of basic necessities for all, regardless of status: shelter, food, free healthcare. Even better, imagine if we could recognize that ultimately human beings are capable of much more than just earning money? It's time to use our immense powers of reason to ask ourselves: What does it mean to build a truly civilized world? History has shown us that Leninist Communism - itself a form of state-sanctioned exploitation of nature and human beings - wasn't the answer. But neither has capitalism allowed us to fully realize our potential as free, creative beings.
We stand on a threshold. Will we use our extraordinary technology, science and rationality to create a just, humane and truly free society? Or will we continue down the path of domination - of each other and of the natural world - destroying our environment and ourselves?
The great utopian, Murray Bookchin, said: "If we do not do the impossible, we shall be faced with the unthinkable." When he said those words, more than a quarter of a century ago, the notion that capitalism could bring the world to the brink of destruction was ridiculed by almost every mainstream intellectual. Yet here we are on the precipice, confronted with the unthinkable. The only course left to us, is to do the impossible - to abandon the paradigm of capitalism that has defined our cultural, political and economic life for the past 250 years, and whose supremacy has led inexorably to the despoilation of our planet and demeaning of human existence.
Let us choose to end the domination of each other and the unthinking exploitation of nature, and find a more human, decent form of social organization, one that prizes true, decentralized democracy, basic decency and the common good.
The oil is almost gone. The hourglass is about to run out. It's time to create a utopia.
Friday, January 2, 2009
Rob Riemen: An Open Letter to President-Elect Obama
An Open Letter to President-Elect Obama, by Rob Riemen
January 2, 2009
Dear Mr. President-elect,
Your interest in the presidency of Franklin D. Roosevelt demonstrates an admirable historic consciousness, an awareness that wisdom can be found among those who, like yourself at this moment, are confronted with an immense challenge and responsibility.
But in the many books on your great predecessor, one crucial conversation has erroneously vanished, not just because it was extremely influential on the third inaugural address of President Roosevelt -- and thus on his presidency during the war years that would be so decisive for the future of America and Europe -- but also because it is this specific conversation that is of such importance for our time.
As you compose your first inaugural address, I fervently hope that you will not pass over the exchange of ideas between a great president and a great intellectual in the White House on the chilly morning of January 14, 1941.
War is raging in Europe, the consequences of the Depression are still present, and America is sharply divided about her role in the world. With only a week to go before he is to give his inaugural, Roosevelt consults the European writer and Nobel Prize winner, Thomas Mann. They first met in 1935 when Mann, partly on the advocacy of Roosevelt, was awarded an honorary doctorate from Harvard. Roosevelt appreciated the writer as the intellectual and moral conscience of Europe, while Mann saw the antithesis of Hitler in this American president. Four days before the election Mann wrote in his journal: "Roosevelt's reelection is of the greatest importance for the further course of history. However, the current era makes this unlikely..." As soon as it is clear that, contrary to his expectation, Roosevelt is reelected, he confides in his journal, "This is the first joy, the first victory in more than seven years, which have brought nothing but disappointment and rage." He sends a congratulatory telegram. Two months later, Mann is invited to the White House.
The conversation between Roosevelt and Mann can be reconstructed through Mann's journal notes, two of his lectures in Roosevelt's possession, and the inaugural address itself.
The evening of January 14, 1941 Mann writes in his journal: "Lively conversation. Political-moral vision priority over economy. [...] Gave him a copy of War and Democracy and dedicated it: 'To F.D.R. President of the U.S. and of a coming better world.''' Mann's gift is a twenty-five page booklet. This booklet contains a more detailed treatment of a theme he discussed in February 1938 in 'a coast-to-coast lecture tour of the U.S.A' to an audience of sometimes more than ten thousand Americans: The Coming Victory of Democracy. Mann's arguement in these two lectures can be summarized as follows.
Never should anything of value be taken for granted. America, too, will have to keep reflecting on what democracy really means if she does not want to be lost, as Nazi Germany is lost. Because, in the end, politics has to do with fundamental values, and as democracy is not merely a way of governing and representation, it is a political duty to make society aware that "democracy is that form of government and of society which is inspired above every other with the feeling and consciousness of the dignity of man." These are big words and Mann is quite aware of how small man can be in "his self-centeredness, cruelty, cowardice, and stupidity." But that is precisely why we must not forget that "The great and honorable in man manifest themselves as art and science, as passion for truth, creation of beauty and the idea of justice." True democracy honors man as a spiritual being, focuses on cultivating human greatness, "It wishes to elevate mankind, to teach it to think, to set it free. It seeks to remove from culture the stamp of privilege and disseminate it among the people -- in a word, it aims at education."
When we forget this, the anti-democratic forces, which are always and everywhere present, will grab for power. To them, human beings are not oriented toward truth, freedom, and justice, but are thoughtless creatures, yearning for physical and material gratification only. They would rather cultivate ignorance than the intellectual life. The anti-democrats do not know what the essence of freedom is. Or freedom is reduced to an exclusively economic phenomenon (Mann: "The perhaps natural egotism of the great private business which at a time of universal conscription insists on its own absolute freedom..."). Or else freedom is threatened by fanatics who do not believe in freedom but rather in "force, high explosive bombs, and bestiality." And this latter danger, the determination to destroy humanity is reinforced by the fact that, when "face to face with fanaticism incarnate, a freedom that through sheer goodness and humane skepticism no longer believes in itself will be irrevocably lost". Nazi Germany is the most harrowing example of anti-democracy but, Mann warns, this force can manifest itself all too readily in the US as well. True democracy can only continue to exist as long as it is an expression of the true ideal of freedom: the cultivation of nobility of spirit, and the determination to defend itself against its deadly enemies.
Six days after his conversation with Thomas Mann, President Roosevelt begins his third inaugural address with the observation that it is important for the Americans "to rediscover what we are and what we may be. If we do not, we risk the real peril of inaction." This, he continues, is all the more important because there are those who claim that democracy no longer has a future. However, that is not true. Not only were matters dealt with democratically in difficult times ("We acted quickly, boldly, decisively"), but there is also "a better understanding that life's ideals are measured in other than material things." The fact that America is able to survive her crisis is, in fact, due to democracy. Democracy is not dying and must not die, "as it is the most humane, the most advanced and in the end most unconquerable of all forms of human society." What is fundamental is the awareness that: "A nation, like a person, has something deeper, something more permanent, something larger than the sum of all its parts. It is that something which matters most to its future -- which calls forth the most sacred guarding of its present. [...] We all understand what it is -- the spirit -- the faith of America." That spirit has always been an ideal of freedom and this freedom must never be reduced to a merely economic phenomenon: "The hope of the Republic cannot forever tolerate either undeserved poverty or self-serving wealth." We must build a society that is safe and offers everyone an opportunity. However: "It is not enough to clothe and feed the body of this Nation, and instruct and inform its mind. For there is also the spirit. And of the three, the greatest is the spirit." America will manage to survive her crisis and will set the example for the rest of the world if she remains true to her spirit, true to the true democracy, true to what George Washington proclaimed the destiny of America to be in his first inaugural address: "The preservation of the sacred fire of liberty [...] entrusted to the hands of the American people." That is why, as Roosevelt concludes his address: "Our purpose is to protect and to perpetuate the integrity of democracy. For this we muster the spirit of America, and the faith of America."
Thus President Roosevelt eloquently articulated the content of a conversation that Thomas Mann summarized that same evening as: "Lively conversation. Political-moral vision priority over economy."
Mr. President-elect, the problems and challenges that confront you are undoubtedly no fewer than those of President Roosevelt. Neither is there any doubt that you will have to act and, like President Roosevelt you will "act quickly, boldly, decisively." But the historic conversation in the White House of 14 January 1941 teaches us that there can be no doubt either that mere economic and policy actions are insufficient. In the spirit of Roosevelt, Thomas Mann warned after the war that "no conference, technical measure, or juridical institution, nor even a world government, can possibly bring the new society one step closer if it is not preceded by a different spiritual climate, a new receptivity to the nobility of spirit".
The wisdom that President Roosevelt and Thomas Mann bestow on us is that America will survive the present crisis but only if the awareness prevails that the true spirit of America, the true democracy, is none other than "that form of government and of society which is inspired above every other with the feeling and consciousness of the dignity of man."
It is an awareness that has been forgotten for too long.
For too long we have been hearing that "It's the economy, stupid!" or "country first," and we have forgotten that the hallmark of a civilized society is human dignity for all.
For too long there has been a culture of money and there never would have been a financial crisis had we not forgotten the wise words of the philosopher Socrates: "My very dear friend... Are you not ashamed that you give your attention to acquiring as much money as possible, and similarly with reputation and honor, and give no attention or thought to truth and understanding and the perfection of your soul."
For too long there has been a culture of total ignorance and anti-intellectualism, and we have forgotten what Mann said in America as early as 1938: "In a democracy which does not respect the intellectual life and is not guided by it, demagogy has free play and the level of national life is depressed to that of the ignorant and uncultivated."
For too long education has been discussed in terms of 'useful' and 'practical,' and we have forgotten that the liberal arts are there to help us express our emotions, articulate our experiences; that true liberal education is there to liberate us from stupidity, prejudice, blind desire, and thus helps us to live in truth and cultivate our soul.
For too long the danger of fanatics who hate the true democracy has been underestimated.
Mr. President Elect, the mere fact that you have been elected is a hopeful indication that the spiritual climate is changing. That the young have played a decisive role in your election is an equally hopeful sign. But the true change, the only change that can offer us a real prospect of a better world to come is a renewed awareness of the true meaning of one word only: freedom.
I am writing you in the hope that an unjustly forgotten conversation of long ago and the example of a great president will be an inspiration to you and encourage you to place your presidency, too, in the renewed conquest and defense of that freedom and the nobility of spirit without which it cannot exist.
I wish you great courage and wisdom for the years to come.
Yours sincerely,
Rob Riemen,
Author of Nobility of Spirit. A Forgotten Ideal (Yale University Press
January 2, 2009
Dear Mr. President-elect,
Your interest in the presidency of Franklin D. Roosevelt demonstrates an admirable historic consciousness, an awareness that wisdom can be found among those who, like yourself at this moment, are confronted with an immense challenge and responsibility.
But in the many books on your great predecessor, one crucial conversation has erroneously vanished, not just because it was extremely influential on the third inaugural address of President Roosevelt -- and thus on his presidency during the war years that would be so decisive for the future of America and Europe -- but also because it is this specific conversation that is of such importance for our time.
As you compose your first inaugural address, I fervently hope that you will not pass over the exchange of ideas between a great president and a great intellectual in the White House on the chilly morning of January 14, 1941.
War is raging in Europe, the consequences of the Depression are still present, and America is sharply divided about her role in the world. With only a week to go before he is to give his inaugural, Roosevelt consults the European writer and Nobel Prize winner, Thomas Mann. They first met in 1935 when Mann, partly on the advocacy of Roosevelt, was awarded an honorary doctorate from Harvard. Roosevelt appreciated the writer as the intellectual and moral conscience of Europe, while Mann saw the antithesis of Hitler in this American president. Four days before the election Mann wrote in his journal: "Roosevelt's reelection is of the greatest importance for the further course of history. However, the current era makes this unlikely..." As soon as it is clear that, contrary to his expectation, Roosevelt is reelected, he confides in his journal, "This is the first joy, the first victory in more than seven years, which have brought nothing but disappointment and rage." He sends a congratulatory telegram. Two months later, Mann is invited to the White House.
The conversation between Roosevelt and Mann can be reconstructed through Mann's journal notes, two of his lectures in Roosevelt's possession, and the inaugural address itself.
The evening of January 14, 1941 Mann writes in his journal: "Lively conversation. Political-moral vision priority over economy. [...] Gave him a copy of War and Democracy and dedicated it: 'To F.D.R. President of the U.S. and of a coming better world.''' Mann's gift is a twenty-five page booklet. This booklet contains a more detailed treatment of a theme he discussed in February 1938 in 'a coast-to-coast lecture tour of the U.S.A' to an audience of sometimes more than ten thousand Americans: The Coming Victory of Democracy. Mann's arguement in these two lectures can be summarized as follows.
Never should anything of value be taken for granted. America, too, will have to keep reflecting on what democracy really means if she does not want to be lost, as Nazi Germany is lost. Because, in the end, politics has to do with fundamental values, and as democracy is not merely a way of governing and representation, it is a political duty to make society aware that "democracy is that form of government and of society which is inspired above every other with the feeling and consciousness of the dignity of man." These are big words and Mann is quite aware of how small man can be in "his self-centeredness, cruelty, cowardice, and stupidity." But that is precisely why we must not forget that "The great and honorable in man manifest themselves as art and science, as passion for truth, creation of beauty and the idea of justice." True democracy honors man as a spiritual being, focuses on cultivating human greatness, "It wishes to elevate mankind, to teach it to think, to set it free. It seeks to remove from culture the stamp of privilege and disseminate it among the people -- in a word, it aims at education."
When we forget this, the anti-democratic forces, which are always and everywhere present, will grab for power. To them, human beings are not oriented toward truth, freedom, and justice, but are thoughtless creatures, yearning for physical and material gratification only. They would rather cultivate ignorance than the intellectual life. The anti-democrats do not know what the essence of freedom is. Or freedom is reduced to an exclusively economic phenomenon (Mann: "The perhaps natural egotism of the great private business which at a time of universal conscription insists on its own absolute freedom..."). Or else freedom is threatened by fanatics who do not believe in freedom but rather in "force, high explosive bombs, and bestiality." And this latter danger, the determination to destroy humanity is reinforced by the fact that, when "face to face with fanaticism incarnate, a freedom that through sheer goodness and humane skepticism no longer believes in itself will be irrevocably lost". Nazi Germany is the most harrowing example of anti-democracy but, Mann warns, this force can manifest itself all too readily in the US as well. True democracy can only continue to exist as long as it is an expression of the true ideal of freedom: the cultivation of nobility of spirit, and the determination to defend itself against its deadly enemies.
Six days after his conversation with Thomas Mann, President Roosevelt begins his third inaugural address with the observation that it is important for the Americans "to rediscover what we are and what we may be. If we do not, we risk the real peril of inaction." This, he continues, is all the more important because there are those who claim that democracy no longer has a future. However, that is not true. Not only were matters dealt with democratically in difficult times ("We acted quickly, boldly, decisively"), but there is also "a better understanding that life's ideals are measured in other than material things." The fact that America is able to survive her crisis is, in fact, due to democracy. Democracy is not dying and must not die, "as it is the most humane, the most advanced and in the end most unconquerable of all forms of human society." What is fundamental is the awareness that: "A nation, like a person, has something deeper, something more permanent, something larger than the sum of all its parts. It is that something which matters most to its future -- which calls forth the most sacred guarding of its present. [...] We all understand what it is -- the spirit -- the faith of America." That spirit has always been an ideal of freedom and this freedom must never be reduced to a merely economic phenomenon: "The hope of the Republic cannot forever tolerate either undeserved poverty or self-serving wealth." We must build a society that is safe and offers everyone an opportunity. However: "It is not enough to clothe and feed the body of this Nation, and instruct and inform its mind. For there is also the spirit. And of the three, the greatest is the spirit." America will manage to survive her crisis and will set the example for the rest of the world if she remains true to her spirit, true to the true democracy, true to what George Washington proclaimed the destiny of America to be in his first inaugural address: "The preservation of the sacred fire of liberty [...] entrusted to the hands of the American people." That is why, as Roosevelt concludes his address: "Our purpose is to protect and to perpetuate the integrity of democracy. For this we muster the spirit of America, and the faith of America."
Thus President Roosevelt eloquently articulated the content of a conversation that Thomas Mann summarized that same evening as: "Lively conversation. Political-moral vision priority over economy."
Mr. President-elect, the problems and challenges that confront you are undoubtedly no fewer than those of President Roosevelt. Neither is there any doubt that you will have to act and, like President Roosevelt you will "act quickly, boldly, decisively." But the historic conversation in the White House of 14 January 1941 teaches us that there can be no doubt either that mere economic and policy actions are insufficient. In the spirit of Roosevelt, Thomas Mann warned after the war that "no conference, technical measure, or juridical institution, nor even a world government, can possibly bring the new society one step closer if it is not preceded by a different spiritual climate, a new receptivity to the nobility of spirit".
The wisdom that President Roosevelt and Thomas Mann bestow on us is that America will survive the present crisis but only if the awareness prevails that the true spirit of America, the true democracy, is none other than "that form of government and of society which is inspired above every other with the feeling and consciousness of the dignity of man."
It is an awareness that has been forgotten for too long.
For too long we have been hearing that "It's the economy, stupid!" or "country first," and we have forgotten that the hallmark of a civilized society is human dignity for all.
For too long there has been a culture of money and there never would have been a financial crisis had we not forgotten the wise words of the philosopher Socrates: "My very dear friend... Are you not ashamed that you give your attention to acquiring as much money as possible, and similarly with reputation and honor, and give no attention or thought to truth and understanding and the perfection of your soul."
For too long there has been a culture of total ignorance and anti-intellectualism, and we have forgotten what Mann said in America as early as 1938: "In a democracy which does not respect the intellectual life and is not guided by it, demagogy has free play and the level of national life is depressed to that of the ignorant and uncultivated."
For too long education has been discussed in terms of 'useful' and 'practical,' and we have forgotten that the liberal arts are there to help us express our emotions, articulate our experiences; that true liberal education is there to liberate us from stupidity, prejudice, blind desire, and thus helps us to live in truth and cultivate our soul.
For too long the danger of fanatics who hate the true democracy has been underestimated.
Mr. President Elect, the mere fact that you have been elected is a hopeful indication that the spiritual climate is changing. That the young have played a decisive role in your election is an equally hopeful sign. But the true change, the only change that can offer us a real prospect of a better world to come is a renewed awareness of the true meaning of one word only: freedom.
I am writing you in the hope that an unjustly forgotten conversation of long ago and the example of a great president will be an inspiration to you and encourage you to place your presidency, too, in the renewed conquest and defense of that freedom and the nobility of spirit without which it cannot exist.
I wish you great courage and wisdom for the years to come.
Yours sincerely,
Rob Riemen,
Author of Nobility of Spirit. A Forgotten Ideal (Yale University Press
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