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Sunday, August 31, 2008

More on bicycles as transportation.

There is an article in today's Washington Post http://www.washingtonpost.com about commuting by bicycle.

While the article is quite long, it can be summarized quite simply: bicycle lanes and secure parking are two of the keys to getting commuters out of their cars and onto bicycles. Bicycle lanes, as opposed to bicycle "trails", separate bicyclists from pedestrians and runners as well as from cars, buses and trucks. By reducing speed and weight differences, safety is greatly enhanced.

Unfortunately, in the USA, few cities have made a serious effort to make commuting by bicycle safe and attractive. Admittedly, dedicated bicycle lanes and secure parking are not cheap but the potential savings, in terms of reduced traffic congestion and pollution (including greenhouse gas emissions), seem to make this a worthwhile investment.

In addition to the public infrastructure investment, help will be needed from employers. Secure parking is a part of it but employees are simply not going to commute by bicycle if, having arrived hot and sweaty, they must spend the rest of the day in significant discomfort. Their colleagues may find the smell somewhat distressing too! Showers and locker rooms will have to be provided to compensate for the high heat and humidity of summers in most of the USA but the return on investment from a reduction in employer paid parking will offset much, if not all, of this cost.

Given the cost of gasoline, and the time wasted in rush hour traffic, a serious effort to encourage commuting by bicycle is a worthwhile component of a rational transportation plan that combines private vehicles with public transportation.

Read the full article here: http://tinyurl.com/5j2n67

Saturday, August 30, 2008

Senator McCain picks a running mate

Senator McCain has announced that Alaska Governor Sarah Palin is his choice to be the Republican Party's Vice Presidential nominee.

If his selection is designed to energize the so-called Christian Right and help him get elected, it may be good news for him. Unfortunately, it smells like very bad news for our country.

Here is the good news about Governor Palin. She is a Governor and former Mayor which means that she has executive experience. Criticizing her for limited time in office is hypocritical since, compared to the Democratic Party ticket, she is the expert.

More good news is that she has shown herself willing to challenge vested interests and entrenched bureaucracies. In general, she has succeeded. She has also been willing to stand up to major corporations.

In the neutral column is the fact that she is an Evangelical Christian with some fairly antediluvian positions on social issues. I consider myself to be a Goldwater Republican, which includes social tolerance - as well as a strong defense and fiscal conservatism, but I am willing to respect, and debate, other views.

Also in the neutral column is that Senator McCain's selection of a woman as his running mate could be described as 'too clever by half'. More so, when her experience does not compared to that of, say, Christine Todd Whitman who served two terms as Governor of New Jersey and, also, as Administrator of the Environmental Protection Agency. To be fair, however, the only executive position held by Margaret Thatcher prior to becoming Prime Minister was that of Secretary of Education.

There are, however, two negatives: one relatively minor and the other of major proportions. The minor problem involves some unproven allegations of corruptly attempting to influence the Alaskan State Police to fire her brother-in-law who is involved in an unpleasant custody dispute with Governor Palin's sister.

While relatively trivial, since no firing took place, the incident speaks poorly of the competence of those in Senator McCain's campaign who are responsible for vetting candidates for selection as running mate.

The major problem is that Governor Palin is a creationist and supports the teaching of creationism in public schools.

The first issue is that 'Creationism' is a religious doctrine. While some may consider the First Amendment to the Constitution to be irrelevant, obsolete and quaint when it comes to religious matters, it states: "...Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;". Given the clarity of those words, how can teaching 'Creationism' in public schools be anything other than unconstitutional.

Even more importantly, Governor Palin's believes in a concept that is supported by no evidence. It is impossible to claim, at least with a straight face, that "revealed truth", written in Hebrew by a great poet then translated into beautiful 17th century English poetry in the King James Bible, qualifies as evidence. Further, creationism is contradicted by a vast body of evidence, developed by geologists, astronomers, physicists, biologists and other scientists, so her position suggests that she is in the grip of an irrational delusion that, not so incidentally, is only supported by a minority of the Christian communion.

The Pope, a serious Christian scholar, accepts evolution even if most American Evangelicals do not.

The implication of creationism is that the loving God of the New Testament has deliberately perpetrated a grotesque hoax on everyone. One of Albert Einstein's observations is worth considering: "God is subtle but He is not malicious."

Since Creationists reject science - although perhaps not the technologies, such as electricity and the internal combustion engine, made possible by science - what then of the National Science Foundation and the U.S. Geological Survey as well as the sciences of cosmology, astronomy, evolutionary biology and ecology? Should we fear for the future of publicly funded scientific research - one of the foundations of our prosperity - if Senator McCain were to die or become disabled in office and she becomes President?

My support for Senator McCain has been greatly lessened by his selection of a religious extremist and his implicit endorsement of her beliefs. One small hope is that, if Senator McCain is elected, the office of the Vice President will - in the words of John Nance Garner (Vice President from 1933 - 1941) - once again become: "not worth a bucket of warm piss."

I wish Senator McCain long life and very good health!

Friday, August 29, 2008

Senator Obama's acceptance speech.

Referring to Senator McCain, the presumptive Republican Party nominee for President, Senator Obama, in his acceptance speech at the Democratic Party Convention last night, said:

"If you don't have a record to run on, then you paint your opponent as someone people should run from. You make big elections about small things."

What am I missing here? Senator McCain has a substantial legislative record and a proven ability to work with members of the other party. Sherlock Holmes - even with his highest powered magnifying glass - would be hard pressed to find much of a record in Senator Obama's political career.

Then, pandering shamelessly to the irresponsible:

"More of you have cars you can't afford to drive, credit-card bills you can't afford to pay and tuition that is beyond your reach."

Whose fault is that? For most - admittedly not all but certainly the great majority - the fault lies with those for whom spending is a priority rather than the old fashioned virtues of earning and saving.

Further compounding the hypocrisy, he went on to say:

"These challenges are not all of government's making, but the failure to respond is a direct result of a broken politics in Washington and the failed presidency of George W. Bush."

There is little doubt that George W. Bush has been one of the worst Presidents in the history of our country. The "broken politics of Washington", however, involves both ends of Pennsylvania Avenue - and, last time I looked, Senator Obama is a member of the Democratic Party which controls both the Senate and the House of Representatives.

Tuesday, August 26, 2008

On being disabled.

Although I am considered disabled (I am a double leg amputee) I have not yet written about disability issues. The reason is that this blog is about issues rather than about me.

I raise the subject, now, because the way that our society treats too many disabled people is just plain wrong. More importantly, there are many members of the military who are returning from Iraq, Afghanistan, and other hellholes, with wounds that will result in lifelong disabilities. The assumption that, because they are disabled, they can no longer contribute is grotesquely wrong.

The result of our ill treatment of disabled people, too often, is a monumental waste of talent and energy which, to quote Talleyrand, "... is worse than a crime, it is a mistake."

Meanwhile, my readers are entitled to know how I view myself as a person with disabilities.

Being disabled is:
  • always hard work,
  • usually time consuming,
  • often painful, and
  • frequently expensive.

The choices are 'get used to it' or 'give up and complain'. With a lot of help from friends - both able-bodied and disabled - I chose the former.

Enough said.

Monday, August 25, 2008

Obama and Biden. Warning - hypocrites at work!

After Senator Biden's remarks during his very brief Presidential campaign, Senator Obama's choice of him as Vice Presidential nominee must leave more than a few of us speechless.

The video should be required viewing:

http://www.youtube.com:80/watch?v=RDVUPqoowf8

As usual, in the long running contest between ambition and honesty, ambition wins again.

Sunday, August 24, 2008

Senator Obama wants the rich to pay their fair share of taxes!

Senator Obama wants the rich to pay their fair share of taxes and, if elected, intends to make sure that they do. Given the likelihood of increased Democratic majorities in both the House of Representatives and the Senate, we should expect some serious tax increases if he becomes President.

I, too, think that the rich (I am not one of them although I am "comfortable") should pay their fair share. By any standards, except the Orwellian beliefs of those who believe that citizens work for the government rather than the government deriving its [limited] powers from the consent of the people, that fair share is considerably less than they are paying now.

The first problem with Senator Obama's plan is his definition of rich. A couple making $250,000 per year (or a single person making $200,000) can be very comfortable in Arkansas or North Dakota, but may be quite stretched - particularly with kids of College age - in the New York, San Francisco, Los Angeles, or Washington DC metropolitan areas.

The second problem is the corruption of language: the term rich, at least to someone like myself who is of a certain age, refers to assets not income. A person or family with $10 million in assets could reasonably be considered "rich" but below that is somewhere between well off and poor.

These first two problems are, however, irrelevant except to point out the intellectual dishonesty of the argument being made by Senator Obama.

The real issue is the definition of fair share. Certainly it sounds reasonable, but we have a tax system that is manifestly unfair. To say "the more you make, the more you pay" is fair but "the more you make, the higher the percentage of your income that you pay" doesn't seem to meet any reasonable test of fairness.

Then, to further consider "fair share", we must look at income distribution and the payment of income taxes.

According to a study by the Cato Institute http://www.cato.org the top 1% received 16% of all income in 2004. They paid, however, nearly 40% of all income taxes -- the highest level in 40 years. The top 10% of income earners pay 71 % of the taxes. Somewhere there is a gross inequity that will only be exacerbated by Senator Obama's plans. That 90% of the population only pays 29% of all income taxes can not be equitable either.

It is also worth noting that the total tax burden imposed by the Federal Government comes to a little under 18% of the National Income but the top rate of income tax is 35%. Those numbers clearly indicate that someone is paying far more than his fair share!

Senator OBama believes that the top rate of income tax should be raised to 39.6% as it was during the Clinton Administration. His attitude reminds me of a very ugly remark by Denis Healy (British Chancellor of the Exchequer in the Labor Government) in 1978: "It will squeeze the rich until the pips squeak".

Is it what he thinks he can get away with cramming down our throats? Is it the politics of jealousy which used to be so rare in America? Senator Obama, with his message of hope, should do much better.

If we are to have a true democracy, the burden of paying for our government must be fairly - that means much more evenly - spread. A single rate of income tax is fair ("the more you make the more you pay") with no deductions for favored groups. The only acceptable exception to a true flat tax might be an exemption equal to the poverty line income.

Admittedly the Charitable and Mortgage Interest deductions can not be abolished overnight: they will have to be phased out to avoid major economic disruptions but, with some political courage, that can be achieved. It is likely, however, that it will be necessary to create the political will through swift kicks, administered by the people, to the rear ends of recalcitrant politicians.

Ayn Rand - a ferociously right wing and Libertarian author - writing in her most famous novel Atlas Shrugged, described what happened when the leaders of industry effectively went on strike. The consequences were an economic meltdown - and it could happen in real life. It certainly did in England - an economic basket case in the 1960s and 1970s where no senior managers bothered to work hard and few entrepreneurs existed - because the top tax rate, on even the not very highly paid, was 83% on earned income with an additional 15% surcharge on investment income.

The difference between those rates and confiscation is hard to distinguish. George Harrison of The Beatles put it well in the song Taxman:

Let me tell you how it will be;
There's one for you, nineteen for me.
'Cause I’m the taxman,
Yeah, I’m the taxman.

Should five per cent appear too small,
Be thankful I don't take it all.
'Cause I’m the taxman,
Yeah, I’m the taxman.

We haven't got there yet but we could: the famous Kennedy tax cut reduced the top marginal rate of income tax to only (only?) 70%!

One of the major causes of the American Revolution was the perceived unfairness of taxes levied on the 13 colonies - and their citizens - by an autocratic and uncontrollable government, located 3,000 miles away and not in the slightest answerable to the people. Our government, in Washington DC, is equally isolated from the real world for much of the year, and certainly appears uncontrollable and verging on autocratic.

We don't have to start a new American Revolution, but we should reject all politicians who believe that success - even the modest success of Senator Obama's so-called rich - should be punished.

Saturday, August 23, 2008

Obama and Biden

A successful President is one who is able to assemble, lead, and inspire a team that can achieve his vision. Leadership and inspiration, while necessary, are not sufficient; experience in the management of a large and slow moving enterprise is also critical.

Of course, it is useful to have a vision - and the last President of the United States to have one was Ronald Reagan. His vision included winning the Cold War and reducing tax rates from the confiscatory levels - only modestly reduced by the 1964 Kennedy Tax Cut which took effect after his 1963 death - that had been introduced during World War II.

President Reagan achieved both of these objectives - not least because he had all the necessary personal talents.

I don't see that sort of ability in Senator Obama. He has never held a job where he had to run anything. Nor does he have any significant foreign policy expertise. Given that we live in a world which is as unsettled (and as dangerous) as at any time in the past twenty five years, such experience is essential. He has moved to shore up his foreign policy failings by announcing that he has selected Senator Joe Biden as his choice to be the democratic Party's Vice Presidential nominee. Given the changes in the real - as opposed to Constitutional - powers of the Vice President over the past 16 years, the choice of a running mate should matter greatly to all American citizens.

Senator Biden was elected to the Senate in 1972 at the age of 29. He reached the Constitutionally required minimum age of 30 before he took office in January 1973. His time in the Senate has been marked by competent, albeit not particularly distinguished, service as Chairman of the Senate Judiciary Committee and, also, of the Senate Committee on Foreign Relations. Neither of these posts has required the ability to run a large enterprise - nor have they equipped him with the tools to understand and help the President develop and implement domestic and economic policy.

Foreign policy expertise is readily available for hire. Former Secretaries of State are a dime a dozen, as are Ambassadors to the UN - some of whom are actually knowledgeable and competent, while there are many National Security Advisors and their Deputies who would be happy to return to government. In addition, since the Congress generally leaves foreign policy to the Executive Branch, a former Senator turned Vice President - no matter how distinguished - is of only marginal use in this area.

Notwithstanding the availability of foreign policy talent, the boss still needs the ability and knowledge to set the direction. Senator Obama is not that person.

In addition, many of Senator Obama's problems will be in the areas of domestic (social) and economic policy. The economy is going through a difficult period at the moment and public opinion is whining (former Senator Phil Gramm made a valid point) that a recession - sorely needed to wring out the economic imbalances caused by too many years of Federal Reserve Chairman Alan Bubblespan's cheap money policies - should not be allowed to occur. We should well remember that, without the recession of 1981 - 1982, an 18 year period of growth with low inflation, and only one short recession, would likely not have occurred.

If, as predicted, we see an overwhelming Democratic majority in the House, and a near filibuster-proof majority in the Senate, we can expect some highly populist - and idiotic - legislation that will involve handing out money, that the government does not have or will have to raise in new taxes, to all sorts of noisy but undeserving characters. Expect, too, unfunded mandates to be imposed on States and Municipalities as well as employers. If so, then those of us who have lived within our means will be the ones to suffer.

We can also expect some class warfare style tax increases, on the grounds that the rich should 'pay their fair share'. Such tax increases are unlikely to improve the state of the economy but more on that another day.

Neither Senator Obama nor Senator Biden has any great knowledge of domestic and economic policy. Even highly competent hired hands, whether Treasury Secretaries or Domestic Policy Advisors, rarely have an office in the West Wing and the ability to drop in on the President to give their advice and opinions when it really matters. Expect a White House whose ignorance of economic policy is dangerous to our well being.

President Obama has made his choice. Unfortunately, while it may be the right choice to get him elected, he could have made few worse choices when it comes to governing our great nation.

Thursday, August 21, 2008

Obama's Dilemma

The problem with being elected President of the Untied States is that you then have to do the job. For that, experience helps - a lot.

During the past twelve years, two Vice Presidents (Gore and Cheney) have become extremely powerful figures because they were able to fill significant gaps in their Presidents' experience.

Senator Obama's experience is vanishingly close to zero in two critical areas.

First, he has never had a job where he had to run anything. The jobs of Community Organizer, Senior Lecturer at the University of Chicago Law School, State Legislator and United States Senator are hardly positions requiring management skills and talent. Second, his foreign policy knowledge is lacking. Although he has been the Chair of the European Sub-Committee of the Senate Committee on Foreign Relations, he is not known for any major legislative or oversight achievements.

The gaps in his resume, then, lead to speculation in the press about possible running mates. Senator Joe Biden and former Senator Sam Nunn are the most frequently mentioned Vice Presidential candidates who can shore up his foreign policy weaknesses. Several State Governors have been mentioned to help him supplement his lack of executive experience.

The problem is that neither Senator Nunn nor Senator Biden have ever run anything. Nor do any of the much touted Governors have any significant foreign policy experience.

The missing player - rarely mentioned as a possible Vice President but eminently qualified - is Governor Bill Richardson of New Mexico. His executive experience also includes service as Secretary of Energy in the Clinton administration and he has foreign policy credentials as Ambassador to the United Nations as well as legislative experience as a Congressman. Then, given that he is of Hispanic descent (through his mother), his selection would seem to be not only obvious but might well attract some non-traditional voters to Obama's cause.

We shall see next week at the Democratic Party Convention beginning on Sunday August 24.

Wednesday, August 20, 2008

Bicycles as transport rather than as toys.

From the age of eight until the age of nineteen, a bicycle was my primary means of transport. As a result of that experience, I am quite willing to "share the road". I spent those years in England where, at quitting time, it was not unusual for the factory gates to open and allow two thousand workers on bicycles to depart.

Learning to drive in England (early 1960s) involved looking out for bicycles - there were a lot of them - as an automatic part of the process. Riding a bicycle then, also involved strict obedience to traffic laws: lack of such obedience involved swift punishment, usually by parents (it's amazing how they found out so quickly but that was village life) and occasionally by police.

As an aside, my last encounter with the constabulary involved being dragged off to court and convicted of: riding a bicycle with no lights (it was 11 p.m.), riding a bicycle with no brakes, drunk in charge of a bicycle, and conduct liable to be hazardous to other road users (riding drunkenly with my hands in my pockets - but it was a cold night).

In the USA, the situation is really ugly. As a result of high (at least by our standards) fuel prices, there are now more bicycles on the road - or the same number of bicycles making more trips - and the danger increases by the day.

Too many automobile drivers entirely lack situational awareness when it comes to bicycles. Worse, many seem think that it is their right and duty to scare the living daylights out of any bicyclist who is unwise enough to ride at, according to the driver, a ridiculously slow speed.

On the other side of the argument, too many bicyclists seem to believe that traffic laws do not apply to them. They run red lights and stop signs while weaving through traffic without the least consideration of the only law that really matters which is the Gross Tonnage Rule. That you actually have right of way is little consolation when you are on the wrong end of a collision between 5,000 lbs of pickup truck travelling at 45 mph (in a 35 mph zone) and 200 lbs of bicycle and rider travelling at 12 mph.

While bicyclists are entitled to their share of the road, they should remember that the despised drivers of automobiles are the ones who, through registration fees, fuel taxes, and other levies, actually pay for the construction and upkeep of the roads. They should also remember that speed differentials are intrinsically dangerous and that riding at 15 mph on a road posted for 35 mph is a risky activity. Unfortunately, there seems to be a culture among bicyclists that riding on a bike path is a low status activity although, curiously, riding on the sidewalk and scaring the living daylights out of pedestrians is OK.

Aggressive driving is a general problem not just limited to virtual assaults on bicyclists. Bicyclists, however, could seize some of the moral high ground if they were more willing to obey the law and, when possible, take the bike path rather than insisting on their rights to the road.

Perhaps I am old fashioned in hoping for a return of good manners and consideration but it would be nice if both sides of the argument would contribute. Instead we must suffer aggressive drivers and suicidal bicyclists - all of whom consider a middle finger salute to be a normal form of greeting when they meet.

Sunday, August 17, 2008

Empires - and their collapse

It is my contention that it takes between 100 and 150 years for the political fallout to settle after the collapse of an Empire. If I am right, that would explain many things about the disorder in the World

We are not yet 100 years from the collapse of the Ottoman and Austro-Hungarian Empires following the Great War. The turmoil in the Middle East and the Balkans strongly suggests that the aftereffects still linger.

Next to collapse was the British Empire - beginning with the partition of India in 1948. The death of the British Empire took place in relatively slow motion, unlike the sudden demise of previous Empires, but the consequences are still being felt in many African countries (Zimbabwe, Kenya, Uganda, Nigeria and others), Myanmar (Burma for the traditionalists), India, Pakistan, and several Pacific island nations.

The situation in the Middle East is further exacerbated by the collapse of the [minor] French Lebanon and Syria) and British (Egypt, Palestine, Iraq) Empires which attempted to fill the vacuum during the period between the two World Wars.

Now we have the collapse of the Russian Empire which, as seen in Georgia, will cause ructions throughout the Caucasus and is likely to cause problems in other countries that are former members of the Soviet Union. Since almost all of the countries that are attempting to assert their independence from Russia are significant oil and gas producers, countries through which critical oil and gas pipelines pass, or members of NATO, we must expect that there will be interesting events in the near future and for years to come.

Unfortunately, we have little military ability to influence the outcome and a great need for Russia's assistance in dealing with Iran and North Korea. Instead of bellicose and grandiose posturing, the Bush administration should heed Theodore Roosevelt's adage: "Speak softly and carry a big stick."

Our stick urgently needs to be strengthened and enlarged; speaking softly can be done immediately.

Friday, August 15, 2008

Zero Tolerance

One of the worst ideas in recent history is the concept of zero tolerance.

Zero tolerance, when applied to minor crimes and vandalism, has some merit although tagging a rowdy kid with a criminal record may well wreck his future entirely.

In a zero tolerance world, I am not sure that I would have graduated from High School but, if I did, my teenage years would have included a lengthy detour through the criminal justice system.

A belt, applied to a naked rear end by a father, is now considered to be child abuse but has saved quite a few unruly kids from contact with the courts. The bruises on my rear end (Malacca canes and sneakers) have long ago faded but I still remember the lessons taught by them. I didn't like it at the time but now recognize the value.

In the military, the zero tolerance culture results in really poor promotion prospects for those found responsible for mistakes and errors - even by subordinates. That results in Majors doing Captain's jobs and Captains doing Lieutenant's jobs, and so on down the chain of command, lest a subordinate's mistake penalize the supervisor. The same problem exists in many businesses.

The big problem is that most people learn best from their mistakes. Without mistakes, there is little personal growth and minimal innovation.

The zero tolerance culture needs to be opposed and there are two really powerful statements that, if said sincerely and accepted by the boss, will contribute mightily to the greater good. They are:

“I don’t know but I will find out” and “I’m sorry. I was wrong; it won't happen again"

Both of these statements are a sign of strength - not weakness - and they need to be said and accepted more often.

Thursday, August 14, 2008

Are we alone in the Universe?

Science fiction writer Arthur C. Clarke - the man who, in 1948, first conceived of the communications satellite - addressed the question of whether we are alone in the Universe. In the book Visions : How Science Will Revolutionize the Twenty-First Century (1999) by Michio Kaku, he is quoted as saying:

Two possibilities exist: either we are alone in the Universe or we are not. Both are equally terrifying.

I agree.

Wednesday, August 13, 2008

Russian foreign policy and the invasion of Georgia

Russian Foreign Policy has not changed for five hundred years. Its three critical issues are year round warm water ports, control of the "near abroad", and preventing any single power from dominating Europe.

With respect to the near abroad, Russian objectives include the need for a buffer that, at worst, is friendly and, at best, is totally controlled. In the Soviet era, the expansion of the almost totally controlled "near abroad" provided one of the most substantial buffers ever experienced by Russia.

NATO's purpose, according to Churchill's military adviser Lord Ismay, was to keep the Americans in, the Russians out, and the Germans down.

During the Cold War, Russia's "near abroad" provided reasonably adequate defense from any ground based threat that NATO might pose. Since the fall of the Soviet Union, the liberation of almost all of the countries that comprise the "near abroad", Russia believes that its security is threatened by the fact that a substantial portion of the "near abroad" includes countries that are now NATO members or, like Ukraine and Georgia, are potential candidates for NATO membership.

The current purpose of NATO is unclear and it is not easy for the Russians to regard it as anything other than a threat. It looks suspiciously like the dominant power controlling Europe that Russia wants to avoid at all costs.

Russia is not being entirely irrational here. During the Soviet era, St. Petersburg was 1,200 miles from the nearest NATO territory: now it is only 60 miles.

That brings us to Georgia - a NATO wannabe - which, last week, indulged in an ill-judged and provocative invasion of a breakaway province that is under Russian protection. With America overstretched in Iraq and Afghanistan, NATO is in no position to do anything serious. No one, then, should be surprised that Russia has slapped down a tiresome and uncooperative member of the "near abroad".

The Russian message is clear - and aimed at other members of the near abroad: understand that any commitments on the part of America and NATO are largely worthless. We (Russia) are the regional power; your recognition of of our power and your prompt acquiescence to our desires, as well as compliance with our instructions, is expected.

Tuesday, August 12, 2008

Oil Prices and Speculators

The mainly Liberal Democrats who are excoriating speculators for the high price of oil are notorious for their diligence in the search for scapegoats rather than solutions.

While it is possible to explain the movement in oil prices, from under $70 per barrel at the end of September 2007 to over $113 today, as the market's belated reaction to the reality of supply and demand, it is hard to see the recent price spike - from $110 in early May to $146 in July and, within a month, back to $113 - as anything other than speculative froth. Supply and demand simply do not change that rapidly in the real world - absent an earth shaking event such as a [new and major] war or natural disaster.

Speculators generally perform a useful function. They provide liquidity to markets - allowing both producers and buyers to take out insurance on prices. That service, however, comes at the cost of speculative excess. The result is that prices consistently overshoot - on both the high and low sides - before settling down to the level dictated by supply and demand.

Although the cost of speculative excess is particularly noticeable, the services provided by speculators are valuable enough that we should be cautious in our attempts to regulate them. Chastising them is certainly useful - thank you Liberal Democrats.

Ill considered - even well considered - regulation, however, is likely to run up against one of the guiding principles of the Universe: The Law of Unintended Consequences.

Caution should be our watchword but the almost irresistible need for politicians to be seen to be doing something is a danger. If we are lucky, the election year urge to leave Washington in order to ensure re-election will keep then from hasty action. If we are not lucky, that same imperative will result in poorly crafted legislation which will only result in further economic dysfunction.

Sunday, August 3, 2008

Immigration - Legal and Illegal

The situation with respect to immigration - both legal and illegal - across the USA-Mexican border could, perhaps be described in these terms:

"A slow motion, generally non-violent, re-run of the war of 1846 - 1848. This time, however, Mexico is winning."

While the nativists are appalled, we may well not lose. In the late 19th and early 20th centuries, the flood of poor and uneducated immigrants - few of whom spoke English - generated many of the same sentiments and prejudices. Our country benefited greatly then from this influx and, even though politically incorrect multi-culturism will slow down the process, I believe that this new group of immigrants will become the great Americans of tomorrow.

For those with doubts, please re-read these words, written by Emma Lazarus and engraved on the Statue of Liberty:

"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"