View 606 January 18 - 24, 2010 (original) (raw)
Tuesday, January 19, 2010
The Massachusetts election will be crucial. It will be interesting to see what happens -- and if it is at all close, where the extra boxes of undiscovered ballots will come from this time as we have recount after recount until Coakley wins. If that seems unduly cynical, I apologize, and I sure hope I am wrong.
I have a lot of notes for today.
Begin with the long term prospects for Haiti. Today's Wall Street Journal has an important article by Bret Stephens: "To Help Haiti, End Foreign Aid." This proposal is in stark contrast to a number of my technocratic friends including fellow science fiction writers who see the Haiti disaster as a splendid opportunity for the US to "do things right" and rebuild Haiti along sound scientific and engineering principles.
Of course the "do it right with sound principles" plan has another name: Colonialism. Not the older kind of Colonialism in which Europeans settled in foreign lands as a governing aristocracy as they did in Rhodesia and other African areas (I deliberately do not say "nations"), but more like Singapore or Hong Kong which were Crown Colonies but were never intended to be places of residence for European families. The historical records for former colonies are mixed. Singapore and Hong Kong are doing very well, although the future of Hong Kong is murky and absolutely dependent on events on the Chinese mainland. China remains an Empire although there is no emperor; think of it as "The Lords Commissioners for Executing the Office of Emperor" and you'll be close enough, and the decisions of that committee are more important to Hong Kong's future than any majority of the people of Hong Kong.
Other former colonies are doing horribly, and it is fairly easy to argue that many of the former colonies -- including some that were unabashedly colonial with permanent settlers taking over much of the best land -- were better off under the colonial government than they are now, and far better off than they are likely to be in future. The prospects for Rhodesia's return to being the breadbasket of Africa are very low; the probability that it will go from today's food-importing impoverished thugocracy into something worse is much higher. I could cite other examples, but surely the point it clear. Perhaps the former colonial governments didn't "do it right" and apply the proper engineering and scientific principles, but they did give pretty good government.
That didn't matter. When I was in college my political views were somewhat different from those I now hold. I was far more certain in those times that government was a science, and economics was a science, and central planning was the proper remedy for the waste of capitalism and its "creative destruction". Even so, I was as enthusiastic as my colleagues in unrelenting opposition to colonialism, and in shouting slogans like "Good Government is no substitute for Self Government!"
I make no doubt that if the US attempts to "do it right" in Haiti, there will be many Americans to take up that cry again. Good government is no substitute for self-government. The question is whether that's true. Rhodesia, for a time after the end of white supremacy, continued to have something like good government. When Niven and I finished Oath of Fealty I still had hopes that Zimbabwe would come through its birth pains and mature into a genuine multi-racial society, and that's reflected in the end of the novel. Were we writing it now, I would have to change the ending. I am not sure what I'd substitute.
In any event, if the US military is told to impose rule on Haiti so that American social engineers can "do it right" and rebuild the nation "properly", I make no doubt that the Legions will try. Semper Fi! How well they will succeed is another story. Fortunately, it is unlikely that they will be given this Sisyphean task; if we are to try to "do it right" in Haiti, we are more likely to turn to the UN, which will guarantee failure as the Iron Law takes hold.
We will, however, very likely succumb to the temptation to send whatever becomes the "government" in Haiti some very generous amounts of Foreign Aid extracted at the point of a gun from US taxpayers. The result will be as usual: the foreign aid funds will go to various US contractors selected by the earmark process; to the extent that money will be given to the Haitian "government" it will add to the capital assets deposited in Swiss and Cayman Islands banks; and there will, as there were many year ago, many projects, almost all built by US corporations with effective lobbyists (Brown and Root in the Johnson-Nixon-Carter days), and generally chosen by the corporations that will build them.
Stephens' point is that Foreign Aid seldom accomplishes what it sets out to accomplish, and often comes in with regulations that seem like a great idea in Turtle Bay; and it often ends up ruining domestic industries. If the UN is giving away free bags of wheat, farmers pretty well have to plant something else -- or stop farming altogether. And so it goes.
I am very glad that I have not been appointed Czar of Haiti. I suspect that someone, whether from Washington or Brussels or out of Turtle Bay will be. God help that person.
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The Boston Globe has called the election for Coakley, 50 to 49. If it's that close then it almost certainly will be to Coakley, on one or another recount. It may take until next Flag Day, of course.
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Cruise ships continue to stop in Northern Haiti (60 miles from the earthquake damage zone), and passengers drink rum and enjoy the beaches and luxury suites while bodies are stacked in Port a Prince, where people are starving.
http://www.google.com/
hostednews/afp/article/ALeqM
5iupbKzPSrqBsB-gEKnD8Nh3FoQ8Q
http://www.guardian.co.uk/
world/2010/jan/17/
cruise-ships-haiti-earthquake
http://www.huffingtonpost.com/
2010/01/18/luxury-cruise-ship-docks
_n_427247.html
Clearly the best thing to do for Haiti is to shut down the only part of the economy that still works. Boycott Haiti. (Oh, but continue to send money.)
When I took ecology at the University of Iowa from Rufus King, in his first lecture he said "You cannot solve famines by feeding people." The rest of the lecture and some of the course was devoted to showing why this is true. You need systematic solutions to systemic problems. Many of them are not obvious. One thing is obvious: you need a source of income. Haiti has tourist resources. Cruise ships bring in tourists who spend money. Making people feel guilty is probably not the best way to induce them to go spend money in Haiti.
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John Bogle "Restoring Faith in Financial Markets" is ironically in the same issue of the Wall Street Journal as an op ed by Deven Sharma, CEO of Standard and Poor, on "Why Rating Requirements Don't Make Sense. http://online.wsj.com/article/
SB10001424052748703959
804575006694196038802.html
Of course the ratings agencies, which gave the Credit Default Swap financial "products" AAA ratings, right up there with Treasury Bonds, were instrumental in creating the mess we are in, and pretty well responsible for the understandable loss of faith in financial markets.
Bogle speaks of innovation in financial "products" like Credit Default Swaps, and collateralized debt obligations. Calling those innovative schemes "products" makes it sound as if they are useful, like toasters or cars or cell phones, but in fact they are schemes, not products. They allowed the injection of a great deal of money into the real estate market. Whenever more money chases the same goods, the prices rise. When that happens rapidly it is called a bubble, and when bubbles collapse, economies often follow. These innovative financial products pretty well guaranteed that a Black Swan would appear. Of course I told you about that long ago (See Chaos Manor Reviews http://www.chaosmanorreviews.com/
open_archives/jep_column-323-c.php (2007) and again in 2008 http://www.chaosmanorreviews.com/
oa/2008/20080923_col.php ) and if you're not familiar with Black Swans go learn about them. We are not through with Black Swans here or elsewhere. Our financial system was built on the premise that there would never be a black swan, and the Democrats are rebuilding it under the same assumptions.
Bogle writes about financial engineering and financial products. Some of those are "products" in the same way that kiting checks was an innovative financial product. The current "remedy" for all this is regulation. Think what good regulation did. As for example, the regulators went after Bill Gates, who had until then ignored Washington and politics. He learned that just because you don't take an interest in politics but instead concentrate on actual products that are actually sold and exported, it doesn't mean that politics doesn't take an interest in you. The upshot of all that was that Microsoft, which had no presence in Washington other than a sales office, now has one of the largest lobbyist efforts in DC. Clearly the plan worked: the regulators get the benefit as do the Congressional staffs who enjoy the informational event (sometimes indistinguishable from Washington parties with free food and drink) and other lobby events. Microsoft then adds these costs to overhead when it contemplates prices for its actual products.
Lobbyist activities are now part of financial engineering.
Be of great cheer. Regulators will take care of you. Of course they were supposed to regulate Fannie Mae and Freddie Mac, but Barney Frank and Chris Dodd sort of exempted them from commonsense regulation, and indeed mandated that they collateralize debt into capital assets, and make loans to marginal applicants in order to increase home ownership. Alas, the collapse of the bubble seems to be diminishing the numbers of home owners, but their hearts were in the right place. What counts is good intentions, not results. When I was a lad, prudence was considered a primary virtue, but now I find more and more people are unaware of what prudence is. Alas.
I suspect I have done more than enough to cheer you up.
With luck we will have good news from Massachusetts tonight. Indeed. we already have good news in that there's even a question about who will win Ted Kennedy's old seat. Perhaps, perhaps, it's not the Kennedy seat at all. Perhaps it actually belongs to the voters.
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Hurrah.
The Republicans did not deserve to be elected, so the people threw the rascals out. In came the Democrats -- and their leadership. Obama, Pelosi, and Reid interpreted the 2008 election as a Democratic win. It wasn't. It was a Republican loss.
The Democrats decided they had a mandate to ram through their Socialist program. "Guess what, we won." No, Mr. Obama, you didn't win. The Republicans deserved to lose and they did. You were the beneficiary of that. The voters turned the rascals out and you were in line to come in. But in interpreting that as a Socialist mandate you rammed through a program that the American people didn't and don't want.
And, I make no doubt, you are not likely to have learned much from the loss of the Ted Kennedy seat. Now, I gather, you're going to continue with your program.
The next few months will be interesting. Clearly the Democrats learned nothing; the question is, did the Republicans learn anything?
