| 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.
=====================
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.
==================
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.
=====================
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.
See
mail for today
=======================
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?
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