Rebane's Ruminations

Obama’s Nobel (updated 10oct2009)

George Rebane

A “surprised and deeply humbled” President Obama was awarded the Nobel Peace Prize for 2009.  In his response he stated that he does not "view it as a recognition of my own accomplishments," going on to say, "I do not feel that I deserve to be in the company of so many transformative figures that have been honored by this prize,"  We can do naught but share his feelings, and join in his clear and accurate assessment of the award.  From his mouth to God’s ear.

[10oct09 update] I was awakened this morning by an NPR piece on Obama's award that reviewed the many other accomplished winners of this prize.  It ended with Obama intoning the above quote, and then concluded with words almost identical to mine.  There is a lot of controversy over this prize - but from NPR, whoda thought? 

Obama, Iran, and Game Theory

George Rebane

Our President’s series of foreign policy embarrassments have now come to a critical stand-off with Iran.  How Obama responds to Iran’s next betrayal of trust will determine to a great extent the future of the Middle East and the Levant (Near East).  Pajamas TV has a very interesting, accessible, and short presentation (here) of the problem facing the US that applies to and informs all international relations. 

Nations ultimately act in their self-interest.  Those actions are explained clearly through the application of one of the systems sciences called game theory.  The video dishes out just enough of the science so that an educated viewer will begin to see why always acting altruistically does not provide the best international and/or social orders.  In fact, such behavior is absent in nature.  For a more revealing and stimulating account of the whole affair of conducting relationships, read Robert Axelrod’s classic The Evolution of Cooperation (also referenced in the video). 

(For the careful reader.  In the video the described tactic ‘Tit for Tat’ is incomplete as introduced, and is implicitly corrected later.  TfT is the hands down winning tactic in the co-operation game known as the Iterated Prisoner’s Dilemma.  The complete rule set for TfT is –

1. Never defect first;
2. When opponent defects, retaliate immediately;
3. In next round if opponent co-operates, forgive and co-operate.

Omitting immediate retaliation puts one into the ‘food chain’ of the defector, reinforcing future/continued defections in it and others who observe the exchange.)

Dollar Destruction Derby

George Rebane

Obama can’t be blamed for starting the destruction of the dollar, but he will get a lot of credit for hastening its downfall.  Major world powers have recently begun secret meetings to move oil (and other energy commodities) off the dollar bandwagon.  Why?  Because, as RR readers have been aware for some time, the US government has no choice but to inflate our fiat money out of existence.  We are broke and owe our creditors debts and our citizens huge entitlements denominated in dollars.  There is simply no other way to pay off the putative amounts - more than $120 trillion and counting - than to print or 'monetarily ease' the dollar into oblivion.

The Independent of Great Britain reports -

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
 
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The target date for the transition is reported to be 2018.  Stand by for the vehement denials that will confirm the report.

A Week on Obama’s Watch

George Rebane

The past week is now folded into the pages of history.  Iran pre-empted Obama’s revelation that it had another major facility for producing nuclear materials for “peaceful uses”.  In response, our National Naif assembled his counterparts from Britain and France to dutifully scribble yet one more line in the sand, while the imams in Teheran worry about getting double hernias from laughing their butts off.

Our progressives applauded this stroke of brilliant coalition building against Iran - an ability, they claim, evaded Bush2.  At the same time Israel is putting finishing touches on its plan take out as much of Iran’s WMD capability as it can with its F-15s and F-16s, while working feverishly to complete its Jericho3 long range missile that can reach all parts of Iran.  Meanwhile, the price of oil and gold yawned.  I feel safer already.

Workers and Work - The Coming Crisis (updated)

[This is the full length piece the first part of which was published today in the 12sep09 Union print edition. The full length version also appears in the newspaper’s online edition.  gjr]

George Rebane

In this recession over six million jobs have disappeared so far in the last year or so.  Out of approximately 150 million American jobs that were available in early 2008, that represents about a 4% annual loss.  Because of globalization and accelerating technology, not all of these jobs are coming back when the economy recovers.  Some will go overseas, and some will disappear because smarter and more capable machines will be doing them cheaper.  At the same time a smaller number of new and different jobs will appear.  This is present day reality.

The bottom line is that fewer jobs will return, and on balance, these jobs will require smarter workers trained in new skills.  This “creative destruction” of jobs will continue into the indefinite future.  So what happens to the workers in developed countries, specifically in America?  To attempt an answer, we have to review some Econ 101 stuff.

People work to garner wealth, which is something that they conserve and also trade for things they want/need to support a given quality of life (QoL).  How is such wealth created?  In any economy (or system) like a community, country, or even Earth itself, creating wealth requires some input from outside the system.  A little bit of thought will quickly convince you that this input for all of Earth’s economies comes originally from our Sun, either in real time or delayed over variable time intervals.  Think of photovoltaic energy that arrives about eight minutes late, to wind that takes a little longer, to planted crops, to forests, to minerals and fossil fuels, to geo-thermal.  Each of these started with the original fusion burn that resulted in the sun and our solar system, and took longer intervals to become available to us.

Throughout history to the present day, wealth creation always began with tapping into such solar energy conduits and storage processes.  Somewhere along the line, those who knew how to do it and do things with it got the early and big bundles of wealth.  Those who didn’t tried then to get it by force, or worked in the lower parts of this energy chain as wealth ‘trickled’ down.  Yes, trickle down works - always has, always will.

If this concept is hard to swallow, just try to imagine a closed community that attempts to satisfy its needs by imposing “buy local”.  There’s only so far you can go with serving each other food, fixing the other guy’s plumbing, and changing the old folks’ diapers.  With nothing coming in from the outside, precious little of this work will be done.  And then what?

Over the centuries human progress has been measured by how readily (read cheaply) we could tap into this river of energy.  Hello innovation and taking risk!  The smarter among us figured out better ways to tap, and then bet their or someone else’s farm on doing it for fun and profit.  The fun part was optional, the profit part was not.

At every such juncture, more wealth poured into the economies, trickled down, and life got better for all.  Even the un- or mis-educated benefited from this, and began to live lives that a few generations before were only enjoyed by the very wealthy.  But in the process jobs were constantly eliminated and new ones created.  And at the same time a lot of the wealth began to accumulate with the smart risk takers, and also clever thieves who skimmed, as the wealth trickled through the economy.  Result, the more successful innovation occurred, the more we saw wealth/income disparity.  But remember, all during this time the pie was not fixed and kept growing.

Now enter the smart machines.  During the last couple of generations machines have started displacing humans as well as working with them in new ways.  And these machines have been crucial to tapping into the river of wealth from the Sun.  Those who could build, operate, and manage these man/machine partnerships kept cutting costs to society and getting richer in the (natural) process.

At this point humans started being squeezed into a tighter corner of well paying jobs, and then along came what is known as the Great Doubling.  You see, some years back, the people who didn’t believe in all this innovation and inequality decided to go in another direction that they claimed would create workers’ paradises with none of this risk and trickle down.  And when they thought they had things just about right, the whole damn thing collapsed on them.  The result was that in the early 1990s the 1.5 billion workers in the ‘free world’ were suddenly joined by another 1.5 billion workers who were ready to leave paradise and sell their labor in the markets opening up around the world – the Great Doubling.

The Great American Labor Squeeze (updated)

George Rebane

[This piece is a continuation of a series that explores the large currents shaking our country and the world.  Here we look at the labor shock from which America today has no plan to recover.  No one wants to talk about it.]

 

Let’s start by recalling the fate of John Henry, America’s legendary ‘steel drivin’ man’ when he attempted to save his job by competing with the new steam-driven steel driver.

Before the Berlin Wall came down in 1989, the American worker was competing against about 1,500,000,000 workers in the world economy.  The other 1,500,000,000 workers of the world were locked behind heavy gates in the socialist/communist workers’ paradises.  Their efforts and output didn’t compete with the workers of America and the free world.  Then the wall came down, and over the next three to five years there were ‘suddenly’ three billion workers across the world, all making things and providing services that could be sold across national boundaries.

The economists and sociologists called this The Great Doubling (and here), and it has poured into labor markets hundreds of millions of workers who discovered that they too can find their place in the sun along with the rest of us in the west.  Foreign governments immediately saw how they could compete.  Just start making things that the comfortable, under-educated, and highly paid western workers made, but make them cheaper and with higher quality.  They all learned to skip the learning curve of the post-war Japanese.  Every worker in the third world who went from field to factory was a hero to their own family and village.  And these eager people went through cutthroat competition to get and keep those jobs while our workers were grousing about not enough benefits and pay for the same output.

We’ve all heard this story, but perhaps, keeping the Great Doubling in mind will give us someplace to hang our hat and reflect as we send our kids off to school to learn skills that are valued primarily in the public sector.  Millions from the other billion and a half are spending more time studying math or science books, and then working their tails off to get into the local technical college.  In those far off lands all it takes is brains, and a clear recollection that you’ll spend your life staring at the ass-end of a water buffalo in a rice paddy if you ever decide that you ‘don’t do numbers’.  All the while the American youngster was taught that s/he had rights – the first of which was to cultivate a totally worthless sense of self-esteem (see update below) – and that the gummint would always come to the rescue.

But the Great Doubling is just one jaw of the pincer that’s putting the squeeze on the 140 million American workers.  The other side is made up of accelerating technology in its myriad of forms.  Smarter and smarter computers are teeming with nano-technology and genomics to continually stretch the income inequality gap between those who can and will, and those who can’t or won’t.  The latter quickly see that their future lies in backing governments that will use the force of arms to provide them with what is not theirs.

The Muslim Street Revealed (Again)

George Rebane

The Libyan welcome of the Lockerbie mass murderer released on “humanitarian grounds” should again educate the soft-headed among us who believe that Islamo-fascists are a small minority of the overseas Arab Muslim populations.  That they hate the west and dream of the global caliphate should not surprise any student of history and current events.  However, what we in America should note is the silence of the Islamic communities already ensconced on our shores.   As Americans, where is their outrage?  These are the ONLY occasions during which they can reliably demonstrate where their heads and hearts are sheltered.  With their silence they have again made it clear that, as in Europe so also in our land, they are here as settlers.

Let’s Not Forget Global Warming

George Rebane

Obamacare is on everyone’s mind these days.  Having more time to look at the five (yes, five) separate bills going through congressional committees makes most people now start holding their noses – the longer we look at it, the more it smells.  But we can’t overlook the other source of perhaps an even bigger disaster – Cap and Tax – the special interest designed energy bill that is supposed to combat anthropogenic global warming (AGW).

Both Obamacare and Cap and Tax are two sides of an economic holocaust that add to the ongoing growth of socialism in the country where government meddling in the private sector is now rampant and increasing.  The result of impementing this program will be a devastation on our land equivalent to our having lost WW2.  But there is still hope that the socialists in Washington will fail as America begins to pay attention.

More Americans than ever are beginning to discover that no poor country takes care of its people or its environment.  A good quality of life is a benefice that only well-to-do countries can provide.  The world overflows with supporting evidence for this truth.  But one of the enduring tragedies of socialism is that it cannot see the relationships between economic growth, levels of wealth, a healthy environment, and improved quality of life for all people under systems of governance based on liberty.  (I hope we’re all past the stage where we confuse democracy and liberty.)

The Heritage Foundation has a new 40 minute video on AGW that is worth watching.  It covers the science part of the Team Gore AGW claims, and goes on to consider the economic impact – especially on the world’s poor – implementing the currently touted AGW policies.  It concludes by offering some productive alternative policies that answer the hysteria still sweeping the developed world.

(Visit NC Media Watch for your daily dose on AGW and things related.) 

… and then, where’s Hillary?? (updated)

George Rebane

Things are getting curiouser and curiouser.  Today everyone is hyper-ventilating on the portents of Sarah Palin’s resignation, President Obama making nice with the Russians, the Dems are on the air talking down the abject failure of stimulation, Iran is confirming it’s a totalitarian state, Madman Kim Jong Il is cutting back North Korea’s economy and rattling its bent saber, and the Chinese are starting to kill the Moslem Uyghurs in wholesale.  And that’s just a start.

Many think that Palin will somehow co-opt the Tea Party movement into a new political party that she will head for her 2012 presidential bid.  That will require a lot of ducks to line up just about perfectly.  Right now this little burp in her political career serves to fill column inches, blogs (like this), and minutes of air time.  As I said on NC MediaWatch ,  ‘She has some work to do before she can readily claim all Tea Party supporters as members of a new political party. The TP is now the standard bearer for a strong sentiment about governance that is drawing a lot of conservative support. But a sentiment – especially a sentiment with no focused leadership - is not by itself a political party. Let’s first see how she sets her sails, and then what wind will fill them.’

Obama’s trip to Russia seems to have no clear purpose that serves US interests.  Putin is on track to re-exert USSR-style influence in Russia’s “near abroad”, and is showing Obama its respect by holding the largest war games since the Cold War right next to Georgia (where it still has troops from its recent invasion) while Obama is drinking tea with Medvedev.  They’re supposed to be talking about a new SALT treaty, as if that will make a difference?? A hell of a way to push the vaunted ‘Reset Button’ that Hillary earlier delivered to Moscow as an apology for the Bush years.

Ruminations - 27jun2009 (updated)

George Rebane

Federalization of states is starting to pick up speed (background here).  California is being joined by fourteen other states in the line-up at the Treasury loans window (more here from Reuters).  They too have run out of money to pay for various obligations, and must now start studying the considerable Owner’s Manual of Federal Loans, Dispensations, and Stimuli that comes with every federal dollar.

As ‘Cap n’ Tax’ (HR2454) is rolling through Congress, we see in yesterday’s WSJ –

Among the many reasons President Barack Obama and the Democratic majority are so intent on quickly jamming a cap-and-trade system through Congress is because the global warming tide is again shifting. It turns out Al Gore and the United Nations (with an assist from the media), did a little too vociferous a job smearing anyone who disagreed with them as "deniers." The backlash has brought the scientific debate roaring back to life in Australia, Europe, Japan and even, if less reported, the U.S.

For more, read ‘The Climate Change Climate Change - The number of skeptics is swelling everywhere.’

[update] The full text of HR2454 can be obtained from here.

Yesterday our Congressman Tom McClintock delivered this speech in House chambers during the HR2454 debate.  Entitled 'Our Generation's Smoot-Hawley', it is short and to the point

Madam Speaker:

When we discuss Herbert Hoover’s mishandling of the recession of 1929, the first thing that economists point to is the Smoot-Hawley Tariff Act that imposed new taxes on over 20,000 imported products.  The Waxman-Markey Bill is our generation’s Smoot-Hawley.  It imposes new taxes on an infinitely larger number of domestic products on a scale that utterly dwarfs Smoot-Hawley.

At least Hoover could argue that Smoot Hawley made domestic products more competitive with imports.  Waxman-Markey disadvantages American products.  When California adopted similar restrictions three years ago, we, too, were promised an explosion of green jobs.  Instead, California’s unemployment rate has skyrocketed to one of the highest in the country.

If this bill becomes law, I believe history guarantees us two things. One: the planet will continue to warm and cool as it has been doing for billions of years. And two: Congress will have just delivered a staggering blow to our nation’s economy just at the moment when it’s the most vulnerable.

In the 26jun09 WSJ we have 'The Albany-Trenton-Sacramento Disease' from which -

President Obama has bet the economy on his program to grow the government and finance it with a more progressive tax system. It's hard to miss the irony that he's pitching this change in Washington even as the same governance model is imploding in three of the largest American states where it has been dominant for years -- California, New Jersey and New York.

Finally, the naïf (confused about small town politics) asked the stately Bonze of Community Conscience, who was sitting in the bliss of self-absorbed meditation, ‘Master, what then is the sound of the One Mouth yapping?’

A fine is a tax for doing wrong. A tax is a fine for doing well.