The risk of war in the South China Sea

May 22, 2015

chinasea-1x-1The Chinese People’s Republic seeks to control the South China Sea.  It is building artificial islands which it will claim as Chinese territory.

Its claims are in conflict with the claims of smaller nations of Southeast Asia, which, so far as I can tell, are equally valid in international law.

The Obama administration is preparing to confront China militarily over these claims.  This is a big mistake.

map_disputed-reefsThe sea routes in the South China Sea are vital to China and not vital to any other nation.   The South China Sea route is the cheapest and most convenient sea route for Japan, Korea and the nations of Southeast Asia.  But if worst comes to worst, they could take a longer route.  The Pacific Ocean is a big body of water.

The United States government is currently confronting Russia and China, the only two nations in the world that are beyond the reach of American naval and air power, over matters that the Russian and Chinese governments see as vital to national survival, and which are not vital to the United States.

artificialislandIn the case of Russia, it is the goal of bringing Ukraine into an anti-Russian military alliance and making Crimea a possible base for NATO forces.  In the case of China, it is the goal of U.S. domination of the sea routes to eastern Asia.

I am not an admirer of the Russian or Chinese governments.  They both abuse human rights.  They both believe in their own versions of exceptionalism, believing they have the right to dominate their smaller and weaker neighbors.   An increase in Russian or Chinese power is a bad thing, not a good thing.

But I don’t think trying to roll back the existing Russian or Chinese spheres of influence is worth risking war over, any more than Russia or China would think it worthwhile to risk war over U.S. domination of the Caribbean and Central America.

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It’s not just Wall Street

May 21, 2015

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It’s not just the USA that allows bankers and financiers to break the law and get away with it.   Or regards the largest financial institutions as “too big to fail”.

This goes back to Prime Minister Tony Blair, who thought he could make London the world’s financial hub by freeing banks from all regulation.

As in the USA, the government’s priority is to protect the financial institutions rather than to protect the public.

Banking regulation is even weaker in Europe than in the United States, and one of the goals of the proposed Transatlantic Trade and Investment Partnership, the next international agreement in the pipeline after the Trans Pacific Partnership, is to set limits on financial regulation.

That would make banking and finance un-reformable, either in the USA, the UK or other TTIP signatories.

Update 5/22/2015.  The five banks that pleaded guilty to rigging interest rates and the exchange rate for foreign currencies are Britain’s Barclays and the Royal Bank of Scotland, the USA’s Citicorp and JP Morgan Chase and Switzerland’s UBS.

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The enigma of Barack Obama

May 21, 2015

HarpersWeb-June2015-Cover-302x410Anyone who voted twice for Obama and was baffled twice by what followed — there must be millions of us — will feel that this president deserves a kind of criticism he has seldom received.  Yet we are held back by an admonitory intuition.  His predecessor was worse, and his successor most likely will also be worse.

One of the least controversial things you can say about Barack Obama is that he campaigned better than he has governed.  The same might be said about Bill Clinton and George W. Bush, but with Obama the contrast is very marked.

Governing has no relish for him.  Yet he works hard at his public statements, and he wishes his words to have a large effect.  Even before he ascended to the presidency, Obama enjoyed the admiration of diverse audiences, especially within black communities and the media.  The presidency afforded the ideal platform for creating a permanent class of listeners.

via Harper’s Magazine..

I am more disappointed in Barack Obama than in anyone else I ever voted for.  His speeches are often eloquent and wise, but his actions have no seeming connection with his words.  He is conciliatory toward his American political enemies, and tough with his core supporters.

I read The Audacity of Hope in 2008 and was under no illusion that Obama was a progressive reformer.  In that book, he presented himself as one who understood both liberals and conservatives and, by showing his reasonableness, could reconcile the two.  This was either hypocrisy or naivete.

What hoped for was that Obama as President could restore the country to normal after the excesses of the George W. Bush administration—a country in which the President respected the Constitution, didn’t start wars and kept his distance from Wall Street.  But none of these things happened.

There are three possible explanations of this.  One is that the entrenched power of Wall Street and of the covert military-intelligence complex—the so-called deep states—are too powerful to overcome, and that Obama is the best we can hope for.  I hate to believe that because it means there is no hope for my country.

Another is that Barack Obama has certain character flaws that make him ineffective.  The third, which is what I tend to believe, is that Obama’s intentions are not what his liberal supporters think they are.  Although he ran on a platform of hope and change, he is a very effective defender of the status quo.

David Bromwich, writing in the June issue of Harpers magazine, examined the Obama record in terms of his character.   The article worth reading, but it is behind a pay wall, so you have to buy the magazine or go to a public library to read it.  I subscribe to the magazine, so I can provide the highlights.

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The claim that off-shoring lowers costs

May 20, 2015

Yves Smith wrote on her naked capitalism blog:

… … The claim that outsourcing and off-shoring lower costs is greatly exaggerated.

Off-shoring and outsourcing … … do lower direct factor and lower-level worker costs.

But they do so at the increase of greater coordination costs of much more highly-paid managers.  And they also increase shipping and financing costs, and downside risk.

Having people work at a distance, whether managerially or by virtue of being in an outside organization where the relationship is governed by contract, increases rigidity (harder to respond to changes in market demand) and the odds of screw-ups due to communication lapses.

And outsourcing also reduces an organization’s skills.  Those lower-level people have a lot of product know-how that you lose when you transfer activities to an outside operation.

It’s nice to think that you can hollow out your organization and just do all the sexy design and marketing stuff and dump the grunt work on other players.  But over time you are breeding future competitors.

Thus off-shoring is best understood as a device for transferring income from the rank and file to middle level and senior executives.

via naked capitalism.

In short, off-shoring lowers the wages of production workers, and raises the salaries and importance of managers.   And who makes the decision about off-shoring?  The managers!

This reminds me of America by Design and Forces of Production, books I read by an economic historian named David Noble.   He wrote that there was no evidence of an overall economic benefit in replacing skilled workers with automatic machinery.  The benefit was in increasing the power of managers and industrial engineers, and decreasing the power of workers.

There’s something called public choice theory, which is about how public officials, when making decisions, consider their own good as well as the public good.  I’d say this theory applies just as much to decisions within corporations or any other organization.

What it means is that when corporate officials say “the market” determines this or that, we the people are entitled to ask—the market for what and for whom?

WTO overrules U.S. country of origin law

May 20, 2015

The World Trade Organization has overruled a U.S. law requiring that imported meat be labeled as to its country of origin.

The law gives an unfair advantage to domestic livestock breeders and meat processors, the WTO said.

Now the WTO is in the process of deciding what retaliatory tariffs can be imposed by Canada and Mexico if the United States does not repeal the law.

This is a sample of what can be expected if Congress approves the Trans Pacific Partnership or Transatlantic Trade and Investment Partnership agreements.

The mechanism is different in the TPP and TTIP, but the purpose is the same.  Under the investor-state dispute settlement processes in these agreements, a panel of arbitrators could fine a government whose laws supposedly treated a foreign investor unfairly.  The government would have the choice of paying the fine or repealing the law.

It might be good to have a trade agreement that set minimum standards for inspection of imported meat.  But the existing and proposed trade agreements go the other way.  They restrict the power of democratically-elected governments to protect their citizens.

LINKS

WTO Rejects U.S. Appeal of COOL Ruling by Lydia Zuraw of Food Safety News.

If Fast Track Passes, Anything Attached to a “Trade” Treaty Will Pass by Gaius Publius for Down With Tyranny!  [Hat tip to naked capitalism]

The case for re-building our rail system

May 20, 2015

train-combined2
The recent derailment of an Amtrak train, killing eight people and injuring 200, has people worried about the safety of railroad transportation.  But rail transportation is extremely safe, compared to automobile driving.

It is also more energy-efficient and affordable, and this is going to become more important over time.

I enjoy the freedom of driving my car and of not being tied to a bus or train schedule.  At the same time I’m glad that bus and train transportation is available when I’m not able to drive, and I’d use it more if it were more convenient.

I might prefer a comfortable leisurely train trip to the hassle of traveling by air, if the schedule were convenient.  I’ve never heard of anybody losing a seat on a passenger train because it was over-booked.

And rail transportation when available is the most cost-effective means of shipping freight.
train-combined1

My e-mail pen pal Bill Harvey sent me a link to an article making the case for investing in rail transportation.  But the U.S. government is doing the opposite.  It is dis-investing in rail.

amtrak2

Why?  I think it is due to an ideology that has taken root in the Republican Party that public services are in and of themselves a bad thing, unless provided by for-profit corporations.  So public services are starved of the funds they need, which makes them function poorly, which provides a justification for punishing them by further budget cuts.

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What went wrong in Afghanistan

May 19, 2015

Adam Curtis is a documentary filmmaker for the BBC who makes connections that other people don’t see.

In his new documentary, Bitter Lake, he shows how Afghanistan has been a focal point of a three-way struggle among Anglo-American capitalism, Soviet Communism and Saudi Arabia’s radical extremist Wahhabist Islam.

While Soviet Communism has collapsed and Anglo-American capitalism is in crisis, Wahhabism is spreading and growing stronger.

Curtis doesn’t offer a policy for dealing with Wahhabism, but his documentary shows that mere firepower is not the answer, nor is providing money and weapons to prop up corrupt warlords and governments.   The First Rule of Holes applies: When you’re in one, stop digging.

The embedded YouTube video above is a history teacher’s abridgment of Bitter Lake which covers all the main points.  Click on Bitter Lake if you want to see the full version or if the embedded video doesn’t work.

51% of public school students are low-income

May 19, 2015

Percent-of-Low-Income-Students-in-PS-2015-01More than half of students attending public schools in 2013 were low-income, the first time they were in the majority since these figures were tracked.

That is, they are not necessarily poor (according to the federal definition), but they are eligible for free or reduced-price school lunches.

Students can get free lunches if their parents’ incomes are 135 percent of the federal poverty threshold or less, and reduced price lunches if their parents’ incomes are 185 percent or less.

A child of a single parent could get a free lunch if the parent’s income was $19,669 or less.  The child could get a reduced-price lunch if the single parent’s income was $27,991 or less.   The reduced-price limit is $43,568 for a family of four.

Low-income students were fewer than 32 percent of students in U.S. public schools in 1989 and only 38 percent in 2000, the Southern Education Foundation reported.   Reed Jordan of the Urban Institute said the 51 percent figure reflects rising child poverty, increasing economic instability and possibly increasing number of poor immigrants.   About one in four American public school students are the children of immigrants.

Changes in eligibility rules also could affect the number.  Schools in which a majority of students are low-income now offer reduced-price lunches to all.

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What we knew back then about Saddam

May 18, 2015

Matt Taibbi thinks it is silly to question Jeb Bush about what should have been done about Iraq “in the light of what we know now.”  Any sensible American knew enough then to realize what a bad idea invading Iraq was, he wrote.

The Iraq invasion was always an insane exercise in brainless jingoism that could only be intellectually justified after accepting a series of ludicrous suppositions.

dick-quizFirst you had to accept a fictional implied connection between Saddam Hussein and 9/11. Then you had to buy that this heavily-sanctioned secular dictator (and confirmed enemy of Islamic radicals) would be a likely sponsor of radical Islamic terror. Then after that you had to accept that Saddam even had the capability of supplying terrorists with weapons that could hurt us (the Bush administration’s analysts famously squinted so hard their faces turned inside out trying to see that one).

And then, after all that, you still had to buy that all of these factors together added up to a threat so imminent that it justified the immediate mass sacrifice of American and Iraqi lives.

It was absurd, a whole bunch of maybes piled on top of a perhaps and a theoretically possible or two. O.J.’s lawyers would have been embarrassed by it.

via Rolling Stone.

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The new meritocracy

May 18, 2015

toles-11-5.occasionallinks&commentarySource: Tom Toles Political Cartoons

Hat tip to occasional links and commentary

Hedge funds are misnamed.  Very few of them are designed to hedge against risk.  Most of them are vehicles for high-risk speculation.  None of them provide capital for growing the real economy.  No trustee for other people’s money should ever invest in one.

LINKS

The Highest-Earning Hedge Fund Managers & Traders by Forbes magazine.

Poor guys: Top US hedge fund managers earn $11bn in 2014, but worst in years by Rupert Neate for The Guardian.

Hedge Funds Close Doors, Facing Low Returns and Investor Scrutiny by Alexandra Stevenson for The New York Times.

The seven ages of man

May 17, 2015

175_stage01
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Get-well cards for the seriously ill

May 16, 2015

263-c-happens-for-a-reason-card_large265-c-treatment-on-the-internet-card_large Read the rest of this entry »

A plan to store natural gas under Seneca Lake

May 15, 2015

A plan is afoot to store natural gas in salt caverns beneath Seneca Lake, one of the world’s beauty spots, an important location for the New York wine industry and a source of fresh water for 100,000 people.

Although Gov. Andrew Cuoma has suspended hydraulic fracturing for natural gas in New York state, the Federal Energy Regulatory Commission has authority to allow fracked gas to be brought in for storage from Pennsylvania and other states.

Filmmaker Josh Fox and author and activist Sandra Steingraber report in the video above how the natural gas industry intends to make New York’s Finger Lakes a storage and transportation hub for gas throughout the Northeast.

They argue that this creates danger of not just of a gas explosion, but even of the collapse of the lake bottom.

LINKS

Video of the Week: We Are Seneca Lake – A Call to Action from Josh Fox and Sandra Steingraber from Josh Fox’s Gasland blog.  (Hat tip to Bill Harvey)

We Are Seneca Lake: Josh Fox & Fracking Opponents Fight Natural Gas Storage Site in Upstate NY on Democracy Now! (Hat tip to Bill Harvey)

World on track for zero population growth

May 15, 2015

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asianbirthrate20140110_asc002_l

Much of the world is on track for zero population growth.  Birth rates in many countries are at the replacement rate of 2.1 children per average couple, or lower.

brazila01gra1The change, in my opinion, has come about because (1) knowledge and availability of birth control are widely available, (2) women are emancipated and have control over their bodies and (3) people are raised far enough out of absolute poverty that they think it is better to have a small number of prosperous, well-educated children than to have many children.

I think that, in the long run, Muslims and Hindus will be as willing to practice contraception as Catholics have proved to be.

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What’s at stake in global climate change

May 15, 2015

4_5_degreesSource: xkcd.


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